IMF says Nigeria has failed to diversify its exports

Nigeria only added 47 new products to its export portfolio during a 30-year period between 1990 and 2020.
This is unlike other countries (including Tanzania and Cameroon) who added 95 new products during the same period under review.
The IMF has therefore advised the West African country to further diversify its exports, because doing so would be benefit its economy.

Nigeria has failed to extensively diversify its export portfolio, a new report by the International monetary Fund (IMF) said.

Part of the report, which was titled Nigeria: Selected Issues Paper, said: “Nigeria has achieved little export diversification over the past decades. Diversification can be attained by including new commodities in the export portfolio (extensive margin) and changing the share of existing commodities (intensive margin). Over the past decades, Nigeria failed to diversify exports at the extensive margin, nor did it add new sub-products within the oil and the few commodities that it exports to achieve a more balanced mix of exports.”

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Do note that during the 30-year period between 1990 and 2020, the West African country only added 47 new products to its export portfolio. The report pointed out that this is unlike other countries (including Tanzania and Cameroon) who all added 95 new products during the same period under review.

In the year 2020, Nigeria only exported 205 products. This is far less than the 258 average recorded across Sub-Saharan African countries.

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The IMF further pointed out that countries like India, Malaysia and Indonesia only began to witness significant improvements in their GDP per capita after extensively diversifying their exports.

In view of this, the multilateral organisation urged Nigeria to increase the number of products it exports, noting that “diversifying the range of goods produced creates greater possibilities for intraregional trade and opportunities for growth.”

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Nigeria's foreign trade balance worsened in 2021, as the country continued on its trajectory of huge trade deficits which has spanned between Q4 2019 and Q3 2021. According to data provided by the National Bureau of Statistics, Nigeria's import bill hiked by 51.1% to $19.3 billion (N8.15 trillion) as of Q3 2021. This represented the highest level ever on record.

Trade deficit is also known as negative trade balance, and it happens when a country's import bill exceeds its export income.