Nigeria’s trade deficit rises to $2.5bn

Nigeria’s trade deficit rose month-on-month by 49 percent to $2.5 billion in January from $1.69 billion in December last year.

This comes even as foreign trade stood at $8.14 billion during the period, the Central Bank of Nigeria, CBN, Economic Report for January, 2021 has shown.

According to the report, Capital importation also dropped by 31 percent to $380 million in January from $550 million in December 2020.

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

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.

E“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 decline in crude oil and gas export receipts.

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The report further stated that 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.”

Capital Importation

The report further stated that 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 percent.

Foreign portfolio investment (FPI) inflow, at $0.01 billion, constituted 8.1 percent 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 percent, 33.3 percent and 50.0 percent, respectively.”