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Nigeria records highest trade deficit since 1981

Nigeria recorded its highest foreign trade deficit since 1981 as the country’s trade balance stood at -N7.38 trillion in 2020



Nigeria has recorded its biggest foreign trade deficit since 1981 as the trade balance stood at a deficit of N7.38 trillion in 2020. This is according to available data obtained from the National Bureau of Statistics (NBS).

According to the recent foreign trade report, total imports in the year 2020 was valued at N19.9 trillion surpassing the total exports of N12.52 trillion, indicating a trade deficit of N7.38 trillion. This is the second time Nigeria is recording a negative trade balance in the past 10 years.

READ: Nigeria’s foreign trade with US slumps as trade with China grows stronger

In 2016, during a similar recession as the one recorded last year, Nigeria recorded a negative trade balance of N290.1 billion, owing to an 11.1% decline in the value of exports. However, the current trade deficit is more than 25 times higher than that recorded in 2016.

Although Nigeria’s economy grew by 0.11% in Q4 2020, marking the exit from the COVID-19-induced recession, the Q4 2020 trade deficit of N2.73 trillion was the highest recorded in the year. The plunge in the value of Nigeria’s export could be attributed to the crash of oil prices and the outbreak of the covid-19 pandemic in 2020.

READ: The Nigerian economy is increasingly dollarized but there is a way-out

Oil price dilemma

  • Since 2010, crude oil export has contributed more than 70% of Nigeria’s exports followed by non-crude oil exports which contributed an average of 24.10% between 2010 and 2020.
  • The value of crude oil export is determined by two major factors, oil price and the volume of oil production.
  • Nigeria recorded its highest trade surplus in the past decade in 2012 (N16.82 trillion) when Brent oil traded for an annual average of $111.67 and Nigeria produced an average of 2.35mbpd.
  • However, in recent years oil prices have been declining which has subsequently led to volatility in Nigeria’s balance of trade due to our dependence on oil sales as a source of export income.
  • In 2016, during Nigeria’s last recession, it recorded its first trade deficit of N290.13 billion since 1982. Similar to the current happening, there was a glut in the oil market which pushed the oil price to an annual average price of $52.39 in 2015 and $43.73 in 2016.
  • Due to the impact of the Coronavirus on economic activities in 2020, history repeated itself as oil price significantly fell by an estimated rate of 34% to an annual average price of $42.34.
  • Nigeria was also faced with the challenge of the quota placed on its production as a member of OPEC which declined its production by about 12% year-on-year.

READ: Nigeria’s total foreign trade drops to N6.24 trillion in Q2 2020, export plunges by 52%

Impact on Naira Valuation

In a free market, a trade deficit usually leads to currency depreciation as the market will rebalance itself by repricing imports higher and repricing exports lower to eliminate the deficit.

  • However, Nigeria practices a managed floating system which means although the market determines the exchange rate, the CBN comes into the market to mop up the excess supply of naira to prevent naira depreciation.
  • The CBN’s foreign reserve is however affected by this activity as the purchase is financed from the foreign reserve.
  • Despite the management by the CBN in 2020, the exchange rate was devalued twice in the year, first on March 20 when the exchange rate went from N307 to about N360 and on August 6th when it went from N360 to N380 to the dollar respectively.
  • The foreign reserve also depleted by 8.35% in 2020 from $38.60 billion as at December 31, 2019 to $35.37 billion on December 31 2020.
  • In the parallel market which is the closest to `the free market’, the exchange rate depreciated by 27.42%, moving from N361/$ at the end of December 2019 to N460/$ at the end of December 2020.

READ: Nigeria’s Foreign Trade hits N9.18 trillion in Q3, as non-oil export rose by 374.5%

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Bottom line

  • After a turbulent year in the oil market, the oil price has returned to pre-pandemic levels, reaching Goldman Sachs’ target for the year in the first quarter of 2021. Nigeria’s oil production levels however remain a large variable in the recovery process as OPEC+ decided to retain its production level for an additional month.
  • Also, the Nigerian foreign reserve has depleted by 1.79% year to date from $35.37 billion as at December 31, 2020 to $34.74 billion on March 8 2021. This is despite the rise in oil prices.
  • It can be hoped that Nigeria will recover from its negative trade balance in 2021, as the economy returns back to normalcy and oil prices continue in its recent bullish trend.


