Abstract
The primary objectives of this study was to examine how the financial
institution export finance in Nigeria using First Bank of Nigeria Plc
Onitsha branch as a case study. In carrying out this study, I used survey
method in which I used the questionnaire to collect data. The target
population was the staff of first bank of Nigeria Plc Onitsha Branch
from which a sample of 80 was drawn. I used research questions and
formulated research hypotheses. The relevant literature was reviewed
for the study. The data were collected, presented analyzed and
hypotheses tested using chi-square. At the end of the study a number
of recommendations were made for further studies and on how to
improve the Nigeria financial export in Nigeria and how to encourage
the institutions for expansion and modernization.
THE ROLE OF FINANCIAL INSTITUTIONS IN EXPORT FINANCING IN
NIGERIA
INTRODUCTION:
Financial institutions are organizations which deal basically in
money.
`They constitute the financial framework of an economy. Financial
institutions help to pool savings and excess liquidity from millions of
individuals and firms within the country and make them available to
those who need them for various purposes.
Financial institutions include commercial bank (Joint stock banks)
discount houses, the central bank, saving banks, development bank
(BOI), insurance companies, hire purchase companies, the national
providence fund, the stock exchange building etc.
Before the introduction Nigeria export- import bank (NEXIM) in
Nigeria as at 1999 the commercial banks were generally referred to
retail bankers, while merchant banks were known as wholesale
bankers.
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However the two operate and offer almost the same services
that any line of demarcation is now rather fussy- one can only say
that the distinguishing factor between the two sectors of the
banking industry is that the commercial banks are members of the
central bank of Nigeria (CBN) clearing house, While the merchant
bank are not members of the Central Bank clearing house.
Another contentious factor is the licence granted merchant
banks to take companies to capital market which the Nigeria stock
exchange denied the commercial licensed them to do so, the
introduction of the universal banking system of divide effect. A trader
could approach either commercial or merchant bank for financing
facility for his transactions. They can provide both short and long term
facilities and can design any product which meets any requirements of
customers.
The Nigeria export-import bank (NEXIM) was established in
1988 but commenced operations in January 1991. The bank was
established to provide mainly short term financing for exporters who
need working capital to buy hair activities. Among the function of the
banks is the maintenance of a foreign exchange revolution fund which
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is to be made available as loans to exporters who need to export
machineries, raw materials and spare parts to satisfy export orders. It
can also consider loans involving domestic trade which are likely to
assist exports.
1.1. BACKGROUND OF THE STUDY
The banking system has been integral part of the structural reforms
and it has a leading role in management of policy change. The role of
financial institutions in export financing is that of a cartelist and a
committed broker. It ranges from assisting company and individual on
how to enter export market through financing and handing shipping
document and collect export proceedings.
Generally an export can meet his financing needs in the
following number of ways.
1. advance payment from overseas buyers
2. internal general funds
3. Credit from bank and other financing institution.
4. Credit provided by the government in the buyer country.
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1.2 STATEMENTS OF PROBLEMS
It is regrettable that despite their various funding mechanism
and incentives put by financial institution s to stimulate the growth of
export in relative contribution to the economy is still very low because
of this low rectum, financial institution face the risk of non-payment of
loan and advance given to export.
Firstly, the problems of policy stability it is needless to
formulate a beautiful policy on export only to be discontinued, shortly,
example the re-introduction of regulatory guideline in domilarily
account was discentives to the exporter. This was reverse later by
central bank of Nigeria (CBN) circulated in September. After much
pressure recently Nigeria export and import only provide fund and
transfer the risk to other banks. Another problem is that Nigeria
exporters who ventures into foreign market do not avail themselves
with the information relating to import countries such as culture,
regulation and wealth this result in low returns those by increase the
risk being faced by the financial institution that finances them. The
Nigeria through the activities of some of its citizen has activities of
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some of its citizen has developed a negative business image both at
home and abroad the poor included.
Accommodation for a period of 3 days to 50 days, while long
term credit usually related to a period of more than 5 years. The
exporters need pre-shipment finance for security the raw material and
other input required for the execution of an export also ranging from
the shipment of goods to foreign countries the credit is therefore
regards as a loan granted to finance goods on the bases of
1. Letter of credit open in favour of exporter by overseas. Imports
bank.
