Nigeria’s trade deficit in manufactured goods hits N4.21tr

Nigeria is largely disadvantaged in international trade involving manufactured goods across the world.

Daily Trust compared Nigeria’s full year earnings from export of manufactured goods with imports of manufactured goods from the third quarter of 2016 to the second quarter of 2017 and discovered that Nigeria recorded a huge trade deficit of N4.21 trillion.

Analysis of data sourced from the National Bureau of Statistics (NBS) showed that Nigeria exported manufactured goods worth N286 billion and imported manufactured goods worth N4.5 trillion from the third quarter of 2016 to the second quarter of 2017.

Daily Trust further compared the country’s earnings from exports of manufactured goods and earnings from imports of manufactured goods between the first half of 2016 and the first half of this year and found that the trade was largely to the disadvantage of Nigeria.

For instance, while Nigeria exported manufactured goods worth N256.56 billion to the international market in the first half of 2016 and the first half of 2017, the country imported manufactured goods worth N4.59 trillion.

Data also showed that Nigeria had a trade deficit of N4.34 trillion in the international trade of manufactured goods.

Meanwhile, Daily Trust found that the recession which affected the manufacturing sector in the country in 2016, leading to production cuts and job losses, started easing off this year. The NBS officially declared the economy out of recession in the second quarter of 2017.

Data showed that export of manufactured goods skyrocketed to N179.79 billion in the first half of 2017, from N76.76 billion recorded in the first half of 2016.

Quarterly analysis of the exports also showed marginal improvements: exports of manufactured goods rose to N98.24 billion in the first quarter of 2017 compared to N45.04 billion in the same quarter last year while it also grew to N81.55 billion in the second quarter of 2017 compared to N31.71 billion in the same quarter last year.

The data analysis showed that the values of export earnings of manufactured goods compared to the earnings from import of manufactured goods should be of grave concern to all stakeholders in the country.

For instance, Nigeria imported manufactured goods worth N2.23 trillion in the first half of 2017, slightly lower than the N2.37 trillion recorded in the first half of 2017.

The marginal reduction in import of manufactured goods into the country in the first half of 2017 may not be unconnected with the improvement in the health of the economy in 2017 and the rise in domestic production, which also translated into a rise in the export of manufactured goods.

Note that Nigeria’s manufactured goods exports in the second quarter of 2017 were 157.16 per cent higher than the recorded value in second quarter 2016, a pointer to the reason import of manufactured goods dipped in second quarter 2017.

In addition, manufacturing contributed 15.96 per cent to the nation’s Gross Domestic Product (GDP) in the second quarter of the 2017, up by 16.98 per cent from the -1.02 per cent recorded in the second quarter of 2016. This is an indication that manufacturing activities are picking up in 2017 from its shambles in 2016.

Nigeria usually tracks 13 activities in the manufacturing sector: oil refining; cement; food, beverages and tobacco; textile, apparel, and footwear; wood and wood products; pulp paper and paper products; chemical and pharmaceutical products; non-metallic products; plastic and rubber products; electrical and electronic; basic metal and iron and steel; motor vehicles and assembly; and other manufacturing.

However, quarterly analysis of the values of import of manufactured goods into the country shows that a lot still needs to be done to increase the volume of goods manufactured in Nigeria and exported to the international market.

For instance, Nigeria imported manufactured goods worth N1.06 trillion in the first quarter of 2017, hugely up from N940.97 billion recorded same quarter in 2016.

Imports of manufactured goods remained high in the second quarter of 2017 at the value of N1.16 trillion, slightly lower than the N1.42 trillion recorded same quarter in 2016.

Speaking exclusively to Daily Trust on this development, an economist, Mr. Fabian Uzodinma, said Nigeria’s manufacturing sector is still at its “teething stage.”

“We don’t manufacture electronics. We don’t manufacture even phones that school children manufacture in China. We import all sorts of canned foods and you expect us to compete favourably in the global market,” he noted.

Uzodinma said the problem with the manufacturing sector in Nigeria predated the economic downturn that affected businesses in 2016.

“Before 2016, the manufacturing sector was having it rough in Nigeria. No power, no critical infrastructures to support manufacturing, nothing was on ground to support the sector,” he said.

However, a recent document seen by Daily Trust indicates that the Presidential Enabling Business Environment Council (PEBEC), saddled with the responsibility of improving the business environment in the country, has developed a National Action Plan (NAP 2.0) for 2017 and 2018, detailing 11 key reforms in the business environment that are capable of impacting the country’s economy positively.

The reforms are expected to improve manufacturing activities, increase productive activities and possibly up the volume and value of manufactured goods exported out of the country.

These reforms border on starting businesses, dealing with construction permits, registering property, getting electricity, getting credit, paying taxes, trading across borders, enforcing contracts, selling to government, entry and exit of people, as well as trading within the country.