FREQUENTLY ASKED QUESTIONS

What is the function of the Nigerian Export Import Bank?

Decree 38 of 1991 established the Nigerian Export Import Bank (NEXIM) as an Export Credit Agency to address a perceived need of providing effective financing in support of government aspiration of diversification and expansion of the nations export basket. The Bank plays a pivotal role in the nation's export development programme by providing a complement of services that can be categorized into three main groups namely:

• The provision of export credit.
• The provision of risk bearing facilities.
• The provision of trade information and advisory services.

What facilities are available to the exporter from NEXIM Bank?

Rediscounting and Refinancing Facility (RRF)

The RRF is a facility designed to assist exporters and banks to provide pre- and post-shipment finance in local currency. The RRF is made available in two ways, namely: Rediscounting Facility and Refinancing Facility. The facility is available for a maximum tenor of 180 days.

Stocking Facility (SF)

This facility, given in local currency, is to enable manufacturers of exportable goods procure adequate quantities of local raw materials (which may be seasonal in nature) needed to keep production at optimal levels during periods of scarcity. The duration of this facility is 12 months.

Direct Lending Facility (DLF/SDLF)

In an attempt to create a wider means of accessing NEXIM facilities and reduce observed lapsed in the on-lending arrangement, the Bank in the third quarter of year 2002 introduced both the Short-term (SDLF) and long-term Direct Lending Facilities (DLF) for exporters. The SDLF is available for the financing of commodity and value added exports. The DLF, on the other hand, is available to companies engaged in marketing and production of exportable goods. The facilities are made available for a maximum duration of 180 days and 365 days respectively.

Local Input Facility (LIF)

The Local Input Facility is a medium/long-term facility disbursed in local currency for the purpose of asset acquisition/modernization, and/or expansion of existing production units for exports. The facility is also made available for the acquisition, rehabilitation and/or expansion of plantations/farms for the production and processing of exportable products.

Export Credit Guarantee Facility (ECGF)

This facility is operated as a guarantee provided to banks in respect of credit given to exporters in support of the export of goods and services from Nigeria. The facility is the usual guarantee, which a lender receives from a suitable party as security to protect it against a borrower's default. It is hoped that this facility will encourage banks to provide credit to exporters.

Export Credit Insurance Facility (ECIF)

This facility insures exporters against risk of non-payment by buyers where such default is ascribable to commercial causes. Payment defaults due to political reasons are covered separately by NEXIM for the account of the Federal Government of Nigeria.

ECOWAS Inter-State Road Transit Scheme (ISRT)

In line with ECOWAS protocol on free movement of persons, goods and services, NEXIM was appointed the National Guarantor under the ECOWAS Inter-state Road Transit Scheme to guarantee goods transiting Nigeria to other ECOWAS countries. The scheme, which is designed to promote free flow of goods among member states, seeks to eliminate the time wasting escort system and diversion of goods consigned to specific destinations in the ECOWAS sub-region.

How is NEXIM different from other Banks?

NEXIM is unique in a number of ways:

Structure
It is an Export Credit Agency (ECA) owned by the Federal Government of Nigeria to finance export.

Product Offerings
The Bank has in its portfolio a total of 8 products and services that meet the customers various export needs:

a. Competitive interest rates.

b. Flexible tenors, which meet short, medium and long-term credit needs of our export customers.

c. Underwriting services which cover commercial and country/political risks

How can I benefit from the services of the Bank?

As is the case with most Export Credit Agencies (ECA) and in line with best practices within the industry, the Bank in providing financial support to exporters, disburses funds through the banking system. This allows NEXIM to take advantage of the extensive coverage offered by the banking system to reach all eligible exporters. As such, exporters requiring funds are required to submit relevant documents to his chosen banker. The exporter’s bank appraises the credit proposals submitted by individual client and if convinced as to the financial viability of the requests, applies to NEXIM for financing (project finance) or refinancing (trade finance) on the transaction. While credit appraisal and monitoring for trade finance transactions are largely the responsibility of the supporting bank, NEXIM does ask for and receive status reports on outstanding credit performance from the banks. For project financing, officers of the Bank undertake independent appraisals of project feasibility reports, the purpose of which is to evaluate projected performance of the project utilizing the Bank’s knowledge of the environment in which the project is to operate.

Where all the supporting documentation is in place, there is a policy on ground to ensure that the Bank executes a turnaround of application within 14 days upon receipt of the application at the Bank offices.

Is the system of funds intermediation through Participating Banks not open to abuse?

