March 11, 2024/CSL Research
Based on a recent report from the National Bureau of Statistics (NBS), Nigeria recorded a trade deficit of N1.41trn in the fourth quarter (Q4) of 2023. Total merchandise trade was N26.8trn, an increase of 38.2% over the value recorded in Q3 2023 and a significant growth of 128.6% when compared to the value recorded in Q4 2022.
On trade classification, total exports grew to N12.69trn, making up 47.4% of total trade and an increase of 22.7% from N10.35trn recorded in Q3 2023. Total imports amounted to N14.11trn, up 56% compared to N9trn recorded in Q3 2023 and making up 52.6% of total trade.
A comprehensive analysis of the export figures revealed that out of the total N12.69 trillion in exports, crude oil made up the lion’s share at 81.2%, amounting to N10.3 trillion. Non-crude oil exports made up the remaining 18.8%, contributing N2.4 trillion.
Notably, non-energy products from sectors such as agriculture, solid minerals, manufacturing, and raw materials only contributed N1.1 trillion, representing a mere 8.6% of the total exports. The nation’s top five export partners continue to be the Netherlands, India, Spain, Canada, and France, collectively constituting an impressive 45.29% of the country’s total exports. On the import front, the top five trading partners, including Singapore, China, Belgium, India, and the United States, dominate with a substantial 68.86% share of the nation’s imports.
That said, for FY 2023, the Balance of Trade (export minus imports) closed at a surplus of N2.9bn, riding on gains from an improved export condition and currency devaluation in Q3 2023. Looking ahead, we believe the introduction of new tariffs on imports will discourage imports. Notably “Tanks and armored vehicles” made up 35.87% of Q4 imports ahead of Premium Motor Spirit (PMS). We believe this may be a one-off item that will not reoccur in subsequent quarters.
However, we reiterate that the limited share of non-crude oil products to total exports highlights the nation’s excessive dependence on crude oil for export revenue. It is crucial to emphasize the necessity of diversifying export earnings away from oil especially amidst reduced crude oil production. Agricultural commodities such as cocoa, cashew and rubber are readily accessible opportunities, given the abundance and quality of our arable lands.
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