Leadership (Abuja)

27 January 2014

Nigeria: Nexim Bank Rated Best Performing African Development Finance Institution

The ongoing reforms at the nation's trade policy bank, the Nigerian Export Import Bank has earned it a continental award as the Association of African Development Finance Institutions (AADFI) has rated the Nigerian Export-Import Bank- NEXIM as 'Best Performing African DFI.'

The decision according to the association was an outcome of the '2013 Annual AADFI CEOs Forum of African Development Banks and Finance Institutions' on the theme "Strengthening African DFIs with Appropriate Standards and Guidelines: 3rd Peer Review & Rating of African DFIs" held at the Serena Beach Hotel & Spa, Mombasa Republic of Kenya from 13-15 November, 2013. The Forum marked the conduct of the 3rd Peer Review of DFIs with the AADFI Prudential Standards, Guidelines and Rating System (PSGRS).

In the letter conveying the message to Nexim Bank, Titled "Congratulation On Your Rating As Best Performing African DFI", Mr. J.A. Amihere, the Secretary General of AADFI, stated, "In the light of your institution's rating as 'Best Performing DFI", we are pleased, on behalf of the Chairman of the Association, to extend our warm congratulations to your Board of Directors and Management Team on this record performance, and urge you not to relent in your effort at entrenching best practices in the operations of your institution as you continue to sustain your development financing mandate."

According to AADFI, the Peer Review Exercise with the AADFI PSGRS was not a competition but an approach to evaluate DFIs in the various areas of governance, finance and operation in order to identify areas of weaknesses for self-improvement and strengths for consolidation.

Suffice to state that considering NEXIM Bank was in the 'Negative rating' for a long time before the Roberts Orya-led Management took office in August 2009, it is instructive to note that it quickly moved to 'B' rating in 2012, then progressed to 'Best Performing African DFI' in 2013.

The state of affairs of NEXIM at the time Mr. Roberts Orya took charge of the then newly-constituted Executive Management on August 20, 2009 was such that the financial and operational performance of the Bank had deteriorated to a punching level, in addition to a myriad of other problems. These extended to an alarming decline in the quality of risk assets as the Bank's total loan portfolio of N14.6 Billion was non-performing by 72%. Within that category, N10.03 Billion or 69.05% was classified as completely lost resulting in a decline in the bank's income.

The net effect was a depletion of the Bank's shareholders funds as a result of accumulated losses, significant decrease in income and tolerance of excessive and escalating overheads. Coupled with these were the issues of non-adherence to corporate governance tenets, non-existent risk management framework, lack of strategic focus and digression from core mandate, lack of visibility of the Bank, etc.

In light of the above, the Executive Team set to reverse the problems and ensure NEXIM Bank was able to contribute significantly to the economic development of Nigeria. Under the leadership of its former Board Chairman, Dr. Kingsley C. Moghalu, the Management received approval in 2010 to reposition the Bank to effectively deliver on its statutory mandate and become an 'effective enabler of Nigeria' economic transformation. Accordingly, a Corporate Transformation exercise was initiated centering on the key perspectives of Strategy, Risk Management and Corporate Governance, Financial Performance, Operations, Organization and People, with assistance from KPMG Professional Services.

The outcome of the exercise was the Corporate Transformation Project (Project Spring) which led to the re-definition of the Bank's Mission, Vision and Strategic Objectives targeting four sectors, namely, Manufacturing, Agro-processing, Solid Minerals & Services, which have high employment and foreign exchange earning potentials in the non-oil sector of the Nigerian economy. This has become the MASS Agenda of the NEXIM Bank.

Subsequently, the Management set out clear transformation implementation activities which included a 5-Year Strategic Plan marshalling out the following areas -

Clearly defined market penetration action plans with responsibilities and timelines;

Robust corporate governance and risk management architecture/frameworks in line with international best practice;

Brand strategy and brand engagement strategy to improve visibility and project the Bank's image;

Clearly defined roles and responsibilities;

Organization-wide key performance indices (KPIs) and scorecard to ensure effective monitoring of the Bank's operations and performance by its staff and shareholders;

Redesigned and roll out of policies, processes and procedures with documented business functional requirements for the redesigned process to ensure efficiency;

IT transformation project which will support the re-designed business processes with minimal approval levels, overlaps, redundancies as well as adequate controls; etc.

