By Abdulrauf Aliyu
At the 3rd National Conference on Non-Oil Export held in Abuja on November 12, 2024, Vice President Kashim Shettima described Nigeria’s trade surplus of N6.5 trillion in the second quarter as evidence of the administration’s success in promoting non-oil exports. On the surface, the numbers might seem impressive, but a closer examination reveals significant structural challenges and a need for deeper reflection on what this surplus truly signifies.
Trade surpluses are often celebrated as indicators of economic strength, but context matters. The surplus must be analyzed in terms of its composition, its sustainability, and its contribution to improving the welfare of Nigerians. The figures announced by the Vice President raise more questions than answers.
One major factor driving the trade balance is the sharp depreciation of the naira. Since the administration floated the currency in 2023, the exchange rate has shifted from approximately N700 to the dollar to between N1,700 and N1,750 today. While this has made Nigerian exports cheaper and more attractive in global markets, the flip side is an increase in the cost of imports. This dynamic might boost export volumes, but it comes at a steep cost to the economy and to ordinary Nigerians.
Inflation has surged, making essential goods and services more expensive for households and businesses. Import-dependent sectors are particularly hard-hit, facing rising costs for machinery, raw materials, and finished products. Any trade surplus built on such fragile foundations raises concerns about its sustainability and its real value.
The composition of Nigeria’s exports adds another layer of complexity. The surplus is driven largely by raw materials and primary commodities such as cocoa, sesame seeds, and crude oil derivatives. These are products with minimal value addition, leaving the country vulnerable to the volatility of global commodity markets. This is a familiar story for Nigeria—exporting raw materials at low prices while importing finished goods at a premium.
Without a deliberate shift towards adding value to exports, the country’s economic progress will remain constrained. A nation exporting raw minerals or unprocessed agricultural goods is like a farmer selling raw milk to the market while buying back cheese at a premium. It benefits others down the value chain but does little to create jobs or wealth at home.
Even when viewed in monetary terms, the numbers lose their shine when adjusted for today’s exchange rate. A surplus that appears substantial in naira terms diminishes significantly when converted to dollars. Compared to when the naira was N700 to the dollar, today’s figures reflect nominal gains rather than real progress.
Exporting more primary goods under such circumstances may give the illusion of growth, but it reveals little about the underlying health of the economy. A trade surplus built on currency depreciation is ultimately a reflection of economic strain rather than strength.
This situation highlights the structural issues in Nigeria’s trade policy. Despite decades of talk about diversification, the country remains reliant on exporting raw materials. The industrial sector, which could process these materials into higher-value goods, is hampered by inadequate infrastructure, unreliable power supply, and a difficult business environment. These constraints make it almost impossible for local manufacturers to compete globally.
If Nigeria is to truly benefit from international trade, the focus must shift from exporting raw materials to producing value-added goods. This requires deliberate policies that prioritize industrial development. Countries like South Korea and Malaysia show what is possible. Both nations were once reliant on exporting primary products but transformed their economies by building industries that produce high-value goods. Malaysia, for instance, moved from exporting raw rubber to dominating the market for medical gloves and electronics.
Nigeria can replicate such success by investing in industries that process its abundant natural resources into finished goods. Cocoa can become chocolate; crude oil can be refined into petrochemicals. These are not lofty ambitions but achievable goals with the right leadership and policy framework.
For this transformation to happen, the government must address critical bottlenecks. Infrastructure must improve to lower the cost of production, making Nigerian industries more competitive. Reliable electricity, efficient transport networks, and better access to technology are essential for this. At the same time, there must be greater investment in human capital. A skilled workforce is the backbone of industrialization, and without it, the dream of value-added exports will remain elusive.
Creating an enabling business environment is equally important. High production costs, bureaucratic bottlenecks, and inconsistent policies continue to deter investors. Reforming these areas will encourage both domestic and foreign investment in sectors that can drive economic growth.
While Vice President Shettima’s remarks about non-oil exports are well-intentioned, the reality is that Nigeria’s economic progress remains hamstrung by its overreliance on primary goods and the effects of currency devaluation. Trade policy must go beyond generating surpluses to creating real value for the economy and for Nigerians.
The figures being celebrated are not without merit, but they must be understood within the broader context of what drives them. A true measure of success lies not in the size of the surplus but in its quality—how it contributes to industrialization, job creation, and improved living standards. Nigeria must move beyond surface-level metrics to address the deeper challenges that have long held its economy back.
A trade surplus should be a signal of growth, not a consolation prize in a weakened economy. It is time for Nigeria’s leaders to recognize this and act accordingly.
