Export-Import (EXIM) banks are commonly regarded as government or semi-government agencies which provide insurance cover to exporters against losses from non-payment by the importers.
As a financial stand to promote trade exports between countries, EXIM banks provide such services as marine insurance, post-shipment discounting of invoices, pre-shipment advances against confirmed orders; they also support in discovery of new markets paths to boost a country’s foreign exchange earnings.
The Nigerian Export Import (NEXIM) Bank which was established in 1991 to amongst other provide relevant supports for export of Nigeria’s goods and services to international markets has in its history weathered strong winds that shook its base and sometimes threatened to dislodge it from existence, but the tide, as it looks now, maybe turning in its favour.
Having gone through governments shake-up of its board in 2009, no one perhaps chewed over the possibility that NEXIM Bank which was almost moribund with a reported 72 per cent total loan portfolio, out of which 69 per cent were classified as completely lost would soon be punching so hard as to contribute to Nigeria’s rise as Africa’s largest economy in 2014.
It however did and from the financial supports it provided to key sectors that contributed remarkable indices in Nigeria’s comfortable economic lead ahead of South Africa, Kenya and other countries that now form the league of investment destinations in the continent, NEXIM appears to be silently making its marks in Nigeria’s developmental matrix.
It was quite startling indeed to learn that key non-oil sectors of the Nigerian economy such as the manufacturing, agro-processing, solid minerals and services sectors whose contributions to the recent GDP rebasing exercise were obvious, have in the last five years, gleaned some good support from NEXIM Bank, albeit quietly.
For instance, it was a remarkable disclosure that the activities of Nigeria’s creative and film industry which is otherwise referred to as ‘Nollywood’ and which was included and captured in one of the 13 new categorisation for computing the GDP in the rebasing process had grossed as much as N9 trillion in its earning but very little is known on the industry’s sustained partnership with NEXIM Bank and its commitment of over N788 million in funding to the industry as at 2013.
Nollywood by reports, now soars high on big budget films like ‘Dr. Bello’, ‘Last Flight to Abuja’ and ‘Figurine’ to become the third top earner in the global movie industry just after Hollywood and Bollywood; NEXIM’s Managing Director, Robert Orya, stated in 2013 during a discussion he participated in at the Pan African University, Lagos that applications to the bank for film funding which it is processing are worth about N26 billion.
But how did the bank became a catalyst to Nigeria’s GDP growth after so many years of indolence? Orya who was appointed to head the restructured board in 2009 noted in this regard that the Key Performance Indicators (KPIs) set by the board and shareholders of NEXIM; the Central Bank of Nigeria (CBN) and Federal Ministry of Finance Incorporated (FMFI) were adequate to spur it into taking measured and tangible actions.
“It was an effort at resuscitating the bank. By all financial and operational yardsticks, the bank was in a dire strait. Its total loan portfolio was N14.6 billion out of which 72 per cent was non-performing,” Orya said in an interview.
He also explained that: “Within that category, N10.03 billion or 69 per cent was classified as completely lost. This ensured the depletion of the bank’s shareholders fund. It took considerable efforts to layout the state of the affairs of the bank as a result of poor record-keeping.
“In spite of a bloated staff headcount, significant skill gaps were identified in the system. What’s more, NEXIM Bank at that time lacked visibility in the banking and media spaces. All the woes can be summarised as resulting from ineffective risk management framework and non-adherence to corporate governance best practices.”
Orya stated that like an orchestra that has found its lost voice, NEXIM quickly launched a corporate transformation plan and with the assistance of KPMG Professional Services, it was able to look deeply into its entire operational tactics; risk management and corporate governance, financial performance and operations, organisation ethics and people, and then decided to set a clear market focus to follow.
“We thought that Nexim Bank should become a major contributor to non-oil exports in the Nigerian economy. We set to increase the contribution of the bank to non-oil export sector by 25 per cent. We were very expansive in our outlook,” he said.
In addition, he stated that: “This was founded in the huge opportunities we know exist in the country. It was our goal to increase the contribution of Nigeria to regional and emerging markets trades by 70 per cent.
“We set to reverse the negative financial performance trends and build a profitable institution with a robust balance sheet size by the end of 2015. Our target was that non-performing loans (NPL) should not exceed 15 per cent. The managed funds in our mission-critical sectors were of interest to us; we therefore set to achieve N100 billion in that category of asset under management.”
Reportedly knowing that these KPIs may not be attained without people’s buy-in, Orya said that NEXIM had to improve on its delivery time and human resource base.
He said: “We set the automation of our processes to achieve 80 per cent turnaround time and 95 per cent efficiency rate and uptime in our IT. These are important for the achievement of ‘A’ credit rating by a reputable rating agency which we also set to achieve.
