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Tag: NEXIM Bank

  • NEXIM Bank: Delivering value through strategic partnerships

    NEXIM Bank: Delivering value through strategic partnerships

    Recently the Nigerian Export-Import Bank – NEXIM Bank, embarked on a deliberate programme of building partnerships designed to deliver value to its stakeholders and target public as the Nigeria’s sole Government Trade Policy Bank.  This development has been applauded by both players and watchers in the Nigerian SMEs, especially those operating in the manufacturing, agro-processing, solid minerals and services sectors.

    The world today has gone past the era of the lone-star performer onto the era of coalition building and strategic partnerships. Today, both open and crowd sourcing are becoming major drivers of global commerce; meaning that business networks are increasingly becoming more cross border and more virtual in nature.

    It is against this background that stakeholders have described the strong collaboration and interfaces among the NEXIM Bank and such institutions as the Nigerian Export Promotion Council (NEPC), the National Directorate of Employment and Crown Agents Nigerian Ltd as the way forward.

    The MD of NEXIM Bank’s, Mr. Roberts Orya and the Executive Director of NEPC – Mr. Olusegun Awolowo, have over the period established a strong working strategic partnership – sharing ideas, valuable contacts etc. These have resulted in beneficial synergies that have linked Nigerian exporters in the non-oil sector with buyers of same abroad further creating jobs and boosting forex revenue for the country.

    This initiative indeed, is a major step in the effort towards the diversification of the economy from the dependency on crude oil for exchange earnings.  It is also a clear evidence that the crucial nature of their respective mandates is not lost on them.

    NEXIM Bank’s recent Corporate Transformation initiative has indeed improved its operations and positioned it as a world class institution that can hold its own among its peers in other fast growing economies, especially among the MINT Nations of Mexico, Indonesia, Nigeria and Turkey.

    The plan of the NEPC to increase the level of non-oil exports by at least 30 per cent in the next four years cannot be fully realized without a dynamic credit institution that will supply the needed financing as well as moderate the shocks that are usually attendant upon the vicissitudes of the export market. This partnership is sure to shore up market confidence and improve the level of trade flows and revenue earnings.

    It is remarkable that in 2013 the annual earnings from informal trade was $12 billion (N1.9 trillion), a figure which is higher than the contribution from the formal trade sub-sector, which was valued at $3 billion (N477 billion) within the same period. NEXIM Bank and NEPC are concerned that most of the transactions that yielded this revenue did not go through the banking channel nor were adequately captured for statistical and ‘market indicator’ purposes. There is therefore, cause for optimism that the continued collaboration by both institutions would help leverage their huge potentials.

     Experts agree that both agencies are now better positioned also to boost Nigeria’s chances of exploring other avenues of trade promotion especially the   African Growth and Opportunities Acts – AGOA, designed to provide a leeway for selected African products to access the US market without the encumbrance of trade tariffs.

    From the time of his appointment as the MD NEXIM Bank in 2009, it is remarkable that Roberts Orya has since led a strategic transformation of the otherwise moribund institution and returned to a path of sustained profitability by refocusing its objectives to key sectors- Manufacturing, Agro-processing, Solid minerals, and Services, known as MASS Agenda.

    Industry watchers are particularly optimistic that the NEXIM Bank-facilitated Sea-Link Project, designed to build regional maritime networks to connect West and Central African ports with a fleet of 3,000 to 5,000-tonne ships, is one of those longed for initiatives that will boost trade within the West and Central African sub-regions. Particularly, it is also anticipated that it will boost Nigeria’strade and revenue benefits beyond the shores of ECOWAS where our products and services already hold sway.

    Another equally strategic move is the Bank’s partnership with the National Directorate of Employment (NDE). This is designed to build capacity, beyond its Corporate Transformation Initiative. Under the arrangement, both agencies are cooperating to train and empower a new crop of entrepreneurs who will become acquainted with SMEs and export of goods and services early in life, as a means of enterprise promotion in non-oil export business.

    After the training, successful participants are given loans upon fulfilling some basic criteria such as registrations with the Corporate Affairs Commission (CAC) and the NEPC as well as the provision of minimal guarantees, among others.

    Without a clear and deliberate effort of this nature, the gains the country is making in transformation of the economy would ultimately prove unsustainable. It is all too well known that Nigeria’s educational curriculum is not where it should be in regard to training employable graduates. Young folks leave schools only to discover that skills and experiences they have acquired do not effectively equip them for engagement or work in most of the sectors and industries. Opportunities such as this, being provided by the NEXIM Bank and the NDE will re-skill the beneficiaries; bridge the skill gaps and provide opportunities for fresh graduates to build capacities in the given areas.

    Another significant evidence of its passion for progress and growth is NEXIM Bank’s partnership agreement with Crown Agents, an international development agency that specializes in strengthening operations of various corporate organizations to position them appropriately to deliver on their mandate.

    Through this arrangement NEXIM has strengthened its internal capacity and is re-engineering its service delivery architecture for greater effectiveness. Crown Agents is particularly renowned inproviding consultancy and training intrade and growth, public private partnerships, public financial management, governance etc. Partnerships of this nature would greatly assist to reinforce NEXIM’s human and technical capacities towards greater efficiency and productivity.

    The Managing Director/CEO of NEXIM, Mr. Roberts Orya, when he met with the Chief Executive of Crown Agents, Terence Jagger, at the inception of the partnershipin 2013 praised “the expertise and commitment of the agency to help improve good governance and capacity of several public finance institutions, commercial and investment banks, as well as supply chains.”

    Mr. Orya observed, and rightly so, that without a sound and technically competent workforce, there is no way NEXIM Bank would be able to remain on track towards becoming the lead export development bank in Africa. Mr. Jagger and his team re-emphasized the commitment of Crown Agents to helping governments to reduce poverty, improve health and increase prosperity for sustainable development.

    Indeed, as government’s sole trade policy bank and export credit agency, NEXIM Bank is at a vantage position to generate the critical mass and synergy with relevant institutions to harness the huge opportunities available for economic prosperity in Nigeria’s non-oil trade space.

    Such agencies include: the Nigerian Export Promotion Council (NEPC; Nigerian Shippers Council (NPC), Small and Medium Enterprises Development Agency of Nigeria (SMEDAN); Chambers of Commerce, Industry, Mines and Agriculture and Manufacturers Association of Nigeria (MAN) among others.

    The relentless drive and strategic leadership focus to transform NEXIM Bank into a world class export credit agency has shown that Mr. Orya is on course to take the financial institution even to greater heights. What is now left is for NEXIM to be strengthened and given the necessary fillip to aggressively begin to offer buyer’s credit facility as an essential product to its customers. This is in line with international best practice and would provide an avenue to Nigerian exporters to overcome issues of cash flow consequences or the risks of extending long-term credit by helping an overseas buyer to secure a long-term financing with a lender.Normally, with this arrangement,aNigerian exporter would be paid as if he has a cash contract, whilst the overseas buyer has time to pay on the contract through the financing secured from the lender, which would be backed by NEXIM Bank’s guarantee. For Nigeria to fully exercise its position as the largest economy in Africa, this is the next necessary step that must be taken. This will also afford NEXIM Bank the opportunity to consolidate on the gains of its strategic transformation.

    – Nwaede is a Public Affairs Analyst based in Lagos

  • Transforming the economy: NEXIM bank example

    Transforming the economy: NEXIM bank example

    The President Goodluck Jonathan Transformation Agenda which has become a household name is intended to permeate a wide spectrum of the nation’s everyday life, ranging from housing, industry, energy, entertainment to the whole gamut of every facet of our social life. The present government is credited for the turnaround being experienced in many of the country’s productive sectors.

    “Perhaps, the Government of President Goodluck Jonathan has done more than previous Administrations to ensure that various Development Finance Institutions (DFIs) are empowered to effectively contribute to the national transformation agenda. The injection of billions of naira into the Bank of Industry, Nigerian Export-Import Bank, Bank of Agriculture and the Federal Mortgage Bank and others are pointers to this,” a policy analyst, Yusuf, said.

