Nigeria records a $1.1 billion foreign trade surplus in the last quarter of 2021

Nigeria's foreign trade increased by 58.6% year-on-year in the third quarter of 2021, reaching a new high of N13.28 trillion, up from N8.38 trillion in the same period of 2020, according to Nairametrics.

The increase in overall trade was linked to a 51.5 percent increase in import bill, which resulted in a balance of trade deficit of N3.02 trillion, according to the study. Crude oil exports surged by 78 percent year on year over the period, from N2.42 trillion in Q3 2020 to N4.03 trillion in Q3 2021.

Nigeria's recurring international trade deficit can be ascribed to a drop in crude oil prices near the end of 2019, when crude oil prices dipped below $60 per barrel during the initial breakout of the covid-19 epidemic in October 2019.

The unfavorable trend in the crude oil market continued into 2020, with Brent crude falling to as low as $15.17 per barrel in April 2020 before rebounding later that year.

Nigeria's foreign trade balance improved to a $1.1 billion surplus in Q4 2021, as export value exceeded import bill for the first time since Q3 2019, ending an eight-quarter run of negative trade balance.

This is based on data on international trade collected from the Nigerian Central Bank (CBN).

Nigeria's international trade balance improved dramatically from a deficit of $327 million in the previous quarter to $1.1 billion in Q4 2021, according to the data. Similarly, Nigeria's trade balance improved by 115 percent from the $7.57 billion deficit recorded in Q4 2020 to the same time the previous year.

Meanwhile, the aggregate trade balance for 2021 is still negative at $6.49 billion, which is better than the negative balance of $21.37 billion reported the previous year.

Export earnings fell marginally by 3.5 percent from $13.42 billion in Q3 2021 to $12.95 billion in Q4 2021, according to data from the apex bank, while import bills fell by 13.8 percent from $13.74 billion to $11.85 billion in the review period.

This means that a considerable decrease in the import bill, rather than a rise in export value, drove the positive trade balance.

Nigerians' continued reliance on imported goods with no corresponding export value continues to erode our already-weak earnings, putting even more pressure on our currency. Crude oil exports, which account for over 90% of Nigeria's foreign exchange revenues, have been harmed in recent months by a combination of market conditions, OPEC supply cuts, and our inability to achieve output quotas.

Nigeria's daily crude oil production fell to 1.5 million barrels per day (bpd) in Q4 2021, down from 1.57 million in the previous quarter, according to the National Bureau of Statistics. In 2021, its average production capacity fell for the fourth quarter in a row.

Additionally, Nigeria's reliance on foreign commodities to meet local wants has made it impossible for the country to boast of a positive foreign trade balance, as the little foreign currency that enters the economy is utilized to pay export obligations, reducing FX liquidity in the economy. Moreover, despite the Central Bank's investment in the agricultural sector, Nigeria has been unable to develop the agricultural value chain and permit considerable agricultural export.

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