Nigeria’s import bill surged by an astonishing 66.8% in the fourth quarter of 2023, reaching N14.1 trillion in the last 3 months of the year.
This increase can be attributed to the depreciation of the exchange rate and inflation related to imports, which contributed to the elevated costs of importation.
The exchange rate between the naira and dollar depreciated from N755/$1 at the end of the third quarter of 2023 to N907/$1 by the end of the fourth.
In the third quarter of 2023, the cost of importing foreign goods for Nigeria was N8.4 trillion, while the combined cost for the first half of the year alone amounted to N13.4 trillion compared to N22.5 trillion in the second half of the year.
The data indicates that Nigeria spent more on imports in the fourth quarter of 2023 than it did in the entire first half of the same year.
In total, imports cost Nigeria N35.9 trillion, compared to N25.9 trillion in the previous period, marking a 40.7% increase. This makes it the highest amount ever spent by Nigeria on the importation of goods in its entire history.
Key insights on the data
A deeper analysis of the data reveals that fuel and lubricants constituted over 33% of total imports, an increase from 30% in the same period in 2022.
- Industrial supplies and capital goods accounted for N5.8 trillion and N4.5 trillion, respectively, as manufacturers continue to depend on foreign-made machinery to drive local production.
- Vehicle imports for the year more than doubled, reaching N1.47 trillion in 2023 compared to N655.6 billion a year earlier, despite numerous reports decrying the high cost of vehicle imports.
- Imports of passenger motor cars suggest that while costs may have risen, the actual number of vehicles imported has decreased as transporters shift towards locally used or locally fabricated transport vehicles.
- Overall, transport and equipment parts saw a surge in import costs by over 100%, jumping from N1.8 trillion in 2022 to N3.8 trillion in 2023.
In terms of segments, manufacturing accounted for a total of N18.3 trillion, or 51.2% of the total imports during the year.
What this means
Imports are often cited as the primary reason for Nigeria’s increasing demand for dollars, which contributes to the weakening of the exchange rate.
- Nigeria imports nearly everything, from used vehicles to boilers, including fuel imports, as none of its refineries are operational.
- With the exchange rate having depreciated to N1,600/$1, the cost of imports in the first quarter of 2024 increased by approximately 35% compared to any other quarter in prior history.
Thus, despite reaching an all-time high in the import bill in the last quarter of 2023, the exchange rate at that time was around N900/$1 on the official market and N1,200/$1 on the parallel market.
