THE ROLE OF FINANCIAL SECTOR IN THE PROMOTION OF NON OIL EXPORTS IN NIGERIA.
There is the need for promoting non oil exports, and the financial institution have a lot of roles to play in this direction. A summary of literature written by other people concerning them of this study and the need fro non-oil export promotion has been considered.
In a paper presented by professor the head of department of finance, university of Lagos. “He observed a huge drop in the value of Nigeria’s foreign trade. The drop he noted has been attributed to a decline in oil exports. To make up, therefore, for the decline or sluggish performance in the oil export sector and thus the inadequate foreign exchange earnings, measures to boast non – oil export activities should be vigorously embarked upon.
Such promotion means according to him are granting export finance facilities export business export finance therefore is a combination of insurance and banking mechanism. Such finance can extent it’s coverage through the cycle of negotiation from production to payment by overseas buyer.
Other promotional means he identities as, providing specialized and general marketing assistance like identifying exportable product and bribing the go between export and foreign buyer.
In concluding remarks, Ojo called for greater attention to be given to the financing of local production of non oil commodities. That this should be the utmost as there’s kneed to promote the sale of non-oil export items are available in a very little quantity much, he said he should be done towards improving the quantity and quantity of non-oil products. To achieve the nations non-oil export target a more dynamic finance policy in the short term, he called for a review of the financial system.
Also in a paper presented by the director of the Nigeria export promotion council, he mentioned that the true concept of export promotion is relatively a new development in third world countries but had been practiced and place like Hong, Kong, Keng, India, Brazil and South Korea.
The strategies for determining exportable products are often based on principle of comparative advantage and that this should also be, on a selective basis. In our own opinion, this is a misconcepted because it under mines the policy of export-oriented development. What his school of though fails to realize is that the ability of a country to meet its local demand also depends at times, critically on the country’s ability to generate additional foreign exchange through exportation of goods services.
In another paper presented, he observed that several economic 1986 and designed towards correcting some structural distortions in the economy.
In the area of export financing, he notes that quits a number of banks adjusting to the challenges of re-shaping the economy through non-oil export. Many have become adoptive innovative and creative their operative financing and collateral instruments such as domestic later of credit (DLC) ESCREW better and ESCREW daft (ED) have been designed and introduced to facilities the flow of credit from urban to rural banks branches.
Export financing he notes must be supported by a wide range of promotional or marketing services initiated by banks. In this area he feels banks must maintain banks as part of their overall marking strategy.
In conclusion, for a successful export promotion and diversification he called on government to review and activity implement some its policies and as well takes steps towards improving the existing infrastructure with the view to causing a reduction in the high cost of production in the manufacturing sector.
On the role of the financial sector in the promotion of non-oil export sector of Nigeria economy, here presented their (Financial sector) role under the role of the central bank of Nigeria being to government and other Nigeria banks. He noted how on well worker out system, the second tier exchange market would have aided rationing the meager and falling exchange revenue into Nigeria and the central bank meant to monitor it’s allocation fumbled and violated it’s rules and finally settled for a new system, the inter-bank foreign exchange market (IFEM).
This has therefore adversely of faceted all sections of the economy (with non-oil export sector inclusive).
The new system which involves banks sending quatation’s every morning to the central bank and from those quotations work out several average and settles for one percent spend allowed, does not start who buys the foreign exchange and for what use it should be put into. This Ajayi says will allow for capital flight and boarding.
In conclusion, called for a return to sanity saying that the new system (IFEM) cannot work Nigeria and it cannot replace a well though out system, second tier foreign exchange market.
- THE ROLE OF THE FINANCIAL SECTOR IN PROMOTING NIGERIA’S NON OIL EXPORT.
Evidently our performance in non – oil export trade has not been significant over the years due to our failure to effectively promote the non-oil product and aim their produce with the weapon to win the non oil export war. This is end, government has provided a packaging of incentives have a lot of financial implication which the financial sector is required to administer. Thus in Nigeria today the role of promoting non –oil exports seen to be wholly that the financial sector of the economy. Therefore, for this objective to be realized, the role to play in the provision of the required financial and other promotional of the support not only for exports but more importantly for those producing export commodities.
