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Tag: NEXIM Bank

  • Nexim Bank and the growth of agriculture in Nigeria

    Nexim Bank and the growth of agriculture in Nigeria

    The Nigerian Export Import bank, as part of its strategic plan of action, hopes to channeling its resources into the development of four sectors in the non-oil segment of the Nigerian economy, namely manufacturing, agriculture, solid minerals and services.

    Agriculture is particularly significant because it once constituted the main stay of the Nigerian economy, and it is the second largest contributor to the GDP of the nation. With 80% of its land cultivatable and its warm climate year-round, Nigeria is a land rich with agricultural resources, which has been the vein of the economy prior to the oil boom and continues to be an important element in the Nigerian GDP. With regards to employment, agriculture is by far the most important sector of the Nigerian economy, employing around 70%   labour. According to the year 2010 statistics, agriculture accounted for between 38% and 40% GDP of that year. Nigeria ranks 25 worldwide and ranks one in Africa for farm output and at least 80% of production comes from subsistence farms. The sector is dominated by crop production, which takes up around 85% of production while the remaining 15% comprises livestock, fisheries and poultry. However, the agricultural sector is not without its challenges. One of the most common complaints from the agriculture sector has been lack of access to credit. Nigerian banks have been reluctant about lending money on anything other than short term basis. These cause difficulties for farmers more than any other sector of the economy, as the agricultural production has a larger gestation period than the banks are ready to grant. However, with Nigerian banks slowly emerging from a national financial crisis, their regulations are in a change as well. One of the problems facing banks is that they have very limited resources for providing long term lending. Lack of irrigation is the second most important issue that needs to be resolved, especially to agricultural jobs in the areas of Nigeria. Irrigation equipment in particular is lacking in Nigeria, and variable rainfall has led to similarly inconsistent harvest yields. Funding in developing essential irrigation systems is essential to growth in the agricultural sector.

    The third and not the least important issue is infrastructure, in terms of transportation of the agricultural products. According to a survey by the university and the International Institute of Tropical Agriculture (IITA), the biggest concern of Nigerian farmers is the lack of infrastructure that supports their growing and selling efforts. poor  road structure and lack of sufficient storage facilities make it almost impossible  for small scale farmers to extend their productions.

    Between October and December, which is the harvest time in most rural areas, abundance of crops causes drop in the prices and farmers sell their products in reduced rates, in the absence of  storage facilities. If government were to act as buyer of the last resort, some inefficiencies could be eliminated. Most of the larger scale private farms have their own ware houses, or the ability to transport crops somewhere else, and they use this as a leverage  and fluctuate prices, thereby causing significant damage to small scale producers.

    Though there is no shortage of governmental programmes, donor funded projects and other informal efforts to fund farmers, the agricultural sector in Nigeria remains crippled by the same issues: Funding and infrastructure. Some entrepreneurs  find themselves able to rise  above the challenges, but most are finding it difficult to secure funding or taking their business plans to neighbouring  countries. The sector needs an important financial long term funding in order to grow to the standard it deserves.

    In recognition of these challenges, the NEXIM bank has keyed into the vision of transforming the agriculture sector, with a view to strategically contributing to the on-going revolution in the sector. This is no surprise since the main aim of setting up the bank in the first place is to promote the diversification of the Nigerian economy and develop the external sector through the provision of credit facilities in both local and foreign currencies, risk-bearing facilities – export credit guarantee and export credit insurance, business development/ financial advisory services and trade and market information, all in support of the non- oil  exports sector. In propelling the non-oil sectors to a grand level, the bank has proactively developed a working blue print spanning five years (2010-2015), with key areas of concentration in manufacturing, agriculture, solid minerals and services. In the agricultural sector, NEXIM’S funding intervention  covers both  Ago- allied and forestry. In focusing  on agriculture  as one of its key strategic areas, the bank is conscious of the fact that the sector is dominated by small and medium enterprises, limited usage of modem techniques/machines and reliance on micro credits. The sector’s huge growth potentials is also not lost on the banks to demonstrate the importance it attaches to the agricultural sector. The bank in it five year blue print has increased and sustained agro-industrial exports through enhancement of quality and local value addition, provision of  7.3% (approximately N 33 bn) , of the agricultural sectors, financing requirement by 2015, account for 2.89% of the sectors GDP   2015, and create sustained 60,587. Jobs within the sector through project finance by 2015 with the significant improvement witnessed by the strategic collaboration between the bank and the agriculture sector, following result are envisaged.

    •Enhancing agricultural productivity for small scale farmers through better access to improved inputs, research results and extension services.

    •Harnessing available water resources for irrigation.

    •Providing conducive environment for large scale private sector involvement.

    • Encouraging large scale commercial farming, with strategic linkages to small scale farmers.

    •Significantly reducing post harvest losses through agro-processing.

    •Better focus on value chain approach through rural and market infrastructure and improve market access.

    Agriculture still remains the preferred hub for economic growth and development. NEXIM bank should therefore  not rest on its oars as the sector continues aggressive expansion that is bound to lead to increased agribusiness growth, wealth creation and economic empowerment.

