There have been considerable changes in the composition and direction of Nigeria’s external trade since its independence in 1960. The trend of Nigeria’s external trade refers to the destination of exports, and the origin of imports.
Nigeria’s exports consist mainly of crude oil and non-oil commodities, while imports consist of manufactured consumer goods, industrial raw materials and capital equipment.
Western Europe has remained the most dominant trade partner to Nigeria, while the United States of America (U.S.A) remains the largest single buyer of Nigeria’s crude oil, closely followed by France. Since 1980 there has been an expansion of market to include Canada, Japan, China. Taiwan, Poland and India, among others. Unfortunately, there is very little trade among African countries because they produce similar goods like Nigeria. There is, however, the new trend being initiated by ECOWAS, to encourage greater trade among all the West African countries.
Since 1985, Nigeria’s balance of trade has been unfavourable. This may be attributable to, among all other things, the fact that the country has relied too much on oil as the main export and revenue earner, which became very manifest during the oil boom era from 1974 to 1979. Since, 1975, imports have been rising at much faster rates than exports. This has also been the trend in recent years. The structural changes in imports reflect the declining importance of the agricultural sector.
However, Nigeria is striving at bringing about a diversification of our export and to bring about increased earnings from non-oil commodities. Emphasis is on manufacturing for exports and encouragement of export of agricultural goods. Also, while trying to increase export earning, efforts are being made to increase import substitution because of the huge debts accumulated over the years, due to our balance of trade and payments problems. With the above measures, Nigeria’s balance of trade may improve with time.