Key highlights
- Nigeria spent N89.3 trillion on imports from 2018-2022, accounting for 48.21% of total trade and representing a surplus of N6.7 trillion for total exports.
- The highest import expenses were in 2022 at N25.6 trillion, with petrol being the top imported item despite Nigeria being a major crude oil producer.
- Experts suggest the Dangote Refinery could reduce Nigeria’s petrol imports and improve local refining, potentially saving foreign exchange.
- Nigeria needs to improve its production capacity and diversify its export items to earn more foreign exchange and positively impact the exchange rate.
Nigeria has spent a whopping sum of N89.3 trillion to import goods in 5 years, between 2018 and 2022. This is according to compilations by Nairalytics from the Foreign trade report released by the National Bureau of Statistics (NBS).
Further breakdown of the data showed that importation accounted for 48.21% of the total trade recorded in the review period. Meanwhile, total exports stood at N95.95 trillion in the same period, reflective of an international trade surplus of N6.7 trillion.
In the 5-year period under review, the highest import expense was recorded in 2022 with N25.6 trillion, representing a 22.8% increase when compared to the N20.8 trillion recorded in the previous year.
Import breakdown in 5 years
- Nigeria imported food and live animals valued at N9.75 trillion between 2018 and 2022, accounting for 10.9% of the total imports.
- Importation of minerals and fuel accounted for 29.1% of the total import bill with N26.01 trillion.
- Machinery and transport equipment gulped a sum of N28.2 trillion in the review period, representing 31.6% of the total import.
- A sum of N11.63 trillion was spent on the importation of chemicals and related products. This accounts for 13% of the N89.26 trillion spent on imports during the period under review.
Nigeria’s import expense grew at a rapid pace over the years, from an annual expenditure of N13.17 trillion in 2018 to N25.59 trillion in 2022, representing a CAGR of 14.22% over the 5-year period. Meanwhile, export earnings have not increased in a similar passion. A cursory analysis of the data showed that Nigeria’s export income only printed a CAGR of 7.65% in the same period.
It is worth noting that Nigeria’s export, which is predominantly composed of crude oil earnings has been impacted in recent years by the combination of oil price volatility and reported oil theft, which has significantly affected production capacity.
Petrol dominates Nigeria’s import
In terms of importation, Motor spirit ordinary, generally referred to as petrol topped the list of imported items. In 2022, Nigeria imported petrol valued at N5.2 trillion, accounting for 20.4% of the total import for the year.
- The African giant continues to spend a fortune on the importation of petrol, despite being a major crude oil producer with three refineries; Kaduna, Warri, and Port Harcourt.
- However, the inability of the refineries to meet local demand has necessitated the continuous importation of petroleum products into the country, at the expense of scarce financial resources.
- Data from the CBN showed that Nigeria’s external reserves lost $1.68 billion between 2017 and 2022. This is despite the $3.35 billion IMF Special Drawing Right received by Nigeria in 2021 and a $4 billion Eurobond issuance in the same year.
- The depletion of the nation’s external reserves has also affected the exchange rate both at the official and parallel market, as the dollar crunch continues to ravage the Nigerian economy. In 2022, the naira depreciated by 23.1% and 5.7% at the parallel and official markets respectively.
Dangote Refinery could be a game changer
Experts and Analysts have suggested that the Dangote Refinery could be a major game changer in reducing Nigeria’s petrol import. The oil refinery, which is constructed in the Lekki Free Trade Zone, in Lagos with a 650,000 barrels per day refining capacity.
- It is expected that the refinery, which is expected to kick off by the middle of the year, will help ensure the local refining of petroleum products and save FX.
- The Minister of State for Petroleum announced during a press briefing in November 2022, that Nigeria will exit the petrol import market by the third quarter of the year.
- It is imperative for Nigeria to improve its production capacity and diversify its export items in a bid to earn more FX, which will have a positive effect on the exchange rate.