Nigeria’s trade value plunged in the first quarter of the year to N2,72tn from N3,51tn recorded in the preceding quarter, this was 22.6 percent less than what was obtained in the final quarter of 2015, National Bureau of Statistic (NBS) reported on Tuesday.
According to the NBS report, this development was as a result of a sharp decline in both exports and imports goods, exports reportedly declined 34.6 percent quarter-on-quarter and 52.3 percent year-on-year, while imports dropped by 7.8 percent in the first quarter and 15.8 percent year-on-year. This abrupt decline in the export value plunged the country’s trade balance to deficit of N184.1bn in the first quarter of the year, making it the first trade deficit in seven years.
The NBS report also shows imports are mainly from Asia, with 23.8 percent of the total imports coming from China. This further affirmed the imperative of Nigeria-China trade agreement if well implemented, it would ease foreign exchange pressure on the US dollar and help attack surging inflation.
The President of National Association of Nigerian Traders, Ken Ukaoha, said other factors also contributed to the development.
“We have for so long remained import-dependent; we have also continued to cultivate a mono product economy, which is oil, and our earnings from oil is presently disappointing. Apart from the fact that the price of oil is depreciating, you also find out that the quantity of our export is going so terribly low as a result of vandalism.” Ukaoha said.
He further stated “We are talking about import substitution, but all the strategies needed there are not in place. Also, the delay in the passage of the budget made all the private sector operators who are major players in exports to relax waiting for the budget passage in order to know the next line of action.”
While other economists said the negative balance of trade would impacts other areas of the economy as external reserves would deplete further.
“The implication of a negative trade balance for a country that does not have invisible imports is that we are going to have a severe negative balance of payment; the implication of this is that our external reserves will deplete further because we will need to use much of it to pay for imports,” said Johnson Chukwu, the Chief Executive Officer, Cowry Asset Management Limited.