Zenith Bank’s commitment to non-oil export earnings growth has enabled it to cement its leadership in the financial services sector. The seventh Zenith Bank International Trade Seminar with the theme: ‘Unlocking Opportunities in Nigeria’s Non-Oil Export Business’ was an opportunity for the bank to get stakeholders’ input on ways to grow non-oil sector and support foreign exchange earnings for the economy. Its emergence as the Best Commercial Bank in Nigeria, at the World Finance Banking Awards and passion for digital banking have leapfrogged its performance in a difficult economic era, reports Assistant Business Editor COLLINS NWEZE.

The non-oil sector is a key segment of the economy. Its ability to create jobs, earn foreign exchange and sustain economic development is not in doubts.

For many financial institutions, support for the non-oil sector is crucial to Nigeria’s journey to economic sustainability.

Zenith Bank Plc is taking major steps to support the economy through investments in the non-oil sector and investments in technology to provide seamless services to its customers.

The seventh yearly Zenith Bank International Trade Seminar with the theme: “Unlocking Opportunities in Nigeria’s Non-Oil Export Business,” was an opportunity for the bank to gather stakeholders to discuss ways to grow the nation’s non-oil sector and build sustainable economic development.

Already, Zenith Bank’s financial performance shows double-digit growth in gross earnings, improved market share in both retail and corporate sectors despite a very challenging macroeconomic environment aggravated by the COVID-19 pandemic.

These milestones enabled Zenith Bank to emerge as the Best Commercial Bank, Nigeria, at the World Finance Banking Awards, retaining the award for a second year. The bank was also named as the Best Corporate Governance Bank, Nigeria in the World Finance Corporate Governance Awards.

Non-oil export support and economy

At the same seminar, founder/Group Chairman, Jim Ovia, called for effort towards diversifying Nigeria’s export base through the promotion of non-oil exports.

Highlighting the importance of non-oil export to the  economy, Ovia pointed out that Nigeria exported cocoa and several other non-oil products for years before oil was discovered.

He cited the 25-storey Cocoa House in Ibadan, which was built with proceeds from cocoa exports. He pointed out that many countries such as Japan and China have been successful because they are doing a great deal of innovation, production and manufacturing of goods and services.

According to him, Nigeria should also look at promoting the nation’s non-oil export sector through technology to create technological giants like Apple, Tesla, and Google. “And we, already, have technology companies in this mould in Nigeria, such as Flutterwave, which is worth $3 billion, making it more valuable than some banks in Nigeria,” he said.

Ovia highlighted the phenomenal growth of Nigeria’s emerging financial technology (Fintech) companies such as Flutherwave, OPay, Interswitch, Kuda and Paystack, with market, which are worth $3 billion, $2 billion, $1 billion, $500 million, and $200 million. According to him, this underscores the enormous opportunity in the Fintech space.

He noted that the most capitalised companies in the world, such as Apple, Microsoft, Alphabet (Google), Amazon, Tesla, Visa, among others, are not oil companies but are in the technological innovation space.

In his welcome address, the Group Managing Director/Chief Executive, Zenith Bank Plc, Ebenezer Onyeagwu, said the seminar has served as a veritable platform to deepen the conversation on promoting non-oil export in Nigeria, bringing together non-oil export practitioners and relevant government agencies to interact and explore the opportunities and proffer solutions to the challenges of non-oil export in the country.

Speaking on the origin of the seminar, Onyeagwu said the commodity price slump of 2014-2016 was a watershed.

According to him, “when crude oil prices plummeted from $114.55 per barrel in June 2014 to $28.76 in January 2016, with an attendant effect on the availability of foreign exchange, it was time to look towards the non-oil export sector for a more sustainable source of foreign exchange that is not susceptible to external shocks and price volatility.”

Highlighting some of the outcomes of the past six seminars, Onyeagwu noted that previous editions’ outcomes had found expression and influenced policy initiatives.

For instance, “the extension of the period of repatriation of non-oil export proceeds from 90 days to 180 days and the policy mandating shippers not to carry export without a Nigeria Export Proceeds (NXP) Form Number were recommendations from previous seminars.

