Statistician General of the Federation and Chief Executive Officer National Bureau of Statistics Dr.Yemi-Kale
For the first time in seven years, Nigeria recorded a decline of N793.5bn in the first quarter merchandise trade to close at N2.72tn from N3.51tn in the fourth quarter of 2015.
Recall that the Nigerian stock market crashed by N1.732 trillion as against the N11.658 trillion market capitalization was as at May 28, 2015 in just one year of the President Muhammadu Buhari administration. In the first quarter of 2016, the All-Share Index also crashed to 28,902.25 basis points from 34,310.37 basis points as the equity category lost over N1.053tn in the first quarter of 2016.
According to a report released by the National Bureau of Statistics (NBS), the drop in the first quarter trade represented a decline of about 22.6% and attributed the decline in the first quarter trade to a sharp drop in both import and export trade.
The report stated that while the country experienced a decline of N671.1bn, representing 34.6 per cent, in the value of exports, imports also dropped by N122.4bn or 7.8 per cent.
The report noted that the difference between the country’s total exports, which was put at N1.269tn, and total imports of N1.454tn made Nigeria to record a negative trade balance of N184.1bn in the first quarter.
“The total value of Nigeria’s merchandise trade at the end of Q1 2016 stood at N2.72tn. From the preceding quarter’s value of N3.51tn, this was N793.5bn or 22.6 per cent. This development arose due to a sharp decline in both imports and exports. Exports saw a decline of N671.1bn or 34.6 per cent, while imports declined by N122.4bn or 7.8 per cent.
“The steep decline in exports brought the country’s trade balance down to -N184.1bn, or N548.7bn less than in the preceding quarter.
“The crude oil component of the total trade decreased by N716.7bn or 46.6 per cent against the level recorded in Q4 2015,” the report read in part.
The highest export product for Nigeria in the first quarter was mineral products, which accounted for N1.05tn or 83 per cent of the total export earnings.
Nigeria mainly exported goods to Europe and Asia, which accounted for N467.1bn or 36.8% and N360.6bn or 28.4%, respectively while Nigeria exported goods valued at N161.3bn to the continent of Africa, while that of the Economic Community of West African States was put at N50.4bn.
Financial analysts blamed the negative trade balance recorded in the first quarter of 2016 on the country’s inability to formulate an effective strategy to boost exports.
They also said the inability of exporters to know the economic direction of the government owing to the delayed passage of the 2016 budget as well as over dependence on revenue from oil were some of the major reasons for the decline in merchandise trade.
Commenting on the negative trade balance recorded at the end of the first quarter of 2016, the Head, Banking and Finance Department, Nasarawa State University, Uche Uwaleke said the fact that a significant proportion of the exports were mineral products underscored the need to diversify the export base.
“The fact that imports declined by just 7.8 per cent speak volumes of the weak elasticity of imports in spite of the high exchange rate. This revelation goes to buttress my position that devaluation of the naira will not make any significant impact on our trade balance given the inelastic nature of imports and the country’s shallow export base.
“The NBS report also shows that the bulk of Nigeria’s imports is from China. By implication, a lot of pressure will be taken off the dollar if the Nigeria-China agreement on yuan transactions is well implemented.
“The naira will also firm up as a direct consequence of settling imports from China in yuan instead of the dollar.”