Fikayo is a first class graduate of economics with experience in investor relations, strategy and research. She is also a member of the Institute of Chartered Accountants of Nigeria (ICAN). She has interest in macro and microeconomics, research, finance and strategy.

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Corporate Press Releases

P2P crypto marketplace, Bitzlato (BZ) partners with Lemonade Finance to ease money transfers across Africa

The partnership will enable users on the BZ platform to buy and sell bitcoins and other cryptocurrencies on the marketplace at zero cost.



Bitzlato (BZ), the latest P2P Crypto Exchange to enter the African market, has added Lemonade.Finance, a borderless payment platform for Africa, as a payment method to its platform.

Lemonade Finance provides 100% digital payment experience for Africans to seamlessly participate in the global economy from anywhere in the world without any hassle or regardless of where they are from.

The partnership will enable users on the BZ platform to buy and sell bitcoins and other cryptocurrencies on the marketplace at zero cost.

Users in Nigeria will now be able to send Nigerian Naira (NGN) to MPESA at 0% transaction fee.

Speaking about this partnership, Ridwan Olarere, CEO, Lemonade Finance, said:

“We are excited to partner with such an innovative company like Bitzlato to connect more Africans through payment. Many Africans living on the continent face many difficulties when making payments as remittance companies charge high fees and are time-consuming. We are now providing our users with a cost-effective way of sending money to Ghana, Kenya, Uk and Europe.”

Commenting on the opportunities this provides to crypto traders on the BZ platform, Mike Lunov, CEO, BZ, said:

“This partnership will provide a much-needed gateway that enables the markets we serve to seamlessly interact with each other in a borderless and open environment. We seek to break the barriers that presently exist for cross border transfers and enable our users to generate value through the opportunities that accrue from cryptocurrencies trading. The innovation exhibited by the Lemonade platform, and the brilliance of its team assures users of top-notch, secure and reliable transfers going forward.”


According to BZ, during the first month, BZ will refund commissions in manual mode while using Lemonade Finance, but this will be automated at the end of this period.

Following this partnership, BZ is now looking to partner with merchants in the crypto space especially in Nigeria, Ghana, South Africa that have a steady flow of Nigerian Naira (NGN) to increase liquidity on the platform.

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Take advantage of the new Lemonade Finance payment method on BZ, which offers zero transactional fees for money transfers from Nigeria into Kenya. Sign up on BZ and start trading crypto easily today.

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Business News

Senate calls for the liberalization of cement policy to crash the price of the commodity

The Senate also tasked the FG on providing more industrial incentives to bring new players into the cement industry.



BUA Cement

The Nigerian Senate has called for the liberalization of Nigeria’s cement policy to boost production and subsequently crash the price of the commodity in the country.

This motion was raised by Senator Lola Ashiru at today’s senate plenary, the senator also tasked the Federal Government on providing more industrial incentives to bring new players into the cement industry, in addition to the liberalization of the cement policy in Nigeria.

Ashiru explained that to reduce the price of cement and in extension, other building materials in the country, the Federal Government needs to provide an enabling operating environment that will encourage new entrants in the country.

The Senate in conclusion called on the FG to provide more industrial incentives and protections such as concessionary loans and larger tax incentives to encourage new entrants and expand the national cement production infrastructure, as this boost in production will lead to a downward review of cement price in Nigeria.

What industry leaders are saying

Earlier this year the founder of BUA Group, Abdulsamad Rabiu, called for the liberalization of Nigeria’s cement policy to boost production and reduce the price of the commodity.

The billionaire philanthropist faulted the belief that Nigeria is self-sufficient in terms of cement production, noting that recent statistics and figures on Nigeria’s population and cement production do not support this status of sufficiency in cement production as stated by some individuals.

He attributed the high price of cement products in the country to the supply gap which exists in the country, as the few producers who currently operate in the country are unable able to meet the country’s huge and growing demand.

The Group Executive Director, Strategy, Portfolio Development and Capital Projects, Devakumar Edwin, explained that the demand and consumption of cement in the nation currently outstrips supply, and this can be pegged on the growth in the country’s population, and the strong appetite for real estate investment and construction in the country.

He revealed that a supply gap of about 40% exists in the country’s cement market and that all players in the industry are working hard to level production with the rising demand in the country.

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