Enhancing Non-oil Exports

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With increasing vulnerabilities occasioned by Nigeria’s over-dependence on crude oil, the responsibility rest on development finance institutions such as the Nigerian Export-Import Bank to promote activities that can stimulate the real sector, writes James Emejo

With a mission to promote exports through the provision of finance, risk bearing and advisory services in line with government policy, the Nigerian Export-Import Bank (NEXIM) is critical in achieving the diversification objectives of the federal government.
In fact, NEXIM is very important for the successful implementation of the Economic Recovery and Growth Plan (ERGP).

Among other things, the Bank is statutorily empowered to provide short and medium term loans to Nigerian exporters and issue short term guarantees for loans granted by Nigerian banks to exporters as well as credit insurance against political and commercial risks in the event of non-payment by foreign buyers.

An overview of its five-year strategic plan spanning 2017 to 2022 indicated a commitment to support 3,600 MSMEs by 2022 including the creation and sustainability of 25,000 direct jobs to Nigerians.

According to Managing Director/Chief Executive, NEXIM Bank, Mr. Abba Bello, within the period, the DFI further seeks to provide support for 1,800 exporters and corporates to participate in the Central Bank of Nigeria’s (CBN) top 100 non-oil exporters as well as increase its share of foreign exchange generation to 10 per cent of total non-oil exports.

Nevertheless, the managing director believes that existing and prospective stakeholders in the export business require proper education and mentoring to succeed and help actualise the bank’s mandate and economic diversification plan of the government in general.
He noted recently that the federal government’s efforts to diversify the economy and achieve rapid economic growth under the ERGP could be hampered without proper focus and policy responses to the issues and challenges affecting the growth of the small and medium scale enterprises in the country.

According to Bello, although poor financing had often been identified as a major constraint to the optimal performance of the sub-sector, “improper project conception, coupled with poor project implementation and poor management practices, which essentially are issues of innovativeness and entrepreneurship development, rather than those of access to finance,” constitute major constraints to the growth of MSMEs.
This explains the resolve of the bank to emphasise on public enlightenment on the role and expectation of MSMEs in the non-oil export business for optimal performance.

This, particularly becomes important in view of recent developments whereby a few of the country’s exports had been rejected on account of falling behind approved global standards and practice.
The awareness campaign by the Bank is further justified by the realisation that every states of the federation has one or more natural resources which if properly harnessed, could be a major source of foreign exchange to the country amid dwindling revenues from oil which had negatively impacted on the ability of government to fully fulfil major financial commitments to contractors and workers.

This is why the recent exporter enlightenment programme which was organised by NEXIM Bank in Katsina State, was seen as a right move on its part to continue to enlighten existing and potential exporters on the Bank’s products and services as well as enhance collaboration with other sister institutions and relevant stakeholders for the purpose of promoting exports and attracting investments to non-oil sector.
The forum was also to create awareness on the Bank’s newly established State Export Development Fund (EDF) in line with the Zero Oil Plan of the federal government.

According to Bello, following the review of applications under the EDF by its board, approval was given for the disbursement of loans valued at about N25 billion in support of various projects in the non-oil export sector.
But the fund could remain largely unutilised for lack of knowledge, requiring enlightenment so stakeholders could take advantage of the facility.
Bello said: “The total amount approved is expected to support about 15,000 direct and indirect jobs and facilitate foreign exchange inflow of about $100 million from non-oil exports.”

Earlier in the year, the CBN had established the N50 billion Export Development Fund, to be disbursed at single digit, which is currently being managed by NEXIM.
Following the inauguration of the new Board in March, 2018, the Minister of Finance had charged the members to hit the ground running to ensure that the institution achieves its mandate of diversifying the foreign exchange earnings of the Nigerian economy.”
Speaking at the enlightenment forum, he pointed out that the EDF seeks to partner state governments in identifying exportable products(s) in each State of the Federation (One State, One product philosophy) to be supported under the fund based on the Federal Government’s diversification strategy as contained in the ERGP.

He added that the State Export Development Fund initiative would ensure the spread of the Bank’s funding intervention across the country and expand its export basket.
The NEXIM Bank boss explained that the objective of the finance institution was to support export-oriented projects across the country, noting oil revenues alone cannot support inclusive economic growth capable of would job creation and economic opportunities for Nigerians.
He told participants that “Our plan is to assist indigenous producers to optimise capacity and also move up the value chain to produce finished products.
“We have observed that the north-west is quite rich in agricultural and mineral endowments and therefore, has the capacity to benefit significantly under the programme.

“A portion of the Export Development Fund has also been set aside to support industries that are major employers of women and youth under a special economic empowerment scheme for the vulnerable groups.”
Also, in furtherance of its drive to boost export trade among the MSMEs, the bank earmarked a seed Fund of N5 billion to promote export oriented projects and support for the Niger-Delta region.

The Niger-Delta Development Fund had been established in partnership with the Niger-Delta Development Commission in that regard and further offered partnership opportunities to cocoa projects and other commodity exporters in Ondo State to promote value added exports.
This was in addition to about N3 billion also set aside under a special scheme designed for women and youth.

Nonetheless, addressing exporters at the enlightenment forum, on improving access to NEXIM’s products and export development facilities, the bank noted that it had over the years supported the non-oil export sector through different products and services including working capital, stocking, foreign/local input, ECOWAS trade support and long term project finance facilities.
It urged Katsina and all the states in the North-west to key into its Export Development Programme (EDP) to boost their economic potentials and promote the rapid development of the region.
He listed the potential to include agricultural products such as cotton, hides & skin, sesame seeds, gum arabic, Ginger, sorghum and various grains and fruits.

Others are solid minerals, including Limestone, Gold, Iron ore, Lead and Zinc, as well as services – ICT, entertainment including Kannywood movies and music.
Bello, said the EDP had been developed by NEXIM to address the critical challenges of the non-oil export sector and the continued dominance of oil & gas in the total export revenues.
He noted that the zone had enormous non-oil resources, which could be developed to boost export earnings, create more jobs and promote economic growth.
According to him: “Despite the enormous non-oil resources of the region, our analysis however shows that the North-West had not benefited optimally from NEXIM’s intervention programme as shown in the table, hence the need for this Exporter Enlightenment Forum.”

He said: “The bank’s objective is to increase its funding intervention in line with the Economic Recovery and Growth Plan (ERGP) to existing exporters to move up in the export value chain, and
attract investment/funding support to the underserved, but key sectors of the economy with high export potentials.
“We are also desirous of working with state governments/regional authorities as a deliberate strategy towards promoting regional industrialisation, economic diversification towards facilitating sustainable and inclusive development in the country.
“We are therefore eagerly looking forward to working with the organised private sector/trade associations and state governments of the North-west region to boost the bank’s funding intervention in the region.”