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Uche Henry
The executive management of the Nigerian Export Import Bank (NEXIM) led by Mr. Abba Bello, recently marked its third anniversary in office.
Indeed, it was a time for stock taking for the team and its stakeholders, as Daily Sun reviews the landmarks that underpinned a turnaround in the life of the nation’s premier export finance bank from several years of insolvency to profitability in its desire to change the narratives in the non-oil exports sector.
The volume of goods and services produced and sold by any nation to other countries in a given year, often determines the strength of its local economy. This is as elementary economics teaches that a strong export base could bolster national self-reliance, creates jobs, ensures efficient resource allocation and facilitates capital formation for a country.
Indeed, the rapid growth and transformation of the economies of Hong Kong, Singapore, South Korea, and Taiwan were largely instigated by the strong export-led policies their governments implemented between 1965 and 1995.
While Nigeria has attempted to play in this turf for many years, not much has been achieved in the export of manufactured goods from independence.
However, having lost much grounds over these years, some of the country’s specialised development finance institutions have now taken up the gauntlet to build a strong export -oriented economy with the good news today being that Nigeria is now on the path to joining the comity of nations with strong export sector following some valuable lessons learnt from the Asian Tigers.
Right from 1986, when Nigeria pursued some export -led strategies, to the present emphasis on non-oil export products like cocoa, groundnut, cotton palm produce, rubber and grains, it had always taken cognisance of the dangers posed by the perennial fluctuations in the price of oil in the international market.
With the recent outbreak of COVID-19 pandemic and the price shocks suffered by primary commodity exporters have faced, there is no better time for Nigerian export oriented agencies to attempts to open up the sector especially given the declining commodity prices.,
Some of the measure being implemented by relevant agencies of government are evidently leading to major breakthroughs in the nation’s efforts to build a strong non- oil export economy.
As a critical institutional component of this strategy following its establishment in 1991, the Nigerian Export-Import Bank (NEXIM) has continued to devote its energy toward ensuring sustainable non-oil exports growth.
By its enabling Act, NEXIM exists to provide finance and risk bearing services to exporters and has over the years played a leading role in defining the country’s export market.
However, since April 2017, when the Buhari administration appointed the agency’s new management with Mr. Abubakar Bello, a seasoned banker at the helm of affairs, the desire to launch a new beginning for the country’s export sector has been compelling.
As expected, the team had hit the ground running in its commitment to create a vibrant export sector for the country.
One can easily decipher this commitment from the fact that despite inheriting a huge portfolio of non-performing loans, weak internal processes, dwindling confidence in the bank by regional and international partners, coupled with an apparent lack of professionalism in the conduct of its business, the new management had in the last three years refocusing the organisation for more stellar performance.
From implementing a strategic re-alignment of business focus, aggressive debt recovery drive to the execution of bold initiatives to bolster its impact on non-oil exports, the Bello -led management broke new grounds to reposition NEXIM as a catalyst for growing Nigeria’s non-oil export market.
From a state of insolvency over three years ago, NEXIM was returned to profit.
The management team had steered NEXIM from the brink of insolvency to profitability in three years. From posting a loss of N8.03billion in 2016, and another loss of N569million in 2017, the trend of losses was reversed to consecutive record profit of N1.09billion in 2018 and N2.03billion in 2019.
This, it did through a commitment to open the country’s maritime industry in line with its target to develop inland waterways, boost maritime trade and enhance the volume of Nigeria’s exports.
Against this backdrop, NEXIM successfully facilitated the consummation of a tripartite agreement between Sealink Consortium and the Federal Government of Nigeria.
The deal aims to consolidate efforts to establish a regional shipping company through a public private partnership (PPP) that will see an increasing use of Nigeria’s waterways for transporting goods. The execution of the partnership will promote trade and mitigate the transport and logistic challenges that often escalate the cost of trade transactions within the West African subregion.
When fully operational, the initiative will also help relieve pressure on Nigerian roads, introduce cost efficiencies in transport logistics and enhance regional trade between Nigeria and other countries.
“The idea behind the MoU is to facilitate export of the solid minerals out of the country, building efficiencies in the nation’s sea transport system. Sealink will serve in the evacuation of the raw materials from the hinterlands through the inland waterways. For us, this is a milestone. Providing effective logistics; providing diversification sources for the nation’s economy and creating jobs” Bello, NEXIM managing Director /Chief Executive said.
Under the terms of the deal, Sealink will not only be expected to foster maritime transportation of goods from within the country but will also facilitate trade within West Africa. The partnership is of historic significance in part because there are currently no vessels that facilitate trade between neighbors in West Africa. Sealink is thus, positioned to fill the gap.
Revamp of CBN intervention programmes for export growth
Indeed the past three years have also seen stronger collaboration between NEXIM Bank and the Central Bank of Nigeria in the management of two intervention schemes to boost funding support to the non-oil export sector, under a new philosophy of Produce, Add Value and Export (PAVE).