“Also, the need to incentivise exporters to repatriate their export proceeds through the official channels and the recommendation to create export terminals across various export hubs in the country were also from past seminars. “Also, previous editions recommended having Export Desks in commercial banks, which has now been instituted.”

He also stated that Zenith Bank has trained over 100 exporters through its ‘Zero-to-Hero’ programmes, which provide a platform for grooming and exposing beginners to become strong exporters by providing training on documentation, product sourcing, access to market and financing. He noted that Zenith Bank would continue the advocacy of promoting non-oil export.

Emefiele commended Zenith Bank for its laudable initiative in organising the seminar to explore opportunities in Nigeria’s non-oil export and increase the nation’s non-oil export base and, ultimately, increasing its share as a percentage of total export.”

“This is why the theme of this year’s seminar is timely and appropriate. This is because the global economy and structure are changing rapidly before our eyes.

“The previous world economic order underpinned by globalisation and trade possibilities seems to be suffering major disruptions lately. We believe Nigeria has a lot of potentials, and we can harness this for the good of our people and country,” he said.

He pointed out that the CBN has undertaken several initiatives to promote the non-oil export sector because of its firm belief that the non-oil export sector holds enormous potential to contribute to employment generation, wealth creation and economic growth.

President/Chief Executive, Dangote Group, Alhaji Aliko Dangote, said: “Nigeria’s non-oil export is quite low compared to other African top oil producers. This exposes the economy to oil price/production risks.

“There is much room for growth, and the CBN is helping drive this through the RT200 programme.”

According to him, the CBN RT200 FX programme, which aims to achieve $200 billion in foreign exchange earnings from non-oil proceeds over the next three to five years, has very laudable objectives, including enhancing foreign exchange inflow, diversifying the source of FX inflow, increasing the level of contribution from non-oil export, and ensuring stability and sustainability of FX flows.

Secretary-General, African Continental Free Trade Area (AfCFTA) Secretariat, Wamkele Mene, enumerated the progress and achievements of the continental and efforts to improve intra-Africa trade.

Also, President/Chairman, African Export-Import Bank (Afreximbank), Prof. Benedict Oramah, highlighted the efforts of his bank to enhance intra-Africa trade through the implementation of the Pan-African Payment and Settlement System (PAPSS).

According to him, the Pan-African Payment and Settlement System would make it easy for Africans to trade among themselves and receive payment for goods and services in their local currencies, eliminating currency conversion challenges.

Zenith Bank says it remains committed to promoting the non-oil export sector by identifying emerging opportunities, which help stimulate non-oil exports and develop robust financial products and incentives for operators in the sector.

The bank launched the non-oil export seminar in 2017 as an initiative to deepen the discourse on promoting the non-oil export business in Nigeria.

Awards and other milestones

The Best Commercial Bank, Nigeria and Best Corporate Governance Bank awards were presented to Onyeagwu at the London Stock Exchange.

The awards were in recognition of the bank’s ability to embrace digital transformation and best-in-class sustainability and corporate governance practices, leading to a stellar business performance in a difficult economic climate.

Commenting on the double recognition, Onyeagwu said: “These awards reflect our strong business fundamentals, resilience and ability to adapt to the ever-changing dynamics of the market through our innovative solutions, as well as our commitment to global best practices.

“As a member and signatory to various domestic and international sustainability frameworks including the United Nations Global Compact (UNGC) and the Central Bank of Nigeria Sustainable Banking Principles, we continue to support the achievement of the Sustainable Development Goals (SDGs) by creating value for our shareholders, customers, clients, investors, communities and the environment through our practices, operations and investments.”

He dedicated the awards to Ovia for his pioneering role in building the structures and laying the foundation for an enduring and very successful institution; the board for the outstanding leadership they provide; the staff for their commitment and dedication; and the bank’s customers for making Zenith Bank their preferred financial Institution.

World Finance is a leading international magazine providing comprehensive coverage and analysis of the financial industry, international business and the global economy. The editorial combines award-winning reportage, covering a broad range of topics from banking and insurance to wealth management and infrastructure investment, with contributions from some of the world’s most well-respected economists and theorists as well as consultants in government think tanks and the World Economic Forum.

