Nigeria’s Trade Deficit Hits $764 Million – CBN

According to data obtained from the Central Bank of Nigeria, the value of Nigeria’s international trade deficit has risen by 175.13 percent from $152.94 million in January 2022 to $420.79 million in March 2022. 

The total value of international trade was $28.77bn in Q1 2022, with imports at $14.77 billion and exports at $14.01 billion, showing a total trade deficit of N764.69 million.

In January 2022, Export was $4.74 billion and import was $4.89 billion with a trade deficit of $152.94 million.

In February 2022, the trade deficit increased as it hit $190.96 million with export at $4.70 billion and import at $4.89billion.

In March, the trade deficit increased to  $420.79 million with exports at $4.57 billion and imports at $4.99 billion.

Godwin Emefiele, the CBN governor, had said in June last year that the country would cut down its import bill in the first quarter of 2022, particularly with the functioning of the Dangote refinery, which would reduce Nigeria’s oil import.

“Of course for petroleum products, by the time the refinery goes into production by the first quarter of next year and the petrochemical plants, we would have reduced our importation by about at least close to 35 percent", he had stated.

Nevertheless, Dangote refinery is yet to be completed and operational and Nigeria has failed to cut down its import bill.

The Nigerian Economic Summit Group in its latest report titled ‘Reforms Towards Resolving Foreign Exchange Challenges in Nigeria’ highlighted the downside of the worsening trade deficit.

According to the NESG, Nigeria is greatly inclined to external borrowing through Eurobonds and multilateral loans to push up external reserves due to the declining trade balance position.

The report read in part, “Owing to the deteriorating trade balance position, the country is increasingly exposed to external borrowing through Eurobonds and multilateral loans to shore up its external reserves.

"In 2021, the trade deficit widened to N1.9trillion from N178.3billion in 2020.

“The country had persistently recorded a trade deficit since the fourth quarter of 2019 when the land borders were shut. However, maintaining a trade surplus consistently coupled with adequate inflows of foreign investments will contribute significantly to improving the net flows of forex through the economy – which crashed from $100.8billion in the first three-quarters of 2014 to $44.5billion in the corresponding period of 2021.”

According to the report, the huge dependence on imports has limited the CBN’s ability to effectively manage the demand for foreign exchange.

In its report, the group said, “Meanwhile, the massive dependence on imports has constrained the CBN’s ability to manage forex demand by prohibiting certain commodities that could otherwise be produced locally from accessing forex at the official market since 2015

“The result of this policy action has heightened demand pressures in the parallel market, leading to a wide gap between the official exchange rate (now the I&E Window exchange rate) and the parallel market exchange rate.

"The parallel market premium averaged N104.7/US$ in 2021, 64.9 percent higher than the average premium of N63.5/US$ in 2020.”