Nigeria-UK Trade Dips by 25% in Q1 2024 Despite Naira Devaluation

Nigeria’s trade with the United Kingdom (Nigeria-UK Trade) has experienced a significant decline of 25% in the first quarter of 2024, raising concerns for both countries.

This unexpected drop comes despite the recent devaluation of the Nigerian naira, a policy change typically intended to make Nigerian exports cheaper and more attractive to foreign buyers.

The National Bureau of Statistics (NBS) released a report revealing this concerning trend. Total trade between Nigeria and the UK plummeted from N602.36 billion in Q1 2023 to N451.45 billion in Q1 2024. This represents a substantial year-on-year (Y-o-Y) decline. Furthermore, the decline appears to be accelerating, as the total trade value also dropped by 14% compared to the previous quarter (Q4 2023), where it stood at N522.79 billion.

A closer look at the data from the NBS reveals that both exports and imports have contributed to the overall trade decline. While Nigeria’s imports from the UK remained relatively stable, dropping only 2% from N186.99 billion in Q4 2023 to N183.34 billion in Q1 2024, exports to the UK witnessed a more substantial decline. The value of exports plunged by 20% compared to Q4 2023 (N335.8 billion) and a staggering 41% year-on-year (N455.48 billion in Q1 2023). This significant drop in exports is likely the main factor dragging down overall trade figures.

The UK has traditionally been a major destination for Nigerian re-exports, including interchangeable tools, iron and steel products, treated metals, and household articles. Additionally, food preparation items worth N1.8 billion were exported to the UK in Q1 2024. On the other hand, Nigeria imported N11.77 million worth of granite and N15.93 billion worth of heat exchange units from the UK during the same period.

Several factors could be contributing to the decline in trade, despite the potential advantage the naira devaluation offered Nigerian exports. The UK’s recent economic struggles might be a significant factor. The UK narrowly avoided a prolonged recession, experiencing a brief economic contraction of 0.3% in Q4 2023, followed by stagnation in April 2024. This weak economic climate might have dampened import demand from the UK.

Another potential factor impacting trade is the UK’s recently revised visa policy for international students. International students are a key source of income for the UK economy, and historically, Nigeria has been the third largest source market for them. However, the new policy restricts family visas for students and limits post-graduation work opportunities in the UK. These changes could be discouraging Nigerian students from pursuing higher education in the UK, potentially leading to a decline in trade associated with student spending and remittances.

The decline in trade between Nigeria and the UK presents a setback for both countries. Nigeria is actively seeking to diversify its trading partners and boost exports, while the UK is looking for new economic opportunities following its exit from the European Union. The coming months will be crucial to see if these trends continue or if corrective measures can be taken to revitalize trade relations and unlock the potential benefits for both economies.