The Managing Director of NEXIM Bank, Mr. Roberts U. Orya sees the 'A' rating by AADFI as a well-deserved reward for all the hard work, painstaking commitment and dedication that his executive management team and staff have put into rebuilding an otherwise moribund institution over the past four years. According to him, "The current rating of NEXIM as 'Best Performing African DFI' from a negative rating in 2011 by AADFI is a clear testimony that the Corporate Transformation initiative we embarked upon since August 2009 has largely succeeded. The Bank is now better repositioned to deliver on its mandate through more capital injection and other institutional support from our two Shareholders - CBN and Federal Ministry of Finance in terms of supervisory, regulatory oversight and guidance functions. This has increased our capacity to support the growth of the non-oil exports and complement the export boosting activities of commercial banks. In all, we have consistently maintained a robust strategy, efficient operations through sustenance of highly skilled and motivated personnel."

Continuing, Mr. Orya stated that "... the ultimate plan of the Bank is to invite an international rating agency, may be Standard and Poor or Agusto & Co, or any of such agencies to rate the Bank... .ideally, this is the time for such a rating... ."

In concrete terms, between August 2009 and December 2013, the Bank has supported Nigerian exporters, mainly Small and Medium Enterprises (SME's) in the MASS sectors, to the tune of N30.99Billion, and issued Guarantees valued at US$27.30Million.

In terms of developmental impact to the Nigerian economy, the Bank has through its funding interventions generated/sustained over 21,075 direct jobs, in addition to many indirect jobs and facilitated the generation of estimated US$250.32Million annually in foreign exchange earnings.

In line with the strategic objective of building a profitable institution with a robust balance sheet, the Management has 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. Dividend for 2011 has also been declared and paid, while dividend for 2012 will be paid after the approval of the accounts by the CBN. This would make it three years of unbroken profitable performance, whilst fulfilling the Bank's role as a development finance institution.

In other areas of its operation, the Bank, within the period under review, has achieved a cumulative loan recovery of N1.82Billion; designed and rolled out a robust enterprise-wide risk management framework.

In terms of branding, communication and visibility, the Bank has created and sustained an amazing awareness of its objectives, products and service offerings across the local, national, and international media through its rebranding exercise.

The net effect of all these is that the Bank, has through its activities, strongly supported and has continued supporting government's policy initiatives, especially Mr. President's Transformation Agenda, with investment and job creation in key sectors of Manufacturing, Agro-Processing, Solid Minerals and Services, including the Creative and Entertainment Industry.

Relentlessly, the Bank is forging ahead with several innovative initiatives and strategic alliances including -

Deepening of intra-regional trade with the launching of ECOWAS Trade Support Facility (ETSF);

Collaboration with the Borderless Alliance (an initiative of the USAID/ West African Trade Hub) to progress the regional initiative aimed at removing non-tariff barriers;

Facilitating the establishment of a Shipping Company (The Sealink Project) to own and operate ocean going vessels within the West and Central African sub-regions; and

Development of the facility guidelines for the Nigerian Creative Arts and Entertainment Industry.

Notably, the Bank has been able to leverage on its balance Sheet to secure lines of credit from institutions like the African Export-Import Bank (Afrexim), the Export-Import Bank of India, the African Development Bank (AfDB) while it has collaboration arrangements with United States Export-Import Bank and other EXIM Banks. The Bank is a member of the World Economic Forum in the Global Growth Company category, and was recently admitted as a member of OECD (Organization for Economic Corporation and Development), in observer status.

The Nigerian Export-Import Bank was established by Act 38 of 1991 as an Export Credit Agency with the broad mandate to promoting the diversification of the Nigerian economy and deepening the external sector, particularly the non-oil through the provision of credit facilities in both local and foreign currencies; risk-bearing facilities through export credit guarantee & export credit insurance; business development and financial advisory services etc.

In pursuit of its mandate of promoting export diversification and deepening the non-oil sector, the Bank's current strategic initiatives are targeted towards boosting employment creation and foreign exchange earnings in the Manufacturing, Agro-processing, Solid Minerals and Services (Tourism, Transportation and Entertainment) industries.

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