How importation is killing Nigeria’s economy

0

Nigerians are known for their high penchant for foreign-made goods in comparison to those produced locally in the country. A total of $411.32 billion worth of goods have been imported into the country, between 2010 and 2017.

In 2017 alone, Nigeria imported $32.67 billion worth of goods from around the globe, down by 7.29% from the total amount of good imported in the previous year – 2016. Nigerian imports represent a tiny 0.2% out of total global imports of $16.054 trillion recorded in year 2017. With a huge population of 195.8 million inhabitants, the total imports of $32.67 billion in 2017 translates to about $167 in yearly imported-product demand from every person in Nigeria.

Imports in recent years

One very important fact to note is that Nigeria’s total import has been declining since 2015, when the value of imported products dropped to $52.33 billion, from the $61.54 billion it imported earlier in 2014. In 2016, Nigerians imported foreign goods worth $35.24 billion into the country. This is a decline of 32.7% from the total amount imported in 2015 ($52.33 billion).

Nigeria imported her highest value of foreign goods in recent years in 2011, when a total amount of $66.78 billion imported products were brought into the country. This was followed by 2014 and 2013, when Nigerians consumed $61 billion and $55.25 billion worth of imported goods respectively. Other years include 2012 ($57 billion) and 2010 ($50.12 billion).

According to the data from National Bureau of Statistics (NBS), Nigeria’s total import value was N2.106 trillion in the second quarter of 2018, compared to N2.518 trillion in the previous quarter of Q1 2018, showing a negative quarter on quarter growth of 16.3%. Also, total imports in Nigeria declined by 19.9% on a year on year basis, from billion in Q2 2017.

Top 10 Imports

According to the data from NBS, Machinery and transport equipment was Nigeria’s leading import in the second quarter of 2018, with an import value of N600.56 billion from N699.11 billion recorded in Q1 2018.

This was followed by Mineral, fuel etc with a value of N426.94 billion, showing a decline of 49.5% from N845.12 billion that was imported in the previous quarter. Chemical and Related Products was next with N373.39 billion. Food and live animals, recorded an import value of N313.65 billion. Manufactured goods had an import value of N262.80 billion – up from N227.51 billion in Q1 2028. 

Other top Nigerian imports include Miscellaneous manufactured articles (N67.04 billion), Crude inedible materials (N40.03 billion), Oil, fats and waxes N13.11 billion, Beverages and tobacco N9.16 billion, and Commodities n.e.s. N190,000.

Destination

Nigeria’s imported goods in the second quarter of 2018 were majorly imported from Asia and Europe. Asia dominated as import destination into Nigeria accounting for 44.4% of Nigeria’s total imports in Q2 2018. Europe accounted for 38.3%, while America was responsible for 10.5% of Nigeria’s total imports in the period.

Nevertheless, China remained Nigeria’s top import destination in the second quarter of 2018. A total value of N531.6 billion goods were imported from China, which is 25.2% of Nigeria’s total import in Q2 2018.

Other top five import destinations for Nigeria in the second quarter of 2018 were Netherlands which accounted for N181 billion or 8.6%, Belgium which exported N170.9 billion or 8.1% worth of goods to Nigeria and India with a total import value of N145.0 billion or 6.9%. The USA completed the top 5 import destinations for Nigeria during the period with a value of N141.5 billion or 6.7% share of her total imports in Q2 2018.

How passion for imported goods began

The huge flair for imported goods among Nigerians began immediately the oil boom started in the early 1970s. With the unexpected and huge inflow of foreign exchange into the economy (due to tremendous increase in the crude oil price then) Nigeria had nothing economically meaningful to do with the oil windfall and began serious importation of foreign goods, which they could not hitherto afford.

Also, the oil boom led to appreciation in the value of the Naira and weakened hard currencies like Dollar and Pounds relatively to the Naira. This exchange rate encouraged importation, since imported goods then became cheaper for Nigerians to consume. Unfortunately, when the oil boom ended in 1977, the Nigerian economy had become heavily dependent on imports – with almost everything imported – and the passion for foreign goods has since failed to vanish among Nigerians.

 Effects on the economy

The incessant high taste for imported goods among Nigerian has been detrimental to the Nigerian economy in the past decades. Nigeria is a country where there is no made-in-Nigeria razor blade and also, foreign made toothpicks can still be found in every nook and cranny of the country.

  • High level of import often leads to forex scarcity, as a result of increase in the demand for dollar by importers which will in turn depreciation in the value of Naira.
  • High value of import by Nigeria has led to unfavourable trade balances, terms of trade and even trade policies for the country.
  • Since Nigerians even import goods that can be easily produced locally, many thriving local factories have folded up and are still folding up.
  • Thousands of Nigerians have lost their jobs, since local industries are closing down. For example, textile industries in the Northern parts of Nigeria used to employ thousands of Nigerians uptill the early 1990s.
  • Dumping has affected local products due to the heavy inflow of low-priced foreign goods which are pushed out of imported countries into Nigeria.

Benefits

However, despite the enormous negative effects of imports on the Nigerian economy, there are still little advantages attached to it.

  • Cheaper than some local goods.
  • Nigerians have access to some products that can never be produced locally, especially with some best technology.
  • After crude oil, Nigeria’s second highest revenue is generated through the Nigerian Customs Service that collects import duties and tariffs.

Illegal importation/smuggling

Another angle to importation in Nigeria is that, the actual amount of imported goods into the country is far more that the total number of imports reported by appropriate agencies. For instance, many foreign-made goods are smuggled into Nigeria through various land boarders, due to the porosity of boarders across the country.

Recently, the Minister of State for Agriculture, Heineken Lokpobiri, expressed concern that federal government uncovered more than one million tonnes of rice waiting to be smuggled into Nigeria through the boarder from Cotonou. Also, while some importers bring in goods through the ports and boarders legally, they, however, connive with some officials of Nigerian Customs Service to reduce the value of the imported goods.

What's your say?

This site uses Akismet to reduce spam. Learn how your comment data is processed.