The Bank’s intervention in the financial market must be seen as complementary rather than competitive to the role of commercial and merchant banks. Government by guaranteeing access to low cost funds assists NEXIM to support businesses that ordinarily may not have access to credit and institutional support.

Our financial services are priced below market with a margin that allows the intermediating banks to adequately cover administrative expenses. Where there is a differential in price there will always be a possibility that arbitrage would take place. The Bank however, is not unmindful of this possibility and has consequently put in place a system of checks and balances that limit the abuse of the system by ensuring that the exporter is advised independent of the intermediating bank of both the rejection/approval and terms of the credit. The onus then lies on the exporter to report cases of abuse to NEXIM, which would in turn investigate the allegations and apply sanctions accordingly.

Regular export enlightenment seminars are held in the various geo-political zones within the country to ensure that all stakeholders are adequately informed of the rules and procedure for participating in the Bank’s facilities. These fora also serve as an additional avenue to receive feedback on the effectiveness of the Bank’s delivery channels and consequently customer satisfaction.

In what ways has the Bank assisted Nigerian exporters through its risk-bearing facilities?

Under the ECGF, the Bank has provided guarantees which have enabled Nigerian exporters access credit internationally on terms that are more competitive than that offered within the local market. The facility has also allowed Nigerians to take advantage of vendor financing to acquire plant and equipment to achieve value addition in production and competitiveness in international markets.

How can I source information to support my export business?

One of the aspirations of NEXIM is to become a repository of trade and financial information as well as a reliable source of market and product intelligence. The Bank’s strategies to attain this position include the establishment of working relationships with other Export Credit Agencies around the world; the creation of linkages with major financial, commodity and product markets, and subscription to current and reputable markets and economic developments journals. Also in this regard, NEXIM has initiated the establishment of one of the best-stocked libraries for finance, economics, risk management and markets. This information is made available either through the telephone, in writing or through direct discussion.

Are there specific banks through which NEXIM disburses its facility?

No, there are no specific banks through which NEXIM disburses its loan facilities. All licensed banks are eligible to access NEXIM support. To participate in the schemes offered, the Bank undertakes an assessment of the banks based on their financials, ranking them and sets exposure limits or credit lines under which they can draw to refinance their export portfolio. The categories are from A to E with category ‘A’ banks enjoying the highest limit. Presently there are about forty-five banks that have established lines with NEXIM BANK.

What role is NEXIM Playing in the Development of Economic activities in ECOWAS?

The Bank has been active in the development of economic activities between Nigeria and the ECOWAS sub region. The Bank is an active member of the West African Bankers Association (WABA), which offers an opportunity to provide valuable input and guidance to the Committee of Governors of Central Banks in ECOWAS on ways and means of addressing the existing bottlenecks in the financial system, which militate against formalized trade within the sub region. The Bank also participates in regional trade fairs with a view to supporting and encouraging Nigerian business to target and capture the sub regional markets.

Furthermore, the Bank has been designated as Nigeria’s National guarantor under the ECOWAS Inter State Road Transit of Goods Scheme (ISRT), which seeks to remove all non-tariff obstacles, which hitherto constituted an impediment to sub regional trade.

What is the Vision of NEXIM for the Year 2010?

The Bank, as any forward looking institution, implements a strategic planning framework, which consists of 4 year rolling plans. 2004 marks the commencement of the Bank’s second 4-year rolling plan (2004 – 2007). The strategic plan builds on the achievements of the Bank during the 2000 – 2003 strategic period. The Bank’s outlook for 2007 and beyond, derives from its new corporate vision and mission statement, which are “To be the Leading Export Credit Agency in Africa (Vision) and “To become a First Class institution promoting a diversified export base through the provision of Finance, Guarantee and Advisory Services in line with Government Trade Policy” (Mission)

Specifically, the Bank is mobilizing resources to support a minimum of 40 % growth rate in export financing on a year-on-year basis through the plan period to N25.0 billion in 2007. This objective will be achieved through a mix of competitively priced interest and fee-based product offerings with a greater emphasis on Risk Bearing, Business Advisory services and Export Credit.

The Bank’s brand will be communicated in a proactive manner emphasizing such key values as;
• Professionalism and Excellence in service delivery
• Customer driven business model

To support this the Bank has recruited competent staff to fill the resource gaps, in an exercise that seeks to achieve competence and capacity development in the key areas of its activities.

The Bank is consistently reviewing its organizational structure to better achieve the corporate objectives identified above and improve the efficiency of all areas of its operations. In order to drive this, the Bank has fully implemented a new banking software (Flexcube) and is currently strategically positioning, with the creation of one new department and two new units, to deliver value to its customers and shareholders in 2006 and beyond.