Nigeria's Q4 2020 Foreign Trade: The Pains and Pitfalls of Being Import Centric


Monday, March 15, 2021, / 09:07 AM / by Proshare Research / Header Image Credit: CIJ INT'L/Ecographics

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Nigeria's high import dependency has become an albatross in a global environment where nation's have become increasingly aggressive in promoting exports. Unfortunately for the country, it neither influences the price or the quantity sold of its principal export, crude oil, which accounts for over 80% of its export and 90% of its foreign exchange earnings. Nigeria's relative global trade position is stacked against a strategic forward-facing dominance in any good or service, meaning that future earnings could be painfully small relative to development goals.


In the data supplied by the National Bureau of Statistics (NBS), Nigeria recorded a trade deficit of N7.37trn in 2020 while its total trade stood at N32.42trn. In Q4 2020, Nigeria's total merchandise trade stood at N9.12trn, an increase of +8.9% when compared to Q3 2020 but a decline of -9.9% when compared to Q4 2019. The export component of trade stood at N3.19trn in Q4 2020 representing an increase of +6.7% when compared to Q3 2020 but a decline of -33% when compared to Q3 2019.


On the flip side, total imports stood at N5.92trn in Q4 2020, an increase of +10.1% when compared to Q3 2020 and an increase of +10.8% when compared to Q4 2020. Imports accounted for 65% and exports accounted for 35% of total trade in 2020 (see Chart 1).


Chart 1: Nigeria's Trade Statistics (N'trn)

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Source: NBS, Proshare Research 

The trade data shows that the Nigerian economy is still primarily dependent on imports and is yet to deepen its value chains and diversify its export earnings away from crude oil. Analysts note that Nigeria's consistent trade deficit results and its overdependence on oil expose its economy to external factors which continuously hurt it. For example, its high dependency on imports implies that it keeps losing domestic jobs that could have been created if such products were produced locally. Also, being import-dependent has made the economy vulnerable to inflation and other external factors.


Nigeria's trade deficit in 2020 could be attributed to various factors such as the coronavirus pandemic, Nigeria's FX crisis, insecurity, ports congestion, and so on.


Nigeria's export trade in Q4 2020 was dominated by crude oil exports which accounted for 78.93% of total exports and other petroleum oil products 13.52% while other important sources of FX recorded relatively low value and contribution to export earnings i.e., manufacturing, and agricultural only accounted for 4.04% and 1.75% of total exports respectively. (see Chart 2).


Chart 2: Nigeria's Crude Oil and Non-Oil Export to Total Exports (%)

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Source: NBS, Proshare Research


Trade Bother

Nigeria's trade numbers reveal the fragile state of the economy. Despite the government's efforts at industrialization, and increasing non-oil exports, the economy still imports a high quantity of manufacturing, agricultural, and raw material goods.


Some of the government's efforts include facilities and programs such as the Non-oil Export Stimulation Facility (NESF), Export development Funds (EDF), Zero oil plan by Nigeria Export Promotion Council, etc.


Although it has a huge expanse of arable land, the Nigerian economy in Q4 2020 imported agricultural goods valued at N532.4bn and only exported agricultural goods valued at N55.78bn. Nigeria's large import of agricultural produce speaks volumes of the inherent crisis in the agricultural sector such as farmer's/herder's crisis, insecurity, lack of storage facilities and infrastructure, logistics problems, etc.

Nigeria has been unable to utilize its huge arable land and the application of technology to making its agricultural produce more competitive hence the reason for the high import of agricultural produce.

Historical analysis of advanced and emerging nations such as Singapore, Taiwan, Japan, etc has shown that there are a plethora of opportunities that industrialization presents to a nation ranging from increased employment, revenue generation, reduced dependency, and so on. It becomes increasingly worrisome that the various industrialization plans, policies, and incentives touted by both the Federal Government and the CBN are yet to yield any positive sustainable result in Nigeria's manufacturing sector.

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A few analysts note that the difficulty in accessing FX by manufacturers, ports congestion, insecurity, poor infrastructures, etc increases the cost of manufacturing in Nigeria and reduces the competitiveness of Nigeria's manufacturing sector, hence crowding out the impact of these policies in boosting productivity. There has been renewed effort by the Federal government and the CBN to solve some of the challenges faced by manufacturers in Nigeria e.g., CBN recently launched the "Naira 4 Dollar Scheme" aimed at improving FX supply, the electronic call-up system aimed at decongesting the ports in Lagos.

Despite these renewed efforts, if the fundamental problems are not addressed these challenges will persist. Nigeria's share of manufactured export to total exports in Q4 2020 was low while its imports of manufactured goods were high. The trade numbers for Q4 2020 reveal that Nigeria's total manufacturing export to total exports was 4.04% valued at N129.05bn while its manufacturing import to total imports was 64.56% valued at N3.83trn (see Table 1).


Table 1: Nigeria's Top Export and Import Products in Q4 2020

Nigeria's Top Exports and Imports in Q4 2020

Top  Exports


% of Total Exports

Crude oil



Other Petroleum Oil Products



Manufactured goods



Agricultural goods




Top Imports in Q4 2020

Top Imports


% of Total Imports

Manufactured Goods



Other Petroleum Oil Products



Raw Materials



Agricultural Goods



Source: NBS, Proshare Research

AfCFTA:  Opportunities and Drawbacks

Nigeria exported more goods than it imported from Africa in Q4 2020 i.e., the total value of exported goods to Africa in Q4 2020 stood at N551.13bn while the value of imported goods from Africa stood at N190.08bn.  Its trade with Africa only accounted for 8.13% of its total trade in Q4 2020 when compared to other regions such as Asia 43.93%, Europe 35.47%, America 11.83% (see Chart 3 below).

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Chart 3: Nigeria's Trade with Regions in Q4 2020

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Source: NBS, Proshare Research


Furthermore, Nigeria's top three export produce to Africa in Q4 2020 were crude oil N431.37bn, manufactured goods N110.7bn, and energy N4.97bn. On the other hand, its top three imports from Africa were raw materials N78.86bn, manufactured goods N75.46bn, and agricultural goods N18.75bn (see Table 2 below).


Table 2: Nigeria's Trade with Africa in Q4 2020

Nigeria's Trade with Africa in Q4 2020






% to Total Exports


% of Total Imports

Agricultural Goods





Solid Minerals





Manufactured Goods





Raw Materials










Crude Oil





Other Oil Products










Source: NBS, Proshare Research


Nigeria's Q4 2020 trade data suggests that Nigeria trades very little with Africa and could lose the opportunity of becoming the industrial hub of Africa. Its manufacturing export to Africa only accounted for 20.09% of its total export while its export of crude oil accounted for 78.27% of total exports to Africa.

Therefore, if it is going to take advantage of the AFCFTA and douse the fear that Nigeria will be a dumping ground, concerted efforts must be taken towards driving productivity and trade with other African nations while ensuring that proper goods standards are met and empowering its customs with technology to prevent smuggling of counterfeited goods. It is pivotal that Nigeria focuses on deepening its manufacturing sector by increasing the provision of credit facilities, tax incentives and eliminating all encumbrances that will hinder its manufacturing sector's competitiveness.

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Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.

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