Post by Trade facilitator on Feb 20, 2013 14:54:25 GMT 1
Economic experts indeed agree that exports are determinant in economic growth. In Nigeria, experts recognize the importance of developing small and medium enterprises (SME) in the country and the need to continue to mobilize significant financial resources for Nigerian export-oriented SMEs, ultimately contributing to economic development, employment opportunities, foreign exchange and regional trade integration.
Yet, most small businesses in Nigeria do not have the financial resources to export their products and services to competitive foreign markets. Nigeria's over dependence on revenues from oil exports has over the years ensured that the non-oil sector, especially the manufacturing sector is starved of required funds.
Around the world's growing economies- from china to India and to the biggest economies in the US and UK, emphasize are placed on support for export-oriented small and medium enterprises, SMEs, as well as their modernisation and expansion activities.
Little wonder the EXIM Bank of the United States from October 2005 through September 2006 authorized $3.2 billion in financing directly to U.S. small businesses.
In Nigeria, the case should be no different. Nigeria like many other Developing African countries started as agrarian economy. The agricultural produce of the early Nigeria include groundnuts, rubber, timber, cocoa, beans, palm kernel, hides and skin, to mention just few. These products accounted for over 50 percent of Gross Domestic Product (GDP) and were the main source of export earnings and public revenue. With the crude oil discovery in 1956 and its exploration in commercial quantityin1958 however, the oil sector gradually became the dominant sector in the economy, and almost the sole source of export earnings. For instance in 1970's petroleum constituted of about 78 percent of Federal Government revenue and more than 95 percent of export earnings.
To give the economy a boast and encourage exporters to meet with the challenge of sourcing for required funds, the Nigerian Export-Import Bank (NEXIM) was established by Act 38 of 1991 as an Export Credit Agency (ECA) with a strategic objective of enhancing value-added exports and bolstering the capacity of SMEs for job creation and foreign exchange earnings.
Since coming to existence, NEXIM has contributed in many ways to Nigeria's socio - economic development, especially in various sectoral funding interventions through value added production and stimulation of non - oil, non-traditional exports. Just to mention a few examples, NEXIM has over the years facilitated increase in value added cocoa processing by over 100,000 tonnes per annum with over US$70 million funding intervention for acquisition of new processing plants and machinery. In the industrial fishing / trawling, Rubber and Oilseed processing NEXIM has respectively disbursed US$42m, US$13m and US$37m for new trawlers, processing plants and machineries.
However, before now, the Nigerian Export-Import Bank (NEXIM), was largely seen by many operators in the financial sector as a mere waste pipe or another bureaucratic contraption set up to minister to the needs of well-connected borrowers who may never repay their loans.
The particular borrowers were not even the ones for whom the bank was statutorily established such as the Small and Medium Enterprises (SMEs) and start-up businesses. In fact, at a point NEXIM became almost a dead institution and no one would want to touch it with a 12-foot pole. It became deeply mired in debts, posting losses year after year.
NEXIM Bank was however reconstituted in August 2009 by the federal government. Hitherto, the operations of the bank were not encouraging and impressive. The character of the bank then was a general decline in the quality of risk assets as its cumulative loan portfolio as at August 20, 2009 was put at N14.6 billion, out of which 72 percent was non-performing; the sum of N10.03billion or 69.05 percent was classified as completely lost.
The bank had a general income decline with its outstanding unpaid capital put at N32.74 billion. This led to decline in creation of risk assets, and depletion of the bank's shareholders' funds.
Source: allafrica.com/stories/201302190429.html
Yet, most small businesses in Nigeria do not have the financial resources to export their products and services to competitive foreign markets. Nigeria's over dependence on revenues from oil exports has over the years ensured that the non-oil sector, especially the manufacturing sector is starved of required funds.
Around the world's growing economies- from china to India and to the biggest economies in the US and UK, emphasize are placed on support for export-oriented small and medium enterprises, SMEs, as well as their modernisation and expansion activities.
Little wonder the EXIM Bank of the United States from October 2005 through September 2006 authorized $3.2 billion in financing directly to U.S. small businesses.
In Nigeria, the case should be no different. Nigeria like many other Developing African countries started as agrarian economy. The agricultural produce of the early Nigeria include groundnuts, rubber, timber, cocoa, beans, palm kernel, hides and skin, to mention just few. These products accounted for over 50 percent of Gross Domestic Product (GDP) and were the main source of export earnings and public revenue. With the crude oil discovery in 1956 and its exploration in commercial quantityin1958 however, the oil sector gradually became the dominant sector in the economy, and almost the sole source of export earnings. For instance in 1970's petroleum constituted of about 78 percent of Federal Government revenue and more than 95 percent of export earnings.
To give the economy a boast and encourage exporters to meet with the challenge of sourcing for required funds, the Nigerian Export-Import Bank (NEXIM) was established by Act 38 of 1991 as an Export Credit Agency (ECA) with a strategic objective of enhancing value-added exports and bolstering the capacity of SMEs for job creation and foreign exchange earnings.
Since coming to existence, NEXIM has contributed in many ways to Nigeria's socio - economic development, especially in various sectoral funding interventions through value added production and stimulation of non - oil, non-traditional exports. Just to mention a few examples, NEXIM has over the years facilitated increase in value added cocoa processing by over 100,000 tonnes per annum with over US$70 million funding intervention for acquisition of new processing plants and machinery. In the industrial fishing / trawling, Rubber and Oilseed processing NEXIM has respectively disbursed US$42m, US$13m and US$37m for new trawlers, processing plants and machineries.
However, before now, the Nigerian Export-Import Bank (NEXIM), was largely seen by many operators in the financial sector as a mere waste pipe or another bureaucratic contraption set up to minister to the needs of well-connected borrowers who may never repay their loans.
The particular borrowers were not even the ones for whom the bank was statutorily established such as the Small and Medium Enterprises (SMEs) and start-up businesses. In fact, at a point NEXIM became almost a dead institution and no one would want to touch it with a 12-foot pole. It became deeply mired in debts, posting losses year after year.
NEXIM Bank was however reconstituted in August 2009 by the federal government. Hitherto, the operations of the bank were not encouraging and impressive. The character of the bank then was a general decline in the quality of risk assets as its cumulative loan portfolio as at August 20, 2009 was put at N14.6 billion, out of which 72 percent was non-performing; the sum of N10.03billion or 69.05 percent was classified as completely lost.
The bank had a general income decline with its outstanding unpaid capital put at N32.74 billion. This led to decline in creation of risk assets, and depletion of the bank's shareholders' funds.
Source: allafrica.com/stories/201302190429.html
