------------- is NOT the cause of balance of payments (BOP) deficits in Nigeria

Analyze the question You are asked to find the option that does NOT cause a balance of payments (BOP) deficit in Nigeria. Three options are causes of a deficit, and one is not.

Explain the concept The balance of payments records all of a country's transactions with the rest of the world. A deficit happens when payments going out (imports, debt service, and so on) exceed receipts coming in (exports, remittances, investment inflows).

Things that widen a deficit:

• Low export earnings
• High import bills
• Heavy outflows such as debt repayments

Things that reduce a deficit:

• Higher exports
• Lower imports (import substitution)
• Fewer foreign payment obligations

Step-by-step evaluation

• A. Poor performance of the non-oil sector: This is a cause. Nigeria depends heavily on crude oil, so weak agriculture, manufacturing, and solid minerals mean low non-oil export earnings. When oil prices fall, the deficit grows.
• B. Export promotion: This is not a cause. Promoting exports raises foreign exchange earnings and improves the BOP, so it helps correct a deficit.
• C. No import substitution strategies: This is a cause. Without local production to replace imports, Nigeria keeps importing goods such as fuel, rice, and machinery, which raises the import bill.
• D. High servicing of debt: This is a cause. Paying interest and principal on external debt sends foreign exchange out of the country, which worsens the current and financial accounts.

Answer: Export promotion is the only option that improves the BOP rather than worsening it.

Correct option: B

Exam tip: In "NOT the cause" questions, look for the option that is a solution or a positive policy. Export promotion, import substitution, and diversification are remedies for BOP deficits. Heavy imports, debt servicing, and over-reliance on one commodity are causes.