More recognition

Zenith Bank’s track record of excellent performance has continued to earn the brand numerous awards, with these latest accolades coming on the heels of several recognition, including being voted as Best Bank in Nigeria, for three consecutive years from 2020 to date, in the Global Finance World’s Best Banks Awards.

The bank also emerged the Best in Corporate Governance ‘Financial Services’ Africa, for three consecutive years from 2020 to 2022, by the Ethical Boardroom; Best Commercial Bank, Nigeria and Best Innovation In Retail Banking, Nigeria in the International Banker 2022 Banking Awards; and Bank of the Year (Nigeria) in The Banker’s Bank of the Year Awards 2020.

Also, the bank emerged as the Most Valuable Banking Brand in Nigeria in the Banker Magazine Top 500 Banking Brands 2020 and 2021, Number One Bank in Nigeria by Tier-1 Capital in the “2021 Top 1000 World Banks” Ranking by The Banker Magazine and the Retail Bank of the year at the BusinessDay Banks and Other Financial Institutions (BoFI) Awards 2020 and 2021.

Zenith Bank was also ranked as the number one bank in Nigeria by tier-1 capital in the 2022 Top 1000 World Banks Ranking published by The Banker Magazine. For the 13th consecutive year, the bank retained its position as the number one tier-1 bank in Nigeria with a tier-1 capital of $2.75 billion, emerging as the 460th bank globally.

The expectation that Nigeria’s economy will suddenly experience a rebound leading to the eventual appreciation of the local currency against the US Dollar will remain a pipedream in the absence of a corresponding fiscal authority policy support for the ongoing monetary policies, writes Group Business Editor, SIMEON EBULU.

Recent measures by the Central Bank of Nigeria (CBN) to further scale down basic forex allocation, in the form of Personal Travel Allowance (PTA) and Basic Travel Allowance (BTA), including other foreign allowances and stipends to those travelling overseas, clearly underscores the precarious position the monetary authority has found itself in continuing to make scarce FX available to end users.

The Deposit Money Banks (DMBs) in response to recent CBN’s guidelines, have cut $2,500 from the $4,000 quarterly allocation to Nigerians who needed such foreign exchange to address basic needs while they are on a brief stay abroad, either holidaying or on business trips. That amount used to be as moderately high as $10,000 some years back. As it stands today, you can only apply for just $1,500 as business travel allowance, or personal travel allowance anytime you’re going overseas.

Those who have attempted to apply for this stipend will even tell you how cumbersome and difficult accessing this new basic travel forex allowance margin is. To get the forex they said, is akin to the proverbial saying of a camel passing through the eye of a needle. Recent media reports have equally attested to the fact that banks have scaled downward their policy on forex allowance sales  to end users, including those schooling abroad and overseas travelers over the lingering dollar scarcity.

This has resulted in banks slashing quarterly dollar disbursements to customers with limits also cut from $4,000 to $1,500 across board. This is a fallout of the ongoing dollar scarcity which has led to less dollar allocations to banks, reduced dollar deposits in banks and difficulty faced by businesses in accessing forex for their operations.

The attendant risks and damage to the economy of the greenback scarcity cannot be overemphasised. Imagine an economy which manufacturing sector is largely dependent on foreign raw materials and driven by implements and machinery, including spares that are substantially sourced from overseas. This presupposes that payments for such factors of production are made wholly with foreign exchange drawn mainly from the nation’s stock of foreign reserves.

A nation’s foreign reserves grow largely from the volume of exports, either of goods and services produced in-country, or like the case of Nigeria and other Organisation of Petroleum Ecporting Countries (OPEC) countries, from oil exports. For no tenable reason, other than malfeasance, Nigerians, most especially those charged with the responsibility to harness and manage her resources, have cast caution to the wind and have taken every advantage derivable from oil (that priced choice gold) and turned their attention to partitioning, as it were the resources of the nation for personal gain.

Now we talk of oil thieves carting away over 400,000 barrels of oil every day; we are faced with bandits and herders killing and scaring farmers from going to their farms; we are today contending with kidnappers collecting N100 million per hostage before they earn their freedom.

