“THE ROLE OF NEXIM BANK IN (NON-OIL) EXPORT DEVELOPMENT IN NIGERIA” MANUFACTURING AGRICULTURE SOLID MINERALS SERVICES A PRESENTATION BY THE NIGERIAN EXPORT IMPORT BANK (NEXIM) AT THE NEXIM AND NCAN FINANCE FORUM 2013   HELD AT IKEJA, G.R.A., LAGOS ON TUESDAY, 23RD APRIL, 2013

OUTLINE THE NIGERIAN ECONOMY EXTERNAL SECTOR PROBLEMS OF NON-OIL EXPORTS IN NIGERIA ROLE OF NEXIM IN TRADE FACILITATION, EXPORT PROMOTION AND DEVELOPMENT IN NIGERIA MANDATE AND FUNCTIONS OWNERSHIP STRUCTURE OFFICE LOCATIONS PRODUCT OFFERINGS HOW TO ACCESS NEXIM FACILITIES INDICATIVE TERMS OF NEXIM FACILITIES CONCLUSION

THE NIGERIAN ECONOMY According to CBN, Real GDP growth increased to 7.9% in 2010 from 7.0% in 2009 Average Annual Growth rate over the last 5 years (2006-2010) was 6.7% Growth was largely driven by non-oil sector which grew by 8.5% Of the 8.5%, the relative contribution of different sectors include: Agric. - 2.4% Services - 2.1% Trade - 2.0% Building/ Const. - 0.2%

THE NIGERIAN ECONOMY (CONT”D)

THE NIGERIAN ECONOMY (CONT”D)

THE NIGERIAN ECONOMY – EXTERNAL SECTOR Aggregate Exports increased by 32.1% to N11.03 trillion in 2010 Crude Oil = 87.6% Gas = 8.8% Non-oil Exports = 3.6% Sectorial Contribution of non-oil exports in 2010 include: Semi Manufactured Goods: 37.5% Agric Produce: 35.7% Solid Minerals: 11.2% Manufactured Goods: 5.8%

THE NIGERIAN ECONOMY – EXTERNAL SECTOR (CONT’D)

THE NIGERIAN ECONOMY – EXTERNAL SECTOR (CONT’D)

THE ROLE OF NEXIM BANK IN TRADE FACILITATION IN NIGERIA. TRADE FACILITATION MAY BE SIMPLY DEFINED AS “THE SIMPLIFICATION & HARMONIZATION, AS WELL AS TIME & COST REDUCTION OF TRANSACTIONS”. NEXIM BANK’S CRITICAL ROLE IN TRADE FACILITATION, IS BEST ILLUSTRADED IN “TIME & COST REDUCTION OF TRANSACTIONS”. THIS IS ACHIEVED THROUGH THE PROVISION OF FINANCE, RISK BEARING FACILITIES & ADVISORY SERVICES TO THE NON-OIL EXPORT SECTOR. COMPETITIVE COST OF FUNDS, LONGER TENURED FACILITIES & QUICK TURN AROUND TIME ARE KEY.

PROBLEMS OF NON-OIL EXPORTS IN NIGERIA Production problems Agricultural production still characterised by poor farming system / limited adoption of improved technology Limited knowledge / technology for Processing and packaging of semi-manufactured goods to meet international standards Global market is moving away from primary products Poor Infrastructure Poor access to finance at all stages across the export value chain i.e. from Production to delivery of goods abroad.

ISSUES IN EXPORT FINANCE Credit and Finance is the life and blood of any business, whether domestic or international Export finance is important due to peculiarities of export trade: Export trade is sensitive to Quality of product Price Delivery schedules Payment terms (must be flexible) Production and manufacture of goods for export take time and there is need for long term funds at reduced cost Merchandise exports require finance that satisfy most of the above criteria

WHAT IS EXPORT FINANCE Export Finance is the total fund available to an exporter to execute an export order/contract This includes the exporters net worth, debts, subsidies, grants, etc Export Finance is also an avenue to offer to buyers important competitive advantage so as to gain business While export finance takes various forms and types, its categorisation may be done according to purpose Stage of export operation Tenor An exporter may need a combination of the different types of financial assistance, hence must be mindful of cost

EXPORT FINANCE (CONT’D) Export Finance constitute critical ingredient in international trade In general, tariff/ non-tariff barriers and absence of transport infrastructure are regarded as barriers to trade However limited access/ high cost of finance as well as lack of guarantees or insurance covers are likely to hinder trade and export potentials of any country.

