Roberts Orya,
Managing Director/Chief Executive, Nigerian Export-Import Bank (NEXIM),
says no other agency is better placed to facilitate cross border trades
in the Economic Community of West African States (ECOWAS) than the bank.
Overview
Nigerian
Export-Import Bank (NEXIM) was set up in 1991 by the Central Bank of
Nigeria (CBN) and the Federal Ministry of Finance. Incorporated for the
purpose of financing, facilitating and promoting Nigeria’s foreign
trade and non-oil sectors of the economy.
Though the bank
derailed from its original mandate, by lending to both oil and non-oil
sectors, in 2009, it re-focused its priorities, to ensure that it
operates only on mandate, that it is, playing majorly in four key
sectors, namely: Manufacturing, agriculture, solid minerals and
advisory services, which is EXIM Bank’s mass agenda. These services
include: The provision of finance, risk-bearing facilities in the form
of credit insurance, guaranties, trades marketing information and
advisory services to Nigerian exporters. Though the challenges we met
when we began was daunting, one is glad to note that we have
successfully faced them and coming out better than we started.
Repositioning the bank
On assumption in
August 2009, the bank’s operational performance was sub-optimal,
characterised majorly by high level of non-performing loans, coupled
with depletion on the shareholders fund as a result of accumulated
losses and provisions of non-performing accounts that were made. There
was virtually no fund to operate with. This was constraining effective
execution of the bank’s primary mandate of trade facilitation and
promotion. The observation was that the two major pillars necessary for
the survival of any major organisation were missing. There was a
general lack of enterprise-wide risks management framework as well as a
loose entrenchment of corporate governance tenets in the bank’s
operational culture. Those were the reasons the bank found itself in
that moribund state prior to the recent reforms. Since April last year,
the bank has been working with KPMG professional services and other
consultants to drive the corporate transformation agenda, which
include: A robust risks management framework, best-in-class corporate
governance framework to drive the bank’s operations in line with
international best practices and regulatory framework. The bank is also
involved in the management of the $200million made available last year
by the federal government for the entertainment industry. Under this
arrangement, government is looking at the development of the film
industry, television, radio, fashion, infrastructure platforms to
deepen the vast potentials and opportunities in the entertainment
industry. In each of these sectors, the bank is looking at the
production, distribution and exhibition issues, particularly projects
that are viable, bankable and possess the capacity of paying back
themselves.
From loss to profitability
In spite of these
challenges, let me report that we have turned around the fortunes of
the bank within the short period we have been in charge. As at the end
of last year, an unaudited profit of about N217million was made as
against a loss of N4.6billion in 2009.When we came in August 2009, the
total non-performing loans, that 100 percent provision was made in line
with prudential guidelines stipulated by the CBN, was N10.03billion.
What we recovered for the five months of 2009, between August and
December, was not up to N300 million. But, between January and December
2010, we recovered only N540 million. So, one can safely say that we
have not been able to recover up to N1billion so far. If one takes that
figure from what we had as total non-performing loans at the beginning,
one would see that we still have a long way to go. Loan recovery is
usually a big challenge in Nigeria. But, we have been able to put in
our best, which has reflected in our bottom line.
Transformation and way forward
Beyond the loan
recovery challenge, the bank has to carry out the ongoing
transformation agenda, to ensure that, going forward, any credit it is
going to create must be of quality. Apart from the one percent general
provisioning that the CBN’s prudential guidelines require NEXIM to
create, we do not want to create any bad loan. We have taken our time
to put in place the pillars necessary to ensure that we do not go the
same way of the past. Any exporter that comes in and is not prepared to
comply with the bank’s conditions would not receive our attention.
There are no political loans in NEXIM bank. Any project we are going to
support must be bankable, viable and capable of paying back itself.
Poised to open up trade opportunities
In 2011 and beyond,
we have a very ambitious target. One of the things in the heart of
NEXIM bank, particularly the sub-region and Africa, is how to deepen
trade in the Economic Community of West African States (ECOWAS)
sub-region. Nigeria, with a population of over 150 million people out
of the over 300 million population in the sub-region, is in a very
advantageous position to reap these benefits. Nigeria’s voice is
usually heard first in all key political and economic issues in the
sub-region. But unfortunately, the country has not been able to take
advantage of these potentials and opportunities. We can continue to
lament year after year about missed opportunities and wasted
potentials, but until we begin to see how these could be exploited to
our advantage, it would not yield anybody any good. As Nigeria’s trade
policy bank, NEXIM is in a very good position to make the difference,
despite the trade barriers.
Committed to deepen cross border trades
Apart from
deepening cross border trades, NEXIM bank is committed to deepening the
payment system in the sub- region, because we still find some Nigerians
taking their goods to Republic of Benin to sell and put all the cash in
their pockets. From where NEXIM is aspiring to be in the near future,
it would be difficult to assist those categories of exporters.
In the next two
year, NEXIM wants to be in a situation to provide financial support to
potential buyers of Nigerian products, to make the country’s products
more competitive. NEXIM should be able to assist any person that wants
to buy Nigerian products, but does not have any support to do so. We
need to formalise trades in the region, because there is still a lot of
informal trade going on in the region today.
Facilitating trade with sea link
Most trades in the
sub-region are conducted through the sea. But, the absence of a
registered vessel for the movement of goods within the region makes it
very difficult to deepen trade. Presently, the region depends on
European vessels for the movement of goods. Because most of these
European vessels would first get to their home country before going to
their final destination, it would take over 60 days to transport goods
that would have required just a few days, since they sometimes would do
trans-shipment to their destinations in Africa. Besides, this year
NEXIM is looking at how to leverage on some lines of credit that it has
from other EXIM banks and multilateral institutions, to enable it give
support to Nigerian exporters, particularly those that want to purchase
plants and machinery. About $40million would be spent in support of
Nigerian exporters in 2011 through the risk bearing facilities.
Zechem and sickle cell drugs
Some time ago,
NEXIM bank, Bank PHB and Diamond Bank gave money to Zechem
Pharmaceuticals for the production of drugs for sickle cell patients.
Though the loan is not doing well, the banks are not concerned about
recovering the money, but how to commence production of the drugs as
soon as possible, to save the lives of Nigerians. It is true everybody
loves money. But, if one is not healthy, one would not be able to enjoy
the money one has. At the moment, there are some billionaires in
hospitals around the world praying fervently for the slightest chance
to live their normal life again. Though NEXIM is a government
institution, it cannot continue to watch as Nigerian children are dying
every day, while it is capable of facilitating the production of drugs
that can help save their lives. That is why we have resolved to do
something above money. That is what we have set out to do in the
Zechem’s case. Beyond that, we have been able to get some kind of
financing through the CBN’s N200 billion real financing and
restructuring scheme being managed by the bank of Industry (BOI). We
have already appointed a receiver to manage the facility. With the
commitment of NEXIM and the other banks, we want to find a way of
commencing production of the drugs for Nigerians within the next three
weeks. We know that the market for the drug is high. People have been
making enquiries about this drug within the sub-region and as from far
away a place as Ethiopia. Therefore, the market for the drug is not in
doubt.
