The President Goodluck Jonathan Transformation Agenda which has almost become a household name is intended to permeate a wide spectrum of the nation’s everyday life, ranging from housing, industry, energy, entertainment to the whole gamut of every facet of our social life. The present government is credited with the turnaround being experienced in many of the country’s productive sectors.
“Perhaps, President Jonathan Jonathan has done more than previous administrations to ensure that various Development Finance Institutions (DFIs) are empowered to effectively contribute to the national transformation agenda. The injection of billions of naira into the Bank of Industry, Nigerian Export-Import Bank, Bank of Agriculture and the Federal Mortgage Bank and others are pointers to this,” a policy analyst, Yusuf said.
Laudable as the Transformation Agenda may seem, it would have remained a mere wish-list without the requisite funding needed to translate it to reality. What is of note is that all of the benefits that the transformation programme advocates, require huge financial outlay. Besides, the programme requires long-term sustainable funding which the commercial banks are not enabled to provide, given the short-term nature of their credit portfolio. The good news is – NEXIM Bank has risen to bridge the gaps.
In no other sector is the role of NEXIM in driving the Transformation Agenda of the President Goodluck Ebele Jonathan administration’s agenda more pronounced than in encouraging the manufacturing, mining and the agric sectors in producing non-oil goods for export. This way, the volume of external trade is being gradually shifted away from crude oil (upon which the nation largely depends), to non-oil items that are abundant and widespread in the country, but which have largely suffered neglect due to a multiplicity of factors, chief of which is funding.
The Managing Director/CEO, Nigerian Export-Import Bank, Robert Orya, is upbeat about the success so far recorded in the Jonathan Transformation Agenda of which NEXIM Bank has played a pivotal role.
According to him, that the important story of Nigeria’s advancement from where we are would not be told by earnings from our hydrocarbon reserves. The success, he said, would be driven by a robust manufacturing industry; self-sufficiency in agriculture for food and processing so that excess yields could tap export markets; world-class service sector to serve domestic industries, global outsourcing and export markets, and commercial access to wider range of mineral deposits that dot every nook and cranny of our country. It’s not for lack of ideas that the export of non-oil goods has remained at infancy, the problem, amongst others, has to do largely with the will and commitment to focus and redirect resources to the non-oil sectors and take cognitive action to actualize what is largely recognized as a cash cow.
Although NEXIM was established to play this role, President Jonathan’s commitment to focus on these sectors in his bid to improve on the nation’s revenue profile, outside crude oil sales and determination to create employment for the nation’s educated and skilled vibrant youths, also played a key role. “What the Administration of President Jonathan has done, perhaps more than any previous regime, is combine commitment with practical actions in diversifying the Nigerian economy away from its sole reliance on crude oil for external revenue,” Orya said.
The inhibitions standing in the way of operators in the identified sectors from accessing finance have to be addressed. NEXIM Bank, having identified the drawbacks, intervened to set the ball rolling in a manner that facilitated the delivery of the intended benefits of the programme. As the NEXIM Bank boss put it: “Development Finance Institutions are bearers of risks which commercial lenders would term excessive, and therefore avoid.”
New industries, new initiatives, people without financial collaterals, projects which cannot pay commercial cost of finance, among others, have been beneficiaries of funding by Development Finance Institutions, such as NEXIM, Orya said, adding that “this way, business formation can continue, people can strive to innovate, bias against social and reputational collaterals are reduced, and projects can be incubated and nurtured to when they can attract lending from commercial banks.”
He said that NEXIM Bank has risen to the challenge by assuming this critical role in Nigeria where banking penetration is less than 15 per cent of the population and where commercial lending rates are prohibitive, land titles are not even available to owner occupiers, but where innovators are born daily, and where we have to eradicate poverty.
He said as a DFI, NEXIM Bank has to assume its natural function in driving the Transformation Agenda of the government, by supporting the export-prone sectors, increase foreign exchange earnings and create employment, so as to free government to focus on the provision and delivery of necessary infrastructural projects to aid implementation of programmes under the plan of structural transformation of the Nigerian economy that cannot be delivered by commercial lending.
Loan Profile: Orya pointed out that NEXIM Bank is the official and sole Trade Policy Bank of the Federal Government, saying in this regard, the bank provides financing, risk-bearing facilities, market information and value-added advisory services to businesses towards deepening export-oriented investments in the country’s non-oil sectors of manufacturing, agro-processing, solid minerals and services, for job creation and economic growth. He said the Export-Import Bank has provided N12 billion in lending to Nigerian export manufacturers over the four-year period from August 2009 to April 2013, adding that it has funded agro-processing export businesses, to the tune of N6.6 billion over the same period.
Against the Structural Adjustment Programme imposed by International Monetary Fund (IMF) in the ‘80s which emphasizes the need to restructure the fabric of the Nigerian economy, what the GEJ Transformation Agenda has done, perhaps more than any previous regime, is to combine commitment with practical actions in diversifying the economy away from sole reliance on crude oil for external revenue. ” From the institutional viewpoint of Nexim Bank, I am excited at the prospects of playing a role in diversifying the Nigerian economy and harnessing the immense potentials of the sectors which had, hitherto, been neglected. Indeed, the role Nexim Bank is playing is unique as a development finance institution (DFI), “ Orya stated. Accordingly, in the solid mineral sector, NEXIM Bank is working in partnership with industry stakeholders to take formal mining off the ground again, Orya said, adding that Nexim Bank has so far provided over N2 billion in early funding to help some commercial miners to develop their site in order to start operation and invite further funding from other sources apart from the long-term commitment of Nexim Bank to the nascent industry.
In pursuit of its drive to impact on other segments of the economy as part of the Transformation Agenda, the bank has taken on the management of the Nigerian Creative and Entertainment Industry Stimulation Loan Scheme (NCEILS). The fund, which is lent at below commercial rate, is meant to fund businesses across the entertainment value-chain, including film production, cinema operation, music recording, intellectual property development and recording studios, as a revolving fund with repayment terms. He said to date, Nexim Bank has disbursed over N1.4 billion for the Fund, adding that Entertainment industry project proposals under review exceed N5 billion in value. Overall, disbursements to the creative and entertainment industry, including the services sector is about N8.5 billion, covering support to transportation and hospitality industries.
