World Economy

Nigeria in Despair, Private Sector Concerned

Nigeria in Despair, Private Sector ConcernedNigeria in Despair, Private Sector Concerned

The poor trade balance of Nigeria with other countries has been a subject of major concern to private sector operators.

The Abuja Chamber of Commerce and Industry, in a statement, lamented the downward trend of the nation’s economic outlook, adding that it was threatening the business activities of its members, The Punch reported.

The statement quoted the ACCI President, Tony Ejinkonye, as saying, “Nigeria’s economy remains in despair; it has become worrisome to us in the private sector how we can survive the economic hardship.

“Nigeria recorded a negative trade balance in Q1, which is a clear indication and a wake-up call for the government to swing into action and look inwards on how to resuscitate export activities across the non-oil value chain, given the crumbling state of the oil sector.

“The report published by the National Bureau of Statistics shows that the total value of Nigeria’s merchandise trade at the end of Q1, 2016 stood at N2,723.9 billion ($13.6 billion) as against N3,517.4 billion recorded in Q4, 2015. This represents a 22.6% decline in the trade balance between Nigeria and the world. The report also reviewed that the negative trade balance was a result of falling export.”

He added, “It is against this backdrop that we are calling on the federal government to consider revisiting the Export Expansion Grant scheme, which was originally initiated to motivate exporters and encourage export-based activities.

“It is now evident given the merchandise trade statistics that the suspension of the EEG will continue to affect growth in the non-oil sector, which has been recording poor performance in the past four years.”


It is expected that the 2016 current account balance will remain in a deficit at 0.4% of GDP as exports contract further on lower oil prices and production shortages, and imports remain tepid given the government’s import substitution efforts.

The proposed plan for a flexible foreign exchange regime, if supportive of price discovery and liquidity, should provide an uptick to foreign direct investment and Foreign Portfolio Investment. “Nonetheless, we expect the balance of payments deficit to widen, reaching minus 2.8% of GDP in 2016 (2015: -1.18%)”, he said.

In the long term, Nigeria could strengthen efforts at expanding its non-oil sector exports particularly in services which accounts for only 0.66% of non-oil GDP despite contributing 55% to the economy. Through human capital development, knowledge transfer and technological innovation, Nigeria could become the services hub for West Africa, exporting services at a level similar to India.