The ongoing invasion by Russia of Ukraine will have some telling consequences on Nigeria’s businesses, a report has said.
Nairametrics posits that the invasion could upset trade balance between Russia and Nigeria, whose bi-lateral trade is worth over $2 billion. It is said that Nigeria risks “significant food shortages and uptick food inflationary pressure”.
The US and a flurry of European countries have slammed a cocktail of sanctions on the Russian federation for invading Ukraine. The sanctions are expected to have tailback effects on other economies, including Nigeria’s.
With Russia being a top source for Nigeria’s imports, particularly food items, the war is expected to hurt it trade relations with the latter.
The National Bureau of Statistics, NBS, giving it foreign trade report, said Nigeria imported goods valued at N813.19 billion (over $2b annualised) between January and September 2021, representing 3.7% of Nigeria’s total import in the same period. One of the food items to feel the effect of the war is ‘durum wheat’, which Nigeria imports from Russia.
Nigeria imported durum wheat worth over N128.1 billion in the 9-month period of 2021, while it recorded a N144.14 billion durum wheat import in the previous year.
Also, Nigeria imports different types of seafoods from Russia, some of which include mackerel, meat, herrings, blue whitings, other fish, all in frozen form.
Equally, Nigeria imported vaccines for human medicine from Russia in Q4 2020.
Aside Russia, Ukraine is also a major trade partner with Nigeria. Nigeria imported milk preparation worth N721.45 million in Q1 2021 from Ukraine, according to information from the NBS.
The implication is that Nigeria will face shortage of wheat import, particularly since our local wheat production only accounts for 1% of the 5 to 6 million metric tons consumed annually.
“The downside to the war is that if supply from Russia is distorted for whatever reason, Nigeria could be faced with further surging wheat prices in its local market as a result of supply gap, which could lead to an increase in the price of some other by-products of wheats, such as bread, wheat meal amongst others.
“On the upside however, this could force Nigeria into expanding its local wheat production as the Central Bank continues to disburse funding to farmers across the country, which is yet to yield obvious desired results,” the report stated.