Monday, October 15, 2012

Nigeria: Nexim Bank - What's There for Non-Oil Export Marketers ?

Lagos — With an average annual growth of 20 percent in the last five years, non-oil export will hit $3billion (N465billion) by the end of this year and well over $4billionn (N620bilion) by 2015. In this report our correspondent looks at how recent reforms in Nigerian Export-Import Bank (NEXIM Bank) are adding value to Nigeria's rising non-oil exports.

Oil still accounts for over 90 percent of total export in Nigeria. This has largely made Nigeria a mono economic country, with little or no competitive edge on the comity of nations. Experts have repeatedly called for the diversification of Nigeria's economy to include robust non-oil export earnings with strong emphasis on agro-allied products and other manufactured products.

Though the non oil export earnings have been slow, surely it's growing. The Nigerian Export Promotion Council (NEPC) had said in April 2012 that Nigeria exported 1.186 million metric tonnes of non-oil products valued at $2.765 billion (N428.57 billion) in 2011 from over 117 products being exported to different countries.

The non-oil export figure, according to the Executive Director/Chief Executive Officer, NEPC, Mr. David Adulugba, represents an increase of 19.15 percent over the $2.32 billion (N359.6 billion) recorded in 2010, and 61.97 percent over that of 2009.

Adulugba, indicated that the 2011 figure was "a far cry from what it should have been for the high incidence of unrecorded exports and other challenges. Some include: challenges inhibiting optimal performance of the sector, inadequate funding, restricted access to credit facilities, infrastructural deficiency, weak logistics to support supply chain, dominance of primary commodities and low productive capacity.

He expressed optimism that with an average annual growth of 20 percent in the last five years, non-oil exports will hit $3b billion (N465bilion) by the end of this year and well over $4 billion (N620 billion) by 2015.

Located in this subtle and steady rise in non-oil export is NEXIM Bank's intervention under the management of Mr. Roberts Orya, the MD/CEO in the last three years.

In financing non-oil export, "NEXIM Bank supported Nigerian exporters mainly the small and medium enterprises (SME's) with some engaged in Greenfield projects, to the tune of N23.33 billion and issued guarantees valued at $27.3 million between 2009 and August 2012. These interventions were in our target sectors with high growth potentials of Manufacturing, Agro - Processing, Solid Minerals and Services [MASS Agenda]," Orya has said while presenting his three-year score card.

The bank as at August 2009, as recounted Orya, had an "alarming decline in the quality of risk assets as the bank's total loan portfolio as at 20th August 2009 was N14.6 billion out of which 72 percent was non performing and within that category N10.03 billion or 69.05 was declared completely lost.

This resulted in the "decline in the bank's income; paucity of funds with the outstanding call up/unpaid capital standing at N32.74 billion leading to decline in creation of risk assets; depletion of the bank's shareholders funds as a result of accumulated losses; significant decrease in income and tolerance of excess & escalating overheads; worsening assets quality and poor record keeping; lack of strategic focus and distraction from core mandate; ineffective Risk Management Framework; non- adherence to corporate governance tenets; and over bloated staff strength with significant skill gaps."

The Corporate Transformation Project , the Project Spring four sectors, as it was tagged focused on manufacturing, agro-processing, solid minerals & services which have several employment slots and foreign exchange earning potentials in the non-oil sector of the Nigerian economy.

Strategic objective as announced was to be a relevant player in the export market and significantly influence government trade policies.

A five-year strategic plan with clearly defined market penetration action plans with responsibilities and timelines was evolved. The bank also defined its business posture to that of complementing the role of the commercial banks and other Development Financial Institutions (DFI's) by focusing on the unreserved markets especially ECOWAS, Africa, Asia and the rest of the world.

These reforms saw improved shareholders support and saw them inject, fresh capital injection into the bank but with strong supervisory and regulatory oversight and guidance from the CBN and federal ministry of finance.

With the turnaround of the bank's performance, management ensured an appreciable return on the equity investment of the shareholders. Accordingly a dividend for the 2010 financial year performance was declared and paid, which was the first time since year 2003 when dividend was last paid, he said.

The MD also indicated that the bank's growth is impacting on the unemployment rate in Nigeria. "The bank through its various operational interventions generated/sustained direct jobs for over 14,358 as at August 31, 2012," Orya said.

NEXIM is also funding the creative arts and entertainment industry from the $200 million intervention bank.

Orya explained that in funding intervention, the bank extends loans to eligible companies in all the value-chain within the creative arts and entertainment industry under the Nigerian Creative Arts & Entertainment Industry Facility Scheme.

The bank disclosed that the total funding support to the Industry by NEXIM so far comprised N700 million and N536 million disbursed amounts to six beneficiary clients.

He explained that the bank's funding interventions thus far were for various entertainment value chains like distribution and exhibition, infrastructure, digital studios and digital equipment as well as film production.

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