By Adedapo Adesanya
Revenue from exports in Nigeria’s manufacturing sector fell by 166 per cent to N778.4 billion from the N2 trillion high reached in 2019, the World Bank has revealed.
In its latest Africa’s Pulse, the global lender said the trend since 2019 that the exports hit N2 trillion, and no year has reached that level. Africa’s Pulse is a biannual publication containing an analysis of the near-term macroeconomic outlook for the region.
The decline started with a significant drop to N960.7 billion attributed to COVID-19 in 2020, while a minor recovery was recorded in 2021 at N1.15 trillion. However, in 2022 a huge drop to N781.1 billion was recorded and another significant drop to N778.4 billion was recorded in 2023.
The apex bank specifically blamed the country’s dwindling foreign trade on poor infrastructure and inefficient logistics, among other factors.
According to the report, the cost of trade in Nigeria (alongside Ethiopia) is four to five times higher than what is obtained in the United States due to insecurity, higher transportation costs, topography and poor road infrastructure.
“Studies from the Africa region consistently find spatial differences in prices of imported goods (food and non-food) as well as non-traded agricultural staples, indicating that markets are not well-integrated, and retail prices of products are affected by distance.
“For instance, trade costs are four to five times higher in Ethiopia and Nigeria than in the United States, due to poor road infrastructure, low competition in the transportation sector, and topography,” it stated.
The report further noted that the consequences of these distortions include the preference of African producers to sell locally rather than export.
The World Bank noted that economic activity is set to rebound in Sub-Saharan Africa, supported by increased private consumption and declining inflation. The report projects that growth will accelerate from a low of 2.6 per cent in 2023 to 3.4 per cent in 2024.
However, the recovery remains fragile due to uncertain global economic conditions, growing debt service payments, frequent climate-related disasters, and escalating conflict and violence.
Despite the projected boost in growth, the pace of economic expansion in the region remains below the growth rate of the previous decade (2000-2014) and is insufficient to have a significant effect on poverty reduction. To this effect, the World Bank advocated that transformative policies are needed to address deep-rooted inequality that prevents Sub-Saharan Africa from sustaining long-term growth and effectively reducing poverty.