Freshly released foreign trade statistics report showed that merchandise goods worth N32.42 trillion were traded in FY 2020, 10.32% lower than N36.15 trillion recorded in FY 2019.
Of the total goods traded, value of exports decreased year-on-year (y-o-y) by 34.75% to N12.52 trillion in FY 2020, while the value of imports rose y-o-y by 17.32% to N19.89 trillion in FY 2020, resulting in higher trade deficit of N7.37 trillion in FY 2020; a complete reversal from a N2.23 trillion trade surplus printed in FY 2019.
Crude oil exports which plummeted y-o-y by 35.71% to N9.44 trillion, constituted 75.42% of total export value in FY 2020. Non-crude oil exports decreased y-o-y by 31.63% to N3.08 trillion in FY 2020, constituting 24.58% of the total export value.
Further breakdown of the non-crude oil exports showed that “Vehicles, aircraft and parts thereof; vessels”, “Base metals and articles of base metals”, and “Prepared foodstuffs; beverages, spirits and vinegar; tobacco” export values fell y-o-y by 27.64%, 95.58% and 2.86% respectively to N841.99 billion, N35.62 billion and N169.27 billion respectively in FY 2020 from N1.16 trillion, N805.33 billion and N174.26 billion respectively printed in FY 2019.
On the import side, capital goods bill (“Boilers, machinery and appliances” as well as “Base metals and articles of base metals”) which constituted 36.81% of the total imports rose to N6.13 trillion in FY 2020 from N5.33 trillion in FY 2019.
Import bills on Mineral products, Chemicals & related products and Vegetable products, constituting 15.82%, 13.47% and 5.43% respectively, rose to N3.15 trillion, N2.68 trillion and N1.08 trillion respectively in FY 2020 from N2.72 trillion, N1.39 trillion and N0.59 trillion respectively in FY 2019.
Europe and Asia continued to dominate Nigeria’s export destinations despite the significant drop in export to the two continents.
The export value to the Europe declined by 36.08% to N4.86 trillion in FY 2020 from N7.62 trillion in FY 2019. Also, exports to Asia collapsed by 20.55% to N4.31 trillion in FY 2020 from N5.42 trillion in FY 2019.
Of the total exports in the Europe and Asia, France and India recorded the highest export value decreases: exports to France and India dropped y-o-y by 55.49% and 36.42% to N0.57 trillion and N1.88 trillion respectively in the year under review.
Similarly, value of exports to African countries nosedived to N2.37 trillion in FY 2020, from N3.92 trillion in FY 2019.
Notably, Nigeria’s export deals with American continent fell sharply to N0.85 trillion from N2.05 trillion, as value of exports to United States dropped y-o-y by 62.10% to N0.38 trillion in FY 2020. Meanwhile, amid the sustained rise in crude oil prices at the international market, the Federal Government of Nigeria, via its agency, Petroleum Products Pricing Regulatory Agency (PPPRA) signaled possible price hike of Premium Motor Spirit (PMS) in the near term, to sell within the band of N209.61 and N212.61 per litre, as the landing cost and the ex- depot prices rose to N189.61 and N206.42 per litre respectively.
Nigeria’s crude oil price, Bonny Light crude oil price rose by 3.13% w-o-w to USD68.19 per barrel as at March 12, 2021.
While Nigeria’s worsened foreign trade deficit in FY 2020 has been predicated on the distruptions to global trade caused by Coronavirus pandemic, we expects exports of Africa’s largest market to rebound in 2021 given significant ease in lockdown measures and resumption of global trade with the ongoing rollout of vaccines.
We thus expect Nigeria’s trade balance to significantly improve and have a net positive effect on the dwindling external reserves and exchange rate.
While we commend efforts by the authorities to boost critical infrastructure, we expect a much more coordinated effort by relevant agencies to promote an export-oriented economy especially given the now expanded market occassioned by the adoption of AfCFTA.