  • NEXIM Bank and solid mineral development

    NEXIM Bank and solid mineral development

    Solid minerals are found in every nook and cranny of Nigeria’s territories. The potentialities of these solid minerals, if harnessed properly, can propel Nigeria’s economy faster than crude oil which has become the nation’s economic mainstay.

    The failure of successive governments and indeed the citizenry to tap into other sectors of the economy, apart from oil, has been blamed for Nigeria’s economic woes. President Goodluck Jonathan-run government is not resting on its oars to diversify Nigeria’s economy through harnessing the country’s abundant solid mineral resources. Against this backdrop, the Nigerian Export Import Bank, NEXIM, has articulated and sustained a blueprint to enhance the development of Nigeria’s solid minerals through financial interventions. As at 2011, NEXIM has identified the subsectors in the solid minerals to include ferrous and non-ferrous metals, stones and gems and energy minerals. These subsectors have been identified as being highly capital intensive, characterised by heavy government presence as well as policy inconsistency. This sector is also largely untapped. Its projected growth was estimated at 8.96% as at 2009.

    NEXIM Bank’s framework from 2010 to 2015 targets making this sector to significantly contribute towards creating an internationally competitive and attractive destination for capital for the profitability of the nation’s mineral resources, provide 16.1% (about N9bn) of the solid mineral sector’s financing requirement, account for 0.82% of the sector’s GDP, and create and sustain 2, 885 jobs within the solid minerals sector through project finance activities.

    With the visionary and proactive leadership of Mr. Roberts Orya in NEXIM Bank, 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 blueprint 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.

    Findings indicate that NEXIM Bank has so far committed about nine per cent of its total investment development portfolio, about N2.5 billion, to the development of the country’s solid mineral sector since August 2009. Its MD/CEO, Roberts Orya, revealed this when he played host to the Patrons of the Miners’ Association of Nigeria. He disclosed to the joy of his visitors that the bank was ready to support the solid minerals as a cardinal sector under its MASS (manufacturing, agro-processing, solid minerals and services) agenda.

    Echoing him, “This commitment does not scratch the surface of the sector’s requirement if Nigeria is to take advantage and benefit from the huge mineral deposits which God has blessed the country. Solid minerals mining is a highly capital intensive area, and requires strong government intervention to unlock its huge revenue and job creation benefits for the country.”

    He made a clarion call on the association to produce its strategic framework to better structure and attract sustainable investments to the sector. He said the agenda focused on issues of mutual cooperation with NEXIM and the Federal Ministry of Mines and Steel Development towards the development of the sector.

    He also revealed that Nigeria is endowed with more than 33 commercially viable solid minerals that could be exploited for the country’s economic benefit. These include gold, lead-zinc ore (Galena), iron ore, columbite, ilmenite, cassiterite, uranium, copper, molybdenite, manganese, wolframite, rutile and diorite, bauxite, gypsum, talc, bentonite and barite, rock salt, gem stones, and kaolin.

    Using the statistics from the Mining Cadastre Office and the Nigerian Geological Survey Agency factsheet, Mr. Orya said the picture of the benefits would be appreciated more when it is considered that some of these minerals are in very dense deposits. According to him, minerals like talc has been identified as having deposits in excess of 40 million tonnes in locations such as Niger, Osun, Kogi, Ogun and Kaduna states; iron ore, with over 3 billion metric tonnes of deposits in Kogi, Enugu and Niger states as well as the Federal Capital Territory; and lead/zinc veins, about 10 million tonnes of deposits spread over eight states.

    Others include bitumen about 42 billion tonnes deposits, which almost twice the existing crude oil reserves, making Nigeria one of the world’s most bituminous destinations owing to its low sulphur and ash content and the most environment-friendly; and coal, nearly three billion tonnes of reserves in 17 identified fields and over 600 million tonnes of proven reserves.

    Sources at the National Bureau of Statistics, NBS, indicate that the solid minerals sector contributes less than one per cent to the country Gross Domestic Product, GDP, as against nine per cent of South Africa’s GDP in 2011.

    “For NEXIM, the critical issues range from how to get the government and other stakeholders to properly structure the mining sector, increase funding, and attract much needed investment capital; infrastructural development for the industry, especially the establishment of internationally certified laboratories and setting up of internationally recognized and endorsed mining calendar for Nigeria as prevalent in other regimes with dedicated attention to solid mineral exploitation,” Mr. Orya said.

    The president, Miners’ Association of Nigeria, Sani Shehu, had at the event thanked the NEXIM Bank management for its commitment and support to its members in the quest to open up the solid mineral sector. He said the group is overwhelmed by the passion of the bank to support the players towards the growth of the mining industry in Nigeria.

    As a capital-intensive industry, which requires long-term investments before its potential could be fully realised, Mr. Shehu cited the experience in India, which is less endowed with solid minerals than Nigeria, but is currently earning about $75 billion (about N11.3 trillion) annually from solid minerals.

    “It took South Africa more than 15 years of steady investment to get there and the country now earns over $30 billion (about N4.5 trillion) annually from the sub-sector,” he said.

    With the commitment of NEXIM Bank towards revitalising Nigeria’s solid mineral sector, it is hoped that it will bring a new dawn on the country’s economy which has been branded all sorts of name because of its oil-based nature and lack of innovations. All hands must be on deck to attain this goal.