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AN analysis of trade statistics has shown that trade relations between China and Nigeria is heavily to the disadvantage of Nigeria.
Data from the National Bureau of Statistics (NBS) showed that Nigeria recorded N6.83 trillion worth of trade deficit with China in the last four years.
Between 2015 and 2018, Nigeria imported goods worth N7.65 trillion from China and exported N818.46 billion worth of goods to China, translating into a trade imbalance of N818.46 billion.
Analysis showed that in 2015, Nigeria imported N1.57 trillion goods from China and exported only N157.49 billion goods to the country, leading to a trade deficit of N1.41 trillion.
Interestingly, in 2016, Nigeria’s imported from China jumped up while export to China slumped, further widening the trade imbalance.
With a trade deficit of N1.61 trillion in 2016, Nigeria’s export rose to N1.73 trillion while import slumped to N122.14 billion compared to 2015.
In 2017, Nigeria’s import and export to China leapt, leaving Nigeria with a trade deficit of N1.57 trillion as a result of N1.79 trillion spent on imports as against N220.57 billion received from exports to China.
Nigeria recorded the highest trade deficit with China in the last four years in 2018 with a trade imbalance of N2.24 trillion.
In 2018, Nigeria exported goods worth N318.26 billion to China and imported N2.56 trillion goods from that country.
Imports from China has been a major foreign exchange (forex) drain on Nigeria’s economy and this led to forex restrictions for importation of certain items that Nigeria deems it has advantage to source locally.
However, even the forex restriction for importation of certain items, such as toothpicks, could not ease the forex burden being exerted on the economy by importers of China’s goods.
To reduce the burden on forex, especially in relation to dollars, on July 20, 2018, the Central Bank of Nigeria (CBN) began the sale of foreign exchange in Chinese Yuan (CNY), signalling the consummation of the Bilateral Currency Swap Agreement (BCSA) signed with the People’s Bank of China (PBoC) on April 27, 2018.
The apex bank said the currency swap between Nigeria and China, which would be Special Secondary Market Intervention Sales (SMIS) retail, would be dedicated to the payment of Renminbi-denominated letters of credit for raw materials, machinery and agriculture.
On three different occasions, Nigeria has injected a total of $868.56 million, translating to 141.47 Chines Yuan into the Secondary Market Intervention Sales (SMIS) to reduce the burden of using dollars to import from China.
Meanwhile, Nigeria’s trade imbalance with China is not new because NBS data showed that Nigeria had a trade deficit of about N6 trillion with China between 2013 and 2016.
Analysis showed that out of Nigeria’s total import bill of N29.91 trillion between 2013 and 2016, China accounted for N6.41 trillion.
This is a huge gap when compared with N714.97 billion worth of goods Nigeria exported to China within the four-year period. A subtraction of Nigeria’s exports from imports from China will show a trade deficit of N5.70 trillion, in favour of China.
The huge trade imbalance is largely as a result of Nigeria’s moribund manufacturing industry that has left Nigerians depending on China for most consumables.
The Minister of Trade and Investment, Dr. Okechukwu Enelamah, said Nigeria is making efforts to deepen industrialisation, reduce imports and increase exports.
On industrialization, Dr. Enelamah said the ministry has aggressively been implementing the Nigeria Industrial Revolution Plan and the establishment of the Nigeria Industrial Policy and Competitiveness Advisory Council is yielding results.
The Minister said to accelerate the Nigeria Industrial Revolution Plan, work has continued on Project MINE, (Made in Nigeria for Exports), to aid structural transformation of the Nigerian economy by increasing the manufacturing sector’s contribution to GDP to 20 per cent by 2025; contribute to sustainable inclusive growth by creating 1.5 million new direct manufacturing jobs in the initial phase; and to increase and diversify foreign exchange earnings to at least US$30bn annually by 2025, by increasing manufacturing sector exports.
He said special economic zones, such as the pilot phase of Enyimba Economic City, Funtua Cotton Cluster and Lekki Model Industrial Park, will increase exports from Nigeria.
He said the Council has made many high-level interventions to address industrial sector issues such as electricity supply, broadband penetration and access roads.
He cited an example with the recent Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme, under which the private sector has committed to sponsoring the construction or rehabilitation of road projects across the country.
He said that MSMEs are key to industrialisation and economic growth, he said the ministry has made a noticeable improvement in the access to finance for this category of investors.
“In the last four years, there have been sustained efforts to build capacity, increase access to finance and eliminate bottlenecks to conducting business in Nigeria, “he said.