Speech: NEXIM Bank Exporter Enlightenment Forum for south-south zone
On behalf of the Board and the entire management and staff of the Nigerian Export-Import Bank (NEXIM), it is my great pleasure to welcome you all to the 2020 edition of our Exporter Enlightenment Forum organized for the South-South region, with the theme “Maximizing Export Potentials in the SouthSouth Region for Economic Growth”. The forum is a flagship event of NEXIM Bank. It is aimed at promoting non-oil export development in Nigeria through capacity building and dissemination of trade and market information among stakeholders and key players in the export value chain.
Please permit me to express our heartfelt gratitude to our host Governor, His Excellency, Dr. Ifeanyi Okowa, for his hospitality and for providing a very conducive environment for this very impressive gathering. I wish to equally thank the Executive Governors of all the other states in the South-South region, who have found time to be here in spite of their very busy schedules.
It is noteworthy that this event is being attended at the highest level of governance at the states. This attests to your commitment to uplift the economic fortune of the region.
The South-south region is the economic powerhouse of Nigeria. Beyond oil, which the region is known for, the south-south is also endowed with huge agricultural and solid mineral resources as well as a thriving tourism sector. These could be harnessed towards contributing to the diversification objectives of the federal government of Nigeria. It is for this reason that NEXIM has found it necessary to organize this forum to bring to the fore the non-oil resources of the South-south region, towards attracting investment and accelerating the growth and development of the region.
As a country, Nigeria’s growth and development aspirations have hitherto been constrained by the overdependence on the crude oil sector, which currently contributes about 70% of government revenues and 95% of export revenues. Besides the undue exposure to the volatility in the global oil market, the ensuing Dutch disease has contributed to the seeming neglect and suboptimal investment in other sectors of the economy.
While the recent episode of oil price slump, which triggered economic recession in Nigeria from 2016 to 2017 is still fresh in our memory, unfolding developments suggest that our country may once again be faced with oil revenue volatility in the current year, given the outbreak of coronavirus in China and trade war between major global players, which is expected to impact negatively on global oil demand, amongst other factors.
The point of emphasis is that Nigeria is so blessed with many other resources such that our economic progress need not be tied to the vagaries of the global oil market. Nigeria is a leading producer of several commodities, which feed into the global economic value chain, generating billions of dollars annually. Besides, Nigeria has at least 34 solid minerals in commercial quantities spread across every state of the country, which are largely untapped, while our services sector has witnessed phenomenal growth over the years. What is therefore required is the concerted efforts to harness these resources towards creating a well-diversified economy that is resilient to external shocks.
The federal government of Nigeria has since launched the Economic Recovery and Growth Plan (ERGP) to promote economic diversification in the country and lay a solid foundation for sustainable growth and development. While the ERGP has similar objectives with other development plans in the past, it also seeks to promote economic empowerment and poverty alleviation at the subnational levels through the One State One Product (OSOP) Programme, which requires every state of the federation to identify and develop at least one exportable product as part of the economic diversification drive.
To support this programme, the Nigerian Export-Import Bank, being the Trade Policy Bank of Nigeria, also launched the State Export Development Programme (SEDP) and earmarked at least N1 billion per state towards promoting regional industrialisation and economic diversification at the state levels.
Since the SEDP was launched about two years ago, we have held discussions with several states of the federation, including those in the South-south, towards developing the necessary partnerships to enhance access of entrepreneurs and exporters to this fund. Let me emphasize that while the fund is targeted at supporting export-oriented projects that are promoted by the private sector, the state governments are expected to play catalytic roles, through provision of land, issuance of necessary permits and other incentives as may be required. This
programme provides the opportunity for us to be able to progress on-going partnership discussions and also explore other areas of collaboration with all the states that are here with us at this event.
This forum is indeed well timed, coming in the wake of the proposed commencement of the African Continental Free Trade Area (AfCFTA), which is scheduled to take off in July this year. The free trade area, which creates a single market of about 1.2 billion people and a combined GDP of about $3.5 trillion will provide enormous trading opportunities for our SMEs and position Nigeria to attract investments, particularly within the context of the regional and global value chains. I will, therefore, expect every state here present to use the opportunity of this event to highlight their economic potentials towards attracting investments, particularly into the non-oil export sectors.
