America, China, Netherlands has broken new records as they lead the list of top Nigeria import sources in Q1 2021.
News Online reports that China, Netherlands, and the United States led the list of top Nigeria import sources in the first quarter of 2021, jointly accounting for 48.8% of the total import bill recorded in the period.
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This is contained in the foreign trade report, released by the National Bureau of Statistics (NBS). Recall that Nigeria’s foreign trade rose by 14.1% year-on-year to stand at N9.76 trillion in Q1 2021, largely due to a significant 54% surge in import bills.
The increase in import value also pushed Nigeria’s trade deficit to its highest level ever recorded, moving from N2.73 trillion recorded in Q4 2020 to N3.94 trillion in Q1 2021, both negative trade balances.
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Nigeria’s import surged by 54% year-on-year to N6.85 trillion in Q1 2021 from N4.44 trillion recorded in the corresponding period of 2020.
Nigeria recorded its highest quarterly import in over 12 years, pushing the country’s trade deficit to its highest ever.
China maintained its position on the top of the list, with imports valued at N2.01 trillion, followed by the Netherlands with N726.1 billion.
The top 10 countries accounted for 72.9% of Nigeria’s total imports in Q1 2021, a marginal increase compared to 70.8% recorded in the previous quarter.
China has maintained the top source of Nigeria’s imports since the first quarter of 2020 when it overtook India. It is worth noting that Nigeria imported merchandise worth over N5.72 trillion from China in 2020, accounting for 28.76% of our total imports.
On the other hand, Nigeria’s export to China in 2020 was estimated at N633.48 billion, accounting for just 5.1% of the total export recorded in the year. This indicates a very wide negative trade balance between the two countries.
Nigeria-China trade relations
Economic relations between Nigeria and China can be traced back to 1971 when the two countries signed the Joint Communiqué on the Establishment of Diplomatic Relations. Since then, trade relations between the two countries have grown significantly into an increasingly complex and expensive business engagement.
Notably, the volume of trade between the two countries grew at low levels until rapid growth turned China from a net exporter of crude oil to the second-largest importer of crude oil in the world in 1993.
However, a surge in Nigeria’s imports of Chinese goods relative to its exports to China has resulted in a trade deficit with China.
This deficit is expected to continue until Nigeria can offer its industrial producers home-grown alternatives of the same quality at competitive prices.
Top 10 Nigeria import sources – Q1 2021
A distant top on the list is China with a total import value of N2.01 trillion, accounting for 29.3% of the total imports by Nigeria in the review period, followed by the Netherlands with N726.1 billion (10.6%).
Nigeria imported merchandise worth N608.1 billion from the United States in Q1 2021 to place them in third place, closely followed by India with an import value of N589.1 billion and Belgium with N238.5 billion.
Others on the list of top 10 import sources include Germany (N190.1 billion), Russia (N189.6 billion), Italy (N178.3 billion), United Kingdom (N133.4 billion), and South Korea with N129.6 billion.
Why this matters
International trade and integration have proven to be a powerful tool for countries to promote economic growth, development, and reduce poverty. However, every economy desires a positive trade balance as this significantly affects its exchange rate and economic growth.
A positive trade balance occurs when a country’s export is more than its imports, while a deficit is when its import surpasses its export value.
It is worth noting that Nigeria recorded its worst trade balance since 1981, galloping to a deficit of N3.94 trillion in Q1 2021.
Meanwhile, Nigeria will need to improve its domestic production capacity in order to reduce the trade gap with other countries of the world, especially China.