    Laudable as the Transformation Agenda may seem, it would have remained comatose and a mere wish-list without the requisite funding needed to translate it to reality. What is of note is that all of the benefits that the transformation programme advocates,, require huge financial outlay. Besides, the programme requires long-term sustainable funding which the commercial banks are not enabled to provide, given the short-term nature of their credit portfolio. The good news is- NEXIM Bank has risen to bridge the gaps.

    In no other sector is the role of NEXIM in driving the Transformation Agenda of the President Goodluck Ebele Jonathan administration’s agenda more pronounced than in encouraging the manufacturing, mining and the agric sectors in producing non-oil goods for export. This way, the volume of external trade is being gradually shifted away from crude oil (upon which the nation largely depends), to non-oil items that are abundant and widespread in the country, but which have largely suffered neglect due to a multiplicity of factors, chief of which is funding.

    The Managing Director/CEO, Nigerian Export-Import Bank, Robert Orya, is upbeat about the success so far recorded in the Jonathan Transformation Agenda of which NEXIM Bank has played a pivotal role.

    “It is evident that the important story of Nigeria’s advancement from where we are would not be told by earnings from our hydrocarbon reserves. Our success would be driven by a robust manufacturing industry; self-sufficiency in agriculture for food and processing so that excess yields could tap export markets; world-class service sector to serve domestic industries, global outsourcing and export markets, and commercial access to wider range of mineral deposits that dot every nook and cranny of our country,” Orya declared.

    It’s not for lack of ideas that the export of non-oil goods has remained at infancy, the problem, amongst others, has to do largely with the will and commitment to focus and redirect resources to the non-oil sectors and take cognitive action to actualize what is largely recognized as a cash cow.

    Although NEXIM was established to play this role, President Jonathan’s commitment to focus on these sectors in his bid to improve on the nation’s revenue profile, outside crude oil sales and determination to create employment for the nation’s educated and skilled vibrant youths, played a key role.

    “What the Administration of President Goodluck Jonathan has done, perhaps more than any previous regime, is combine commitment with practical actions in diversifying the Nigerian economy away from its sole reliance on crude oil for external revenue,” Orya said.

    The inhibitions standing in the way of operators in the identified sectors from accessing finance have to be addressed. NEXIM Bank, having identified the drawbacks, intervened to set the ball rolling in a manner that facilitated the delivery of the intended benefits of the programme. As the NEXIM Bank boss put it: “Development Finance Institutions are bearers of risks which commercial lenders would term excessive, and therefore avoid.”

    New industries, new initiatives, people without financial collaterals, projects which cannot pay commercial cost of finance, among others, have been beneficiaries of funding by Development Finance Institutions, such as NEXIM, Orya said, adding that “this way, business formation can continue, people can strive to innovate, bias against social and reputational collaterals are reduced, and projects can be incubated and nurtured to when they can attract lending from commercial banks.”

    He said that NEXIM Bank has risen to the challenge by assuming this critical role in Nigeria where banking penetration is less than 15 per cent of the population and where commercial lending rates are prohibitive, land titles are not even available to owner occupiers, but where innovators are born daily, and where we have to eradicate poverty.

    He said as a DFI, NEXIM Bank has to assume its natural function in driving the Transformation Agenda of the government, by supporting the export-prone sectors, increase foreign exchange earnings and create employment, so as to free government to focus on the provision and delivery of necessary infrastructural projects to aid implementation of programmes under the plan of structural transformation of the Nigerian economy that cannot be delivered by commercial lending.

    Loan Profile

    Orya, pointed out that NEXIM Bank is the official and sole Trade Policy Bank of the Federal Government, saying  in this regard, the bank provides financing, risk-bearing facilities, market information and value-added advisory services to businesses towards deepening export-oriented investments in the country’s non-oil sectors of manufacturing, agro-processing, solid minerals and services, for job creation and economic growth.

    He said the export-import bank has provided N12 billion in lending to Nigerian export manufacturers over the four-year period from August 2009 to April 2013, adding that it has funded agro-processing export businesses, to the tune of N6.6 billion over the same period.

    Against the Structural Adjustment Programme imposed by International Monetary Fund (IMF) in the ’80s which emphasizes the need to restructure the fabric of the Nigerian economy, what the GEJ Transformation Agenda has done, perhaps more than any previous regime, is to combine commitment with practical actions in diversifying the economy away from sole reliance on crude oil for external revenue. ” From the institutional viewpoint of Nexim Bank, I am excited at the prospects of playing a role in diversifying the Nigerian economy and harnessing the immense potentials of the sectors which had, hitherto, been neglected. Indeed, the role Nexim Bank is playing is unique as a development finance institution (DFI), “Orya stated.

    Accordingly, in the solid mineral sector, NEXIM Bank is working in partnership with industry stakeholders to take formal mining off the ground again, Orya said, adding that Nexim Bank has so far provided over N2 billion in early funding to help some commercial miners to develop their site in order to start operation and invite further funding from other sources apart from the long-term commitment of Nexim Bank to the nascent industry.

    In pursuit of its drive to impact on other segments of the economy as part of the Transformation Agenda, the bank has taken on the management of the Nigerian Creative and Entertainment Industry Stimulation Loan Scheme (NCEILS). The fund which is lent at below commercial rate is meant to fund businesses across the entertainment value-chain, including filming production, cinema operation, music recording, intellectual property development and recording studios, as a revolving fund with repayment terms.

    He said to date, Nexim Bank has disbursed over N1.4 billion for the Fund, adding that Entertainment industry project proposals under review exceed N5 billion in value. Overall, disbursements to the creative and entertainment industry, including the services sector is about N8.5 billion, covering support to transportation and hospitality industries.

     

    – Adegoroye is an Abuja- based policy analyst

  • NEXIM Bank: Transforming economy through non-oil exports’ funding

    NEXIM Bank: Transforming economy through non-oil exports’ funding

    Over the last four years, the Nigerian Export Import Bank, has taken a strategy role in helping to drive the Transformation Agenda of the government through funding of non-oil products for export, reports, SIMEON EBULU, Group Business Editor

    The future of the nation’s economy that has long been sustained by crude oil export, is gradually shifting away from the hydrocarbons to manufacturing, agriculture and the services’ sectors.

    Driving this shift, NEXIM Bank, has in the main, identified  manufacturing, mining and the agric, as sectors that can churn-out non-oil goods for export. This way, the volume of external trade is being gradually shifted away from crude oil (upon which the nation largely depends), to non-oil items that are abundant and widespread in the country, but which have largely suffered neglect due to a multiplicity of factors, chief of which is funding.

    The bank’s initiative is in tandem   with President  Goodluck Ebele Jonathan administration’s Transformation Agenda  that is intended to permeate a wide spectrum of the nation’s everyday life, ranging from housing, industry, energy, entertainment and the whole gamut of our social life.

    As laudable as the Transformation Agenda may seem, it would have remained comatose and a mere wish-list without the requisite funding needed to translate it to reality. What is of note here is that, all of the goodies that the TA is advocating, require huge financial layout. Besides, the programme will require long-term sustainable funding which the commercial banks are not enabled to provide, given the short-term nature of their credit portfolio, but NEXIM  Bank has risen to bridge the gap.

    The bank’s Managing Director/Chief Executive Officer (CEO), Robert Orya, is upbeat about the successes so far recorded in the Transformation Agenda of which NEXIM Bank has played a pivotal role.

    He said: “It is evident that the important story of Nigeria’s advancement from where we are would not be told by earnings from our hydrocarbon reserves alone. Our success would be driven by a robust manufacturing industry, self-sufficiency in agriculture for food and processing so that excess yields could tap export markets, world-class service sector to serve domestic industries, global outsourcing and export markets, and commercial access to wider range of mineral deposits that dot every nook and cranny of our country.”

    It’s not for lack of ideas that the export of non-oil goods has remained at infancy, the problem, amongst others, has to do largely with the will and commitment to focus and redirect resources to the non-oil sectors and take cognitive action to actualise what is largely recognised as a cash cow.