EXPORT TRADE TRANSACTION CHAIN Flow of Goods Bridge Financing Pre-shipment Financing Post-shipment Financing Import Financing Producer Bank Trader Consumer

NEXIM’S ROLE IN TRADE FACILITATION & EXPORT FINANCE NEXIM MANDATE: NEXIM was established by Act 38 of 1991 to provide finance, risk mitigating facilities and trade information as well as advisory services in support of exports to the Nigerian export community.   The main statutory functions of the Bank include the: Provision of export credit guarantee and export credit insurance facilities to its clients; Provision of credit in local and foreign currency to its clients in support of exports; Establishment and management of funds connected with exports; Provision of trade information and export advisory service in support of export business; and Provision of investment guarantees and investment insurance facilities.

NEXIM’S ROLE IN EXPORT FINANCE: OWNERSHIP: NEXIM is wholly owned by the Federal Government of Nigeria, with shareholding equally subscribed to by the Central Bank of Nigeria (CBN) and Ministry of Finance Incorporate (MOFI) as follows Central Bank of Nigeria (CBN) N25.00 billion Ministry of Finance Incorporate (MOFI) N25.00 billion N50.00 billion

NEXIM’S ROLE IN EXPORT FINANCE & TRADE FACILITATION: OFFICE LOCATIONS: HEAD OFFICE: NEXIM House, Central Business District, Abuja. AREA OFFICES: Lagos Area Office Calabar Area Office Kano Area Office The Bank’s offices are adequately staffed and equipped to meet customers’ demands for its products and services.

NEXIM’S ROLE IN EXPORT FINANCE: OUR TARGET SECTORS NEXIM Bank will aggressively pursue business opportunities across the key sub-sectors within the Manufacturing Sector.…

NEXIM’S ROLE IN EXPORT FINANCE: OUR TARGET SECTORS (CONT’D) NEXIM Bank will aggressively pursue business opportunities across the key sub-sectors within the Agriculture Sector..…

NEXIM’S ROLE IN EXPORT FINANCE: OUR TARGET SECTORS (CONT’D) NEXIM Bank will aggressively pursue business opportunities across the key sub-sectors within the Solid Minerals Sector..…

NEXIM’S ROLE IN EXPORT FINANCE: OUR TARGET SECTORS (CONT’D) NEXIM Bank will aggressively pursue business opportunities across the key sub-sectors within the Services Sector..…

NEXIM’S ROLE IN EXPORT FINANCE: PRODUCT OFFERINGS A) EXPORT FINANCE Rediscounting & Refinancing Facility (RRF): designed to assist banks to provide pre and post-shipment finance in local currency to their export clients. Stocking Facility (SF): Provides financing in local currency to enable manufacturers stock seasonal inputs required to keep production at optimal levels of production throughout the year. Local Input Facility (LIF): Supports manufacturers of export products with medium to long term finance for the acquisition of new plants; expansion of existing capacity; and procurement of spare parts, as well as packaging raw materials amongst others. Direct Lending Facility (DLF): is a funding variant that allows for direct provision of short to long-term export credits to eligible exporters. The loan obligor in this case is the exporter.

NEXIM’S ROLE IN EXPORT FINANCE: PRODUCT OFFERINGS (CONT’D) A) EXPORT FINANCE (CONT’D) ECOWAS Trade Support Facility (ETSF): This was developed to assist Exporters take advantage of the huge potentials that exist within the ECOWAS corridor. Ultimately, ETSF will promote formal trade, deepen payment system, economic integration and cooperation amongst countries in the ECOWAS Sub-region. Nigerian Creative and Entertainment Industry Stimulation Loan Scheme (NCEILS): is intended to address issues regarding the institution of credible structures, attract investment in the development of content and infrastructure in the media and entertainment sector as well as improvement in production standards, distribution, marketing and exhibition standards

NEXIM’S ROLE IN EXPORT FINANCE: PRODUCT OFFERINGS (CONT’D) B) IMPORT FINANCE: Foreign Input Facility (FIF): provides manufacturing exporter with foreign exchange for the importation of raw materials, packaging materials and capital equipment needed for production of goods specially designed for export. It is a facility made available to exporters in foreign currency through their banks and is therefore repayable in foreign currency. Medium-Term Export Credit Guarantee Facility: This is available as Medium-term Export Credit Guarantee which provide effective tool for the management of risks associated with export financing. 24

