Nigeria’s Export Trade is Still Largely Driven by Crude Oil
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Trade as it is known, is the exchange of goods and services from one person to another. If it is done within a geographical boundary, it is called domestic trade and if it is done outside the geographical boundary, then it is termed international trade. The Nigeria’s trade figures are therefore those of international activities as they show the total amount of goods and services brought into the country as well as those sold to other countries over a particular period of time. When export is greater than imports, then there is a positive balance of trade. However, when import is greater than export, then it shows that the balance of trade is a negative one.
During the first 9 months of 2019, total trade figure of Nigeria was N26.03 trillion of which exports amount to N14.42 trillion while that of import was N11.61 trillion. This means that export as a percentage of total trade was 55% in the first 9 months of 2019 while import was 45% of the total trade figures.
The aim of this research work is therefore to identify the key drivers of growth in the export category as well as examine the compositions of Nigeria’s imports while explaining the country’s misplaced priority in terms of the production and exportation of certain commodities.
Nigeria has a Positive Trade Balance of N2.8 trillion in the First 9 Months of 2019
Over the three quarters in the first 9 months of 2019, trade balance has been positive as Nigeria’s exports have always been greater than its imports during the periods, of which the trade balance which occurred during the third quarter of the year is the largest at N1.39 trillion. This was aided by the decline in imports during the third quarter of 2019 as import was N3.90 trillion compared to N4.01 trillion recorded in the second quarter of 2019. For export, it grew by 15% from N4.60 trillion recorded in the second quarter of 2019 to N5.29 trillion in the third quarter of 2019. This gave rise to 135% increase in trade balance during the third quarter of 2019.
Crude Oil Export is 77% of Total Exports in 9’M 2019
It is a source of joy to know and see exports being greater than imports in trade as it shows a country’s ability to be self-sufficient while solving the problems of other countries and it boosts foreign exchange inflow into the country. However, seeing that the composition of total exports is positively skewed towards the exportation of crude oil, then becomes a source of concern as it explains the state of the country’s export is still bad when crude oil export is held constant.
Based on the data obtained from the NBS
Based on the data obtained from the NBS, it showed that crude oil export was 77% of total exports in the first 9 months of 2019 while non-crude oil exports constitute the remaining 23%. This means that of the total export value of N14.42 trillion in the first 9 months of 2019, crude oil export was N11.06 trillion while all other exports that are not crude oil related amounted to N3.36 trillion. Over the three quarters, non-crude oil export was the highest in the third quarter of 2019 and this is majorly due to the re-exports of high value cable sheaths of iron to Ghana during the period.
Sesamum Seeds: The Diamond in the Rough
Also known as beni seeds and grown mostly in Benue and Taraba state, Sesamum seeds have proven to be the most valuable agricultural export of Nigeria over the past few years as it has been leading other agricultural products when it comes to agricultural products exports.
In the first 9 months of 2019, sesamum seeds worth N75.5 billion was exported to other countries of the world of which Japan was the top destination. For example, of the total sesamum seeds exported to other countries and valued at N14.83 billion (lowest since the first quarter of 2019), about 40% was exported to Japan at a value of N5.60 billion while Turkey came second as sesamum seed export to the country was N2.87 billion during the period.
Good fragmented Nigerian cocoa beans worth N41.85 billion was exported to other countries of the world in the first 9 months of 2019. During the third quarter of 2019, Netherlands served as the top destination of Nigeria’s good fragmented cocoa beans export. Below shows the ranking of the top 6 majorly traded agricultural produce in Nigeria during the first 9 months of 2019.
Based on the data obtained from the NBS
Summary of Nigeria’s Import and Export Trade in Q3 2019
Of the total export of N5.29 trillion in the third quarter of 2019, crude oil export was N3.75 trillion (70.84%) while non-crude oil export amounted to N1.54 trillion (29.13%). Imports however was valued at N3.90 trillion in the third quarter of 2019. The importation of manufactured goods topped the list of imported commodities into the country in the third quarter of 2019 as it constituted 71.29% (N2.78 trillion) of the total imports followed by the importation of other petroleum products valued at N529.15 billion (13.57%). Trade balance therefore was positive during the third quarter of 2019 at N1.39 trillion. However, if we are to take crude oil away from the total exports, it means total exports would be N1.54 trillion and trade balance would have been negative at N2.36 trillion.