    Although NEXIM was established to play this role, the President’s  avowed disposition to focus on these sectors in his bid to improve on the nation’s revenue profile outside crude oil sales and create employment, played a key role.

    “What the Administration of President Goodluck Jonathan has done, perhaps more than any previous regime, is combine commitment with practical actions in diversifying the Nigerian economy away from sole reliance on crude oil for external revenue,” Orya said.

    The inhibitions standing in the way of operators in the identified sectors from accessing finance has to be addressed. NEXIM Bank, having identified the drawbacks, intervened to set the ball rolling in a manner that ensured the delivery of the intended benefits. As the NEXIM Bank boss put it,“Development Finance Institutions are bearers of risks which commercial lenders would term  excessive, and therefore avoid.

    “ New industries, new initiatives, people without financial collaterals and projects which cannot pay commercial cost of finance,  have been beneficiaries of funding by the Development Finance Institutions (DFIs).

    This way, business formations can continue, people can continue to innovate, bias against social and reputational collaterals are reduced, and projects can be incubated and nurtured to when they can attract lending from commercial banks,” Orya said.

     

    Support for Creative Arts and Entertainment Industry

    In furtherance of the government’s policy initiatives for strengthening the Creative Arts and Entertainment industry, the bank supported the industry through funding intervention with lending commitments of about N1 billion in the industry’s various value chains in the last three years. The Bank’s funding intervention in the sector is intended to address issues regarding the establishment of credible structures, attract investment in the development of content and infrastructure as well as facilitate improvement in production standards, distribution, marketing and exhibition standards.

    He explained that NEXIM Bank has assumed this critical role  in Nigeria where banking penetration is less than 15 per cent of the population, commercial lending rates are prohibitive, land titles are not even available to owner occupiers, but where innovators are born daily, and where we have to eradicate poverty.

    He said as a DFI, NEXIM Bank has to assume its natural function in driving the Transformation Agenda of the government, by supporting the export-prone sectors, increase foreign exchange earnings and create employment, so as to free government to focus on the provision and delivery of necessary infrastructural projects to aid implementation of programmes under the plan of structural transformation of the Nigerian economy that cannot be delivered by commercial lending.

     

    Loan Profile

    Orya explained that NEXIM Bank is the official and sole Trade Policy Bank of the Federal Government. In this regard, it provides financing, risk-bearing facilities, market information and value-added advisory services to businesses towards deepening export-oriented investments in the country’s non-oil sectors of manufacturing, agro-processing, solid minerals and services, for job creation and economic growth.

    He said the bank has provided N12 billion in lending to export manufacturers over the four-year period from August 2009 to April 2013, adding that it has funded agro-processing export businesses to the tune of N6.6 billion over the same period.

    He said what the Jonathan Transformation Agenda has done, perhaps more than any previous regime, is to combine commitment with practical actions in diversifying the economy away from sole reliance on crude oil for external revenue.

    “From the institutional viewpoint of Nexim Bank, I am excited at the prospects of playing a role in diversifying the Nigerian economy and harnessing the immense potentials of the sectors which had, hitherto, been neglected. Indeed, the role Nexim Bank is playing is unique as a development finance institution (DFI), “ Orya stated.

     

    Exporter Enlightenment Programmes

    The bank has sustained the Exporter’s Enlightenment sessions in various geographical zones to encourage investment and entrepreneurship in exports, especially value-added exports.  In response to the feedback from the Exporter Enlightenment Programmes and to increase the reach and spread of the Bank, arrangement have been concluded to establish eight Agency Offices in Yenogoa, Benin, Aba, Akure, Makurdi, Ghashua, Gusau and Yola to complement the Head Office in Abuja and the three Area Offices in Lagos, Kano and Calabar.

    Also in the solid mineral sector, NEXIM Bank is working in partnership with industry stakeholders to take formal mining off the ground again, Orya said, adding that NEXIM Bank has so far provided over N2 billion in early funding to help some commercial miners to develop their site, so as to start operation and invite further funding from other sources apart from the long-term commitment of NEXIM Bank to the nascent industry.

    In pursuit of its drive to impact on other segments of the economy as part of the Transformation Agenda, the bank has taken on the management of the Nigerian Creative and Entertainment Industry Stimulation Loan Scheme (NCEILS).

    The fund which is lent at below commercial rate, is meant to fund businesses across the entertainment value-chain, including filming production, cinema operation, music recording, intellectual property development and recording studios, as a revolving fund with repayment terms.

    He said to date, NEXIM Bank has disbursed over N1.4 billion for the Fund, adding that Entertainment industry project proposals under review exceed N5 billion. Overall, disbursements to the creative and entertainment industry, including the services sector is  about N8.5 billion, covering support to transportation and hospitality industries.

     

    Outcome

    Increased funding intervention of over N43billion to the four target non-oil sectors –  Manufacturing, Agro – Processing, Solid Minerals & Services,which have high employment and foreign exchange generation potential leading to the creation of over 26,000 direct employment within the last five years, and foreign exchange earnings of about $353.07million yearly, over the same period

  • NEXIM Bank: Charting way to economic diversification

    NEXIM Bank: Charting way to economic diversification

    The mantra that Nigeria is mono-product economy follows the nation’s perceived over-dependence on the oil sector. This notion undermines the genuine and committed programmes of various administrations in the country over the years to diversify the nation’s economy to other non-oil sectors which are currently yielding positive results.

    Malaysia, for instance, is often used as an anecdote to undermine some giant strides in Nigeria’s economic progression especially in the agro sector the trite story is that Malaysia got its initial palm oil seedlings from Nigeria and is now the world’s second top producer of the commodity.

    Such tales should now be retold following giant strides recorded by some agencies of government that have shown palpable mettle in steering the non-oil sectors of the nation’s economy to greater heights. That Nigeria is blessed with abundant natural resources is no longer news. The albatross has been the lack of the political will, appropriate policy regimes and institutional frameworks in harnessing the nation’s natural endowments.

    It is against this background that the Nigerian Export-Import Bank (NEXIM) needs to be commended for its efforts to ensure that Nigeria raises its profile in the international export market by leveraging its potential in the non-oil sector. Pursuing the MASS Agenda – export-oriented investments in the Manufacturing, Agro-processing, Solid Minerals and Services sectors of the economy, NEXIM has contributed immensely in steering progress in rejigging the nation’s non-oil sector, which is in tandem with DrGoodluck Jonathan’s Transformation Agenda.

    The Bank is a major source of encouragement to non-oil sector exporters of Nigeria’s goods and services as it works assiduously to ensure that Nigeria’s entrepreneurs in the MASS sectors receive the requisite support to venture into the competitive international markets. This becomes better appreciated when viewed against the background of the competition among developing countries to exploit the opportunities that abound in the international markets, especially under the African Growth and Opportunities Act (AGOA) by which the US has given incentives of access to its market for a range of primary products from the Africa.

    NEXIM Bank adopted various mechanisms to get the ball rolling in this direction. It offers an array of products such as its Direct Lending Facility (DLF), Export Credit Insurance (ECI), Stocking Facility (SF) and Export Credit Guarantee Facility (ECGF).

    ECGF is designed to protect banks in Nigeria and foreign suppliers of credit and goods against the risk of non-payment of loan advances granted to exporters to meet short-term export contracts as well as to encourage banks and other financial institutions to finance export business without fear of default from exporters. The type of guarantees available under the facility ranges from the pre-shipment guarantee which encompasses credits and advances granted by banks for the purposes of manufacturing, purchasing, processing and packaging of goods to be exported under a confirmed export order. Others are the post-shipment guarantee covering export bills or receivables, and the advance payment guarantee specifically designed to protect foreign buyers against payment risks in respect of payments advanced to exporters in Nigeria to finance exports.

    On the strength of the foregoing, the commitment of the Bank to giving the necessary protection to Nigerian exporters to alleviate their fears of swimming with the sharks in the seas of export business is evident. Many Nigerian businesses attest to these initiatives for their robust improvements in the recent time.

