Article Summary
- Nigeria’s foreign trade in the first quarter of 2023 decreased by 17.5% compared to the same period in 2022 but increased by 2.8% from the previous quarter.
- The decline in foreign trade can be attributed to slow economic activities and a severe cash crunch in the country during Q1 2023.
- Nigeria’s export slightly increased by 2% while imports stood at N5.56 trillion, with petrol accounting for 79.4% of total imports in the review quarter. The country recorded a positive trade balance due to improved crude oil production.
Nigeria recorded a total foreign trade of N12.05 trillion in the first quarter of 2023, representing a 17.5% decrease compared to N14.6 trillion recorded in Q1 2022. It however increased marginally by 2.8% from N11.72 trillion recorded in Q4 2022.
The year-on-year decline may be attributed to slow economic activities in the country as a result of the severe cash crunch experienced in the country, which impacted most sectors of the Nigerian economy in Q1 2023.
Nigeria imported petrol worth N1.49 trillion in the review quarter, accounting for 26.8% of the total import during the period. This is contained in the recently released foreign trade report by the National Bureau of Statistics (NBS).
Number breakdown
Breakdown of the report showed that imports stood at N5.56 trillion in Q1 2023, from N5.36 trillion and N7.49 trillion in Q4 and Q1 2022 respectively.
On the other hand, Nigeria’s export increased slightly by 2% to N6.49 trillion in the review quarter from N6.36 trillion recorded in Q4 2022 and an 8.7% decline from N7.1 trillion in Q1 2022.
This translates to a trade balance of N927.2 billion in Q1 2023 from N996.8 billion recorded in the previous quarter and a negative balance of N393.6 billion recorded in the corresponding period of 2022.
Nigeria recorded its second consecutive positive trade balance, after enduring multiple foreign trade deficit in the recent past. This improvement may be attributed to improved crude oil production.
According to the NBS, the country recorded an average daily oil production of 1.51 million barrels per day (mbpd) in Q1 2023, higher than the daily average production of 1.49mbpd recorded in the same quarter of 2022.
Top trading partners
The top five export destinations in the first quarter of 2023 were the Netherlands with N837.65 billion or 12.91%, the United States of America with N579.35 billion or 8.93%, Spain with N488.17 billion or 7.53%, France with N487.34 billion or 7.51% and India with N456.69 billion or 7.04% of total exports.
Altogether, exports to the top five countries amounted to 43.92% of the total value of exports. ‘Petroleum oils and oils obtained from bituminous minerals, crude’ with N5.14 trillion representing 79.37% remains the commodity with the largest export values in the period under review, followed by ‘Natural gas, liquefied’ with N622.36 billion accounting for 9.59%, and ‘Urea, whether or not in aqueous solution’ with N146.79 billion or 2.26% of total exports.
In terms of Imports (CIF), China, the Netherlands, Belgium, India, and the United States of America were the top five countries of origin of imports to Nigeria in the first quarter of 2023.
The values of imports from the top five countries amounted to N3.1 trillion representing a share of 55.78% of the total value of imports. While the commodities with the largest values of imported products were ‘Motor Spirit Ordinary’ (N1.49 trillion or 26.84%), ‘Gas Oil’ (N472.4 billion or 8.50% and ‘Durum Wheat (Not in seeds)’ (N249.22 billion or 4.48%).
Why this matters
International trade plays a vital role in the Nigerian economy by driving economic growth, generating foreign exchange earnings, creating employment opportunities, facilitating technology transfer, improving consumer choices, and promoting regional integration.
The positive balance of payment for the second consecutive month, is a welcome development, which will help improve Nigeria’s balance of payment and by extension impact positively on the exchange rate.