The first of the scheme was the N500 billion Non-Oil Export Stimulation Facility (NESF) initiated by the CBN, in collaboration with NEXIM to help redress the declining export financing and reposition the sector to increase its contribution to economic development. The facility is designed to improve access of exporters to concessionary finance to expand and diversify the non-oil export baskets; attract new investments and encourage re-investments in value-added non-oil exports production and non-traditional exports; and shore up non-oil export sector productivity and create more jobs. Other impact areas include supporting export-oriented companies to upscale and expand their export operations as well as capabilities; and broadening of the scope of export financing instruments.
Within the past three years, due to process enhancement and an aggressive drive to make a difference, the Abba Bello Management team have processed loans under the scheme totaling N39.45bn to 27 export companies.
The second intervention was the N50billion Export Development Fund (EDF) structured to stimulate and increase funding, especially to Small and Medium Enterprises (SMEs) towards facilitating regional industrialisation for value added exports and broadening Nigeria’s export basket and market destinations. Since the CBN released the funds to NEXIM in February 2018 the bank has deployed a total of N52.9 billion to support 62 strategic export related projects.
The ECOWAS Trade Support Facility launched a few years ago has been taken to the next level under the Abba-led administration. The export financing framework was designed to support small traders operating in the regional market to further the regional protocol under the Economic Community of West African States (ECOWAS) Trade Liberalisation Scheme (ETLS). The bank said it is poised to assist Nigerian exporters to upscale their products in readiness for the commencement of the African Continental Free Trade Area (AfCFTA)
NEXIM is the national guarantor under the Inter-state Road Transit Scheme (ISRT), designed to prevent diversion of goods transported by road to other ECOWAS countries, to prevent revenue leakages in member countries. Given that the operationalisation of the ISRT scheme requires inter-agency cooperation, the bank said it is forging necessary alliances with other government institutions and other ECOWAS countries for successful implementation of the programme.
It has also been promoting an export trading company, called NEXPORTRADE Houses Limited, in partnership with the export group of the Manufacturers Association of Nigeria (MAN) and the Nigerian Export Promotion Council (NEPC). The Bello-led management is currently working with other stakeholders to rebrand and retool the operations of the company.
It is using NEXPORTRADE to provide a platform for SMEs to trade in the regional market by providing warehouses in other African countries where SMEs can display their goods to enhance their access to the regional market.
NEXIM bank’s introduction of a State Export Development Programme is also seen as another strategy to keep all stakeholders connected in the effort to build a virile export sector that would make Nigeria competitive on the global stage . Through this programme, NEXIM is working with every state of the federation to develop at least one exportable commodity in furtherance of government’s objective under One State One Product programme. The initiative is also targeted at promoting regional industrialization and poverty alleviation. Under the scheme, the bank has earmarked at least N1billion under favorable terms and conditions to each state of the federation for offer to the target beneficiaries, which are mostly SMEs.
The State Export Development Programme also includes an Aggregator scheme, whereby the bank provides support to a large exporting company, who in turn could support a large number of farmers under an outgrower arrangement. This ensures that the bank supports the entire export value chain, particularly in the agricultural sector.
NEXIM is a major partner of the nationwide MSME clinic, being conducted by the Presidency under the office of the Vice President. Under the initiative, NEXIM bank has reached out to many SMEs and made vital contributions towards the provision of common facility centers towards assisting SMEs to upscale their products, thus increasing their domestic and international competitiveness.
In December 2018, the bank signed a tripartite agreement with AFREXIMBANK and Nigerian Export Promotion Council for a partnership to provide $1 billion financing to support Nigeria’s trade and investments in other African countries. The Bank has since agreed modalities for the disbursement of the fund with Afreximbank and has started processing applications from exporters with focus on the regional market.
MASS as diversification compass
To ensure fidelity to the bank’s mandate as well as align corporate actions towards deliberate results and impact, the Abba Bello Team on resumption developed a new corporate strategy 2018-2022, which aims to make the Bank one of the leading export financing institution in Africa. In doing this, the bank revalidated its target sectors, described by the acronym MASS, which stands for Manufacturing, Agro-processing, Solid Minerals and Services. This MASS agenda serves as a corporate compass that guides institutional efforts designed to support the Buhari administration’s diversification strategy.
Driving value addition
NEXIM bank within the past three years has also made remarkable strides in supporting exporters to embrace value addition in the lines of exports. The push is in line with its PAVE philosophy which stands for “Produce, Add Value and Export” with the objective of helping Nigerian exporters earn more.This renewed drive is significant. For instance, Nigeria is the largest producer of shea in the world but has no major footprint in the export of shea products. The story is the same for many other Nigerian exports like leather, cocoa etc.
NEXIM is orchestrating change. In 2018, one of the companies funded by the bank did the first major export of shea butter out of Nigeria. The bank is also supporting operators in the leather industry to move up the value chains by producing leather products such as shoes, belts and bags.
Overall, the efforts of the Bello -led management team to reposition NEXIM bank are not only timely but necessary.
