By Henry Uche
In three years at the helm of its affairs, Abubakar Bello, the enigmatic managing director and Chief Executive of NEXIM Bank has taken the bank through a journey of wholesale transformation that saw it giving a fresh breath of life to several moribund institutions across the country.
Over these past three years, the NEXIM Management Team has implemented a suite of reform initiatives, to help reposition NEXIM as a leading non-oil export development finance institution making tremendous impact as a key driver of the Muhammadu Buhari administration’s plan to boost Nigeria’s non-oil exports.
This has been possible through it’s well designed concessionary financing scheme helping to revamp several moribund local manufacturing firms, supporting a broad range of firms to expand their production capacities while also leading in the regional initiatives to promote increased economic integration and global trade among African several others. The result has been a decent uptick in Nigeria‘s non-oil export earnings coupled with the creation of thousands of skilled and unskilled jobs as factories expand operations and new openings for the unemployed citizens.
With new impetus for growth created by the Abba Bello led- management Nigeria is now experiencing a build-up of financially capable, and competitive non-oil export firms helping to maximise Nigeria’s participation in the regional and global market.
With these institutions up and running through the NEXIM financial muscles, it can easily be concluded that there exists in Nigeria non oil export trade a reasonable cause for optimism about the future of foreign earnings now drying up in several sectors of the economy against the backdrop of declining global oil prices, which accounts for 90 percent of foreign earnings, a reformed and stronger NEXIM Bank that is powering the emergence of financially capable non-oil export firms is so crucial and signals the possibility that the non-oil sector might receive the necessary financial boost to help Nigeria hedge against the ominous effects of low global oil prices.
Although, there has been a recent rally in oil prices to about $64 as economies have began opening up with movement and travel increasing again after the dark days of the COVID-19 pandemic, it is now crystal clear also that the golden era of oil prices at over $100 per barrel may have gone forever.
For one, the US shale boom and the Paris climate accords, have have speedily changed the outlook for future of oil and gas industry. But while there are prospects that major economies like the US, China and Europe will ramp up implementation of green energy policies that would actively shift their economies away from oil at a time when the costs of producing shale is declining through technological innovation, it is however becoming clearer that Nigeria’s oil fossil deposits might someday be less valuable than other oils produced and sold in the coming years.
This reality therefore calls for for deep and sustained action with Nigeria having just a narrow window of opportunity left for low hanging fruits to re-engineer the lopsided structure of its foreign earnings basket. The urgent need to move at blistering pace towards a rapid economic diversification by building local manufacturing capacity and bolstering non-oil exports is the more reason why recent developments at NEXIM, the leading non-oil development bank, is so significant today.
Increasing financing of non-oil export firms
Looking at the bank’s recent performance matrix, industry analyst have raised thumps up to management’s targeted approach to significantly spreading and improving access to concessionary financing of non-oil export firms. In the past three years, NEXIM Bank had processed a record total of 227 financing applications valued at N173billion for a range of non-oil export businesses. The amount includes a naira component totalling N159.27billion and a dollar financing portion in the sum of US$37.67million, equivalent of N14.3billion.
So far, the bank has successfully disbursed over N68billion to 68 of the 227 beneficiary businesses, while over N30billion is currently under processing for another batch. The financing was structured under the bank’s Export Development Fund (EDF) window that is specifically designed to support export-oriented enterprises in the non-oil exports value-chain cutting across different segments from manufacturing, agriculture, solid minerals to services.
Revamping manufacturing plants , trade facilitation
The historic increase in NEXIM Bank’s financing interventions has handed many non-oil export businesses a much-needed financial lifeline to grow and thrive. Beneficiary operators are deploying the funds to resuscitate moribund manufacturing plants, while others are scaling up production levels to enable them produce more. These expansions have led to the creation of thousands of decent – skilled and unskilled – paying jobs for Nigeria’s teeming unemployed population.
Equally notable is the fact that a greater number of local businesses are engaging in high profile regional and global transactions on the back of the Bank’s financial boost. And, as a result recording higher foreign receipt that have positively impacted the volume of Nigeria’s export earnings in recent time.
Specifically, records show that over the past three years, Nigeria has received about $182.31million and €203,018.42, the equivalent of N70.40billion, as export proceeds from some of the NEXIM funded projects that have repatriated their income. More of such receipts are expected from other projects that are yet to complete their transaction circles.
Another positive indicator of NEXIM Bank’s impact is that many of the export businesses, which the Bank supports now feature prominently on the list of Top 100 exporters published annually by the Central Bank of Nigeria. The number of companies on the CBN Top 100 have grown from 2 in 2017 to 18 today.
The broad and longer-term implication of this trend is that NEXIM is, in effect, powering the emergence of a cross-sectoral and financially resilient network of non-oil export businesses that would collectively lead the charge towards the rapid growth of the country’s non-oil exports.