“On the human capital front, we wanted to maintain single-digit staff attrition rate by attracting and maintaining a highly skilled and motivated workforce. Importantly, we placed emphasis on risk bearing and advisory services.”
He however disclosed that NEXIM Bank is now entirely focused on sectors that have high job-creation and high export potentials in the non-oil sectors.
These sectors are manufacturing, agro-processing, solid minerals and services within which the high earning ‘Nollywood’ is categorised.
According to him, the fortunes of NEXIM are now reversed to make it a profit-rather than a loss-making organisation.
“We achieved an audited profit of N189 million in 2010 as against the loss of N5.46 billion incurred in 2009. Profit-making has been a trend since then, to the effect that this is the first time ever since its inception in 1991, that the bank has made profit consecutively for four years, starting from 2010 to 2013.
“We have declared dividends for our two shareholders, CBN and FMFI. The NPL dropped from 15.59 per cent in December, 2013 to 14.95 per cent in April, 2014. The balance sheet size is currently at N51.52 billion, and we are rigorously pursuing additional capital and other funds,” he added.
With its plan to disburse N13 billion in 2014 which represents 37.7 per cent increase in its disbursement volume when compared to the N9.44 billion it reportedly disbursed in 2013, Orya said the bank was also on the verge of achieving financial closure for a Line of Credit (LOC) from African Development Bank worth $200 million amongst other efforts.
He said the Miners Association of Nigeria currently works with it to increase advocacy for intervention fund in Nigeria’s solid minerals sector which is hugely underdeveloped; NEXIM is expected to act as the fund manager if such intervention comes.“The bank planned to disburse N13 billion in the 2014 financial year, which represents 37.7 per cent increase, compared to the disbursement of N9.44 billion in 2013,” he said, adding that: “We have disbursed N4.39 billion from January to April, against a set target of N4.17 billion which implies that our target for the year could even be surpassed with increased availability of funds.”
NEXIM’s reports also indicates that projects financed by it include exportation to emerging markets which constitutes 99 per cent of the total amount disbursed and 79 per cent of the total number of customers financed from January to April, 2014, such export destinations are emerging markets in China, India, Indonesia, Singapore and West African countries.
When asked to further explain the impacts of the bank’s activities on Nigeria’s economy, especially in line with its development finance mandate, Orya said that small and medium scale enterprises (SMEs) in the country have benefitted from it to the tune of N35.46 billion.
“Some of the projects we funded were Greenfield projects. We have also issued guarantees valued at US$27.30 million, all between August 2009 and May 2014. These interventions were in our target sectors, based on the aforementioned high growth, export and job creation potentials criteria. In the same period, the bank through its facilities generated estimated foreign exchange earnings of $325.25 million, annually.
“Our operational interventions helped in the creation and sustenance of direct jobs estimated at 24,139 in the period of my stewardship, apart from thousands of indirect jobs. Our developmental efforts have contributed to the performance of the creative and entertainment industry which the recent GDP rebasing has shown to have grown in leaps and bounds,” he said.
He noted that the bank’s role in the creative arts and entertainment industry was in two-fold; funding intervention and capacity building within the industry within which the bank extends loans to eligible companies in all the value-chain of the country’s creative arts and entertainment industry under the Nigerian Creative Arts and Entertainment Industry Facility Scheme.
The industry capacity development he stated had helped in establishing market structures in the creative arts and entertainment industry. Sponsorship of exhibition, facilitation of improvement in film production standards as well as distribution and marketing coverage have all received boosts from NEXIM.
“In recognition of the work we have done to develop the operational guidelines for fund intervention in the creative and entertainment industry, Mr. President directed that NEXIM Bank should manage the entertainment industry fund, which he pledged in 2011 to catalyse growth and improvement in Nollywood,” he disclosed.
Perhaps, NEXIM Bank as the trade policy bank understands the policy thrust of government in Nigeria’s non-oil sectors. Its concentration on sectors with huge untapped potentials are what Orya said will serve as a springboard for improving Nigeria’s share of global trade in the services, manufacturing, agro-processing and solid minerals sectors. Nigeria he said, has untapped favourable competitive advantages in these sectors.
“There is no doubt that NEXIM Bank has been transformed into an institution of significance in the Nigerian development financing space. But much of what we have been able to do in the last five years was to first reverse the misfortune of the bank as a result of unfocused management of the immediate past.
“However, we have also put in place the framework to scale up the results we have been able to achieve. Therefore, in that sense, there is a lot of motivation for me to drive the growth of the bank, on the back of the measures we have put in place,” Orya said while suggesting that the impacts of the bank’s activities are palpable in most facets of Nigeria’s economy but not deliberately associated with it.
In the thoughts of Orya, NEXIM Bank has adopted resourcefully strategies to remain intimately involved in Nigeria’s economic development; that strategy nonetheless means that it is silently close to the hearts of the economy.
Culled from: http://www.thisdaylive.com
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