NEXIM Bank to create 24, 000 jobs
Hauwa Noroh Ali, Abuja

Nigeria is steadily realizing her export promotion targets in the non-oil sector which have been elusive over the years. The success of this could be traced to the current robust state of the Nigerian Export and Import Bank (NEXIM), which in the past few years has been meteoric.

The Managing Director/CEO, Robert Ungwaga Orya during a meeting with the Senate Committee on Budget and Insurance to defend the bank’s 2012 budget at the National Assembly, stated that  NEXIM targets a profit of N1.6bn as against the N1.1bn in 2011 fiscal year.

At the budget defence, Mr. Orya  also announced the determination of NEXIM to give urgent attention to the non-oil (MASS) sectors of the economy – Manufacturing, Agriculture, Solid minerals and Services – which will tap in the hitherto virgin sectors and propel Nigeria’s economy beyond expectations.

Towards this, he presented a budget projection of N30bn to promote export-oriented investments in these sectors. , “Forty-four percent will go to manufacturing, 35.8%, agriculture; 5.6%, solid mineral resources, while services take 14%.”

This will create over 23,923 jobs and generate USD229.6m forex earnings for Nigeria in the 2012 fiscal year through active support of the manufacturing, agricultural, solid mineral and Service sectors of the nation’s economy.

NEXIM in 2011
Taking the Committee through the business activities of the Bank for the year 2011, Mr. Orya explained that what the Bank has done over the years toward the realization of the its mandate was to enhance the contribution of the non-oil sectors to the GDP through funding interventions in the MASS sectors where the country has high export potentials and comparative advantage.

“NEXIM has funded a lot of Greenfield and start-up projects that have become successful and are published on the CBN’s Top 100 Exporters List”.

He informed the Committee that so much is happening in the mining sector where the Bank is providing the required assistance to get the industry well structured.

He explained that a lot of work has gone into charting an investor friendly policy framework for the mining sector in order to ensure full realisation of the huge potentials therein, which economic impact would no doubt surpass that of the oil and gas sector.

As part of its mandate, Mr. Orya informed the Committee, that NEXIM is also looking at the services sector, especially financing the development of branded and rated hotels in line with the Nigerian Tourism Development Master Plan as well as other services with high export potentials.

“We are looking at the creative arts and entertainment industry because we believe that it’s an industry that has a high growth, employment and foreign exchange earning potentials. It is essentially an area where you can generate a lot of employments for the youths…” he said.

Trade deepens 

Mr Orya noted that NEXIM had shown keenness to deepen trade within the ECOWAS sub-region.
 “…we looked at the status of Nigeria within ECOWAS (Economic Community of the West African States) sub-region, and realized that the population of ECOWAS is over 300 million people with Nigeria constituting about 165million of that, ... it became obvious to us that this is the largest market and about the most dominant economy where every serious investor should show interest to invest….” he said

Regrettably, the NEXIM boss said, there are patent obstacles to enabling Nigeria fully exploit the benefits of this position especially the issue of trade barriers, which  informed the idea of the Bank in coming up with an initiative to alleviate the issue of intra-regional trade and integration.

Reviewing the trade potentials within the ECOWAS region and the Central Africa region .Mr. Orya decried the unavailability of an efficient sea transportation system that can directly connect the regions. He then painted a simple but powerful illustration of the problems faced by Nigerian exporters,

“…if you have to move your goods from Lagos to Tema port in Ghana by truck, with all the non-tariff barriers, it might take you two - six days but if you have to move your goods from Apapa Port in Nigeria to Tema port in Ghana by sea, it may take you about 60 days. This is because the vessels would first sail directly to their home ports in Europe or South Africa and from there make a transshipment of the goods back to Tema Port. Under this kind of scenario there is no way one can deepen trade, because we don’t have our own sea-going cargo vessels….”

 He posed to the Committee that if a country like Nigeria does not take steps to see how the trade barrier could be addressed there is no way trade would improve within the region. This prompted NEXIM Bank to come up with an initiative to facilitate a dedicated regional Sealink company which will be private sector driven for the benefit of West and Central African countries with Nigeria getting the most because of the size of its economy.

 The goal is to have a regional maritime shipping company that would essentially serve and transport persons and goods between these two neighboring regions. It is important to point that this is line with the provisions of the ECOWAS protocol on Free Movement of Persons, Goods and Services.

He then informed the Committee that NEXIM has come up with a promotional company as a Special Purpose Vehicle that would set up the Regional Sealink company and raise the initial funding requirement of about US$61.5 million US dollars in both debt and equity capital noting  that as soon as that money is raised and the company is incorporated the SPV which was already incorporated in October 2011 would cease to exist.

The initial sponsors of the project comprise members of the Federation of West Africa Chamber of Commerce, the members of individual ECOWAS member countries Chambers of Commerce and Industry, a big logistics company based in Douala, called Transimex S.A. Cameroun, among others.

Challenges 
He however acknowledges that there are immediate challenges to achieving the level of success NEXIM Bank has set in its medium term plan, namely the issue of non-performing loans  “Some of the debts, being owed the Bank, span between 10 and 15 years and some of the debtors are banks that were liquidated in 1990’s by the Nigeria Deposit Insurance Corporation. The Bank could only recover N418m out of about N1.9bn it planned to recover in 2011. In 2012, we plan to recover N1.3bn. As soon as we are able to recover that, it will go into our loss and profit account.”

He however pleaded with the Upper House to assist NEXIM in getting AMCON to write off or buy over some of the toxic debts to enable it clean up its balance-sheet.

Explaining how the Bank has been able to function and make profit during the global financial crises, and continues to operate profitably, Mr. Orya sums his answer that NEXIM is ‘taking a holistic approach to its corporate transformation which entails strategies around adequate capitalisation, adoption of a robust enterprise-wide risk management framework, good corporate governance principles, smarter business processes, clearer focus and compliance with regulations and relevant government policies’.

According to Orya, “NEXIM should be able to provide trade finance to buyers of Nigerian goods from any country if that importer does not immediately have the funds....”

He revealed that NEXIM consistently strives to provide financial products not readily provided by other financial institutions e.g. equity, longer-term finances, venture capital, etc and provides risk bearing facilities such as non-oil export credit guarantee and insurance as well as market and trade information and value-added export business advisory services.

Responding, the Senate Committee Chairman, Senator Ayo Adeseun commended Mr. Orya for his visionary leadership and gave the assurance that the Senate will stand beside the Bank and, indeed any other Nigerian MDA that shows commitment to achieving its mandate.

On his part, the Vice-Chairman of the Senate Committee on Banking and Insurance, Senator Isa Mohammed Galaudu, described Mr. Orya as ‘God-sent to Nigerian Government institutions…’ and thanked him and his Management for what he described as ‘proactiveness’ in handling the business of the bank.

Earlier, during a similar budget defence before the House Committee on Banking and Currency, the Chairman, Sir Chudi Jones Onyereri, remarked that NEXIM has done creditably well over the period in review and that the House will ensure that the Bank is given all necessary support towards continuous delivery of its mandate.

Ugo