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Nigeria FOREIGN TRADE AND BALANCE OF PAYMENTS
Foreign Trade
Until the mid-1950s, agricultural commodity
exports--mainly
cocoa, groundnuts, palm oil, and palm kernels--earned more
than
the cost of merchandise imports. The demand for imports
remained
limited by the country's low income, lack of
industrialization,
negligible use of foreign inputs in agriculture, and
sterling
bloc restrictions. Nigeria had continued to specialize in
primary
products (food, raw materials, minerals, and organic oils
and
fats) and to import secondary products, such as chemicals,
machinery, transportation equipment, and manufactures,
used in
Nigeria's development (see
table 12, Appendix). Primary
commodities comprised 98 percent of exports and 21 percent
of
imports in 1955, 92 percent of exports and 19 percent of
imports
in 1975, and 98 percent of exports and 24 percent of
imports in
1985.
Minerals (largely petroleum) accounted for an
increasing
proportion of exports through the 1970s, increasing from
13
percent in 1955 to 35 percent in 1965, to 93 percent in
1975, and
then to 96 percent in 1985
(see tables 13, Appendix). The
dependence on oil and a few other export commodities made
Nigeria
particularly vulnerable to world price fluctuations.
Nigeria's
overall commodity terms of trade (price of exports divided
by
price of imports) fell substantially, from a base of 100
(1980)
to 83.8 (1984) and 35.5 (1986), before rising to 42.6
(1987) and
then falling to 34.6 (1988). Meanwhile, export purchasing
power
(quantity of exports multiplied by the commodity terms of
trade)
declined from 100 (1980) to 48.3 (1984), 23.0 (1986), 23.1
(1987), and 20.4 (1988), a 79.6 percent reduction in the
purchasing power of exports in eight years.
Nigeria traded worldwide with about 100 countries, but
the
composition of trade by country had changed since the
colonial
period. During the colonial era, Britain was Nigeria's
dominant
trading partner. As late as 1955, 70 percent of Nigeria's
exports
were to Britain and 47 percent of its imports were from
Britain.
However, by 1976 Britain's share of Nigerian exports and
imports
dropped to 38 percent and 32 percent respectively. In the
1970s,
Britain was replaced by the United States as Nigeria's
chief
trading partner. In 1988 the United States was Nigeria's
best
customer, buying more than 36 percent of its exports
(primarily
petroleum products); Britain was Nigeria's leading vendor,
selling the nation more than 14 percent of its imports.
In 1990 Nigeria had associate status, including some
export
preferences, with the European Economic Community (EEC).
As a
result, it had a number of major EEC trading partners,
including
Germany, France, Italy, Spain, and the Netherlands.
Nigeria also
had an active trade relationship with some members of the
Organisation for Economic Co-operation and Development,
notably
the United States, Canada, and Japan (see
table 14,
Appendix).
Trade with African countries, mainly neighboring countries
within
the Economic Community of West Africa (ECOWAS--created in
1975),
comprised only 3 to 4 percent of total trade. In the
1980s, trade
with Eastern Europe and the Soviet Union constituted less
than 1
percent of Nigeria's total.
Data as of June 1991
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