Nigeria recorded a trade surplus of N5.81 trillion in the third quarter of 2024, driven by strong export earnings, primarily from the oil and gas sector.
This is according to the latest data from the National Bureau of Statistics (NBS).
While the surplus marks a notable improvement from the previous year, it represents a decline from the N6.95 trillion recorded in the second quarter of 2024. Experts caution that the surplus, although seemingly positive, underscores persistent structural challenges in Nigeria’s economy.
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The NBS revealed that Nigeria’s total merchandise trade for Q3 2024 stood at N35.16 trillion, reflecting an 81.35% increase compared to Q3 2023 and a 13.26% rise from Q2 2024. Exports accounted for 58.27% of total trade, amounting to N20.49 trillion, while imports stood at N14.67 trillion.
“Nigeria’s total merchandise trade stood at N35,160.44 billion in Q3, 2024, representing an increase of 81.35% compared to the value recorded in the corresponding period of 2023 and a rise of 13.26% over the value recorded in the preceding quarter,” the report stated.
Crude oil exports accounted for N13.41 trillion, representing 65.45% of total exports. This was a 57.06% increase compared to Q3 2023, while exports of liquefied natural gas (LNG) and other petroleum products surged by 303.93%, totaling N4.58 trillion.
Despite the substantial trade volume, economists argue that Nigeria’s heavy reliance on crude oil and gas for export revenue highlights the country’s failure to diversify its economy. They added that the trade surplus is not something to celebrate yet. This is because over two-thirds of the export earnings come from oil and gas, Nigeria’s dominant source of revenue, a clear signal that diversification efforts are not yielding significant results.
While the government has made efforts to boost non-oil exports, such as agriculture and solid minerals, these sectors still contribute a relatively small portion to total exports. Agricultural exports reached N884.07 billion, a 301.87% increase from Q3 2023, but only accounted for 4.31% of total exports. Similarly, solid minerals exports rose by 86.58% to N15.79 billion, reflecting their limited impact.
Rising Import Bills
On the import side, Nigeria’s total import bill for Q3 2024 was N14.67 trillion, a 62.30% increase from N9.04 trillion in Q3 2023 and an 8.71% rise from Q2 2024.
The surge in imports was driven by manufactured goods, which rose 76.44% to N6.98 trillion, and raw materials, which increased by 66.11% to N1.58 trillion. Imports of agricultural products totaled N882.24 billion, reflecting a 37.06% increase year-on-year.
China remained Nigeria’s largest import partner, followed by India, Belgium, the United States, and Malta. Key imports included motor spirit, gas oil, durum wheat, and used vehicles. Nigeria is still heavily dependent on imports for essential goods, including machinery, raw materials, and food products, further highlighting its economic vulnerabilities.
Challenges in Diversifying the Economy
Nigeria’s heavy reliance on oil has left its economy vulnerable to global price fluctuations, coupled with production challenges that have kept output low. Diversification has been a cornerstone of economic policies for decades, but progress has been slow. The dominance of oil exports in the trade surplus suggests that recent initiatives, such as promoting agricultural value chains and manufacturing, have yet to achieve the desired outcomes.
Policy analysts note that diversification requires significant investment in infrastructure, technology, and human capital.
Countries like Malaysia and Indonesia have successfully diversified their economies by transforming their agricultural sectors and investing in manufacturing. For Nigeria, inconsistent policies, weak infrastructure, and limited access to finance for small and medium enterprises have hindered progress.
While the trade surplus underscores Nigeria’s growing export potential it also highlights the need for strategic interventions to reduce import dependency. With crude oil still dominating export earnings, diversifying into other sectors like agriculture, manufacturing, and solid minerals has been touted as critical for sustainable growth.
The government has been urged to address the trade imbalance by enacting bold reforms, including enhancing export credit schemes, improving infrastructure, and creating a more favorable business environment. Additionally, boosting local production was recommended to reduce import dependency.