The latest data from the National Bureau of Statistics (NBS) indicated that Nigeria’s external trade declined by 10.32 percent in 2020. From N36.15 trillion in 2019, significant decline in non-oil and crude oil trades shrank Nigeria’s foreign trade to N32.42 trillion in 2020, leaving a trade deficit of N7.37 trillion. At the end of 2019, Nigeria had a trade surplus of N2.23 trillion.
While imports grew by 17.32 percent year on year from N16.96 trillion in 2019 to N19.89 trillion in 2020, exports fell by twice as much as the margin the imports for the period grew. In 2019, exports equalled N19.19 trillion, but fell by 34.75 percent in 2020 to N12.52 trillion.
Crude oil exports, the nation’s source of its foreign exchanges, fell by 35.71 percent. Crude oil export value for 2020 was N9.44 trillion compared with N14.69 trillion realised in 2019. A number of factors are responsible for the significant drop in crude oil exports. It is an open secret that Covid 19 disrupted many economies in the world last year, which lead to factory closures, and a complete shutdown of the global aviation industry, resulting in economic recessions in many countries. Consequently, demand for crude oil slumped due to oversupply of the product to the international market.
To reverse the supply glut, OPEC members and Russia agreed on production cut to reverse the downward movement in crude oil prices. That worked towards the end of 2020 as crude oil prices picked up but reduction in supply meant lesser revenue for OPEC members and Russia.
“The relative improvement in crude oil prices at the international market, following positive market sentiments, occasioned by the COVID-19 vaccine optimism, led to an increase in crude oil export receipts. Available data showed that the value of crude oil export increased by 8.5 per cent to US$2.31 billion in November 2020, above US$2.13 billion in October 2020. This was, however, 37.9 per cent below the US$3.72 billion in the corresponding period of 2019.
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“Gas export, on the other hand, decreased by 3.1 per cent to US$0.31 billion in November 2020 relative to the US$0.32 billion in October 2020”, the Central Bank of Nigeria(CBN) said in its Economic Report for November 2020.
The non-crude oil exports fell by as almost the same margin as the crude oil export in 2020. This segment of export generated N4.50 trillion for Nigeria in 2019, but due to consistent decline in exports in quarters two, three and four of 2020, Nigeria ended up with N3.08 trillion export proceeds from non-crude oil exports in 2020, representing a decline of 31.63 percent.
The top ten export products in the last quarter of 2020 were petroleum oils and oils obtained from bituminous minerals and crude, liquefied natural gas, floating or submersible drilling or production platforms, and other petroleum gases in gaseous state.
From the list of items above, it is quite clear the sources of Nigeria’s foreign exchange are products directly related to the nation’s oil and gas industry.
The non-oil products are sesame seeds-whether or not broken, good fermented Nigerian cocoa beans, as well as sesame oil and its fractions.
Motor spirit ordinary dominated imports in the last quarter of 2020. Others items were vaccines for human medicines, durum wheat, used vehicles, and other antibiotics.
Fears of contracting Covid 19 forced Nigerians to embrace pharmaceutical and non-pharmaceutical measures to ward off the virus. Thus, the market for antibiotics expanded to meet the rising demand for antibiotics drugs. This is evident in the import statistics.
In the last quarter of 2020, vaccines for human medicine worth N399.3 billion were imported into Nigeria. N40.5 billion worth of antibiotics were among the top 15 products imported into Nigeria in the second quarter of 2020.
That was not the trend in 2019. In Q1 2019, no medical products for human use were among the top 15 imports into Nigeria. In Q2 2019, syringes used in medical, surgical, dental or veterinary sciences worth N48.96 billion were imported into Nigeria. Vaccines for human medicines worth N88.73 billion were brought into Nigeria. In Q4 2019, antibiotics worth N129.63 billion, and vaccines for human medicines worth N71.79 billion were among the top 15 items.
The upsurge in vaccines and antibiotics import was because of the global pandemic Covid 19, which has caused 1,982 deaths in Nigeria as of the end of February 2021.
Even if the Covid 19 related deaths have not crossed a thousand mark, the fact that the most affected states in Nigeria are Lagos, Abuja, Plateau, Kaduna and Oyo states, would still have made people to take stringent precautions such as the use of antibiotics. These are the economic and administrative centres of Nigeria, where an outbreak is likely to have a ripple effect on the entire nation. With the approval of AstraZeneca/Oxford COVID 19 vaccine by NAFDAC, we expect that in the first two quarters of 2021, import of antibiotics might surge.
The analysis of destinations of exports in 2020 showed that India remained Nigeria’s largest export destination, revealing that Nigerian firms sold goods worth N547.02 billion to Indian firms and households, and thus the country accounted for 17.1 percent of Nigeria’s export. Spain, South Africa, The Netherlands, and the United States were the other top five export destinations, accounting for 9.81 percent; 8.03 percent; 6.09 percent, and 5.33 percent of Nigeria’s exports.
China led the import source chat in the last quarter of 2020, and this trend is just a replica of what transpired in the previous quarters. With N1.67 trillion worth of goods imported from China, that country accounted for 28.28 percent of the goods firms and households bought from overseas during the reference period.
Crude oil export, other petroleum oil products accounted for 92.3 percent of Nigeria’s export. Confirming that the Nigerian economy is not yet diversified, agricultural goods export in the last quarter of 2020 accounted for just 1.75 percent. Raw material goods exports worth N46.89 billion, representing 1.47 percent were exported between October and December 2020. Solid minerals accounted for 0.14 percent while manufactured goods represented 4.04 percent of Nigeria’s exports.
On the import side, manufactured goods, representing 64.56 percent of the total imports, and raw material goods that amounted to 12.08 percent, dominated the import chart between October and December 2020.
Interestingly, 8.98 percent of the country’s imports were agricultural goods. This does not come as a surprise in view of the worsening insecurity in Nigeria which has resulted in lower productivity due to farmers’ inability to access their farms.
