Despite Weaker Naira, Nigeria’s Foreign Trade Surplus Rises By 162%

Nigeria recorded significant improvement in foreign trade in 2022 with export earnings outweighing import bills by N1.2 trillion, resulting in foreign trade surplus of 162 per cent, despite the weaker value of the Naira during the year.

data released by the National Bureau of Statistics (NBS) has shown that minerals export was the major item that pushed Nigeria goods trade surplus to N1.2 trillion in 2022 as export bills (N26.8 trillion) outweighed import earnings (N25.6 trillion) for the first time since the pre-COVID year (N2.23 trillion in 2019).

Nevertheless, the NBS noted that the surplus in 2022 represents an improvement of over 162 percent compared to the 2021 goods trade deficit of N1.94 trillion.

The positive trade balance was recorded during the period despite the weaker naira (9.09 percent y/y to N461.50 in 2022), weaker demand for export commodities, the effects of Russia’s invasion of Ukraine in 2022, which translated to weaker trade flows among nations, and the continued high costs of imports as companies became hard hit.

Analysts from Cowry Assets Management Limited said these outcomes resulted in a rapid decline in demand for consumer, intermediate and investment goods sectors across board.

From the NBS report, Nigeria’s total merchandise trade in 2022 accelerated to N52.4 trillion in 2022 from N39.75 trillion in 2021 as Nigeria’s total export value surged 42 percent to N26.8 trillion from N18.91 trillion in 2021.

The increase in total exports was higher than the total import value, which stood at N25.59 trillion (23 percent up from N20.84 trillion in 2021).

However, total trade declined by 4.52 percent in the fourth quarter to N11.72 trillion, relative to N12.27 trillion as reported in the third quarter of 2022, as the value of total exports exceeded the value of imports in the quarter.

An analysis of the data filed shows that Nigeria exported mainly ‘mineral products’ which amounted to N5.7 trillion or 89.11 percent of total export value.

This was followed by “vehicles, aircraft and parts thereof; vessels, among others,” which were valued at N199.29 billion or 3.13 percent of the value of total exports, and “products of the chemical and allied industries,” worth N169.27 billion or 2.66 percent of the value of total exports.

Meanwhile, export value during the quarter was dominated by crude oil exports (N4.9 trillion), which accounted for 77 percent of total exports.

Non-crude oil exports stood at N1.5 trillion or 22.76 percent of total exports, of which non-oil products contributed N732.24 billion, representing 11.51 percent of total exports.

For the import values, which declined 15.5 percent in fourth quarter (Q4) to N5.4 trillion, there were mineral fuels (N1.9 trillion)

There were also imported machinery and transport equipment (N1.3 trillion), chemicals and related products (N694.68 billion).

According to the NBS, the value of imported manufactured goods in the quarter under review stood at N2.5 trillion, a decrease of 14.11 percent as compared to the value recorded in Q3, 2022 (N2.9 trillion).

This value also declined by -18.43 percent when compared to the value recorded in Q4 of 2021 (N3 trillion).

Meanwhile, the value of other oil product imports in the fourth quarter of 2022 stood at N1.9 trillion, indicating a decline of 18.18 percent from the value recorded in Q3, 2022 (N2.3 trillion), but an increase of 10.40 percent compared to the value recorded in the corresponding quarter of 2021 (N1.7 trillion).

Nigeria’s major trading partners in the review period were China and Belgium, while exports went to Spain and the Netherlands.

The two major agricultural products traded were superior quality cocoa beans and sesame seeds.

“We note that Nigeria’s trade balance can be further improved through policies aimed at export promotion, especially for non-oil exports.

“This can be achieved if the Federal Government creates an enabling business environment to improve trade and exports, just as seen in the recent rise in the trade balance,” the analysts stated in a note to clients.

The analysts added that the pressure on the naira as a result of the devaluation, rising inflationary levels and the headwinds faced by global trade in 2022 as a result of slowing economies and supply chain congestion globally have brought about the shrinkage recorded in the total trade balance for Nigeria.