    Mr Roberts Orya, the managing director of NEXIM Bank, has become the exponent of the push to give the non-oil sectors a pride of place in the efforts to diversify the economy. Prior to the reconstitution of the board of directors of the bank on 14th August, 2009, the bank was at its lowest ebb. It experienced a decline in risk assets. The bank’s total loan portfolio as at 20th August, 2009 was N14.6b out of which 72% was non-performing. Within that category N10.03b or 69.05 was classified lost in line with Central Bank of Nigeria’s prudential guidelines. This led to the Bank’s income decline with the called-up capital standing at N32.74b; depletion of its shareholders’ funds; significant decrease in income and tolerance of excess and escalating overheads; worsening assets quality and poor record keeping, lack of strategic focus; ineffective risk management framework; non-adherence to corporate governance tenets; and over-bloated staff strength.

    The board under Mr Roberts Orya initiated plans to turn the table around. It undertook a corporate transformation exercise on strategy, risk management and corporate governance, financial performance, operations, organization and people, with assistance from KPMG Professional Services in 2010.

    MrOrya’s leadership acumen, manifested in NEXIM Bank signing memoranda of understanding with various institutions and agencies globally aimed at boosting export trade in the country, is a testimony that there is a silver lining at the end of the tunnel. A few years ago the bank concluded arrangements to spend 3.7 billion naira to finance local industries to export their products, while placing NEXIM Bank in the forefront of the efforts to empower small and medium enterprises as well as build the capacity of budding exporters to leverage foreign markets.

    Under him, the Bank is realizing its ambition of creating approximately 55,000 new jobs through empowering its SME clients and plans to realize over US $1.6 billion as foreign exchange into the economy. The Bank has also made a projection of an overall contribution of almost seven per cent from non-oil exports, including a 10 per cent share in the exports to the Economic Community of West African States (ECOWAS). To achieve these laudable goals, the Bank has enjoyed a good collaborative agreement with the African Development Bank (AfDB) in some project facilities.

    The Bank currently complements commercial banks and other development financial institutions by focusing on unserved markets globally. It also adopted an optimal operating model with a robust structure and structured market-facing departments along the key target sectors of manufacturing, agro-processing, solid minerals and services.

    NEXIM also adopted a performance-driven organizational culture which has led to strong shareholders’ support through fresh capital injection, as well as institutional support through supervisory and regulatory oversight and guidance from the Central Bank of Nigeria and Federal Ministry of Finance. This increased the Bank’s capacity to support the growth of the non-oil exports and complement the export credit support of commercial banks.

    To enhance access to credit by the SMEs, NEXIM obtained an approval for a loan of US$200m from African Development Bank, backed by the sovereign guarantee of the Federal Government. The Bank also has strong transactional relationships with the United States Export-Import Bank (US EXIM), the Guarantee Fund for Private Investments in West Africa (GARI Fund) and is a Shareholder in the Africa Biofuels and Renewable Energy Company (ABREC), while it has signed a memorandum of understanding with the Industrial Development Corporation of South Africa. NEXIM Bank also has credit insurance agency collaboration with the Islamic Corporation for Insurance of Investment and Export Credits, a division of the Islamic Development Bank.

    The Bank also realizes the potentialities of Nigeria’s entertainment industry and made lending commitments of about N1b in the industry’s various value chains of late. The intervention is to take care of the establishment of credible structures, attract investment in the development of content and facilitate improvement in production standards, distribution, marketing and exhibition standards.

    The Bank commissioned EXIM India to undertake a study to review the industry and recommend best financing programmes in line with global best practices. It also sponsored capacity building programmes and film festivals such as Zuma Film Festival, BOBTV African Film and TV Programmes Expo, Eko International Film Festival, Nigeria Music Video Awards, Nigerian Copyright Commission’s Stakeholders’ Forum on Review of the Copyright Law

    NEXIM also collaborated

  • The case for re-authorisation of US Ex-Im Bank

    The charter which authorized the existence of Export – Import Bank of the United States (U.S. Ex-Im) was due for renewal at the end of this past September. Its re-authorisation required congressional approval. But the renewal of the charter seemed to have fallen due at the wrong time. Bipartisan consensus on virtually anything has been difficult to come by for some time now, for reasons that could very easily be linked to the mid-term election in November, 2014. This had made the U.S. Ex-Im to teeter on the brink of dissolution until its charter was extended for nine months pending long-term re-authorization.

    I had expected the renewal of the charter of the Bank to be a seamless exercise. But it wasn’t. Instead, the debate became rancorous and polarized along party lines in the most awkward way. For instance, President Barack Obama lent voice support to the renewal of the charter. He said every country has an institutional framework like the Ex-Im Bank to support its exports. He also noted that, if the U.S. Ex-Im became defunct, U.S. companies would struggle to compete abroad. This position is a marked departure from when in 2008, as a Democrat senator, Mr. Obama criticized the Ex-Im Bank as a government programme that doesn’t work and “little more than a fund for corporate welfare.” In another twist of irony, the Republican-dominated House of Representatives has stood in the way of the renewal of the U.S. Ex-Im charter. Whereas it is the Tea Party, mainly conservative Republicans, that traditionally supports business — the very businesses that U.S. Ex-Im is set up to provide funding support to. This tends to demonstrate the fluidity of policy positions that are established by partisan considerations.

    Nevertheless, the debate has actually helped to shed more light on the activities of the Bank. Otherwise uninformed U.S. business owners, who want to sell in overseas markets, now know about the specialized bank, which some commentators had described to be ‘little-known outside Washington DC.’ A similar case of institutional obscurity was made, with validity, against Nigerian Export-Import Bank (NEXIM Bank) before I came into office and until we rolled out what remains a robust communication strategy. Inadequate corporate communication might have led to the accusation that the U.S. Ex-Im was little transparent and accountable. This provides an important learning experience that highly specialized institutions of the state nevertheless need to share information about their activities with the general public.

    The U.S. Ex-Im Bank is a Development Finance Institution (DFI) which was chartered to act as the Export Credit Agency (ECA) of the United States. The objective of the Bank is to help U.S. businesses access foreign markets. There are a few tools that have been developed to achieve this objective. They include provision of guarantee, export insurance and buyer credit. Together, they help make U.S. products to be competitive abroad, since exports of other countries are similarly incentivized, if not subsidized, by their governments. It is this same objective that informs the creation of the ECOWAS Trade Support Facility by NEXIM Bank to assist Nigerian exporters gain more access to the West African market where we compete with exports from China and the European Union.

    ECAs help to mitigate the risk of entry into a foreign market. They also help to provide funding to build capacity for export. Thereby, local businesses are able to achieve higher profit and employ more local people. The virtuous cycle that is created by an ECA also entails helping the country to move towards a positive current account position, by reducing trade deficit. By helping to create export markets, an ECA invariably helps in boosting domestic economic growth.

    The US Ex-Im has a rich history of performance. The Bank is more than 80 years old. It has since its founding, till now, funded $567 billion of U.S. exports. The Bank has raised its intervention in the past few years, partly because Africa has come under the radar of some U.S. companies. Its intervention in U.S. export amounted to $37 billion in 2013 alone. The aggregate funding has supported over 1.2 million U.S. jobs over the years. More than 80% of its funding has benefitted small and medium scale enterprises (SMEs).  The US Ex-Im also funds big U.S. businesses including General Electric, Caterpillar and Boeing. Funding by the Bank has helped U.S. businesses to innovate and compete in new technology, including renewable energy. What’s more, the bank has been profitable, placing no burden on tax payers in covering its cost of operation.

    Considering its good purpose, positive performance, and setting aside politics, one may ask: “why should U.S. lawmakers be reluctant to keep the Ex-Im Bank going?” Some of the answers reveal very little understanding of the unique role an export credit agency plays. Some people have argued that the U.S. Ex-Im is in competition with the commercial banks. Not really. ECAs usually fund businesses or operations which are considered to be too risky by commercial banks. The businesses might be at an early-stage of growth and exploration of export markets. Without much institutional track-record and operational experience in a foreign market, most businesses cannot expand through conventional bank financing. They would be dogged by high risk evaluation that will either deny them funding or the price of credit would be too high for their affordability. In Nigeria, an additional obstacle which conventional finance would pose to the businesses is the predilection of commercial banks for short-term lending. But, a specially mandated DFI like the U.S. Ex-Im or NEXIM Bank would take on these risks and back the businesses on the strength of its balance sheet and sovereign mandate (not necessarily involving issuance of a sovereign guarantee).

