Q4 2020 Foreign Trade Report: Recovery Not Enough

Wednesday, March 10, 2021 / 12:17PM / by CSL Research / Header Image Credit: Brandspur

This week, the National Bureau of Statistics (NBS) releasedits Q4 202o foreign trade report. In the release, total trade (Import +Exports) grew 8.9% q/q to N9.12trn but declined 9.9% y/y (Q4 2020 compared withQ4 2019). On an annual basis, total trade dipped 10.3% y/y for FY 2020.

The total value of trade in FY 2020 was N32.42trn. In theperiod, export rose (6.7% q/q) from Q3; however, compared to Q4 2019, itdropped 33.3% y/y. Import, on the other hand, grew 10.1% q/q from Q3 2020,comparing Q4 2020 to Q4 2019 (up 10.8% y/y), and annually up 17.3% y/y in 2020compared with 2019. These led to a merchandise trade deficit of N7.38trn forNigeria in FY2020, reversing the trend of three consecutive years of tradesurplus.

Activities in FY 202o tapered, as the Federal Governmentrestricted economic activities by implementing lockdowns and prohibition ofsocial gatherings commencing in Q2 2020. Although the lockdown began to beeased gradually later in Q2, the pandemic's far-reaching effect burdened exportactivities.

Thus, despite increasing over Q3 position in Q4 2020, exportsstill plunged on an annual basis by 34.8% y/y to N12.52trn. The decrease was onthe back of a decline in the exportation of Solid Minerals (down 46.2% y/y),Energy (down 40.3% y/y), Manufactured Goods (down 53.7% y/y), Crude Oil (down35.7% y/y), and other Oil Products (down 17.1% y/y) in FY 2020. In Q4 2020,crude oil export retained its dominance as the major source of foreign exchangereceipt as it generated c.81.0% of the total export proceeds in the period.

Followingthe relaxation of lockdown worldwide, Imports rose in Q4 2020, up 10.1% q/q. Onan annual basis, imports were up 17.3% y/y to N19.90trn in FY 2020. Theincrease in the annual importation of Agricultural Produce (up 78.6% y/y), RawMaterials (up 72.5% y/y) and other import lines reflect the structuralbottlenecks and insecurity that continue to impede industrialization inNigeria. These factors have triggered the sustained rise in the value ofimports over the last five (5) years.

Despitethe recovery in trade activities across the globe, we expect the weakness inthe trade account to persist, due to the nation's compliance with OPEC'sproduction cuts amidst continued reliance on imported raw materials, manufacturedand capital goods.

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