Latest data from Nigeria's National Bureau of Statistics (NBS) have painted a concerning picture for Nigeria's economic ties with India. Despite being the leading export destination for Nigeria in the initial half of 2022, India has now descended out of the top five in just a year.
At the backdrop of the G20 summit, President Bola Ahmed Tinubu spearheads a Nigerian delegation in India. The core agenda is to promote foreign direct investment. But the latest statistics raise questions about the larger trade dynamics between the two nations.
Nigeria's exports to India in Q2 2023 stand at N463.3 billion, placing India as its sixth-largest recipient. This is a stark contrast to 2022's figures where exports were N1 trillion. Exports started their descent in Q3 2022, with the year ending with an overall 61% drop from N2.1 trillion to N849 billion. In terms of overall trade, there's been a 44.6% dip from N3 trillion in 2022 to N1.69 trillion in 2023.
Crude Reality: The Oil Factor in the Decline
The principal catalyst for this decline seems to be the dwindling exports of crude oil, a major revenue source for Nigeria. A glimpse into the past shows crude oil exports to India in 2022's first two quarters at N1.03 trillion and N1.09 trillion. As the year progressed, these figures nosedived to N559.3 billion and N420.8 billion in the third and fourth quarters.
The pattern persisted in 2023, with the exports being a mere N327.8 billion and N368.2 billion in its first two quarters. This has inevitably affected Nigeria's cumulative crude oil exports, which witnessed a decline from N11.5 trillion in 2022 to N10.6 trillion in 2023.
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The Russian Effect on Nigeria’s Export Market
With the ongoing conflict between Russia and Ukraine, global trade dynamics have been altered significantly. Russia's crude oil has become more affordable, making it an attractive option for India. Consequently, Nigeria's once-dominant position in the Indian crude oil market has been overtaken by Russia.
A report from the International Energy Agency, as cited by the NY Times, highlights India’s significant reliance on oil imports, with almost 45% of its requirement stemming from overseas purchases. Additionally, Nigeria faces competition from Iraq and other Middle Eastern nations in the crude oil export sector. With India being the third-largest oil consumer and importer globally, the stakes are high. India's growing appetite for Liquefied Natural Gas (LNG) further complicates the situation.
President Tinubu's current focus on luring foreign investments is commendable. Yet, rekindling India's interest in Nigerian crude oil seems paramount for ensuring stable forex inflows.