The Nation Newspaper

Tag: NEXIM

  • NEXIM’s three years scorecard

    NEXIM’s three years scorecard

    Three years in the saddle as the Managing Director/Chief Executive of the Nigerian Export Import Bank, NEXIM, analysts hold the view and very strongly too that the Robert Orya-led management team has helped to turn around the fortunes of the once moribund bank, reports Ibrahim Apekhade Yusuf

    ERASTUS Okorodudu works as a farm supervisor at the a rubber plantation in Ughelli, Delta, which he joined fresh from the university after several attempts to secure a job at different multinationals oil companies yielded no positive results

    But four years down the line, he has not looked back.

    Like most of his contemporaries working in oil companies, today, Okorodudu is also living the good life and can easily afford any luxury money can buy, all thanks to the lifeline his employers secured from NEXIM in 2010, which literally opened floodgates of opportunities, including exposure to emerging markets, to mention but a few.

    The foregoing anecdote, if you may, is one of many testimonies which many of the beneficiaries of NEXIM’s export grant have been reeling out at any given opportunity.

    One of such foras was the interface and discussion sessions with prospective investors facilitated by NEXIM in Lagos late last year.

    For an organisation which suffered an eclipse as a result of its run of misfortunes some years ago, the sudden change of fortune coupled with its impressive fundamentals within a space of three years, analysts argue, speaks to the competence and ability of its current management team led by Robert Orya.

    NEXIM’s dark days

    Investigation revealed that the state of affairs of the bank at the time of the assumption of duty of the new executive management in August 2009 was such that the financial and operational performance of the bank had deteriorated to an alarming level, in addition to a myriad of other problems, chief among which was alarming decline in the quality of risk assets as the bank’s total loan portfolio as at 20th August 2009 was N14.6 billion with over 72% being non performing, N10.03 billion or 69.05 classified as completely lost; resulting in decline in the bank’s income, thus leaving the bank with a debt overhang of N32.74 billion coupled with depletion of the bank’s shareholders funds as a result of accumulated losses to mention but a few.

    Mandate to Robert Orya-led management

    Given the parlous state of the bank, the focus of the Robert Orya-led executive management team was to help turn around the fortunes of the bank as well as ensure that NEXIM is able to contribute significantly to the economic development of Nigeria.

    Thus with the Board of Directors under the dynamic leadership of Dr. Kingsley C. Moghalu, Deputy Governor Financial System Stability Central Bank of Nigeria [CBN], in 2010 approved the strategic repositioning of the bank to effectively deliver on its statutory mandate and become an effective enabler of Nigeria’ economic transformation.

    Accordingly, the management undertook a corporate transformation exercise centred on the key perspectives of strategy, risk management and corporate governance, financial performance, operations, organisation and people, with assistance from KPMG Professional Services.

    Expectedly, this corporate transformation project tagged: “Project Spring” led to the re-definition of the bank’s mission, vision and strategic objectives, with the intention of channelling its resources into the development of four sectors namely: manufacturing, agro- processing, solid minerals and services, which have high amount of employment and foreign exchange earning potentials in the non-oil sector for the economy.

    Performance scorecard

    In three years, the management team has been able to transform the bank, thus delivering on its mandate through a robust strategy, efficient operations and highly skilled and motivated personnel.

    There have been fresh capital injection from the shareholders as well as other institutional support through supervisory and regulatory oversight and guidance from the CBN and Federal Ministry of Finance, thus it has increased the bank’s capacity to support the growth of the non-oil exports and complement the export credit support of the commercial banks.

    Besides, the bank has supported Nigerian exporters especially the small and medium enterprises (SME’s) with some engaged in Greenfield projects, to the tune of N23.33billion and issued guarantees valued at $27.3million between 2009 and August 2012.

    The bank through its various operational interventions generated/sustained direct jobs of over 14,358 as at August 31, 2012 even as it has helped to facilitate the generation of estimated foreign exchange earnings of US$189.20 million to date.

    From a debt overhang running into billions of naira as at August 2009, the bank has been able to achieve a cumulative loan recovery of N1.3billion so far with a promise of better days ahead.

    The bank has also supported the entertainment industry with over N700 million and N536 million disbursed amounts to six beneficiary clients

    In furtherance of the bank’s support for the arts, it engaged in strategic partnerships/sponsorship supports of some creative and entertainment industry events for marketing, advocacy and capacity building programmes, which were intended to create awareness, build capacities, facilitate monetization of intellectual property/proprietary assets as well as showcase Nigerian talents. These events/programmes include among others the following: the Zuma Film Festival, the 10th Nigerian Video Music Awards, 9th African Film & TV Programme EXPO, Nigerian Booth at the Cannes International Film Festival 2012, African International Film Festival, 1st National Policy Dialogue on the Development of the creative/entertainment industries in Nigeria, to mention but a few.

    Apart from making inroads in the nation’s fledging entertainment sector with the disbursement of the $200million loan, the bank has facilitated the establishment of the regional sealink project, which has the propensity to save Nigeria about N800 billion ($5 billion) annually.