EXPORT FINANCE
This is a wide export finance services and facilities offered by the commercial and merchant banks to exporters, such finance can be negotiation, production, shipment financing.
Export financing deal requires enormous amount of capital in the form of carious types of loans and advance as well as other financial services like guaranteed banks and letters of credit percipient financing both commercial and merchant banks could provide facilities such as letter of credit, loans, cash or over drafts to exporters for the purpose of carrying out foreign market survey, purchasing, manufacturing, packing, warehousing domestic transportation etc. of goods meant for export post shipment services of the other hand, refer to the assistance given to export.
The financing, facilities are subdivided into short, medium and long term export credit to meet different need of individual export. Short term can be inform of pre or post shipment finance granted inform of loans, cash or overdrafts its duration varies from three months in some countries to one year in others. Medium and long term export project with long question period of over one year. Repayment periods may be five years or more. In an interview with J. A. ERINOSO, of the export promotion division, NAL merchant bank of Nigeria limited, he noted that so far through his dealing with Nigerian exporters, they need combatively more of pre-shipment and so far his bank have been meeting up with these needs.
MARKET RESEARCH
This refers to a systematic collection of data for the purpose of making adequate decision on the production and sale of goods and services. It can help the researcher or government to know which industry should get priority investment and export promotion, program, the land of marketing assistance needed by exporters and in which market they should concentrate their promotional efforts.
Nigerian banks can be into this kinds of research with the help of their international correspondent banking network.
ADVISORY AND CONSULTANCY SERVICE:
Almost all commercial and merchant banks are meant to provide among other advisory and consultancy service to exporters in area of enlightenment in trade regulation, the desire product design, packaging, promotional and presentation requirement, in foreign markets. At other times, they advice on production process that will require on production process that will require to lowest cost and export procedures and rules are too complicated and exporters are expected to strictly abide by then in this case, since the banks conversant with the procedures and are then better placed to advice exporters on this issue of the exporters so want.
TRADE AND ECONOMIC INFORMATION:
Banks make available some useful information to exporters because it is only exporters with the right information that can face export challenges and know how to proceed with their program. It is in recognition of this fact that banks periodically issue trade and economic bulletin which exporters with information on how to handle complex export procedures. It also help our exporters to understand the third would countries.
MARINE INSURANCE:
In order to earn foreign exchange, the Nigerian exporter must take his or her goods across the boarder and this is mostly done by ships though the seas and oceans. The ship that conveys these goods are usually exposed to some sea hazards which may cause their wreckage (eg. Nigeria’s vessel, river guava, which was cause up by sea typhoon sometimes in February, 1989 at Portigal). However, marine insurance ensures that risk, connected with marine adventures are adequately covered to the extent of the needs of the insurance, as agreed to with his insurer.
Apart from covering these risks under marine insurance policies, the exporter is also able under this mechanism to obtain prompt for goods consigned to an overseas destination.
INSURANCE OF GOODS:
Another aspect of service rendered indirectly to exported is an insurance cover for goods in transit. Through, this aspect of insurance remains under – utilized in Nigeria, get it serves as great relief to those who are involved in haulage business transporting goods from the inter-land to the seaports to be exported. In some cases these goods are stolen or destroyed on the road. In situation where the transporter cannot pay back the export (owner of the goods) the export may be faced out of business.
But where there was on appropriate policy covering the goods in transit, it would certainly have provided a welcome relief for them to settle the exporter.
AGRICULTURAL INSURANCE SCHEME:
It is common that crops and livestock get destroyed by natural hazards, such as drought pest, wind storms, diseases, insects and fire which are unforeseen and uncontrollable by the farmer. Agricultural insurance comes thus stabilizing agricultural industry.
Agricultural insurance should provide inducement banks to increase lending to agriculture, particularly when it is pledged as collateral for loans this ensuring payment.
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