Post by Ismail AbdulAzeez on Apr 1, 2017 22:18:54 GMT 1
NEXIM BANK: HELPING TO GENERATE 5 BILLION DOLLAR YEARLY WITH FACILITIES FOR EXPORTERS
The Nigerian export-import bank recently launched two intervention products targeted at promoting the country’s non-oil exports. The funds are the 500 billion naira export stimulation facility (ESF) and the 50 billion naira export re-discounting and refinancing facility (ERRF). These intervention funds by Central Bank of Nigeria (CBN) are part of Federal Government’s efforts to address the persistent over-independence of the economy on revenue from crude oil exports.
With the rebasing of the GDP in 2014, it became clear that the economy has been well diversified with the services sector contributing 54.8 percent of the GDP. The contribution of agriculture, which used to be about 35 percent of GDP prior to rebasing, has been diluted to 22 percent; while the oil and gas sector accounted for only about 14 percent.
In spite of this changing dynamics, however, the oil and gas sector continued to account for about 70 percent of government revenues and 95 percent of export earnings. This is due to the non- diversification of our external sector and the poor competitiveness of Nigeria’s non-oil exports.
Our non-oil export sector has continued to be challenged by myriad of problems. Prominent among these problems are low investment and poor access to credit. Over the last five years, credit flow to the export sector has not only been low, but it has also declined, accounting for average of 0.6 percent of total domestic credit to the private sector. High risk aversion and dearth of long-term funds at competitive interest rates in the commercial banking system are largely responsible for the low access credit.
It is against this background that the CBN has introduced these intervention schemes, with the objective of redressing the declining trend in domestic export credit. The main objective of these is to boost the level of non-oil export earnings, which has stagnated at about 5 percent of total export earnings over the years. The funds are also expected to attract and incentivize new and additional investments to the non-oil export sector, in addition to providing export-oriented projects with concessional medium to long-term funds to mitigate some of the observed challenges and enhance their competitiveness.
Other Export Development Initiatives
NEXIM Bank is working on a number of other initiatives that will support Nigeria’s non-oil export growth. The bank has been working on the facilitation of a regional shipping company to provide direct maritime links within West and Central Africa. The `Sealink’ project will help in removing non-tariff barriers and logistical challenges that have limited trade within the regions to 10 percent total volume.
It is also collaborating with a number of stakeholders to unlock export capacities. Working with the Solid Minerals Association of Nigeria and the Shippers Council, it intend to attract private sector investments towards dredging the inland water ways to provide dry bulk cargo barges to facilitate the movement of solid minerals by sea. This will help the country to realize the annual export potential of at least one million tones of coal, iron ore and lead/zinc.
Together with major serious investors, these can be achieved. Nigeria can resuscitate and commence the production of hydrocarbon-free jute bags in the country for packaging of exports. And to unlock further financing, NEXIM Bank is collaborating with African Export-Import Bank (AFREXIM) on the introduction of factoring as a strategic debtor financing tool or an alternative funding instrument for exporter SMEs.