After the National Bureau of Statistics (NBS) recently released its second quarter 2024 report detailing the country’s N6.94 trillion trade surplus, Pol Eco Analytics, an independent research and think tank based in Nigeria, stated that while the news is encouraging, it does not indicate that the economy is improving as planned.
It made clear that the presence of a trade surplus, which occurs when a country’s exports surpass its imports but not by enough to lower the high cost of living and ease of doing business in Nigeria, is an economic indicator of a favorable trade balance.
This was stated in a statement signed by Adefolarin A. Olamilekan, Senior Researcher and Policy Analyst at Pol Eco Analytics, and provided over the weekend in Abuja.
Recall that last week, the NBS reported that Nigeria’s total trade for the second quarter of 2024 was N31,892.46 trillion, down 3.76 percent from N33,1 trillion in Q1 2024 and up 150.39 percent from Q2 2023.
According to the data, overall exports were recorded at N19,418.93 trillion, or 60.89 percent of total commerce, while total imports were recorded at N12,473.53 trillion. This indicates that exports grew by 1.31 percent as compared to the amount recorded at N19,167.36 trillion in the first quarter of 2024.
Notably, overall exports rose by 201.76 percent in Q2 2024 compared to Q2 2023, which was recorded at N6,435.13 trillion as a trade surplus.
The recent creation of an N6.94 trillion trade surplus, according to Pol Eco Analytics, shows how resilient Nigeria’s economy is. However, the firm also pointed out that neither trade deficits nor trade surpluses are a guarantee of economic strength.
Adefolarin stated, “As a precautionary measure to coordinate fiscal and monetary policy to stabilise prices, Nigerian economic policymakers should undoubtedly be paying attention to examples where a pattern of extensive and protracted current fiscal imbalance has gone ill.
“The Nigerian authorities do not need to be reminded that trade deficits or surpluses can have positive or negative effects based on the prudent investment of the corresponding flows of financial capital.”
From an economic development perspective, he stated that the current state of affairs in the nation, with real GDP growth averaging only 2.6% annually, 37% unemployment, and a 38.8% poverty rate that has been steadily rising along with the ongoing crisis in the country’s cost of living, should be a warning sign for any economy.
As a stakeholder in the Nigerian economy and development project, Pol Eco Analytics stated in the statement that the Nigerian authorities must investigate ways to address this situation by implementing the necessary steps to lessen the economic hardship in the face of a positive trade surplus reported in the first and second quarters of 2024 of N6,435.13 trillion and N6.94 trillion, respectively.
In light of this, we urge President Tinubu and his economic team to make significant investments in economic sectors that would strategically result in an export-oriented economy as a matter of national importance. Nigeria’s government is currently seeking a more strategic diversification and income from the oil and gas sector to support the country’s economic expansion.
In the meantime, the NBS noted in its report that non-crude oil exports came in at N4,859.37 trillion, or 25.02 percent of all exports during the Q2 2024 under review, while crude oil exports accounted for N14,559.56 trillion, or 74.98 percent, of Nigeria’s export trade.
As a result, N1,944.25 trillion, or 10.01 percent, of all exports came from non-oil products.
According to the report’s conclusion, Spain, the United States, France, India, and the Netherlands were the top trading partners in Q2 2024. Nigeria’s top trading partners are still China, the United States of America, Belgium, India, and The Netherlands.