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Nexim Bank and Structural Transformation of Nigerias Economy By Roberts U. Orya Nigeria is the natural leader of Africa.

For decades, our dear country has been Africas foremost producer and 8th world largest exporter of crude oil to the international market. Nigeria is strategically located to take advantage of modern forms of transportation to enable her participation in cross-border trade, and build a virile domestic economy. Our population growth rate of average 3 per cent since the last national headcount of 2006 currently has the population estimate at more than 160 million. This in combination with impressive GDP growth average of 6 per cent over the last decade has more recently amplified the importance of Nigeria within the international community. Indeed, a stable country outlook brought about by our return to democracy in 1999, and the robust reforms which several organs of government have continued to deliver, are endearing the country to both local and foreign investors, chiefly from enterprise point of view. Our clime is one richly endued with natural and human resources. Therefore, the numerous and abundant potentials of Nigeria, which are widely recognised, actually include the opportunity for our country to provide the world one of the most inspiring stories of human development that China and emerging Asia seems to now tell exclusively. But the Vision 2020 tells that policymaking in Nigeria takes cognisance of our potential to leap forward in the global economic, and, in effect, diplomatic order in a few years ahead. However, it is evident that the important story of Nigerias advancement from where we are would not be told by earnings from our hydrocarbon reserves (although we have one of the worlds largest); our success 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. The inherent limitations of crude oil-fuelled economic growth, in terms of employment generation, pro-cyclical access to funding for development, and corruption, have come to the fore after the 1970s when as a young nation we came into sudden and abundant wealth from crude oil sales. Structural Transformation The structural transformation of the Nigerian economy is underway. Although we recognised it as a necessity, lack of national ownership and successful implementation elsewhere created the rally against the Structural

Adjustment Programme imposed by International Monetary Fund (IMF) in the 80s. But since then, successive administrations have continued to harp on the need to restructure the fabric of the Nigerian economy. However, what the Administration of President Goodluck Jonathan has done, perhaps more than any previous regime, is combine commitment with practical actions in diversifying the Nigerian economy away from sole reliance on crude oil for external revenue. The management of Nigerian Export - Import Bank (Nexim Bank), which I head as managing director cum CEO, has identified four sectoral anchors of the economic Transformation Agenda of President Goodluck Jonathan (GCFR) in order to support it and enhance success of the programme. Succinctly, these sectors are Manufacturing, Agro-processing, Solid minerals and Services, which we encapsulate as our MASS Agenda. 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). Role of Development Finance Institutions Multilateral DFIs, best exemplified by the World Bank at global level, and African Development Bank (AfDB) at continental level, are alternative financial institutions. Their ubiquity is not represented by brick and mortar; quite unlike commercial banks, DFIs are not known by the high number of branches they have even in the high streets of Lagos, London, Hong Kong, Frankfurt, New York and Dubai. Rather, the spread of development finance institutions are seen in people and businesses they impact. Quite often, DFIs 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, etc have been beneficiaries of funding by DFIs. This way, business formation can continue, people can continue 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. In light of the foregoing, the role of development finance institutions are of critical importance in Nigeria where banking penetration is less than 15 per cent of the population, 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. And of course, delivery of necessary (infrastructural) projects to aid implementation of programmes under the plan of structural transformation of the Nigerian economy cannot be funded by governments tax incomes considering several long-term projects that cannot be delivered by commercial lending. If this is true with government, it is true also for businesses, perhaps more so. Therefore, while at global level the World Bank lends to governments to deliver crucial projects, the International Finance Corporation (IFC) lends to private sector businesses. And in Nigeria, there are a handful of DFIs which are promoted by the government to support businesses beyond the limits and inclinations of commercial lenders. What Nexim Bank Does Nigerian Export Import Bank is the official and sole Trade Policy Bank of the Federal Government of Nigeria. In this regard, Nexim Bank provides financing, risk-bearing facilities, market information and value-added advisory services to businesses towards deepening export-oriented investments in the countrys non-oil sectors of manufacturing, agro-processing, solid minerals and services, for job creation and economic growth. This mouthful raison d'etre quickly introduces the ownership, functions, focus and goals of Nigerian Export Import Bank. At the same time, it connects you to my passions and the passions of the executive management and staff of Nexim Bank since my tenure in September 2009.

Nexim Bank is your banker if your business aligns with the objective of the Nigerian government of the day which seeks accelerated economic diversification and increase in export revenue through economic activities other than in the oil sector. Nexim Bank has provided 12 billion naira in lending to Nigerian export manufacturers in the period August 2009 to April 2013, with many of them carrying the Proudly Nigerian label on their products in the West African sub-regional market and globally. Similarly, Nexim Bank has funded agro-processing export businesses, to the tune of 6.6 billion naira over the same period. In the solid mineral sector, we are working in partnership with industry stakeholders to take formal mining off the ground again. Although mining is capital-intense, the Nigerian solid mineral sector needs more than funding. The legal and regulatory frameworks in Nigeria are works in-progress. The Mining Act has been reviewed to reflect the ideals of all market participants. Nexim Bank has so far provided over 2 billion naira 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. The Nigerian Creative and Entertainment Industry Stimulation Loan Scheme (NCEILS) which Nexim Bank manages for the Federal Government reflects Nexim Banks adherence to prudential guidelines on crediting provisioning. Whilst the fund lends at below commercial rate, it is not a grant. It is meant to fund businesses across the entertainment value-chain including filming production, cinema operation, music recording, intellectual property development, recording studios, etc., as a revolving fund with repayment terms. Irrespective of the challenges operators in the industry have faced with developing good proposals, we believe this is a cultural issue, and not an insurmountable technical limitation. Thus, Nexim Bank has to date disbursed over 1.4 billion naira for the Fund. Entertainment industry project proposals under review exceed 5 billion naira in value. Including disbursements to the creative and entertainment industry, Nexim Bank has disbursed 8.5 billion to the services sector, covering support to transportation and hospitality industries. In my next article in this series, I will share my views on the drive for job creation under the Transformation Agenda of President Goodluck Jonathan, and the role Nexim Bank is playing to sustain existing jobs in our focal industries while supporting creation of new ones.

Roberts U. Orya is MD/CEO, Nigerian Export-Import Bank.