In the agricultural sector, total trade amounted to N282 billion of which exportation of agricultural products was 14.9% (N42.1 billion) while agricultural imports accounted for 85.1% (N239.9 billion) of total agricultural trade. Asia was the top destination of Nigeria’s agricultural export during the third quarter of 2019 as export of agricultural produce to the continent amounted to N20.55 billion. On the flip side, Africa was the least destination of Nigeria’s agricultural export as export to the region amounted to N645.40 million, 18% less than agricultural export to the Oceania (N785.24 million). During the third quarter of 2019, Nigeria imported agricultural products from Europe, 7 times as much as it imported from Africa. That is, Europe was the top supplier of Nigeria’s agricultural imports as import of agricultural product from the region was valued at N98.20 billion while that from African countries was valued at N13.62 trillion.
In the manufacturing sector, total trade stood at N3.78 trillion of which export of manufacturing products was valued at N996.8 billion (26.5%) while import was valued at N2.78 trillion (73.5%). According to the NBS, the export of cable sheaths of iron and steel (N750.3 billion) as well as floating and submersible drilling platforms (N117.4 billion) to Ghana, were the major drivers of manufacturing exports in the third quarter of 2019. The importation of vehicles worth N120.6 billion from the United States, topped Nigeria’s manufacturing imports followed by the importation of motorcycles from India at a value of N81.8 billion. That said, the majority of Nigeria’s manufacturing imports came from the Asian continent as Nigeria imported manufactured products worth N1.74 trillion (62.6% of total manufacturing imports) from the Asian continent.
During the period under review, Nigeria did not import crude oil from any country or continent, rather it exports to them. Of the total N3.75 trillion worth of crude oil exported to the different continents, N1.11 trillion worth of crude oil was exported to Asia while N1.58 trillion was exported to Europe, N558.02 billion worth was exported to the Americas while N499.09 trillion worth of crude oil was exported to African countries.
Water transport remains the major mode of transporting goods between Nigeria and trading partner countries. In Q3, 2019, water transport accounted for N5.26 trillion (representing 99.39% of total exports). Air transport contributed N15.4 billion, Road transport accounted for N11.6 billion and other means accounted for N5.4billion of total exports. Similarly for imports, most goods brought into the country arrived via water transportation means. Water transport accounted for N3.49 trillion or 89.5% of the value of total imports. Goods imported by road and air were valued at N17.2 billion and N390.3 billion respectively.
Based on the foregoing, it can be seen that Nigeria’s balance of trade is favorable as its exports are more than its imports. However, a closer look into the compositions of the exports and imports makes Nigeria’s trade be a cause of concern. For example, Nigeria imports crude palm oil (of which the country use to be one of the largest producers in the world and Malaysia was said to have come to Nigeria at a time to collect the seeds as well as learn how to plant them). In the third quarter of 2019, Nigeria imported crude palm oil worth N5.37 billion from the same Malaysia it taught how to grow crude palm oil.
As a result, Malaysia is the largest exporter of crude palm oil into Nigeria in the third quarter of 2019. India came in second at N2.65 billion while Ivory coast came third as Nigeria imported crude palm oil worth N1.20 billion from the country in the third quarter of 2019. In terms of the exports however, crude oil is still the largest component of Nigeria’s export as it accounts for 77% of Nigeria’s total exports in the first 9 months of 2019. As explained earlier on, if crude oil were to be excluded from Nigeria’s exports, then the negative trade balance of Nigeria would have been a massive one. Nonetheless, having a positive trade balance is still a major achievement as it shows the strength of Nigeria’s exports over its imports, thereby leading to an increased foreign exchange earnings for the country. A major implication of which will be a stable exchange rate due to the influx of foreign currencies which can be used to settle payment for imports and still be left with surpluses.
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