By James Emejo
Analysts yesterday urged the federal government to pursue port reforms, address poor infrastructure as well as inefficient and bureaucratic border administration in order to boost external trade, which recorded about N7.37 trillion deficits in 2020.
They also called on the government to remove trade barriers because a generally poor business environment does not mean well for foreign trade.
The analysts pointed out in separate interviews with THISDAY that the decline in the country’s export trade was a direct consequence of the negative impact of COVID-19 pandemic on merchandise trade, and urged both the fiscal and monetary authorities to sustain ongoing interventions to stimulate the economy.
The experts, among other things, prevailed on government to boost efforts aimed at encouraging value addition to export commodities including cocoa, sesame seeds, yam and work towards their acceptability in the export markets.
Their advice came as Nigeria’s total merchandise trade declined to N32.42 trillion in 2020, compared to N36.15 trillion in 2019, according to the National Bureau of Statistics (NBS).
This represented the first fall in total trade since 2019, after an annual consecutive increase from 2015.
The decrease is not unconnected with the adverse effects of the COVID-19 pandemic, which slowed down global businesses.
However, total trade increased by 8.9 per cent to N9.12 trillion in the fourth quarter of last year (Q4 2020), compared to N8.37 trillion in the preceding quarter.
According to the Foreign Trade in Goods Statistics (Q4 2020), which was posted on the NBS website, Q4 performance was lower by 9.9 per cent when compared to the N10.1 trillion in Q4 2019 while the value of trade in Q4 was the highest recorded over the past year.
The export component of trade stood at N3.19 trillion, representing an increase of 6.7 per cent over the N2.99 trillion in the preceding quarter.
In addition, the share of exports in total trade declined to 35 per cent in Q4 from 47 per cent in Q4 2019.
On the other hand, total imports reached a record high at N5.93 trillion in the quarter under review, representing an increase of 10.1 per cent over the N5.38 trillion in the preceding quarter.
The NBS noted that the value of imports nearly doubled the value of exports, as trade deficit rose to its highest level and for a fifth consecutive quarterly deficit at N2.731.2billion, representing an increase of 14.30 per cent compared to Q3 2020.
Crude oil remained the country’s predominant export, which was valued at N2.42 trillion, representing 81.02 per cent of total exports while non-crude oil exports stood at N568.2billion, or 18.98 per cent of total export during the review period.
On annual basis, the value of total imports in 2020 stood at N19.89 trillion or 17.3 per cent higher than the previous year while total exports was valued at N12. 52 trillion, which was 34.8 per cent less than 2019.
The annual merchandise trade deficit in 2020 stood at N7. 37 trillion, the statistical agency added.
India remained the top export destination for Nigeria during the quarter under review with N547.0 billion or 17.12 per cent total exports.
Exports to Spain, South Africa, the Netherlands and the United States of America stood at N313.4 billion or 9.8 per cent; N256.7 billion or 8.03 per cent; N194.5 billion or 6.09 per cent, and N170.4 billion or 5.33 per cent respectively.
These five countries collectively accounted for 46.39 per cent of the value of total exports in Q4 2020.
The President of the Capital Market Academics of Nigeria, Prof. Uche Uwaleke, attributed the improvement recorded in Q4 to the increase in economic activities following the ease of lockdowns and restrictions and accounted for the impact of the interventions especially by the Central Bank of Nigeria (CBN) on production and volume of trade.
Uwaleke said that the increase in merchandise trade would have positive implications for the economy depending on whether or not the trade balance is favourable as well as opportunities for job creation.
Also, the Managing Director/Chief Executive, Credent Investment Managers Limited, Mr. Ibrahim Shelleng, said the average lead times for shipments remained some of the biggest hindrances to foreign trade in the country.
Shelleng said that the average time for importation in Nigeria is about 33 days while average time to export is about 22 days.
He said these factors greatly impact on the cost of trade and ultimately affect the country’s ability to be competitive in global trade.
He said: “Relying on one major port alone (Apapa) is also a significant bottleneck and is part of the reasons for poor turnaround times. We must bring up other ports up to speed and utilise technology to provide a more efficient and modern port.”
The Managing Director/Chief Executive Officer, Dignity Finance and Investmemt Limited, Dr. Chijioke Ekechukwu, said an improvement in the security situation in the country would further improve the volume of trade transactions.
Ekechukwu said the drop in external trade in 2020 compared to preceding year of 2019 was expected due to the impact of COVID-19 lockdowns, adding that Nigerians being resilient people resumed business activities as soon as the lockdown was lifted, thus boosting the Q4 performance.
Also, the Managing Director/Chief Executive Officer, the SD&D Capital Management Limited, Mr. Idakolo Gbolade, said the government should do more to provide additional incentives to exporters.