2. Insurance of ware House Company. The duration of such credit
provided by the past does not usually exceed 12 days post
shipment credit is a loan or advance granted or any other type
of credit, provided by the bank to an exporter of goods from the
date of export proceeds within today. The main types of
advance for post shipment are negotiated form of export bill
drawn with confound export contract will order.
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The Nigeria export and import bank (NEXIM) provides both long
and short term credit through commercial and merchant bank to
support export from non oil product
a. Advance fee fund syndromes popularly called 419
b, Cheating
c. Supplying of poor quality product
d. Manipulation of words and document
The practice sign through illegal export of goods especially to
neigbouring west African Countries which cannot be over worked as a
in habited factor. In view of there problems counters in financing
export.
1.3 PURPOSE OF THE STUDIES
The purpose of this research work is as follows:
i. To study the modalities adopted by export that need export
assessing
ii. To determine the economy polices finance and their
effectiveness on the export business
iii To ascertain the problems encountered by the financial
institutions in export production finance.
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iv. To examine the prospective of export financing in Nigeria
vi. To ascertain the extent to which oriented industries
benefited from export financing.
1.4 SIGNIFCANCE OF THE STUDY
The research work on the role of financial Institutions in export
financing will be beneficial to the Nigeria economy in the following
ways.
1. GENERAL ECONOMY: It will help the nation in devising the
foreign exchange and revenue of the nation as well as receiving
pressure on the balance of payment
2. MANUFACURERS: With the introduction of the structural
adjustment program (SAP) in 1986, many manufacturers have been
oriented into the system and hopefully manufactures export good
with the financial institutions incentives will improve the production
potentials as well as production producing large qualities of export
purpose.
3. EXPORTERS:The financing of export will go a large way in
helping Nigeria exports to compete favorably with the international
world.
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4. STUDENTS: This research work will be valuable to the students
who may carry out the similar research work in related field for
reference purposes.
5. FINANCIAL INSTITUTIONS: The research work will work into
the problems and the prospect of institution the export finance and
the recommended ways to improve on it.
1.5 RESEARCH QUESTIONS
1. Are the problems encountered by financial institutions in export
financing in Nigeria.
2. Are there modalities adopted by the financial institutions in
assessing goods for exports?
3. Has export oriented financial institution affected financial
industries to an extent?
4. Are there prospects of export financing in Nigeria.
5. Are there difference economic policies adopted by the
government to support export financing and their effectiveness
on their export financing in Nigerian
1.6 FORMULATION HYPOTHESIS
HO: Export financing does not have prospect in Nigeria
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HI: Export financing have prospect in Nigeria
HO: Modalities are not adopted by financial institution is
assessing goods for export.
HI: Modalities are adopted by financial institution in
assessing goods for export.
HO: Financial institutions in export financing in Nigeria does
not encounter Problems.
HI: Financial institutions in export financing in Nigeria
encounter problems.
HO: Export oriented financial institution has not affected
financial industries to an extent.
HI: Export oriented financial institution has affected finance
industries to an extent
1.7. SCOPE OF THE STUDY
The scope of the study is very wide it focuses on the roles of
financial institution in export financing in Nigeria. As a result of this,
the researcher has consulted with several reviews on the issues of the
roles of financial institution in export financing in Nigeria which are
appreciated for employees at a particular point in time. It also serves
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as a useful guide to organizations. In their future decision making
process on training related issues, knowledge of private sectors.
1.8. LIMITATION OF THE STUDY
For the nature of the research work the researches Intended to
limit its work because of the time of this research work the
economic of the nation is also battered that the research cannot
afford to visit all the financial institution and has a limited time.
ii. TIME FACTOR: The research has witnessed some months
duration in season. However the researcher was able to utilize
the available period
iii. WORK LOAD: The department worked load is numerous for
the research work coupled with the fact that the researcher
must attend lectures there by prevent a through and intensive
work.
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1.9 DEFINITION OF TERMS USED
1. EXPORT ORIENTATION GOODS: Goods produced with the sales
intention of exporting them to countries in order to generate
foreign exchange.
2. FOREGIN EXCHANGE: Currency of other countries reserved
in a given country.
3. PRE-SHIPNAMENT AND POST SHIPMENTS: This is a loan
granted to any credit granted by the bank to exporter of the
date of extending the credit before and after shipment of goods
to the date off receipt of exporter proceeds within 60 days.
4. BALANCE OF PAYMENT: The relationship between a countries
payment is form of a statement of income and a statement account
on the international account