For us in NEXIM Bank, given the enormous opportunities, we have seen the need to promote regional trade, even before Nigeria became a signatory to AfCFTA and that is why in our current strategic plan (2018-2022), we have allocated at least 60 per cent of our intervention to support intra-African trade. In addition to this, NEXIM is promoting several key initiatives, targeted at facilitating regional trade, some of which I will briefly mention.
First is the regional Sealink project, under which the Bank is facilitating the establishment of a regional shipping company through a Public Private Partnership (PPP) arrangement, to promote trade as well as mitigate the transport and logistics challenges that have increased the cost of trade in the regional market. Of recent, we also signed a tripartite MOU between us, the Sealink company and NIWA (Nigerian Inland Waterways Authority) towards the operation of the Sealink in the Nigerian inland waterways to facilitate movement of bulk cargo, particularly in the solid minerals sector, thus unlocking the opportunities in the sector and enhancing the contributions of solid minerals to export revenues by at least $1 billion, annually.
Currently, the implementation of the Sealink project has reached a critical stage, with the receipt of approval from the Federal Ministry of Solid Minerals Development for the use of the Ajaokuta River Port/Jetty. The Sealink is now scheduled to commence operations within the second quarter of 2020, and engagements are already on-going with potential customers for offtake agreement of bulk cargo within the West and Central Africa regions.
I wish to also talk about our efforts in developing Factoring, which is an alternative trade finance instrument, specifically targeted at promoting financial inclusion amongst our MSMEs. As we may all be aware, informal trade in Nigeria is estimated at about $12-18 billion, far more that the recorded trade of about $3 billion. This is mainly due to the crowding out of our SMEs, who often find it difficult to access funds from the banking system in spite of their contributions to economic activities. Our efforts to develop factoring will, therefore, help to achieve the twin objectives of promoting trade and bringing more of our SMEs into the formal sector, thereby enhancing their contributions to national development.
Over the past few years, we have engaged in extensive collaborative efforts with various public and private sector organisations, leading to the development of the draft Nigerian Factoring Bill. This Bill, which is expected to provide the necessary regulatory and legal environment for the smooth operation of factoring business in Nigeria, is now being considered by the National Assembly and we have continued necessary sensitization and engagement to ensure that the Bill is passed as soon as possible. Our partners, notably Afreximbank and the Factor Chain International, only recently held an interactive session with members of the National Assembly to push for the adoption and quick passage of the Factoring Bill so as to unleash the benefits to the Nigerian economy.
Let me also seize this opportunity to inform our exporters that NEXIM is partnering with Afreximbank to implement the Nigeria African Trade and Investment Promotion Programme (NATIPP), for which $1 billion has been earmarked to support the growth of trade between
Nigeria and other African countries, within the context of deepening intra-regional trade as well as promoting investment activities within the African region. During the course of the year, we shall also be embarking on a very extensive sensitization programme with Afreximbank to increase awareness and deepen access to this fund by Nigerian exporters and entrepreneurs.
Given our new philosophy, which seeks to emphasize Production and Value Addition for Export (PAVE), we have selected speakers to focus on strategies to boost production and value addition of exportable products, as well as discuss issues around access to finance and other topical issues, including the need to improve export procedures, quality standards and packaging.
In this regard, I wish to welcome the Chief Executives and representatives of the following Government Agencies and other organisations who have continued to work closely with us and are indeed present here with us today. These are:
1) The Central Bank of Nigeria (CBN)
2) The Nigerian Export Promotion Council
(NEPC),
3) The Nigerian Incentive Risk Based System for Agricultural Lending (NIRSAL),
4) The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN)
5) The Raw Materials Research &
Development Council (RMRDC)
6) The Nigerian Customs Service (NCS) 7) The Standards Organisation of Nigeria
(SON)
8) The Bank of Agriculture (BOA)
9) The National Agency for Food and Drugs
Administration & Control (NAFDAC)
10) The Nigerian Agricultural Quarantine
Service (NAQS)
11) The Bank of Industry (BOI)
12) The Bank of Agriculture (BOA)
13) The Development bank of Nigeria (DBN) 14) The Nigerian Institute of Oil Palm
Research (NIFOR)
15) The Multimix Academy
16) 3T Impex Trade Academy
Finally, let me mention that this forum is also designed as a feedback session for our exporters and prospective exporters. We therefore look forward to hearing from you on the key challenges and your suggestions towards improving the growth and development of our non-oil export sector.
I thank you for your kind attention.
NEXIM is partnering with Afreximbank to implement a $1 billion fund to support the growth of trade between Nigeria and other African countries.