Nigeria’s trade deficit rises by 49% to $2.5bn

The nation’s trade deficit rose month-on-month by 49 per cent to $2.5 billion in January from $1.69 billion in December last year even as foreign trade stood at $8.14 billion during the period.

Also, capital importation dropped by 31 per cent to $380 million in January from $550 million in December 2020.

However, aggregate external trade improved marginally by 3.2 per cent during the period.

These were contained in the Central Bank of Nigeria, CBN, Economic Report for January 2021 where the apex bank stated: “The expected positive effect of the re-opening of Nigeria’s land borders on trading activities was evident, despite the adverse effects of the second wave of the COVID-19 pandemic Data on aggregate external trade at $8.14 billion, showed a month-on-month increase of 3.2 per cent, from $7.89 billion recorded in December 2020.

“When compared with the corresponding period of 2020, it indicated a 27.5 per cent decline. Aggregate exports declined by 9.2 per cent to $2.81 billion in the review period, compared with $3.10 billion in December 2020, due, largely, to a decline in crude oil and gas export receipts.

“Merchandise imports, however, increased to $5.33 billion in January 2021, from $4.79 billion in December 2020, as domestic demand improved in the review period.

“A higher trade deficit of $2.51 billion was recorded in January 2021, relative to $1.69 billion in December 2020.”

The CBN report further stated: “A disaggregation of capital importation by type of investment showed that inflow of other investments (OI) accounted for the largest share at $0.29 billion, and represented 75.5 per cent of the total, followed by foreign direct investment (FDI) inflow of $0.06 billion, which accounted for 16.4 per cent. Foreign portfolio investment (FPI) inflow, at $0.01 billion, constituted 8.1 per cent of the total.

“When compared with the $0.44 billion, $0.09 and $0.02 billion for OI FDI and FPI, respectively, in the previous period, it indicated a decline of 34.1 per cent, 33.3 per cent and 50.0 per cent, respectively.”