Research Document: NESG Foreign Trade Alert 2024 Q1

Posted Mon, Jun 17, 2024 11:57 PM

The persistent record of a trade surplus is remarkable, but efforts should be geared towards improving non-oil exports so as to sustain the current gains.

A large chunk of the merchandise exports were agricultural products, accounting only for 5.4 percent of total exports in 2024Q1. Meanwhile, persistent insecurity continues to ravage the major food-producing regions. Therefore, tackling insecurity would boost agricultural productivity, improve agricultural exports and rein in food inflation, which averaged 37.8 percent in 2024Q1. Similarly, the Manufacturing sector’s performance is being adversely affected by divestments; hence, there is a need to create an enabling environment for businesses to thrive and expand.

The huge import bill expended on petroleum products (mineral fuel) is not likely to abate soon.

The fact that import bills on petroleum products are enormous despite that the Dangote Refinery kick-started operations in 2024Q1 suggests the need to revitalise the local refineries. While efforts are being made to restore operations at the Port-Harcourt refinery, commitment is needed to speedily revive the other refineries. Once all the local refineries become operational, there will be a drastic reduction in petroleum importation, while the refineries will also leverage the improvement in domestic crude oil production. It is also incumbent on the Government to improve local power supply to reduce the exposure of households and busineses to fossil fuel.

Nigeria's progress in achieving higher intra-African trade remains slow.

In 2024Q1, Nigeria exported crude oil to three African countries, including South Africa, Ivory Coast and Senegal, whereas non-oil exports to these countries were meagre. The fact that Nigeria has a limited market for its oil and non-oil products in Africa suggests the slow progress achieved under the African Continental Free Trade Area (AfCFTA) agreement. Hence, there is an urgent need to promote value addition and support industry players, particularly in agro-processing, as this would help Nigeria diversify its export markets and reap the benefits of exporting processed food and non-food items. For instance, according to the Nigerian Export-Import Bank, Nigeria loses about US$200 billion annually for not exporting processed cocoa