In a move to diversify the economy and boost the growth of non-oil export sector, the Central Bank of Nigeria (CBN) recently announced the disbursement of Non-oil Export Stimulation Facility (NESF). The N500bn loan facility will be administered by the Nigerian Export-Import Bank (NEXIM) to local businesses and stakeholders, who operate in that sector of the economy, in line with section 31 of CBN Act. The loan, according to the CBN, will attract single interest rates of between 5-9 per cent.
We recall that the NESF was introduced in 2016 by the CBN to stimulate growth in the non-oil sector of the economy and drive its foreign exchange earnings. The facility was essentially designed to redress the declining export credit and reposition the sector to increase its contribution to revenue generation and economic development.
Essentially, the loan is expected to improve export financing, increase access of exporters to low interest credit and offer additional opportunities for them to upscale and expand their businesses and improve their competitiveness.
The loan is also expected to provide funding for working capital and stocking requirement of non-oil exports. It is equally structured to take care of trade export financing and pre and post-shipment funding gaps.
According to the guidelines for disbursement of the loan, facilities with a tenor of up to three years would be granted at a maximum interest rate of 7.5 per cent annum. Also, facilities with tenor of over three years, would be granted at a maximum interest rate of nine per cent per annum.
NESF covers the export of goods wholly or partly processed or manufactured in the country as well as export of commodities and services, which are permissible and excluded under existing export prohibition list. It also permits the importation of plant and machinery, spare parts and packaging of materials, regarded for export-oriented production that cannot be produced locally, among others.
We applaud this necessary but timely intervention by the CBN aimed at encouraging non-oil exports and diversification of the economy. It came at the right time when the economy is in dire need of rejuvenation. To fast track the disbursement of the loans to target beneficiaries, we call on all the qualified businessmen and women to take full advantage of the loan facility to help redress the existing stifling business climate and grow the economy. The country, which is just beginning to witness a bounce in the economic growth indicators, needs measures such as the NEXIM loan facility to sustainably grow the economy.
Without doubt, the new measure is bound to improve productivity and encourage rapid industrialisation of the country. When industries produce for export, more foreign exchange would be generated for the economy and the much-needed jobs will be created. The job creation component becomes more attractive when the country’s rising unemployment figures are put into consideration.
If the aim of the loan is to boost non-oil export and diversify the economy, we suggest that the loan facility be given at a lower interest rate as done in advanced economies. For the purpose of the loan to be achieved, let the interest rate not go beyond five per cent.
We say this because in most of the developed economies in Europe, America and Asia, the interest rate is hardly more than two per cent. Let more of such loan facilities be made available to capture more small and medium scale businesses, the driving engine of any economy.
While we call for a transparent implementation of the loan facility, we advise that only qualified businesses should benefit from it so that the aim of establishing it will not be vitiated. Above all, let all the stakeholders work in concert to make this initiative succeed.