Naira Depreciation Pushes Nigeria’s Imports To N35tn

Nigeria’s total imports grew to N35.9tn in 2023, from N25.5tn recorded in 2022, according to data by the National Bureau of Statistics.

A breakdown of the data showed that in the first and second quarters of 2023, total imports stood at N6.4tn. It increased to N9tn in the third quarter and again to N14tn in the fourth quarter.

By volume, manufactured imports topped the chart with imports worth N18.3tn. Agric imports stood at N2.2tn while imports of raw materials totalled N3tn.

On the other hand, Nigeria was able to churn out exports worth N35.9tn. However much of these were under the category of crude oil which constituted N29tn while exports of other oil products stood at N3.5tn.

Agricultural exports were N1.2tn while manufactured goods exported outside Nigeria totalled N778bn.

This means that Nigeria recorded a balance of trade of –N1tn in the agricultural sector and a staggering –N17.5tn in the manufacturing sector.

Speaking with media source, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf blamed naira depreciation for the significant increase in exports on a year-on-year basis.

He said, “I think it is because of the naira depreciation. If you are importing something that was $1m when the exchange rate was N450, now you are importing products worth $1m and the exchange rate is N1,500.

“That is three times already if you multiply it in naira. So, in dollar terms, it is possible that the import has even reduced. We have to consider that.”

The increase in exports comes amid President Bola Tinubu’s drive to boost non-oil exports and diversify the economy away from crude oil exports.

According to NBS data, the total non-oil export of Nigeria in 2019 (the highest in recent times) is just about $9.13bn.

While presenting a paper at an event organised by the Nigerian Export Promotion Council, the Director-General of the Manufacturers Association of Nigeria, Segun Ajayi-Kadir said Nigeria has not done well in global export trade as it ranked 52nd among nations.

He added that the country has also not done well domestically in terms of the share of non-oil and manufactured exports to total exports.

He listed factors militating against exports including the high cost of local and imported raw materials, insecurity across the country, including industrial areas, dearth of skilled manpower.

Others include high cost of transportation, forex instability and deterioration in exchange rate, inadequate access to funds/high-interest rates on commercial bank loans

He said, “However, the discovery of crude oil brought a shift that made the country majorly depend on the oil sector to the neglect of other sectors.

“This made the economy susceptible to fluctuations in revenue, occasioned by the usual instability associated with the prices of crude oil in the international market.”

In January, the Executive Director of the Nigerian Export Promotion Council, Nonye Ayeni, while addressing the media on the performance report of the non-oil export sector for 2023, said the value of Nigeria’s non-oil export revenue recorded a marginal decrease to $4.5bn.

The drop represents a $300m or 6.3 per cent decline from the $4.8bn revenue accrued to government coffers in 2022 and $500m less than the $5bn target set by the council for the year.

She said, “In 2022, there was a $4.8bn in terms of value. And in 2023, there was a marginal decline to $4.5bn. But we got an increase in the volume of exports. In 2023, we had 6.68, million metric tons of manufactured, semi-processed, solid minerals to agricultural commodities.”

Explaining reasons for the decline, Nonye blamed the weak poor exchange rate, the surge in informal trade, political instability in neighbouring countries and export rejection amongst others.