EXPORT FINANCING IN NIGERIA, PROBLEMS AND PROSPECTS

ABSTRACT

This research sought to examine the impact of Nigerian Export Import Bank credit terms on non-oil export in Nigeria; examine the impact of Total banking export credit on non-oil export in Nigeria and examine the relationship between non- oil export and Nigeria ’s gross domestic product. The study adopted the ex post facto research design for the period 1990 to 2007 and data were gathered from secondary sources. The study utilized the simple linear regression analysis where the Nigeria Export-Import Bank Credit (NEIXMC), Total Bank Export Credit (TBEC) and Non-oil Export (NOE) were used as the independent variables and Non-oil Export (NOE) and Gross domestic Product GDP as dependent variable for the hypotheses respectively. The result of the hypotheses tested revealed that Nigerian Export Import Bank credit have positive significant impact on non-oil export in Nigeria; Total banking export credit have positive significant impact on non-oil export in Nigeria and Non-Oil Export have positive significant impact on Nigeria’s gross domestic product. Thus the study recommends that; Local manufacturers should be encouraged to expand production and source market globally; export policy implementation agencies should be made to improve on their strategies to boost production and Government should ensure pre and post shipment finance in local currency through rediscounting facility among others.

CHAPTER ONE

INTRODUCTION

1.1  Background of the Study

The growth of any economy is a function of the quality and quantity of goods and services it produces. There is always a tendency to produce and market to earn a living. In the wider society, the quality of life enjoyed very much depends on the quality of goods and services available to the citizenry. There is the development aspect of growth that enables equitable distribution. This entails getting products from one part to the other.

Production in one country could be transported to another to enhance quality of life. Developing nations have the tendency to import greater part of their goods and services from developed nations. To square up with the developed nations, they have to increase production of exportable goods.

Nigerian economy has depended predominantly on crude oil since the discovering of crude oil in the early fifties. Prior to this theirs, cash crops like cocoa, palm produce, cotton, groundnut and cassava have been the mainstay of the economy. These cash crops earned so much foreign reserve of the economy.

Nigerian Bauxite and Cable are the best in the world and are sought for globally. (Soludo, 2009:20).

One would have expected a balance of payment that tilts to the favor of local production. This, however, is not the case with Nigeria as imports far outweigh exports. Export financing is a means of helping local producers process their products for a better market abroad. It is designed to make funds available for local producers to seek for market abroad. The essence of every productive business is to sell to a wider range of customers to reduce cost and continue in business. Oftentimes, it is propelled by the desire to increase the market share, and thus, the clientele. According to Nigerian Export Promotion Council (2009:12), export financing makes fund available for exporters to process there good for export. It notes that in Nigeria, there are many opportunities to explore for exports created by government, noting that there could be logistics that may hinder continuity. Nigerian Export –Import Bank (NEXIM, 2008:19) notes that a lot of exporters do not want to take the risk of assessing funds from NEXIM due probably to high interest rate. But it states that the risk involved in export financing is such as to secure the financier’s investment while monetizing the exporter.

According to Chartered Institute of Bankers of Nigeria – CIBN (2008: 14), export financing enables businesses to take their products all over the world, by enabling the exporter get to many places round the globe to market his products. There are a lot of benefits to a business selling overseas, but there can be a lot of financial risks involved as well. It is important to understand the risks and government regulations before selling overseas. According to International Monetary Fund (2007:122), export credit scheme aids export financing and boosts a country’s Balance of Payment. It notes that if done right, it can be profitable and can sometimes bring a business more profit than selling within the country. Export financing, notes Soludo (2009:15) is loan meant for shipping of products outside a country or region. If you have a product that is good, appealing to another country, and has great potential to sell, you could also consider a venture capitalist to help bring your business where it needs be. “CBN greatly encourages venture capital as export finance. There are also some creative methods of export financing. One of such methods is utilizing a factoring house overseas. Basically the factoring house will purchase the exported products at a discount below invoice value. The factor sells the products at a higher margin. This ensures that the exporter receives his money upfront, which reduces the risk greatly” (McJones, 2010:112)

According to International Development Agency (2010:13), funds are provided to developing countries to help them purchase United States goods and services. McJones (2010:13) observes that IDA services are no longer highly operational in Nigeria, but there are Export Assistance Centers, EAC, that offer technical assistance to exporters of which the Nigerian Version is Export Processing Zone.....

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Item Type: Postgraduate Material  |  Attribute: 68 pages  |  Chapters: 1-5

Format: MS Word  |  Price: N3,000  |  Delivery: Within 30Mins.

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