    According to the NEXIM boss, the project, which is being sponsored by the Federation of West African Chambers of Commerce and Industry, FEWACCI and endorsed by both the ECOWAS Commission and the Maritime Organisation of West and Central Africa, MOWCA, will also help facilitate the realisation of the various maritime-related laws like the Cabotage and MIMASA Acts and the implementation of the National Shipping Policy.

    While the jury may still be out on what should be the proper measure of success or otherwise of an organisation of NEXIM’s status, expert opinions seem to be in its favour, which is salutary enough.

    But will NEXIM get rather complacent and be carried away by its momentary success? Time, will tell.

  • $200 million entertainment fund not grant but loan, says NEXIM Boss

    $200 million entertainment fund not grant but loan, says NEXIM Boss

    Entertainment practitioners who want to access funds from the $200 million entertainment fund need to know that the fund is not a grant but a facility for the growth of the industry.

    Addressing Finance Correspondents in Abuja on Friday, the Managing Director of the Nigerian Export Import Bank (NEXIM) Mr Robert Orya linked the alleged slow disbursement of the $200 billion Entertainment Fund to inability of practitioners to meet the stipulated minimum requirements for accessing the loans.

    He pointed out that the management of the Fund had been based on high ethical principles and laws guiding the nation’s banking sector. According to him, one of the reasons for delayed disbursement of credit to practitioners is the wrong impression some of the industry practioners have that the money in the Fund is a grant by government to assist the growth of the sector and not a loan.

    Mr Robert Orya, dismissed insinuations that NEXIM bank was deliberately delaying efforts to access the Fund, saying that the bank has and will continue to process loan applications and grant credit to those that meet conditions for loans. Already, the management of NEXIM he said has disbursed N700 million of the fund to those who applied for and fulfilled the conditions for accessing the credit to support their operations in the industry.

    He explained that “the fund is not a grant, we appreciate the fact that this people have the talents, but they don’t have the collateral. Now, collateral is important because the banking laws in Nigeria prohibits you, or it becomes a crime if I lend money to you to a certain amount without security, I am a candidate for jail and it becomes criminal.”

    He added that “the challenge these people have been having is the challenge to comply with the requirements for them to access this Fund. That was why when we drafted the operational guidelines; we discussed them with the members of the industry because we said you are the people that are going to use this. We are using different guidelines for the entertainment industry. It is not the normal guidelines of the bank and we discussed these things with them, the Association of Movie Producers and everybody that we needed to have their own input because they are the people that are going to use it. So, it is not fast not because there is an inhibition at the end of NEXIM.”

    On the general business operations of the Bank, he disclosed that the NEXIM has been repositioned to fulfil its mandate as reflected in its balance sheets as well as its interventions in key projects that are aimed at boosting Nigeria’s and other West African countries’ shares in the global maritime export trade.

    Orya also denied allegations that NEXIM’s supposed profit was from investing in Treasury Bills, stressing that the bank’s income is from its investment income that is interest on loans.

  • Concerns over access to NEXIM Bank’s $200m package for Nollywood, others

    Concerns over access to NEXIM Bank’s $200m package for Nollywood, others

    The nation’s film industry is believed to have the potential to aid the diversification of the economy. This explains why  President Goodluck Jonathan provided a $200 million (about N300 million) intervention fund for the creative and entertainment sector. But, almost two years after the fund was announced, only one film, Doctor Bello, has benefitted from it, writes  VICTOR AKANDE

    The figures are encouraging. Nigeria’s economy grew by 6.28 per cent in the second quarter of this year and inflation fell for the second straight month in August. The GDP growth in Africa’s second largest economy climbed in the second quarter, up from 6.17 per cent in the first quarter.

    According to statistics released last week by the National Bureau of Statistics (NBS), the growth is driven by the non-oil sector.

    “The non-oil sector was driven by growth in activities recorded in the building and construction sector, while oil sector output decreased (compared with Q2, 2011),” the NBS said in a report.

    This is despite the fact that the oil sectr accounts for more than 80 per cent of Nigeria’s revenue and about 95 per cent of its foreign exchange earnings.

    The search for alternative sources of growth and foreign earnings made the Federal Government to consider the country’s film industry, poularly known as Nollywood.

    The reasons for this are not far-fetched: In the last four years, it has consistently churned out over 2,000 films. In 2008, 2,408 films were produced; In 2009 recorded 2,514 films; and 2,621 films were produced last year. Nollywood, as the industry is known, is ranked first in the world in quantum and third in revenue generation, with receipts over the years estimated at between $300 million to $800 million.

    Little wonder researches have taunted it as a viable non-oil sector money spinner for the government.

    But, it is generally agreed that for the industry to realise its potentials, the government must offer some stimulus. So, it was good news when in November, 2010, President Goodluck Jonathan announced his administration’s decision to float a $200 million revolving loan scheme for the industry.

    Two months away from now, the announcement will be two years. Stakeholders in the industry are agitated over access to the fund. Only one producer, Tony Abulu, has been able to access the fund through the Nigerian Export and Import Bank (NEXIM) for the production of of his Doctor Bello.

