Lagos — Since 1986, Nigeria has pursued an export-led strategy. This includes an emphasis on non-oil exports such as cocoa, groundnut, cotton, palm produce, rubber, and grains owing to perennial fluctuations in the prices of oil in the international market.
One component of this strategy was the establishment of the Nigerian Export-Import Bank (NEXIM) in 1991. Designed as an export credit agency, NEXIM provides finance and risk-bearing services to exporters and has over the years played a leading role in defining the country's export market.
Owing to the twin shock of the COVID-19 pandemic and the sudden fall in international oil price, the Nigerian economy is experiencing a fall in exchange earning, a fall in Gross Domestic Product (with latest figures showing a contraction of over 6 percent), depletion of external reserve, currently at $34 billion, scarcity of foreign exchange, and high cost of goods.
These multiple fiscal constraints have re-ignited the need to ramp up non-oil export and diversify foreign exchange earnings. This is because the volume of goods and services that a nation produces and sells to other countries impact the strength of its local economy.
A strong export base therefore promotes national self-reliance, creates jobs, and ensures efficient resource allocation and capital formation for a country.
The NEXIM is being boosted to ensure this export base is realized by Nigeria. In April 2017, the President Muhammadu Buhari's administration appointed a new management for NEXIM under the leadership of Mr. Abba Bello. The team inherited a huge portfolio of non-performing loans, weak internal processes, dwindling confidence in the bank by partners and a lack of professionalism in the conduct of the bank's business.
Three years on, analysts are of the opinion that there has been a turnaround from the re-alignment of business focus, aggressive debt recovery drive to the execution of bold initiatives.
A public policy analyst, Terhemen Ikyaave in an evaluation said to our reporter: "The Abba Bello management team is breaking new ground and repositioning NEXIM as a growth catalyst for Nigeria's non-oil exports.
"To start, Mr. Abba Bello and his team have done an impressive job of steering NEXIM from the brink of insolvency to profitability. From posting a loss of over N8bn in 2016, another loss of N569m in 2017, the bank has reversed the trend to record consecutive profits of over N1bn in 2018 and N2.03bn in 2019."
Ikyaave also mentioned the historic breakthrough in longstanding efforts to open the country's maritime industry.
He said: "Last month, NEXIM enabled the consummation of a public-private partnership between Sealink Consortium and the federal government to establish a regional shipping line."This is significant. The regional shipping line will promote regional trade and reduce the transport and logistics challenges that increase cost of trade. It will also expand the potentials of the $1billion agreement that NEXIM signed with AFREXIMBANK and the Nigerian Export Promotion Council in December 2018 to support Nigeria's trade and investments in other African countries." The analyst further noted a boost in collaboration between NEXIM and the Central Bank of Nigeria to fund the non-oil export sector. A notable result he said is the disbursement of loans totaling over N39bn to 27 export companies under the Non-Oil Export Stimulation Facility.
There is also the provision of over N52bn to 62 high-value projects under the Export Development Fund that encourages exporters to earn more through value addition. In 2018, one of the beneficiaries made the first major export of shea butter out of the country. Daily Trust reports the bank's introduction of the State Export Development Program that promotes One product Per State for export. Under the scheme, the bank has earmarked about 1bn per state for offers to qualifying businesses.
Ikyaave noted that the bold initiatives of the Abba Bello team are timely and inspire hope for the country.
He said, considering the turmoil in global oil markets, the resulting negative impact on the country's finances and economy, Nigeria needs a more aggressive strategy to reduce dependence on oil.