Nigeria records $1.1 billion foreign trade balance in Q4 2021

Nigeria’s foreign trade balance leapfrogged to a surplus of $1.1 billion in Q4 2021, as export value surpassed import bill for the first time since Q3 2019, representing 8 consecutive quarters of negative trade balance.

This is according to data on foreign trade obtained from the Central Bank of Nigeria (CBN).

According to the data, Nigeria’s international trade balance increased significantly from a deficit of $327 million recorded in the previous quarter to $1.1 billion in Q4 2021. Similarly, when compared to the corresponding period of the previous year, Nigeria’s trade balance increased by 115% from a $7.57 billion deficit recorded in Q4 2020.

Meanwhile, the aggregate trade balance for the year 2021 still lies in the negative region at $6.49 billion, although better than the $21.37 billion negative balance recorded in the preceding year.

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A further breakdown of the data from the apex bank, showed that export earnings dropped marginally by 3.5% from $13.42 billion recorded in Q3 2021 to $12.95 billion in Q4 2021, while import bill reduced by 13.8% from $13.74 billion to $11.85 billion in the review period.

This implies that the positive trade balance was driven by a significant decline in import bill rather than an increase in export value.

In December 2021, Nigeria’s foreign trade skyrocketed by 58.6% year-on-year in the third quarter of 2021, reaching a record high of N13.28 trillion from N8.38 trillion recorded in the corresponding period of 2020.

According to the report, the surge in total trade was attributed to the 51.5% increase in import bill, which however, resulted in a deficit of N3.02 trillion balance of trade. During the period also, crude oil export increased by 78% year-on-year from N2.42 trillion in Q3 2020 to N4.03 trillion in Q3 2021.

Nigeria’s recurring foreign trade deficit can be attributed to the fall in the price of crude oil towards the end of 2019, when crude oil prices fell below $60 per barrel in October 2019 during the first outbreak of the covid-19 pandemic.

A foreign trade surplus occurs when the export earnings of a country surpasses the import bill, while a trade deficit occurs when import spending surpasses export earnings. Nigeria recorded its first quarterly trade surplus in over two years in Q4 2021, as crude oil prices, which is a major source of Nigeria’s foreign inflow already edging close to $100 per barrel.