Nigeria-Russia trade worth over $2billion is jeopardized as the Russia-Ukraine war persists

As the conflict between Russia and Ukraine worsens, trade between Nigeria and Russia worth more than $2 billion is jeopardized. Following the outbreak of the war on Thursday, Nigeria risks experiencing severe food shortages and an increase in food inflationary pressure.

The battle began when Russian President Vladimir Putin ordered his troops to invade Ukrainian territory, resulting in multiple casualties in the area after camping at Ukrainian borders for weeks.

Russia is a global economic powerhouse, as one of the world's top exporters of crude oil, as well as a major player in the energy industry, as one of the world's largest producers of natural gas. Russia is also a major exporter of raw materials.

The latest Russian attack has prompted a slew of sanctions from Western economies, including the suspension of trade and other agreements.

Emmanuel Macron, the president of France, and Ursula von der Leyen, the president of the European Commission, have both imposed sanctions on Russia's economy, targeting the banking, energy, and transportation sectors, without exempting the country's export controls and trade financing limitations.

However, Russian President Vladimir Putin issued a warning to the country's corporate leaders, warning them to work hand in hand with the government, knowing full well that more economic limitations will be imposed.

Meanwhile, because Russia plays a major role in our international trade, the current restrictions are projected to have an impact on Nigeria's import capacity.

Nigeria's primary source of imported goods, particularly food, is Russia.

According to the National Bureau of Statistics (NBS) foreign trade report, Nigeria bought items worth N813.19 billion (nearly $2 billion annualized) between January and September 2021, accounting for 3.7 percent of the country's total imports over the same time.

Nigeria imports the following from Russia:

Although refined petroleum products account for the majority of Nigeria's import bill, durum wheat, which is largely imported from Russia, is a big item that is always included on the list of top import commodities.

Wheat is the third most widely consumed grain in Nigeria, according to the Central Bank of Nigeria (CBN).

A closer examination of the data reveals that Nigeria imported durum wheat worth over N128.1 billion in the first nine months of 2021, compared to N144.14 billion the previous year.

In addition, Nigeria imports a variety of frozen seafood from Russia, including mackerel, pork, herrings, blue whitings, and other fish. It's also worth noting that in Q4 2020, Nigeria imported human medical vaccines from Russia.

While Russia is Nigeria's largest trading partner, Ukraine has also done business with the country in the past, importing milk preparation worth N721.45 million in the first quarter of 2021, according to NBS data.

The Implications for Nigeria

Nigeria is a large user of wheat products, with local production accounting for barely 1% of the 5 to 6 million metric tons consumed yearly, forcing us to import to meet our needs.

The demand-supply mismatch has forced the country to spend more than $2 billion on wheat imports each year, making it the second-largest contributor to the country's food import bill.

The disadvantage of the war is that if the Russian supply is distorted for whatever reason, Nigerian wheat prices may rise more in the domestic market as a result of the supply deficit, which might lead to an increase in the price of other wheat by-products such as bread and wheat meal.

On the plus side, while the Central Bank continues to disburse funds to farmers across the country, which has yet to generate evident expected benefits, this could drive Nigeria to grow its domestic wheat production.