The National Bureau of Statistics (NBS) has released its Trade Balance Report for the fourth quarter of 2023 (Q4’23), revealing a trade deficit of N1.4 trillion. While this might seem concerning, the report also highlights a positive trend: a significant increase in the value of exports compared to the previous quarter.
Exports on the Rise, But Not Enough to Outpace Imports:
Nigeria’s total merchandise trade in Q4’23 reached N26.8 trillion, reflecting a substantial rise of 38.24% compared to Q3’23 and a staggering 128.64% increase year-on-year (YoY). However, a closer look reveals a gap between exports and imports. The value of exports stood at N12.69 trillion, while imports reached N14.1 trillion. This translates to exports accounting for 47.36% of total trade, with imports making up the remaining 52.64%.
Crude Oil Dominates Exports, Non-Oil Sector Shows Promise:
As expected, crude oil remains the kingpin of Nigerian exports. In Q4’23, crude oil exports reached a value of N10.31 trillion, constituting a whopping 81.23% of the total export value. This dominance underscores the need for diversification. However, there’s a silver lining. Non-crude oil exports reached N2.38 trillion, representing 18.77% of the total. Notably, non-oil products contributed N1.09 trillion (8.63%) to this figure, indicating some growth in this sector.
Imports Surge, Primarily Driven by Asia:
Nigeria’s import bill also saw a significant rise in Q4’23. Total imports reached N14.1 trillion, representing a 56.04% increase compared to Q3’23 and a staggering 163.08% YoY increase. This surge in imports is a key factor contributing to the trade deficit. The report further breaks down the import sources:
- Asia: N9.45 trillion (66.9% of total imports)
- Europe: N3.4 trillion (24.3%)
- America: N954.99 billion (6.77%)
- Africa: N241.83 billion (1.72%)
- Oceania: N27.06 billion (0.19%)
It’s worth noting that imports from ECOWAS countries within Africa accounted for a mere N32.74 billion, or 0.23% of the total import value.
Looking Forward: The Need for Diversification
The widening trade deficit in Q4’23 serves as a wake-up call for Nigeria. The over-reliance on crude oil exports makes the country vulnerable to fluctuations in global oil prices. To achieve a more sustainable trade balance, fostering the growth of non-oil exports is crucial. This can be achieved by investing in infrastructure, promoting export-oriented industries, and creating a more business-friendly environment. By diversifying its export base, Nigeria can reduce its dependence on oil and create a more resilient economy.
