Non-oil holds only 7% of Nigeria’s exports in seven years

• N98.5tn earned from exports in seven years

YEARS after the country kicked off a national campaign to diversify its sources of foreign earnings and grow the contribution of the non-oil export sector, crude remains the mainstay of the economy.

Analysis of seven-year data shows that crude and non-crude oil contributed 93 per cent to the total value of exports, which stands at N98.27 trillion. Out of the figure, crude accounted for N76.12 trillion while non-crude contributed 7.28 trillion. The balance (N22.24 trillion) came from the non-crude oil sector.

In the seven years, the average value of earnings from crude was N10.86 trillion per annum whereas N1.2 trillion came from non-oil exports. About 3.18 trillion was realised on average from non-crude oil export. In the seven years dating back to 2014, last year was Nigeria’s best year in terms of non-oil and non-crude oil exports when the country received N2.5 trillion and N4.5 trillion from the two windows respectively. In 2014, non-oil recorded zero import as shown by the data sourced from the National Bureau of Statistics (NBS).

The growth trajectory across different export sources broke down last year with crude export value declining N14.69 trillion recorded in 2019, the highest in recent years, to N9.44 trillion, translating to a 36 per cent shortfall.

The decline has been traced to the crash in the international market last year when production activities from Asia to Europe were grounded by Covid-19 restriction.

At the height of the pandemic, oil prices tumbled with West Texas Intermediate (WTI) going for negative prices some time in April when storage facilities were filled up. The price of Bonny Light, Nigeria’s crude benchmark, could barely cover the cost of production, which experts say is among the costliest in the world.

If the decline in crude export last year was bad, that of non-oil was worse. The figure tumbled from N2.5 trillion reported in 2019 to N1.4 trillion last year, showing a drop of 44 per cent. Perhaps, the dwindling performance of the non-oil, despite an increase in the campaign for an alternative to crude, underpins the strength of the positive correlation between the health of the crude sector and other areas of the economy.

Foreign trade data of last year speaks volumes of the country’s external imbalances and growing weak fiscal position. For the first time in four years, the country recorded a negative trade balance, posting as much as N7.4 trillion trade deficit.

The last time the country’s trade balance was negative was 2016, and it was merely N290 billion.

In the seven years reviewed, 2014 was the most buoyant for the country when the trade surplus was N8.9 trillion; 2018 came second with a N5.4 trillion trade surplus while 2017 recorded N4 trillion to come third in the ranking.

Nigeria’s trade position for last year is the worst in the history of modern trade relations. Covid-19 impacts notwithstanding, Nigeria’s growing trade imbalance appears an emerging threatening trend. In the fourth quarter (Q4) of 2019 when the trend started, Nigeria recorded –N579 billion trade balance.

It declined to N330 trillion in the first quarter (Q1) of last year, an improvement that was not sustained as it jumped to N1.9 trillion the following quarter. The growing trade deficit has continued, hitting N2.7 trillion in Q4 2020.

Dr. Biodun Adedipe, a leading economist, warns that the growing deficit is a trigger for macroeconomic instability. He advises the country to stop the importation of commodities with local substitutes.

Last year’s figures also underscore the growing influence of China in Nigerian market. Of the total value of N19.9 trillion imports recorded against Nigeria last year, 28.3 per cent of the bills or N5.6 trillion is in favour of China.

China’s regional rival, India, came second controlling, 8.5 per cent of Nigeria’s import. But India balances its many monthly consignments to Nigeria, off-taking one-sixth of Nigeria’s exports to top the country’s export trading partners, China is not among the leading countries consuming Nigeria’s commodities.

Nigeria’s top export trading partners for last year include Spain, South Africa, The Netherlands and the United States. Joining China and India on the top import trading chart are the United States, The Netherlands and Denmark.

On Q4 2020, NBS notes: “Nigeria’s total merchandise trade stood at N9,120.2 billion, representing 8.9 per cent over the level recorded in the third quarter of 2020 but was 9.9 per cent lower when compared to the fourth quarter of 2019. The value of trade in Q4 was the highest recorded over the past year.”

The export component of trade stood at N3,194.5 billion, an increase of 6.7 per cent over the preceding quarter but a drop of 33 per cent over the previous year. Also, the share of exports in total trade declined to 35 per cent in Q4 2020 from 47 per cent a year earlier.

“The total imports reached a record high at N5, 925.7 in Q4 2020, an increase of 10.1 per cent over the preceding quarter, and 10.8 per cent over the preceding year. Imports also accounted for 65 per cent of total trade in Q4 2020, compared to 53 per cent the previous year. As the value of imports nearly doubled the value of exports, the trade deficit rose to its highest level and a fifth consecutive quarterly deficit at -N2,731.2billion, an increase of 14.3 per cent compared to the preceding quarter,” NBS states.