Before the discovery of oil in Nigeria, her manufacturing industry was flourishing robustly. Areas such as cocoa, rubber, and agriculture were the mainstay of the nation’s economy. However these sectors went into comatose following the discovery of oil in commercial quantities. Since then, Nigeria’s economy has been anchored on the oil sector.
But the dangers such sole dependence portends might have informed President Goodluck Jonathan’s tremendous commitments to diversifying the nation’s economy. The prospects of his efforts have given hope that sooner than later, Nigeria’s non-oil sector will take the centre stage.
It is against this background that the Nigerian Export-Import Bank, NEXIM, established by Act 38 of 1991 as an export credit agency to promote diversification of the Nigerian economy and deepen the external sector through the provision of credit facilities in both local and foreign currencies, risk bearing facilities, business development and financial advisory services and trade and market information services, has initiated a working blueprint, spanning from 2010 to 2015, to propel the non-oil sectors of Nigeria’s economy to a grand-level.
The bank’s key areas of concentration are manufacturing, agriculture, solid minerals and services. The goal is to become the leading export development bank in Africa.
The objectives of developing these non-oil sectors are to have a clear market focus and become a major contributor to non-oil exports, build a world-class institution which imbibes best-in class corporate governance and risk management practices; be a relevant player in the export market and significantly influence government trade policies; build a profitable institution with a robust balance sheet size with a highly skilled and motivated workforce.
The bank has budgeted about N42 billion for the manufacturing sector’s financing requirement, or six per cent of the manufacturing sector’s financing needs, while accounting for at least 3.71 percent of the nation’s gross domestic product (GDP) by 2015.
Its managing director Roberts Orya said the bank has already approved and issued $32.3 million worth of guarantees to support the nation’s manufacturing, transport and tourism sub-sectors.
Orya also disclosed that NEXIM Bank has identified manufacturing, agriculture, solid minerals and services, as four sectors of the economy to play in, hence its MASS agenda. The MASS agenda is a corporate transformation project of the bank that was launched in April 2010 to revamp the bank and ensure it becomes the leading African export development bank.
Orya said the bank’s plan under the new agenda is to ensure that whatever product to be exported henceforth has some value addition, and not just raw materials, as was the case in the past.
In his words, “We want some kind of value addition, and are committed to deepening the manufacturing sector in the country by providing all necessary assistance to manufacturers.”
With the MASS project, the bank hopes to increase the efficiency and profitability of manufacturing establishments through the funding and acquisition of new technology. It would be recalled with project financing from NEXIM Bank, RIGGS Ventures Plc recently expanded its operations with production capacity increasing from 9 million to 69 million polypropylene sacks per annum, consisting of cement, industrial and agro sacks. This expansion has created over 300 direct jobs and thousands of indirect jobs. The company has its major customers in Nigeria, Republic of Benin, Cameroon and Niger Republic and other ECOWAS countries.
Orya said initiatives like RIGGS are very strategic to achieving the bank’s mandate to deepen the manufacturing sector and create more jobs for the Nigerian youths and thereby contribute to boosting non-oil exports.
He said NEXIM’s commitment to handle bourgeoning manufacturing concerns such as RIGGS Ventures to become supranational entities in the ECOWAS and Central African sub-regions by ensuring that their products are made easily exportable to these markets.
NEXIM Bank operates in a synergy with the Central Bank of Nigeria. NEXIM’s strategic plan for the CBN’s trade development includes enhancing the implementation of ECOWAS trade support facility, becoming the national guarantor for the ECOWAS interstate road transit scheme, facilitating the realization of NEXPOTRADE goals of establishing export houses in all ECOWAS countries, and improving the strategic alliances with multilateral agencies, DFIs and export credit agencies.
In the manufacturing sector from 2010 to 2015, NEXIM Bank has maintained an increased efficiency and profitability of manufacturing establishments through the funding of acquisition of new technology, increased access of manufacturers to short and long-term credit, provide 6% (about N42bn) of the manufacturing sector’s financing requirement by 2015, account for 3.71% of the sector’s GDP by 2015 and create about 70,479 jobs through project financing activities.
NEXIM to this end identified four subsectors in the manufacturing initiative. They are food and beverages, wood and wood products, domestic and industrial products (plastic and rubber), and steel and processed alloy. The peculiar features of this subsector are that they are dominated by multi-nationals, depend on imported machinery; and the abundance of local raw materials. It is estimated that in 2008, the potential of this sector’s gross domestic product was 4. 19% with a projected growth rate of 7. 14%. Its financing requirement as at 2011 was N522bn while NEXIM’s proposed intervention stood at N12bn.
No doubt, NEXIM is toeing the line of the continent’s parent body the African Export-Import Bank (Afreximbank) which has in the same vein provided about 55mn euros in loans to three local manufacturing firms for equipment procurement and to expand food processing capabilities. It is the bank’s initiative to move Africa away from being an exporter of raw produce alone.
It is expected that NEXIM bank, just like Afreximbank, will increase direct lending and encourage commercial banks to be involved in lending wherever possible.
The roadmap to NEXIM’s success in this aspect is not easy, although the expectations are high that it will be able to wither the storm to reposition Nigeria’s non-oil sector for the better.
However, it needs to have a research-based body to identify core areas across the federation with their comparative manufacturing strength, and encourage them respectively through manpower and funds to enable them to develop their respective manufacturing prowess. Again the bank should also ensure that these products are valued well through sound marketing strategies. By so doing, the oil sector will not constitute the core of Nigeria’s economy; above all the prospect of employment, industrialisation and foreign exchange is higher in the non-oil sector.