Strategy for enhanced exports
A lot of the successes recorded by the bank can be attributed to sense of focus and professionalism by the management of NEXIM Bank within the past three years. On assumption of office in May 2017, the Abba Bello led management crafted a Strategic Action Plan that laid out a clear but ambitious roadmap for the bank. The plan outlined the bank’s corporate priorities, performance targets and operational course of action for the period 2018 to 2020.
Since then, its operations have been guided by a strict adherence to the innovative philosophy of Produce, Add Value and Export (PAVE) designed to reverse the trend where primary products (such as cashew nuts, processed leather, cocoa, tobacco, cotton, etc.) dominated Nigeria’s export basket.
With this philosphy, NEXIM has within the past three years expanded its operations beyond powering non-oil start-up business projects to cover the rehabilitation of important industrial manufacturing firms, whose operations were shut down due to inadequate working capital. This includes the provision of working capital and business advisory services. Companies that have benefitted from NEXIM Bank’s revitalization financing support cut across important sectors such as manufacturing, agriculture, and solid minerals.
NEXIM has also designed and implemented programs targeting key non-oil export commodities as part of an overarching strategy to maximise the scale and depth of Nigeria’s participation in the global non-oil exports market. A good example is the Shea Butter. Several operators that are into the production and export of Shea butter in Lagos, Ogun & Niger States have received varying levels of financial and advisory support that has led to a significant boost to their production and export levels.
Expanding Nigeria’s export basket to maximise global trade opportunities
As a direct consequence of NEXIM’s intervention and support for the acquisition of Shea processing plants, Nigeria recorded its first major export of Shea butter in March 2018. Prior to NEXIM’s intervention, the country had no significant footprint in the export of shea products due to low processing capacity and high incidents of smuggling and informal trade. This is despite its ranking as the world’s largest producer of shea, with annual production of 364,000 metric tons, accounting for 45 per cent of global output. NEXIM’s support strategy is helping this trend.
NEXIM has also recorded impressive impact in its efforts to help players in the Hides & Skin industry to maximise the benefits of the global leather industry projected to reach a market value of $306billion by 2027. The bank formed a strong development partnership with the Kano leather cluster in Kano and deployed concessionary financing totalling about N2billion and approvals totalling N2.4billion currently undergoing disbursement processes to enable them to scale their operations. Over the past three years, NEXIM had funded three companies and assisted them to acquire new machines and retool their operations towards becoming major players in the global value chain. Similarly , about N3.6billion has also been approved and undergoing disbursement processes for similar projects in Abia State.
Other high impact non-oil commodities and services supported by NEXIM include the cocoa industry, solid minerals, services sector, and the pharmaceutical industry.
Besides being a major advocate of value-added exports, the bank also supported the export of raw materials, particularly where the local industries could not fully absorb production or where production capacity can be expanded. In the same vein, the bank has also provided working capital to support many companies engaged in cleaning and export of various agricultural commodities and other products. Such commodities include hibiscus flower, dried ginger, sesame seeds, gum Arabic and charcoal, which were exported to various parts of the world.
Driving Intra-Africa Trade initiatives
NEXIM also pioneered several initiatives that would help Nigeria to take full advantage of the opportunities offered by the African Continental Free Trade Area (AfCFTA) that is designed to move exporters up the value chain, promote intra-African trade, create jobs, and enhance export revenues.
Noteworthy is the Sealink Project that is designed to foster regional trade connectivity and facilitate inland waterways operations to support hinterland trade and bulk commodities exports, especially of solid minerals. Last year, NEXIM facilitated the signing of a tripartite memorandum of Understanding (MOU) between NEXIM, Sealink and NIWA (Nigerian Inland Waterways Authority) towards the operation of the project. The Bank is working closely with the National Inland Waterways Authority (NIWA), Nigerian Navy and other private sector partners to ensure commencement of operations within Q2, 2021.
The second Intra-Africa Trade initiative is the Inter-State Road Transit Scheme. This aims to facilitate the transportation of goods by road across Customs territories free of duties, taxes, and restrictions while in transit in line with ECOWAS protocol. NEXIM has undertaken to act as the National Guarantor under the scheme through the issue of insurance bond to mitigate the risk of diversion. NEXIM has also promoted Factoring services to foster financial inclusion and provide alternative trade financing support for Micro, Small and Medium Enterprises (MSMEs).
Improved relationship with multilateral institutions
The bank has also improved relationship with multilateral institutions and funding partners, leading to payment of due obligations and attraction of new lines of credit. NEXIM is collaborating with the African Export-Import Bank (Afreximbank) to implement the Nigerian-African Trade and Investment Promotion Programme (NATIPP), under which US$1bn has been earmarked to support Nigeria’s trade and investment activities under the African Continental Free Trade Agreement.