NIGERIAN Export-Import Bank, NEXIM Bank, recently launched two intervention products targeted at promoting
the country’s non-oil exports. The funds are the N500 billion, Export Stimulation Facility,
ESF, and the N50 billion Export Rediscounting and Refinancing Facility, ERRF. These intervention funds by
Central Bank of Nigeria, CBN, are part of the efforts of the federal government to address
the persistent overdependence of the economy on revenue from crude oil exports.
With the rebasing of the GDP in 2014, it became clear that the economy has become well
diversified with the servicessector contributing 54.8% of the GDP. The contribution of
agriculture, which used to be about 35% of GDP prior to rebasing, has been diluted to
22%; while the oil and gas sector accounted for only about 14%. In spite of this changing
dynamics, however, the oil and gas sector continued to account for about 70% of
government revenues and 95% of export earnings. This is due to the non-diversification of our
external sector and the poor competitiveness of Nigeria’s non-oil exports.
Our non-oil export sector has continued to be challenged by a
myriad of problems; prominent amongst these problems are low
investment and poor access to credit. Over the last five years,
credit flow to the export sector has not only been low, but it
has also declined, accounting for an average of 0.6% of total
domestic credit to the private
sector. High risk aversion and
dearth of long-term funds at
competitive interest rates in the
commercial banking system are
largely responsible for the low
access to credit.
It is against this background
that the CBN has introduced
these intervention schemes,
with the objective of redressing
the declining trend in domestic
export credit. The main objective
of these facilities is to boost the
level of non-oil export earnings,
which has stagnated at about
5% of total export earnings
over the years. The funds are
also expected to attract and
incentivize new and additional
investments to the non-oil
export sector, in addition to
providing export-oriented
projects with concessional
medium- to long-term funds to
mitigate some of the observed
challenges and enhance their
N500billion Export
Stimulation Fund
The ESF is a long-term facility
with a tenor of up to 10 years. It
is available to all operators in the
export value chain, including start-ups and existing exportoriented
companies wishing to
expand. It is also available as
working capital/stocking facility
or for acquisition of plant and
machinery for processing and
packaging of goods for export.
All applications under the
intervention schemes are
expected to be submitted through
the Participating Financial
Institutions, PFIs, which could
be a commercial bank or other
development finance institutions
(DFIs). After a satisfactory review
of the applications in line with
the eligibility criteria provided in
the CBN guidelines, the PFIs will
then forward such applications
to NEXIM Bank. The Bank will
in turn do a further review of the
applications within a period of
time not exceeding 20 working
days before forwarding the
applications to the Central Bank
of Nigeria for approval and
The N50billion Rediscounting
and Refinancing Facility
The N50billion ERRF is an
enhancement of the existing
N1.225 billion Rediscounting and
Refinancing Facility operated by
NEXIM Bank since its inception
in 1991. The RRF is essentially
an interbank facility aimed at
encouraging and supporting
Deposit Money Banks, DMBs, to
provide short-term pre- and postshipment
financing in support
of exports. The facility provides
a discount window to support
export-financing banks, thereby
improving their liquidity and
providing incentives for them to
expand their export portfolio. The
facility also moderates the cost of
export finance with the aim to
enhance export competitiveness.
Under the scheme, the
participating banks are required
to apply directly to NEXIM
Bank, in a prescribed format, and
approvals are granted on the basis
of individual export transactions.
Export bills/transactions are
discounted /refinanced at an allin
rate of a maximum of 6% per
annum (p.a.) with NEXIM Bank
allowed a maximum spread of
3% p.a.
The RRF, together with the
ESF are expected to immediately
redress the declining trend in the
flow of credit to the non-oil export
sector. We have observed that
credit to the sector declined from an average of about N525 billion
annually over the previous five
years to about N125 billion in
2014. This has been a major factor
in the declining contribution of
the non-oil export sector to total
export revenue.
We have projected that every
additional funding of between
N75 billion and N100 billion
has the potential to generate
additional export proceeds of
about US$1 billion. This implies
that we should be able to enhance
non-oil export earnings by at
least $5 billion annually through
these funds. This projection
is our minimum target as we
expect the provision of these
funds to stimulate additional
investments and create the
necessary multiplier effects.
There is also the possibility that
these funds could be increased
by the CBN if necessary. We will
undertake periodic review of
their performance and present the
scorecards in order to determine
the funds’ development impacts
in terms of job creation and
improvements in productivity
and capacity utilisation, among
other development benchmarks.
The ESF comes at a maximum
interest rate of 7.5% for shorttenored
transactions spanning
up to three years, and 9% for
longer term transactions that are
up to 10 years. The RRF on the
other hand comes at a maximum
all-in cost interest rate of 6%.
These should help to lower the
cost of operations, in addition
to addressing the problem of
mismatch, whereby long-term
assets are funded with shortterm
facilities, which is why
many viable projects have ended
up with the Asset Management
Company, AMCON.
Besides the generous terms
of the funds, NEXIM Bank is
working with other government
agencies to address other critical
issues such as logistics and
packaging/quality standards,
which have contributed
significantly to the poor market
access and weak competiveness
of Nigerian goods in international
As a country, there is
no alternative to export
diversification, particularly in
view of the current downturn in
the global oil market, which is
expected to be quite protracted.
This development, coupled
with the need to create jobs for
the teeming youth and promote
sustainable development, has
led the current administration of
President Muhammadu Buhari
to reaffirm its commitment
towards the development of the agricultural and solid mineral
sectors, where Nigeria has huge
Other Export Development
NEXIM Bank is working on a
number of other initiatives that
will support Nigeria’s non-oil
export growth. We have been
working on the facilitation of a
regional shipping company to
provide direct maritime links
within West and Central Africa.
The Sealink project will help in
removing non-tariff barriers and
logistical challenges that have
limited trade within the regions
to 10% of total volume.
We are collaborating with
a number of stakeholders
to unlock export capacities,
working with the Solid Minerals
Association of Nigeria and
the Shippers Council; we
want to attract private sector
investments towards dredging
the inland water ways to
provide dry bulk cargo barges to
facilitate the movement of solid
minerals by sea. This will help
the country to realize its annual
export potentials of at least one
million tonnes of coal, iron ore
and lead/zinc.
Together with major investors,
we hope to resuscitate and
commence the production of
hydrocarbon-free jute bags in
the country for packaging of
exports. And to unlock further
financing, NEXIM Bank is
collaborating with African
Export-Import Bank, Afrexim,
on the introduction of factoring
as a strategic debtor financing
tool or an alternative funding
instrument for exporter SMEs. In
this regard, we plan to facilitate
the enactment of the enabling
legislation that will guide the
provision of factoring services
in Nigeria.
Several initiatives are
being undertaken by various
government agencies including
the Federal Ministry of
Industry, Trade & Investment,
FMITI, and Nigerian Export
Promotion Council, NEPC,
aimed at creating the required
environment to boost investment
in the non-oil export sector and
develop a sustainable industrial
value chain. It is expected that
with all these efforts, coupled
with NEXIM Bank’s initiatives,
we should begin to see positive
results very soon. We are very
Bashir Wali, Ag Managing
Director/CEO, Nigerian Export-
Import Bank, wrote from Abuja

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