In all of this confusion, people are pointing accusing fingers at the CBN, expecting that the bank, under the leadership Godwin Emefiele will make certain dollars margicaly available to an economy that technically is on auto-reverse. Make no mistake, the signs and telltales of a failing economy are everywhere to see.

Take a look at the overbearing and mounting public debts already in excess of $41billion, the unbearable price of Automotive Gas Oil (AGO) needed to power industrial machines, the unstable, or near absence of electricity, the steep Naira/Dollar exchange rate, hovering between N670+ to above N700 to the dollar, fuelled by the greenback scarcity, and so much more. What of the growing army of unemployed Nigerians, young and old and the pervading insecurity in the land? Need  we say more? Add to this the Federal Government’s flip-flop oil policy on whether to unbundle the energy sector, or leave it in the hands of NNPC Limited which prides itself to having remitted $2.1billion in six months in an economy that is yearning for much larger sums to move the economy forward!

People are asking the government to come up with a template on how to address the projected $6billion subsidy on fuel imports, more so for a country that is the sixth largest producer of crude oil in the world, but regrettably  cannot refine its crude oil for domestic consumption.

The CBN had previously, through several policies and interventions put up a dogged fight to ensure that forex is readily available to industries for raw materials/inputs imports, as well as to end users. Through its engagement with BDCs operators (Bureaux De Change), until recently when it severed this arrangement, the CBN had through this channel provided forex to a large segment of forex end- users, including manufacturers.

The bank also pursued and continues to push several intervention measures in agriculture, power and energy, aviation and manufacturing, just to name a few, with the intent of encouraging massive production in-country and boosting non oil product exports to earn foreign exchange. The apex bank has never ceased to pursue incentive-based diaspora remittances and other cost reduction palliatives to International Money Transfer Organisations (IMTOs) to create inbound channels for hard currencies to stream into the country.

The restriction of forex to fund imports of about 43 items or more that can be produced in-country is also one among several efforts by the apex bank to ensure that forex remains readily available to legitimate end users in Nigeria. Hard as the CBN tries to ensure a balancing of the supply and demand equation of the forex supply chain, the harder it would appear, the chain is proving to hold.

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So what next?

As the saying goes, it takes two to tango, and  I dare say, tangle too. It’s time the Monetary and Fiscal arms of the Federal Government join hands together to fix this lingering menacing challenge. The CBN has been on this trough alone long enough, the Ministry of Finance, Budget and National Planning, representing the Fiscal arm of the Federal Government,  must come in frontally to be counted and resolve the logjam on how to generate enough forex to go round and at the same time stanch fuel subsidy payment and close the dual, or multiple naira/dollar exchange rates.

The will, both political and economic to do the needful and give a breather to the nation’s economy must now be fully explored and put to work.

In response to the dollar  scarcity, banks have also cut the amount of foreign currency customers can spend on payment cards abroad to as low as $20 monthly while many others have reviewed the forex disbursement rules. In an emailed note to customers, entitled: Update on Foreign Currency Transactions, Access Bank said it will between now and December 2022, process only one maintenance/ upkeep request yearly per student schooling abroad for a maximum amount of $1,500, adding that such service will only be rendered to customers whose school fees were processed through the bank and will be subject to maintenance/ upkeep not having already been disbursed previously at any time this year.

It said where the original school fees payments were settled through other banks, “we will not process the corresponding maintenance/ upkeep requests,” saying applicants will be advised to contact the bank that originally processed their school fees.”

These are clogs being introduced to discourage forex transactions, and at the same time send a subtle signal that regular services of this nature are on their way out banks schedules. Likewise, more Nigerian banks have reduced their monthly international spending limit on naira cards.

The banks informed their customers they were reducing the limit from $100 to either $20 or $50 a month. The United Bank for Africa (UBA) earlier in the year announced $20 as its new limit, saying this was in line with its promise to keep customers updated on its services. Other banks like  Zenith Bank and First Bank have equally informed their customers that they are cutting their international spending limit on its naira cards to $20, and in addition to suspending international ATMs and point of sales (PoS) transactions. FirstBank announced that due to “current market realities on foreign exchange,” it has reduced its spending limit to $50.