    Funding by ECAs can prepare a business and help it through the difficult early stages until it is capable of attracting or affording commercial loans. This process can work the other way round at the later stages of the corporate development of a business. A growing business, which had accessed commercial lending from the banks, may nevertheless need a specialized bank to help it access a foreign market. Therefore, the role of an export credit agency is very supportive of both commercial banks as well as local businesses.

    Some detractors have talked about excessive risk-taking by ECAs. This claim is based on generalized risk evaluation.  Such assessments do not always take into account that ECAs have special risk management tools that are suited to the kind of risk they bear. For instance, NEXIM Bank makes the point of understanding specific risks of its clients. We follow our clients to the market to understand the peculiar variables that constitute risks to them. We then develop specific products to help address the risks. Regarding the U.S. Ex-Im, its track record is strong enough to denounce any accusation of excessive risk-taking. Since its founding, the Bank has witnessed episodes of serious financial crises in the domestic, emerging and global markets. Yet, the U.S. Ex-Im has been unscathed in any of them. Its recent non-performing loan is 0.2% of total portfolio.

    The accusation of cronyism also derives from a misunderstanding of the role of an ECA. For instance, NEXIM Bank is designated as the Official Trade Policy Bank of the Federal Republic of Nigeria. This means the operations of the bank must necessarily be in alignment with the trade objectives of the government. In this regard, NEXIM Bank has been pushing the programme of economic diversification in the non-oil sectors as enunciated under the Transformation Agenda of President Goodluck Jonathan. The programme entails the broadening of the export base in order to generate more foreign exchange for the country and create more local jobs. Local industries which are capable of scaling up to help deliver on this policy objectives are naturally supported by NEXIM Bank.

    The allusion to giving loans to some beneficiary big U.S. companies to establish cronyism accusation is not well-founded.  Between 2007 and 2014, loans to SMEs accounted for 68% of the total portfolio of the U.S. Ex-Im. While a few organisations have dominated the list of beneficiary big firms, it is not without justification. Companies like Boeing and Caterpillar are manufacturers of expensive heavy duty equipment and machines. The equipment and machines are very much needed in the delivery of public works and infrastructure projects in Africa and in other developing regions that are witnessing an economic renaissance. Accordingly, these firms are bound to generate big-ticket transactions which will require some of the financing tools at the disposal of the Ex-Im Bank to consummate. The same argument more or less holds for the involvement of General Electric which, in recent times, has shown interest in the investment opportunities of sub Saharan Africa’s infrastructure and electric power. The proactive investment of GE in the SSA power sector ensures it is a reliable vehicle and partner for the delivery of President Obama’s Power Africa Initiative.

    To be fair, the U.S. Ex-Im Bank has discharged its mandate creditably. The institution has inspired establishment of similar export credit agencies around the world. The Bank seems to have entered a new phase whereby it would play a more active role in boosting trade between the U.S. and Africa in general, and U.S. and Nigeria in particular. NEXIM Bank is in a collaborative relationship with U.S. Ex-Im and several other ECAs with the aim of sharing knowledge and capacities. This will require strengthening the U.S. institution after its charter has been renewed for long-term.

  • Nigeria to lift trade frontier in U.S.-Africa relations

    Nigeria to lift trade frontier in U.S.-Africa relations

    President Barack Obama deserves commendation for instituting a new engagement with Africa. Bringing trade relations to the fore, even if the traditional concerns for security and good governance remain on his agenda, is especially laudable.

    For some, the recently concluded U.S.-Africa Leaders Summit, represents a fitting recovery from what had appeared as general apathy towards Africa. When finally he decided to broadly engage with African leaders, President Obama looked beyond the traditional model that has been criticised as paternalistic.

    In the past, the focus was on dolling out U.S. aid to Africa, in a relationship in which the hand of the giver was always on top. Even more commendable is that, as the U.S. contemplates deepening commercial relationship with Africa, it looked beyond the traditional sector of trading oil and few other extractive commodities.

    Nevertheless, Africa commands this new attention. In the last ten years, Africa has significantly shed the image of war and deprivation. Economic growth has been steady, averaging estimated five per cent yearly, according to the International Monetary Fund (IMF) and the World Bank. Constitutional democracy has taken root in most African countries. Evidence of improved governance is seen across Africa, and economic reform initiatives — like the ones enunciated in the Transformation Agenda of President Goodluck Jonathan of Nigeria — have improved market performance, unlocked private sector resources and, consequently, helped to expand the middle class.

    Africa remains resource-rich. But the new attraction for the continent, especially from China, recognises so much that Africa has to offer and what it needs for further progress. Africa has become more aspirational than it had ever been or even taken to be, aware it has the capacity to give even as it takes from development partners. As a result, a win-win approach is being realised in engaging the African continent.

    China has gained the head start advantage over the United States and Europe in commercial relations with Africa this new term. Indeed, as the West loses the momentum for trade with Africa, even so has China pushed its appetite for African economic engagement.  It is an open secret; China’s trade with Africa has been on the increase. It rose from $166 billion in 2011 to $210 billion in 2013. In the same period, U.S. trade with Africa dwindled from $125 billion to $85 billion. Africa has opened the door to China’s knock on the door of African opportunities. While this is happening, for debatable reasons, the U.S. beats a retreat. The policy justification for U.S. exit cannot be because of the traditional concerns of insecurity and bad governance. These issues have improved significantly over the past decade. Perhaps, the changing structure of U.S. trade interest, because of increased energy security at home, provides an explanation. Nevertheless, the $33 billion investment commitment by the Obama administration and U.S. investors in power and other industries during the recent meetings in Washington DC is a commendable reawakening.

    There is no doubt that Africa’s trade with the West, particularly the United States, has important and unique values. Well-recognised is sharing of best practices. Even if African leaders had been reticent towards policy prescriptions, the evidence now is that the continent shares the values of representative government, open and transparent policy and economic freedom for the private sector to drive growth and prosperity. Moreover, the riches of Africa’s diversity accommodate multiple, external players, on the basis that Africans themselves are also investing in the continent and are establishing functional commercial partnerships. Yes, we have abundant natural resources. But even more importantly, we have the population to support production of consumer products. Africa’s demography — about one billion people which comprises a higher youth population — tells that long-term viability of investments cannot be in doubt. In Nigeria, the services sector is now the biggest contributor to our Gross Domestic Product. The opportunities seem boundless.

    Because U.S. businesses have largely overlooked African opportunities, and the U.S. press have yet to shed the old stereotypes in reporting the continent (although the European press have made better progress with objective and balanced reporting of Africa), it will be useful to highlight some of the attributes of the African growth story and the investment opportunities. Nigeria is a fitting example, because of scale, homogeneity of policy around private sector development and commonality of Africa’s aspirations. The Federal Government protects private investment. One of the ways this is affirmable is respect for contract. Competitive bidding has been the hallmark of licensing and sales of public assets in the country after the last of the military interregna 15 years ago. This ensures deals are transparent and valid. The reform of the legal and regulatory frameworks has been pursued with vigour since 1999, helping to define engagement, making contracts binding and making rules clearer and less whimsical.

    As we affirm at the Nigerian Export-Import Bank, the Nigerian opportunities are not concentrated in oil and gas. At NEXIM Bank, we have identified manufacturing, agro-processing, solid minerals and services as areas of big opportunities; not just for commercial profit, but also for socially impactful businesses through local employment and empowerment. In these sectors, Nigeria seeks to create opportunities for a vibrant youth population with realistic wage structures. Broader investment in these high growth and job-rich sectors will enhance wealth creation, broader base prosperity and increase demands, in a virtuous cycle.