    NEXIM is one of the approved banks for the management of the fund.

    The film is billed for a world premiere at the John F. Kennedy Centre for Performing Arts, Washington, United States on September 27.

    Some practitioners in the sector have questioned why Abulu, who lives in the United States, should be the first to access the Nigerian Creative and Entertainment Industry Stimulation Loan Scheme. Many have described the process of accessing the facility as too technical. Others believe the collaterals are cumbersome to meet.

    Veteran filmmaker Dr. Ola Balogun believes the bank has a ‘hidden’ agenda. Balogun, in a piece entitled: ‘NEXIM: What agenda?’ doubts the bank’s understanding of the industry to channel the fund properly.

    Balogun said the government’s interest in the art and entertainment sector can better be advanced through grants or film funds rather than a loan. He said there is no nation that conducts cultural policies by requiring artists and cultural workers to queue up in banks for loans.

    He said that in the US, support for the arts is conducted through foundations and through state-supported entities such as the National Endowment for the Arts.

    Balogun faulted the process that subjects artistes to the rigours of filling forms access loans. He said artistes are not businessmen, experienced n such financial technicalities.

    A former consultant to the National Film and Video Censors Board (NFVCB), Mr. Yinka Ogundaisi, expressed shock when NEXIM unveiled Abulu as the first beneficiary of the scheme. He said: “I myself had issue with the same NEXIM when, to the consternation of all of us, it announced the support to fund the film, Doctor Bello by Tony Abulu.”

    Ogundaisi said he later discovered that NEXIM had its valid reasons for picking the Abulu project, adding: “Despite the misgivings, we should at least praise Dr. Roberts Orya for doing something rather than sitting on the fence”.

    He added: “NEXIM’s core mandate is to promote indigenous products for export. The epidemic level of piracy now tormenting Nigerian movies has made it suicidal for any fund provider, especially a bank, to commit their funds into either its production or distribution.

    “Yet, NEXIM must find a way to achieve its core mandate, which was why the bank decided that if there is no indigenous Nigerian movie that can be safely promoted for export, they might as well create one as a model, hence their funding support for Tony Abulu’s film meant for distribution offshore. But all the same, a Nigerian product that NEXIM can associate with and tout as the evidence of achieving their mandate.”

     

    Why it is difficult to access the fund

     

    NEXIM Bank’s Managing Director Roberts Orya said most Nollywood filmmakers could not access the fund because they lack auditable business structures. He said although the mandate of the bank is to generate inclusive growth, the project remains a loan scheme, which must yield returns.

    According to him, the total interest to be charged on any loan facility granted under the scheme is within the single digit. These are charged on the basis of tenor and assessed risks which include 7.0 per cent – 7.5 per cent (under two years); 7.5 per cent – 8.5 per cent (between two years and five years); and 8.5 per cent – 9.0 per cent (between five years and 10 years).

    Orya said the question of why Abulu should be the first beneficiary is a mere sentiment that does not go well with business.

    He said: “Any company in Nigeria can benefit from the facility, provided it is legally registered and incorporated in the country; operates in the entertainment and creative industry; not owned by government (federal, state or local); and it is not an oligarchy business interest that may interfere with content policy for its own interests.”

    He noted that there is a gross violation of intellectual property rights, resulting from ineffective Intellectual Property laws. He highlighted other challenges, which include low production for theatrical releases and cross-border co-production arrangements; lack of adequate digital production and distribution infrastructure to exploit the new media and digital distribution platform; inefficient andunstructured distribution marketing outlets both domestically and internationally; poor corporate structure and book-keeping culture; and inadequate exhibition and theatrical infrastructure, which, he said, is 0.36 screens per million populations.

    Nigeria has less than 60 modern screens in multiplexes, located in five cities, compared to India’s over 13,000 screens translating to 12 screens per million people.

    “This is partly to address the historical reluctance of commercial banks to engage the segment by showing that FGN credits, properly channelled to the segment, can be serviced and repaid thus hopefully setting a precedent that banks will directly adopt as their liquidity positions improve,” he said.

    Ogundaisi described as worrisome thatmany players in the industry cannot develop viable proposals, a development blames for their inability to access the fund.

    Unlike Balogun, he sees nothing wrong in artistes writing proposals. He said: “All they (NEXIM) require is a viable business proposal. Now, this is a challenge that I believe we should focus our attention on for now. I am aware that proposals on infrastructural development which require their funding support is already with them to study and react to.

    “I would suggest we allow the next few weeks to indicate whether Dr. Orya’s public pronouncements to support all viable business proposals in our creative and entertainment industry are for real or just another way of politicking.”

    Significantly, NEXIM, a co-manager of the fund which also has the Bank of Industry (BoI) holding the domestic investment edge, said it is committed to helping the growth of the industry. It said more movie makers would benefit from the revolving loan. Orya said the fund represents a significant commitment by the government to the creative segment of the economy. Besides, partnering with the beneficiaries would not only attract a broader international market, but also put to rest, insinuations that the fund is open to box office heavy weights.