Nigeria is a country of ironies. Its officials make policy pronouncements they do not believe in. Most times, the action of government is the direct opposite of its policy statements. President Jonathan has stated time and time again that his focus is on the transformation of the Nigerian economy to becoming one of the 20th largest economies in the world come 2020.
The ambition is great and inspiring but there seems to a lot of gaps that if the unexpected happens that Nigeria has 24 hours of power supply, the agricultural sector deliver goods along the value chain, how will the products be sold? To whom and where is not currently on the drawing board. The Minister of Trade and Investment seems to be more interested in the direction of foreign direct investment without planning how goods produced in Nigeria are to be appropriately marketed and sold out there.
Nigeria is at the moment not engaging the appropriate technique of trade financing.
In other countries that are serious with export, apart from the various export incentives put in place and administered by export organisations, they set up a viable trade financing banks that guarantee export and import from their countries.
The United States of America which is the center of private enterprise has the US Export-Import Bank, EXIM. The bank helps the US economy by encouraging export of US products. The bank gives credit line to importers of US products from other countries. The same applies to China, India, Britain and others. Very often, you hear Nigerian banks announcing that they have secured credit line from US and Europe that is available to Nigerians who want to buy products from these countries.
By financing Nigerians to buy US-made goods, the bank is encouraging increased production in the US and other countries. As companies in these countries expand their production line to meet demands from the importing countries, they help grow their economy and create the much needed jobs. Nigeria, the importing country, instead of producing locally will buy made in US or China and export jobs to where the credit line is coming from that would have been created.
If this government is serious, it must begin to think of how to recapitalise the Nigeria Export-Import Bank to position it for a greater role now and in the future. The Federal Government has reiterated that if Nigeria must achieve the set target of becoming one of the 20 largest economies in the world, there was the need for the promotion of value added export of locally produced goods.
The expectation is that with the transformation agenda, the promotion of value added export of Nigeria’s indigenous products and generation of additional foreign exchange for the country should be paramount in the minds of Nigeria’s economic policymakers.
But contrary to this noble expectation, the trade promotion organs of the government have been grossly neglected.
The Nigerian Export-Import Bank that should play a leading role in the export of Nigeria’s non-oil products have been relegated to the background by government. It is highly under-capitalised and cannot reasonably intervene in trade financing.
Take for instance, the Federal Government reconstituted the Board of Directors of the Nigerian Export-Import Bank on 14th August 2009, including the appointment of a new executive management team. The state of affairs of the bank at the time of the assumption of duty of the new executive management in August 2009 was that the financial and operational performance of the bank had deteriorated to an alarming level, in addition to a myriad of other problems, principal of which were:
*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 per cent was non-performing and within that category, N10.03 billion or 69.05 was classified as completely lost resulting in decline in the bank’s income; paucity of funds with the outstanding called 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; over-bloated staff strength with significant skill gaps; lack of visibility of the bank.
But the bank has been successfully turned around and has since started reaping the gains of the Corporate Transformation exercise as it has been fully repositioned to deliver on its mandate through a robust strategy.
For a country that is aspiring to join the league of export-driven economy, Nigerian policymakers must learn to place emphasis on trade promotion and financing. Planning this along with investment in production in all sectors of the economy is the way to go. If Nigeria fails to plan for the export of products from the value chains being developed now, it means the government set out to fail from the onset.