    General Electric is one of the U.S. major businesses that have recognised the business potentials in the infrastructure gap in Nigeria and the bright policies of the Jonathan Administration to harness the potentials. GE is investing in the Nigerian power sector where we intend to increase output five folds over the next decade. The ripples of substantial progress in meeting Nigerian power sector demands will prove that the country is very well able to grow in double digits for a long time, given current seven per cent GDP growth at a time industrial activities and enterprises are stifled by power shortage from the national grid. But in pursuing progress, public investments in infrastructure have been substantial even as private sector investment in power generation and distribution has towered, in contradistinction to when it was zero up till a few years ago. However, more private sector investment is necessary in infrastructure and power to accelerate progress.

    Partnerships are working in Nigeria. Public-private partnerships have delivered projects and unlocked potentials. Similarly, private sector partnerships are thriving. GE has been operating in Nigeria through business partnerships with local investors, who themselves are successful, savvy and understand the local environment. In Washington DC last month, GE and Heirs Holding led by Nigerian Mr. Tony Elumelu, further demonstrated the working of private sector partnerships by deepening relationship with the new deals they announced.

    Similarly, Africa’s richest man, Aliko Dangote entered project partnership with Blackstone-backed Black Rhino, in a $5 billion investment in infrastructure development. With policy support from the administration of President Jonathan, Nigerian small and medium scale businesses are growing. They are viable prospective partners to U.S. SMEs who want to invest abroad to generate new businesses and develop new markets.

    It is in the area of private sector partnerships that Nigeria will provide the lift for the new commercial engagement of the United States with Africa. Using the familiar proclivity of the Nigerian diaspora to succeed, and the achievements of those in the U.S., the average Nigerian at home is self-motivated to succeed. We have embraced the principle for self-actualisation in business. Nigerian businesses are successfully raising capitals in the international markets. A number of Nigerian banks and non-financial services providers are multinationals in their own rights, having subsidiaries in several countries in Africa. A few are listed in the London Stock Exchange, the Johannesburg Stock Exchange and in Canada, closer to the US. These vibrant businesses will help U.S. businesses to quickly gain traction and gain market share as partners.

    Nigeria is not just the biggest economy in Africa; it is the regional hub for West Africa. For businesses looking at Africa, Nigeria provides the base for further outreach to cover West and Central Africa. The two sub-regions account for over 400 million population. Intra-regional trade amongst these two sub-regions is significant when we consider Africa’s trade without factoring in extractive commodities. The traditional trade relation is receiving a boost by the efforts of NEXIM Bank to facilitate a private sector shipping company to provide maritime trade links between West and Central Africa. The Sealink project is coming to financial close, following investment interests by African investors. This initiative will help remove non-tariff barriers to intra-Africa trade.

    Moreover, the past five years have witnessed NEXIM Bank’s funding interventions in Nigerian SME manufacturers who now export to West Africa and beyond.

    In the short term, a security challenge exists with the insurgency in the North Eastern part of the country. Efforts are being made to contain the threats. Longer-term, the efforts of the Federal Government will come into fruition with its recognition that a society that promotes prosperity through the right combination of investments in its people and infrastructure will remove the desperation and some of the other incentives that drive criminal activities.

    Lastly, Nigeria recognises the importance of civil society engagement. Civil engagement has been the hallmark of the administration of President Jonathan, which promoted the national conference that recently concluded. Under the Administration, elections have become more transparent, conclusive and less acrimonious. Opposition parties freely engage, and have criticised the government without any untoward consequences. It is this civility and democratic ethos that further assures that Nigeria is the place to do business, even as Africa is ready for business.

  • NEXIM Bank and task of export promotion

    NEXIM Bank and task of export promotion

    Nigeria, in accordance with President Goodluck Jonathan’s transformation  agenda, has begun to gradually assume the portal ofAfrica’s economic base. Hitherto, this enviable position was held by South Africa and Egypt. Facts show that for two years now, 2011 and 2012, Nigeria was ahead of others African countries as the top destination for foreign direct investment. There has also been aremarkable improvement in local participation in the country’s oil and gas sector as well as the non-oil sector, no thanks to theremarkable improvement in the structural transformation of the economy.

    According to the managing director of Nigeria Export-Import Bank, Mr Roberts Orya, “The non-oil sectors are now the key drivers of the country’s GDP growth, which is expected to rise to 7.3 percent in 2014 Nigeria’s rise above South Africa and Egypt in attracting foreign direct investment boils down to her frontier opportunities in various sectors such as power, infrastructure, agriculture, solid minerals, retailing and services. The job opportunities created by this robust economic prospect  have been tremendous. No doubt a private-sector driven economy has globally shown to be the panacea for job creation. It is against this backdrop that the Nigeria.

    Export-Import Bank has not rested in its oars in ensuring that the nation’s private sector has the maximum support to thrive.

    In the services sector for instance, the bank has made total funding disbursement of N15.6 billion, which accounts for 16. 4 percent of total loan disbursement by the bank. In appraising the scorecard of NEXIM Bank recently, finance minister NgoziOkonjo-Iweala said, “”NEXIM bank was set up to support import and export trade within the country. We are happy to say that NEXIM has proven its worth. It has been performing its functions. That makes the bank a very important part of our finance complex. But there are a lot of expectations. The government of President Goodluck Ebele Jonathan has embarked on a path of transforming the economy; trying to work with our private sector to expand trade, particularly regional trade, incorporating the West African zone and even beyond. With Nigeria’s economy accounting for 55 per cent of the regional economy, that means our weight means a great deal in the sub-region. Therefore, what we do in terms of supporting our private sector to trade within the region and beyond is very important. As such, NEXIM is key and critical if Nigeria is going to play its role of being the powerhouse within the West Africa sub-region, and beyond that, within Africa.”

    NEXIM Bank in its efforts to create a robust economy where the private sector thrives has also adopted various measures. Under the foreign input facility, NEXIM grants short, medium and long term fixed rate loans in foreign currency to participating banks on behalf of their export clients. These facilities are available to Nigerian exporters engaged in the importation of raw materials for export production, packaging materials for export, spare parts for export promotion and capital equipment needed for production of goods for export.

    Accessing the facility is devoid of the usual bottlenecks. Exporters simply apply to participating banks for foreign input facility; the participating banks then appraise the application based on its existing lending rules; the participating banks then forward a formal request to NEXIM, supported by relevant documents, and then NEXIM disburses funds to the participating banks upon fulfillment of all conditions precedent to draw loan.

    Under its local input facility, NEXIM Bank also grants short, medium and long-term fixed rate loans in local currency to participating banks on behalf of their export clients. This facility is for setting up new export-oriented projects, revitalisation, acquisition of additional assets for modernisation, and/or expansion of existing production units for exports; acquisition, rehabilitation and/or expansion of plantations/farms for the production and processing of exportable products as well as acquisition of spare parts and packaging

    materials for the manufacturing of exportable products.

    In the area of export credit guarantee, NEXIM Bank provides an effective tool for the management of risks associated with export financing.

    The objectives of the facility are to protect banks in Nigeria and foreign supplies of credits and goods against the risks of non-payment for loans and advances granted to exporters to meet short-term contracts and to encourage banks and other financial institutions to finance export business without fear of default from the exporters.

    The guarantees available include pre-shipment guarantee which entails credits/advances granted by a bank for the purpose of manufacture, purchase, processing and/or packaging of goods to be exported under a confirmed export order. There is also post-shipment guarantee which guarantees credits/advances granted by a bank in Nigeria against an export bill or any other receivables. Besides, there is the advance payment guarantee designed to protect foreign buyers against payment risks in respect of money advanced to exporters in Nigeria to finance export order. The risks covered are insolvency of the buyer immediately before shipment is undertaking; cancellation of export licence, imposition of restriction on the export of goods, insolvency of the buyer and protracted default by the buyer

    NEXIM Bank has also devised the export credit insurance made to protect exporters against commercial and political risks associated with export business. The goals are to encourage exporters to diversify their export markets without fear of the risks inherent in dealing with new buyers; to attract new enterprises into the export business and to encourage exporters to extend credit terms to their buyers in order to enhance their competitiveness in the international market.

