It
has been revealed that the negative growth of the economy and low crude
oil output has weakened Nigeria's international trade with most of its
partners, particularly the United Kingdom.
Minister for Industry, Trade and Investment, Okechukwu Enelemah
Nigeria has recorded its first trade deficit with the United
Kingdom since 2009, with merchandise imports from the former colonial
master in 2016 exceeding shipments of Nigerian merchandise to it.
An analysis of international trade data from the National Bureau of
Statistics showed that Nigeria imported N362.87bn worth of goods from
the UK and exported N300.66bn to the European country last year,
recording a negative trade balance or net export of N62.21bn.
The value of imports from the UK to Nigeria grew by 28 per cent
year-on-year from N283.76bn, while export to the UK from Nigeria shrank
by 28 per cent from N414.85bn in 2015.
Analysts said this was a reflection of the state of foreign trade
in the country in 2016, in which imports out performed exports by
N290.13bn as a result of the plunging revenue from crude oil exports.
The country imported products worth N8.82tn and exported merchandise
valued at N8.53tn.
“The terms of trade worsened in a way that the volume of exported products dropped significantly,” the Managing Director/Chief Executive Officer, Cowry Assets Management Limited, Mr. Johnson Chukwu, said.
Before 2016, the data showed that Nigeria had recorded trade
surpluses with the United Kingdom for six consecutive years, with the
highest positive balance of trade of N1.11tn in 2012.
The statistics indicated a trade surplus of N4.91bn in 2010, which expanded to N970.42bn in 2011 and peaked at N1.11tn in 2012.
In 2013, the NBS data indicated that the balance of trade between
both countries shrank to N362.87bn; grew to N535.63bn in 2014 and
further reduced to N131.09bn in 2015.
Despite the shortfall in export by Nigeria to the European country
in the year under review, the UK remained one of Nigeria’s top 10 export
destinations.
Further analysis showed that Nigeria’s trade with Europe as a whole
in 2016 also resulted in a negative balance of trade of N1.05tn as
against a trade surplus of N1.31tn in 2015.
Explaining the factors responsible for the negative balance of
trade, Chukwu said the global fall in oil prices and shrinking volume of
crude oil produced had adversely affected the value of Nigeria’s export
to the UK.
He stated, “Nigeria’s export to the UK is majorly crude oil. If
you observe, in the last quarter of last year, the country started
recording negative trade balances. Even if we still exported the same
volume of crude to the UK, the price had dropped drastically; therefore,
the value of our export was quite low.
“It was principally due to low prices of crude oil last year.
In the case of Nigeria, we had double whammy; the price of crude went
down and the volume dropped because of heightened militancy in the Niger
Delta. These two factors are why the trade balances with most of our
trading partners became negative and the overall balance of trade was
negative in 2016.”
The Forcados export terminal, through which one of Nigeria’s
largest crude oil grades is being exported, was shut down around
February last year for more than a year after militants’ attacked the
oil pipeline.
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu,
had said that between January and June 2016, over 1,000 incidents of
vandalism were recorded and resulting in a loss of 109 million litres of
petroleum products and 560,000 barrels of crude oil, with the country
producing 1.5 million barrels per day as against the 2.2 million bpd
targeted in the budget.
According to the Director-General, Lagos Chamber of Commerce and
Industry, Mr. Muda Yusuf, the UK may not be buying much of Nigeria’s
crude oil again because about 80 per cent of the country’s export to it
was oil.
“If there was any country that was buying our oil before and
for any reason stopped buying our oil, it will immediately show in our
balance of trade. The UK may be buying elsewhere as against buying from
Nigeria. Because the oil price and output dropped, our capacity to
export was also affected,” he stated.
Nigerian importers and exporters had entertained fears that the
referendum by the UK on whether to remain or leave the European Union
would impact their business interests, with many delaying their
international trade business decisions due to uncertainties of Brexit’s
effect on existing trade policies.
However, the British High Commissioner to Nigeria, Paul Arkwright,
had last year assured Nigerians that the Brexit would not change the
existing bilateral trade relationship between the two countries.
He, however, emphasised that there would be no attempt by the UK to
remain inside the EU or re-join the continent as there would be no
second referendum.
The envoy gave an assurance that investment in Nigeria by British
companies and cultural links between the two countries would not waver.
He urged Nigerians to strengthen trade and investment ties between
both countries by taking advantage of the Brexit to attract British
business interests divesting from other regions to Nigeria.
****
Via The Punch
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