More banks have followed suit citing recent economic realities. Guaranty Trust Bank, Sterling Bank, Union Bank said their new limit was also $20 a month. Wema Bank went a step further and said it will end its cross-border payments with Naira cards.   Emefiele, hinged the persistent US Dollar scarcity partly to the COVID-19 pandemic, saying the global financial conditions tightened as investors withdrew over $120 billion in portfolio flows from emerging and frontier markets in the first half of 2020.

He said while flows began to recover in the early part of 2021, financial flows to emerging markets like Nigeria, were constrained by expected tapering by the Federal Reserve Bank in 2022, which is likely to affect global financial conditions.

Part of the fallout of this according to  financial market analysts,  is that banks are not honoring card payments, many foreign investors are not able  to get their money out and manufacturers are unable to import vital raw materials due to dollar scarcity. As this development continue to fester, we can’t really continue to hold only the CBN responsible and accountable for this.

There’s a common adage made popular in legal parlance (Nemo dat quod non habet), which literally means that “no one can give what they do not have.” That the central bank has resorted to cutting down, and in some instances denying FX to applicants, is a pointer to one variable, that is, the supply can no longer meet the demand. And it’s common knowledge without contestation  that the CBN does not mint, or print the dollar.

The CBN only receives the greenback, as it were from those who earn it by reason of the nature of businesses they engage in, including diaspora remittances from IMTOs and from export proceeds, among others. Somehow, the apex bank by reason of its central role as the manager of the nation’s  FX, inadvertently took on the role of forex allocation to all strata of the economic spectrum and the general public.

For a while one might say this went on well, but with the creeping in of supply and demand disequilibrium and the fallout  of exchange rate differentials, the flaws in the practice are there now for all to see.

You cannot at one end engage in forex acreation and at the other end give room forex hemorrhage. Before pursuing the argument of assignment of roles and responsibilities to both the CBN and the Finance Ministry, or the Monetary and Fiscal authorities, it must be agreed that the whole effort of resolving the forex conundrum will be an exercise in futility if enforcement and prosecution of forex offenders at whatever levels is not carried out, not minding those whose-ox-is-gored.

There are established ways, backed by statutes and legal provisions that the Fiscal arm can collaborate and should work with the Monetary authority to ensure that there’s adequate supply of forex. Taxation, payment of Customs tariffs, rates and charges where required will ensure adequate sources of revenue for the government.

The almost insatiable appetite for foreign loans designated in foreign currency has created a drain on the nation’s forex revenue and a dip on Nigeria’s foreign reserves. Nigeria is almost at the point where its debt service provision is almost equal to its annual budget.

As the banker to the Federal Government, the CBN is saddled and burdened with the challenge of resolving the debt burden. In addition, there is a growing and an unwholesome preference by the government in favour of social investment that is consumption driven, rather than on investment and in productive activities.

A situation where the federal government is devoting over $1billion of borrowed funds to social investment, is to say the least injurious to a totering economy like ours. The Fiscal authority should steer the federal government clear of devoting recovered looted funds to social investment as the case of the over $320million Abacha recovered loot.

Again, the oft repeated argument by the Fiscal authority, especially the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed that Nigeria’s problem is more of revenue generation than debt should be discontinued. If the challenge Nigeria has is how to increase revenue, then tell us how you intend to raise the nation’s revenue. It would amount to being  insensitive to the present day reality, if it does not strike a cord to the minister that Nigeria’s debt service provision alone is chopping off our entire budgetary provision. At what point will it matter and become a problem, if not now?

The observed funds leakages that have become so common and noticeable year-in, year-out, especially in budget padding by MDAs (Ministries, Departments and Agencies) should be addressed. If what is earned by way of forex inflows is frittered away, or mismanaged at the fiscal end, then the monetary authority’s  efforts at forex acreation will amount to an exercise in futility.

Besides, the idea that an individual in a critical position in the finance ministry is being tried for diverting federal government’s money running into several tens of billions of naira, leaves much to be desired. Incidences of this nature cannot contribute to enhancing the value of the naira, vis-a-vis the dollar.

These are minuses that must be addressed, and that urgently too.