What is the function of nexim bank?

Answer 1

The introduction of the Nigerian export-import bank (NEXIM), became

important when it was obvious that export promotion programs instituted by such

agencies as the Nigerian export promotion council; export processing zone; tax subsidy

program; concessionary financing program and export credit guarantee scheme, lacked

the credit to finance agricultural development and local investment.

NEXIM started its operation with a share capital of N500milion in 1991, and its

statutory functions were as follows:

(i) Provide export credit guarantee and export insurance facilities to non-oil

exporters.

(ii) Provide credit in local currency to support exports.

(iii) Maintain a foreign exchange revolving fund for lending to exporters who

need to import foreign inputs to facilitate export production.

(iv) Provide domestic trade with insurance to assist exports and;

(v) Establish and manage funds connected with exports.

While arguments for or against the role of export in economic growth ranges on,

several empirical studies corroborates the assertion that export is an engine of growth in

most economies of the world. Flemming (1962) demonstrated the overall effects of

external trade as depending on the differences between export and imports, also for

exchange product market and money market, concluding by emphasizing the adequate

mixture of trade and exchange rate policy, fiscal and monetary policy, as a prerequisite

for rapid economic growth and development.

Oyejide (1975) confirmed the positive relationships that exist between export and economic growth. Fosu (1991) ascertained a highly significant and positive relationship

between export and output growth rates. Ayodele (1997) opined in his study that export

success contributes to economic growth. By and large, it has been largely held by a good

number of development economists that trade is an engine of growth. In other words,

trade (export) enhances growth of an economy.

Contributions of NEXIM bank towards export (non-oil) growth in Nigeria 1990-2005

The mission statement of NEXIM is stated thus: "to become an efficient,

responsive, first class commercially-oriented and export stimulating institutions

committed to bringing about export-led recovery, as well as a culture of self inspired and

sustained exporting in Nigeria".

Little, wonder, the banks operational activities can be classified under specified

facilities provided;

ADB (African Development Bank) export stimulation loans (1990-2005):

The Nigerian Export-Import Bank (NEXIM) was first referred to as the Export

Guarantee and Insurance Corporation. Its first prominent task was the bearing of about

US245 million dollar export stimulation loan disbursed through 41 merchant banks, and

21 commercial banks to 124 export oriented projects in areas such as cocoa, rubber

trawling, food processing and garment manufacturing (table 6). Cocoa processing assumed the largest percentage share with 27.06 percent; followed by trashing with 16.98 per cent; oil seed processing 14 per cent of loans and 19 benefiting projects table 6. Food

processing took 4.99 per cent of the loan with just 8 benefiting projects. As a result

NEXIM bank has become the predominant source of short-term trade financing provided

for the non-oil export sector, with banking system providing less than 9 cent from their

resources in 1993 (Table 2).

Between 1990 and 2005, NEXIM has been a consistently rising trend for short term

credit provision of about 35 per cent in 1990, 70 per cent in 1991, close to 90 per cent in

1992 and over 91 per cent in 1993. Table 2 shows the value of non-oil export growth

during the period under review, N3259.6 million in 1990; N4677.2 million in 1991;

N4227.8 million in 1992, and N5022.3 million in 1993.