Chief Executive Officer (CEO) of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, has linked the drop in trade surplus to poor performance of crude oil, which accounts for about 90 per cent of the exports.
Nigeria’s trade balance saw a notable decline in Q4 of 2024, standing at N3.42 trillion, a 34.9 per cent drop from the previous quarter, which stood at N5.81 trillion.
Total trade for the quarter stood at N36.6 trillion, a 2.2 per cent rise from Q3 2024, according to the Q4 Foreign Trade in Goods Statistics report released by the National Bureau of Statistics (NBS).
The report noted that the reduction in surplus was largely driven by the continued increase in imports and a slight decline in export performance.
Reacting to this decline, Yusuf said the drop in trade surplus is so noticeable because, in terms of export value, oil remains Nigeria’s biggest export.
He said what the performance means is that the slightest movement in oil prices or oil outlook often has significant impacts on the country’s trade.
Yusuf said: “When you look at the import numbers, before now, our biggest import bill was also petroleum products and we can attribute the current deficit to largely what is happening in the oil and gas space and within the international trade ecosystem of the sector.
“There has been a drop in the nation’s oil output, which efforts have been made to correct in recent times, but this drop is partly responsible for the trade deficit numbers. We are also beginning to see a drop in crude oil prices. Both from the price and outlook perspective, these variables are responsible.
“Total exports in Q4 2024 were valued at N20.01 trillion, reflecting a 57.7 per cent year-on-year increase but a slight 2.55 per cent decline from N20.54 trillion recorded in Q3 2024. Crude oil continued to dominate Nigeria’s export market, accounting for 68.87 per cent of total exports with a value of N13.78 trillion. This marked a mere 2.8 per cent increase from Q3 2024.”
Touching on import, especially of petroleum products, he said, there was a sharp drop in importation of petroleum products, which he said has always been a major pressure point in international trade.
“However, we have not seen enough commitment to this idea of localising our petroleum product supply, especially since we have adequate domestic capacity. The increase in petroleum products imports may also have contributed to the drop in trade surplus especially as FX has been quite stable and we cannot attribute the drop to volatility in the exchange rate. A good part of this issue would have to be situated within the context of the oil and gas sector, that is, import and export of crude and import of petroleum products,” he said.
He said the solution is to commit better to localising petroleum products transactions, particularly consumption so that the country relies less on importation.
“If this can be done, it will reflect significantly on our trade balances in the next quarter,” he said.
Speaking on the ban of some of the country’s agricultural products in the international market, he said the country has been down this route before and that it was unfortunate the country is experiencing this again.
“The regulatory agencies responsible and charged with quality assurance and export of food products should see this as a challenge. In terms of value, these exports are not hugely significant but they still contribute to FX earnings and help boost our non-oil exports. We have been talking of boosting non-oil exports and our strength is actually concentrated in agro-allied industries but sadly, we have not developed these industries as much as we should have to international standards.
“We need to do more to ensure the required agencies step up to their responsibilities not just so the ban can be lifted but to export more of our agricultural products to improve our non-oil export numbers in the next quarter,” he said.