    NEXIM’s ECIF provides both pre and post shipment cover arising from commercial and country risks such as insolvency of the buyer immediately before shipment is undertaken or other events that make it inadvisable to export; cancellation of export licence which was valid at the time production commenced; position of restriction on the export of goods not subject to licence at the time production commenced; protracted default by the buyer; buyer’s refusal to accept the goods dispatched which conformed to contract specifications; war, revolution and civil disturbance in the country of the buyer, which prevents or delays the transfer of payment due under the contract and any other causes of loss arising outside Nigeria which is beyond the exporter’s and buyer’s control.

    This initiative is targeted at sustaining Nigeria’s economic progression which was recently adjudged the best in Africa. Quoting the MD of NEXIM Bank recently, “The bank’s funding intervention in support of exports has created and sustained 60, 000 jobs in the past few years: 2009 – 25000 jobs, 2011 – 35, 000 jobs. The bank support has attracted foreign generation of about 100 million dollars annually, making a total of 200 million in the past years.” NEXIM Bank has in the last few years supported the Nigerian non-oil export to the tune of N20 billion. According to the projection of the MD/CEO, “Our funding intervention in the next five years is to support the non-oil export sector to the following minimum level: 2011 N37billion, 2012 N41billion, 2013 N50billion, 2014 N63billino and 2015 N94billion.”

    With  these fundamental approaches in encouraging international trade in Nigeria, NEXIM Bank has once more shown that it has the wherewithal to move Nigeria’s economy to the promised land. The effects include improved standard of living, robust economy, job creation and absolute faith in Nigeria’s economy by investors.

     

    • Nwoko is a public affairs analyst based in Lagos

  • NEXIM Bank boosts regional trade through sealink project

    Operators in inter and intra-regional trade in West and Central Africa, whose businesses have long been hampered by poor transportation infrastructure, can now heave a sigh of relief.

    This is because the Sealinkproject, an initiative by Nigerian Export-Import Bank (NEXIM) to establish a direct coastal link between the two regions, may take off soon.

    The project, expected to promote regional investments in trade, enjoys theendorsement and support of various regional bodies across West and Central Africa, including Economic Community of West African States (ECOWAS) Commission, Federation of West African Chambers of Commerce (FEWACCI), and the Maritime Organisation of Central Africa (MOWCA).

    To realise the project, NEXIM Bank, in partnership with the management of Sealink Promotion Limited and other government agencies in the West and Central Africa Sub-region, announced  a private placement offer to individuals and corporate organisations within the sub-continent. The announcement was made in Lagos at an investors’ forum organised by Sealink to herald its plans to tackle the problem of transportation that has hindered the growth of business within the sub-continent.

    Under the new offer, a total number of 89,036956 ordinary shares will be opened for subscription at a price of $0.70 per share with each private individual entitled to buy a minimum of $14,000 worth of shares. The offer, which strarted since March 24 is expected to close on September 30.

    The Managing Director and Chief Executive of NEXIM Bank, Roberts Orya, explained that the offer was a private placement and not a public offer targeted at institutional investors and high network individuals.

    He said the Sealink project, a public-private initiative, will enjoy some concessions from the governments within the two regions in terms of priority berthing or some other forms of engagements.

    “We are watching it very closely to ensure that we don’t have people that will come from the backdoor and hijack the initiative, so at the end of the day when it comes to the issue of allotment, it is the Board of Sealink that will do the allotment so we will be able to identify who and who have subscribed,” Orya said.

    He also said soon, the shares would be segregated into different classes with class ‘A’ principally reserved for the organised private sector. “It is the private sector that are trading and so they will get priority, then we have some government agencies like Nigerian Maritime Administration and Safety Agency (NIMASA) or the likes that want to invest in it, we can give them the class ‘B’ shares while the class ‘C’ will be reserved for some foreign investors that want to have a little stake so that at the end of the day we are not just localised,” he explained.

    At the Investor’s Forum,  Chairman of Sealink Promotional Company Limited, Mr Wilson Attah Krofah said the idea behind the project is aimed at ensuring that the barriers that are most common in both land and air transportation are settled through ease of convenience, which sea transportation offers. He added that aside the need for a quick transportation, the essence of the project was to create jobs for people within the sub-region.

    He explained: “The initial share capital we are looking for is 60 million US dollars. This money is intended to buy shipping lines to carry goods, passengers and cargoes along West and central Africa. But part of it will be used as working capital, which runs to a total of $24million. Our target is to get money from private individuals who will be owners of the shipping line because we want the shipping business to be owned and run by private individuals from West and Central Africa so that we can have the control on how the shipping line is run.”

    Krofah noted that the aim was to encourage trade within West and Central Africa to ensure the creation of jobs and wealth for the sub-continent. “As you know, a lot of investors are coming to Africa because they believe there are opportunities here,” he said. adding: “As indigene of the sub-region, we should take full advantage of the opportunities particularly within the sub-region.

    “Otherwise, the continent will be exploited by foreigners and people in other sub-regions. Based on this, Sealink Shipping line has come to encourage us to trade among ourselves.”

    He noted that operators in the sub-region have so far been trading by road, which creates a lot of problems because of numerous barriers cross countries. “Even by air, there are safety issues, but when you go by sea, there are no barriers,” he added.

    However, the Director-General, Nigeria Chamber of Commerce, Industry, Mines and Agriculture, NACCIMA Dr. John Isemede stressed that the benefits of bilateral trade agreements will remain on paper if there were no vehicles and support from the governments in the effective movement of goods and people across regional borders.

    Dr. Isemede praised NEXIM and FEWACCI for the initiative, noting that for countries to trade effectively there must be a multi-purpose vehicle that will promote the cost advantage factor. “Today is a new chapter in the history of Nigeria where we are talking of transformation agenda, which encompasses the transformation of individuals and infrastructure in order to compete favourably with other parts of the world,” he said.

    Chairman, House of Representative Committee on Banking and Currency Hon. Jones Onyereri while commenting on the economic importance of the project and the role of legislation in facilitating trade integration, said it is a project that the government will be fully committed to support. He noted that it is an avenue to generate employment for the teeming unemployed youth in the country. He said: “For this project, as legislators, we are going to look at how our people will be empowered economically despite the challenges that we have.”

    Onyereri noted that since the project is a public-private partnership, it will be well run. “The government is a bad manager. As far as the legislative protection is concerned, we will ensure that we constantly review the Act that established NEXIM basically to give it the legal framework that will ensure that they go ahead of their core mandate,” he promised.

    The sealink initiative is another landmark of NEXIM Bank. It is expected to offer a unique and compelling investment proposition in the fast growing West and Central African region.

  • Nexim Bank: Repositioning for Nigerian non-oil exports

    In recent decades, export competitiveness in the era of globalization has been at the heart of domestic economic growth and development debates. Against the background of growing disparity in income between the developed and the developing world, due largely to divergence in industrial capacity, the central question has always been: what can and should be done in developing countries to boost export growth and diversification, and enhance competitiveness in international markets?

    In 2007, a leading economist at the MIT, Alice H Amsden noted that the gamut of policies, practices and institutions which led to the rapid skill formation and industrialization in successful exporting countries of the developing world was carefully built, diligently developed and tested over many years, led to trade protectionism, competitive pricing and the establishment of Export Processing zones which afforded access to imported input at world prices and often more advantages.

    In Nigeria, no bank understands the intricacies of export growth, export development, export diversification and export competitiveness more than the Nigerian Export-Import Bank – NEXIM Bank, the Trade Policy Bank of Nigeria. Established in 1991 by Act 38 of 1991 originally as an Export Credit Agency, owned equally by the Central Bank of Nigeria (CBN) and the Ministry of Finance Incorporated (MoFI), NEXIM has since 2009 reformed its processes and redefined its focus to promoting the diversification of the Nigerian economy and deepening the external sector, particularly the non-oil sector through the provision of credit facilities in both local and foreign currencies; risk-bearing facilities through export credit guarantee & export credit insurance; business development and financial advisory services etc.

    In pursuit of this renewed mandate of promoting export diversification and deepening the non-oil sector, the Bank’s current strategic initiatives are targeted towards boosting employment creation and foreign exchange earnings in the Manufacturing, Agro-processing, Solid Minerals and Services (Tourism, Transportation and Entertainment) industries –  The MASS Agenda of NEXIM Bank.

