Nigeria’s trade sector experienced a marginal decline in its contribution to GDP in the first quarter of 2025, despite recording slight year-on-year growth. According to the National Bureau of Statistics (NBS), trade contributed 18.21% to real GDP in Q1 2025—down from 18.45% in Q1 2024. While real trade grew by 1.78% year-on-year, this figure was lower than the 2.31% growth seen a year earlier. On a quarterly basis, trade actually contracted by nearly 15%, indicating persistent economic challenges tied to consumer demand and import dynamics.
Experts say the slowdown in trade activity is driven by weakened purchasing power, high import-related costs, and an unstable exchange rate. Dr. Muda Yusuf of the Centre for Promotion of Private Enterprise noted that while reduced imports may encourage local sourcing, they have also contributed to inflation and suppressed demand. The combined costs of import duties, shipping fees, levies, and logistics have driven up prices, limiting consumption and straining the inventory of traders and importers.
Further compounding the issue is the manufacturing sector’s struggle with unsold goods. Former CIBN president, Prof. Segun Ajibola, and MAN president Francis Meshioye both emphasized that poor consumer demand has left manufacturers with N1.4 trillion worth of unsold inventory by the end of 2024. Inflation, which surged to 34.6%, along with a steep depreciation of the naira—from N666/$ to over N1,700/$ in one year—has made production more expensive and exports less competitive, worsening the overall trade outlook.
The drop in import volume has also forced many manufacturers to reduce their production shifts, a sign of decreased activity in Nigeria’s trade and industrial sectors. According to Alli-Shobande of the LCCI Freight Forwarders Group, relative naira stability has yet to translate into higher import volumes or stronger consumer demand. He urged the government to cut import-related costs and improve logistics to enable better planning and boost business performance.
Across the board, stakeholders agree that trade’s sluggish growth mirrors Nigeria’s wider macroeconomic challenges. They called for coordinated policy action including naira stabilization, reduced port and import charges, support for SMEs, and inflation control. They believe that improved consumer spending—bolstered by wage increases and tax relief—will be key to reviving trade momentum in the coming quarters and sustaining economic growth.
Source: Punch