NEXIM’S ROLE IN EXPORT FINANCE: PRODUCT OFFERINGS (CONT’D) C) RISK BEARING SERVICES Export Credit Guarantee Facility (ECGF): designed This is designedfor the acquisition of industrial plant and machinery on determined payment terms and the obtaining of proceeds of exports in advance by exporters such as Advance Payment Guarantee (APG). Export Credit Insurance Facility (ECIF): This is designed to protect exporters in Nigeria against the risk of non-payment for goods and services exported on credit terms. Risks covered include commercial, economic or political risk ECOWAS ISRT & THE SEA LINK PROJECT

NEXIM’S ROLE IN EXPORT FINANCE: PRODUCT OFFERINGS (CONT’D) D) EXPORT SUPPORT SERVICES Business and Financial Advisory Services: NEXIM offers export and general business advisory services to existing and potential clients of the Bank. Through this service, NEXIM sources Lines of Credit (LOC) for qualified projects in Nigeria from multilateral institutions (such as the African Export Import Bank), Export Credit Agencies and other financial institutions. It also arranges loan and/or guarantee syndications with other financial institutions for specific projects. Trade and Market Information: To enhance the profitability of export transactions, the Bank also provide trade and market information and advice on export-import markets, products, pricing, etc. based on enquires received. 26

NEXIM’S ROLE IN EXPORT FINANCE: HOW TO ACCESS NEXIM FACILITIES ELIGIBILITY CRITERIA The Bank’s facilities are available to any registered, creditworthy export Company/Cooperative Society, incorporated in Nigeria, registered with the Nigerian Export Promotion Council (NEPC). REQUIRED DOCUMENTATION INCLUDE: Application Form Certified True Copy of Certificate of Incorporation, Certified True copies of CO2 & CO7; and Memorandum & Articles of Association; Current three year tax clearance; Three (3) year Audited Accounts and most recent management accounts, where applicable Feasibility Study/Business Plan including Projected Cash flow, P&L and Board Resolution Authorizing Company to borrow and Letter of Authorization for NEXIM to seek information on Company; Registration with NEPC; Proforma Invoice; Export Contract or MOU and Evidence of past export(s) if any; Valuation Report of the proposed security;

NEXIM’S ROLE IN EXPORT FINANCE: HOW TO ACCESS NEXIM FACILITIES TENOR: Short < 12 months Medium > 12 months < 60 months Long > 60 months INTEREST RATE: NEXIM provides all its facilities/products at below market rates but, on the average, the applicable rates are between 10% per annum and 15% per annum for the short-term Inter-bank and Direct Lending facilities.

ROLE OF NEXIM IN EXPORT PROMOTION AND DEVELOPMENT ANNUAL STATISTICAL DATA OF NEXIM INTERVENTION IN THE EXPORT SECTOR FOR THE PERIOD COVERING JANUARY 1, 2005 TO OCTOBER 31, 2011

CONCLUSION The Nigerian Export-Import Bank has since inception been deeply involved in Trade Facilitation through the provision of Finance, Risk Bearing Facilities, Financial Advisory Services & Trade Information. The Bank understands that Trade Facilitation is actualized through Simplification & Harmonization, as well as Time & Cost Reduction of Transactions. Going forward, NEXIM Bank shall continually improve its products and services in order to ensure more efficiency in the Bank’s contribution to Trade Facilitation in Nigeria. However, it is pertinent to note that Nigeria’s non-oil export potentials are far from being significantly tapped/explored . We therefore implore you to avail your selves of NEXIM facilities and take advantage of the numerous business and investment opportunities that abound in our dear Nation.

OUR CONTACT Head Office Plot 975, Cadastral Zone A0, Central Business District, Abuja Website: www.neximbank.com.ng E-mail: neximabj@neximbank.com.ng Branches: Lagos Area Office, Calabar Area Office Kano Area Office Old Niger House, 163/165, Calabar Free Trade Zone Fatima House, Broad Street, Cross River State Murtala Mohammed Way, Lagos State Kano State neximlag@neximbank.com.ng neximcepz@neximbank.com.ng neximkao@neximbank.com.ng

THANK YOU FOR YOUR ATTENTION