    The Bank is concerned with the competitiveness of Nigeria’s products and services in foreign markets. According to the MD/CEO of NEXIM, Mr. Roberts Orya, Nigerian exporters have looked away from their traditional market of West Africa and the African region, and focused on the markets of Europe and Americas despite not having the competitive edge. This is different from the practice of the most successful exporters of the developing world including South Korea, Turkey, China, India, Brazil, etc., which for strategic commercial reasons,entrenched their regional competitiveness before venturing outside their core trading blocs.

    NEXIM understands that export-competitiveness requires actions at the highest national level. No doubt, theAdministration of His Excellency, Dr. Goodluck Ebele Jonathan, GCFR, in pursuit of the Transformation Agenda, is showing strong political commitment to boost Nigeria’s export-competitiveness.

    Just recently, at the inauguration of the new NEXIM Bank Board as reconstituted by President Goodluck Jonathan for improved performance, the Coordinating Minister for theEconomy and Honourable Minister of Finance, Dr. Ngozi Okonjo-Iweala expressed satisfaction at the achievements of NEXIM and restated Government’s determination to trade expansion. The CME said that, “…the Government of President Goodluck Ebele Jonathan has embarked on a path of transforming the economy; trying to work with our private sector to expand trade, particularly regional trade, incorporating the West African zone and even beyond…” She charged the new Board to understand that NEXIM has a responsibility if Nigeria is going to play its role of being the powerhouse within the West Africa sub-region, and beyond.

    NEXIM takes developmental rather than a purely financial-return-maximisation approach in its lending. The Bank focuses on the identification, development and financing of projects thatagrees with national objectives on private sector developmentand non-oil export.

    NEXIM Bank received commendations from its Shareholders for its support to the Creative and Entertainment sector, and facilitation of the establishment of the Sealink Project, which will boost access by Nigerian exporters to the ECOWAS and Central African markets.

    The shareholders of the Bank have given it the approval to strengthen its balance sheet, including attracting offshore lines of credit. Already, NEXIM has partnerships with many overseas financial institutions, like the African Development Bank, Afrexim Bank, Islamic Development Bank, India EXIM, to name a few.

    With the inauguration of the bank’s board headed by the Deputy Governor, Economic Policy, CBN, Dr. Sarah Alade, it is expected that the nation’s export trade policy will strengthen, even as NEXIM Bank continues to grow its funding interventions and export advisory services.

  • NEXIM’s non-oil sector initiatives

    NEXIM’s non-oil sector initiatives

    Up until the discovery of oil in Nigeria, her economy flourished in the non-oil sectors of agriculture, manufacturing and solid minerals. But in the later part of 1970s, what appeared to be a blessing – discovery of oil in commercial quantities – turned out to be an albatross to Nigeria’s economy in the long run. The oil boom overshadowed, and by extension, became a doom because it diverted the attention of government from sustaining the tempo of growth in other sectors of the economy.

    However, with the coming on board of NEXIM Bank, and indeed the current leadership in the saddle of Mr. Robert Orya, there appears to be a light at the end of the tunnel. Orya’s giant strides have repositioned NEXIM on its fundamental mandates.

    NEXIM Bank’s working blueprint, from 2010 to 2015, is aimed at propelling the non-oil sectors of Nigeria’s economy to a grand-level. The bank’s key areas of concentration are manufacturing, agriculture, solid minerals and services. The goal is to become the leading export development bank in Africa.

    The objectives of developing these non-oil sectors are to have a clear market focus and become a major contributor to non-oil exports, build a world-class institution which imbibes best-in class corporate governance and risk management practices; be a relevant player in the export market and significantly influence government trade policies; build a profitable institution with a robust balance sheet size with a highly skilled and motivated workforce.

    A target of this magnitude is always herculean, but the NEXIM-led administration of Orya is abreast of this. It adopted a phased-approach to attaining the goals. They are categorized into Horizon 1, Horizon 2 and Horizon 3.

    The Horizon 1, from 2010 to 2011, with its theme ‘position for growth’, was concentrated on enhancing interbank operations through the RRF window; institution of robust risk management framework, establishment of strategic alliances, strengthening human resources and operations as well as execution of penetration strategies and above all, recapitalization. This phase is the building base.

    The Horizon 2 (2012-2013) with the theme ‘create new momentum’ is tagged the Expanding Impact. It influences the contribution of the non-oil sector of Nigeria’s gross domestic products; collaborates with established government agencies for providing relevant industry and country data, boosts trade beyond West African regions and to become a visible brand in Africa.

    With the chemistry of horizons 1 and 2 well articulated, the Horizon 3, with the theme ‘Become the leading EDB in Africa’ has the concept of accelerated growth. It is the realization period, and meant to be attained from 2014 to 2015 and upwards.

    The plan is to key into the financial sector goals linked to the national vision and aspirations. These aspirations are grouped into three pillars thus: guaranteeing the well-being and productivity of the people, optimizing the key sources of economic growth, and fostering sustainable social and economic development. In the pillar 1, the concentration is on financial inclusion with much emphasis on the informal sector intervention. It also encompasses the housing financing with emphasis on policy formulation and regulatory framework. In the real sector financing, the focus is on agriculture, infrastructure and industry.

    The pillar 2 with emphasis on optimizing the key sources of economic growth will deepen financial markets through dematerialization and integrated dealing system; payment system reforms anchored on RTGSS and cross border settlement, as well as shared services with basics in cost containment and cost optimization.

    Fostering sustainable social and economic development, which is the thrust of pillar 3, is the pivot for trade development through effective policy formulation and implementation and synergy with other stakeholders. It also looks into economic data warehouse via one-stop information on economic data in addition to organizational capital with a concentration on knowledge-based and performance-driven organisations.

    NEXIM Bank operates in a synergy with the Central Bank of Nigeria. NEXIM’s strategic plan for the CBN’s trade development includes enhancing the implementation of ECOWAS trade support facility, becoming the national guarantor for the ECOWAS interstate road transit scheme, facilitating the realization of NEXPOTRADE goals of establishing export houses in all ECOWAS countries, and improving the strategic alliances with multilateral agencies, DFIs and export credit agencies.

    NEXIM Bank’s business posture takes into cognizance the economic importance of commercial banks and other developmental financial institutions in the sound sustenance of Nigeria’s economy. To that end, it is positioned to complement the roles of commercial banks by focusing on the unserved markets.

    In the manufacturing sector from 2010 to 2015, NEXIM Bank has maintained an increased efficiency and profitability of manufacturing establishments through the funding of acquisition of new technology, increased access of manufacturers to short and long-term credit, provide 6% (about N42billion) of the manufacturing sector’s financing requirement by 2015, account for 3.71% of the sector’s GDP by 2015 and create about 70,479 jobs through project financing activities.

    In the agricultural sector, from 2010 to 2015, the bank has increased and sustained agro-industrial exports through enhancement of quality and local value addition, provide 7.3% (approx. N 33bn) of the agricultural sector’s financing requirement by 2015, account for 2.89% of the sector’s GDP by 2015 and create and sustained 60,587 jobs within the sector through project finance by 2015.

    In the solid minerals sector, NEXIM Bank’s blueprint from 2010 to 2015 is to create an internationally competitive and attractive destination for capital for the profitable exploitation of Nigeria’s mineral resources, provide 16.1%, about N 96billion, of the solid mineral sector’s financing by 2015, account for 0.82% of the sector’s GDP by 2015 and sustain 2,885 jobs within the solid minerals sector through project financing.

    The services sector is another area in Nigeria’s economy that has the capacity of meteorically pushing Nigeria’s economy to another level. Being abreast of this, NEXIM Bank’s target from 2010 to 2015 is to contribute to the provision of safe and cost effective transport services within Africa, enhance Nigeria’s tourism sector, provide 23.6%, about N96bn, of the services sector’s financing, account for 0.61% of the sector’s GDP by 2015, and create and sustain 26,236 jobs within the sector by 2015.