We take deliberate step to increase support for the Agricultural Sector under our Strategic Funding Framework - Abba A. Bello
. . . Says the Nigerian Banking Industry is increasingly becoming integrated with the global financial system
Abba Bello has 26 years’ experience in banking, where he has held senior management positions in corporate banking, regional and commercial banking, and public sector banking in more than a decade. Abba also had a brief stint in auditing.
Abba is a graduate of accounting from Ahmadu Bello University, Zaria. He also holds a post-graduate degree in Business Administration from University of Liverpool, United Kingdom.
Until his appointment as Managing Director and Chief Executive Officer of Nigerian Export-Import Bank in April 2017, he was Executive Director, Unity Bank Plc., in charge of Corporate Banking, Agriculture and North Directorate.
Abba has cognate experience in international banking. He was the pioneer Managing Director/CEO of United Bank for Africa Plc.’s subsidiaries in the Republic of Chad and Zambia for several years.
Abba has attended several courses in Nigeria and abroad in leadership, advanced management, and executive management. He is a member of Chartered Institute of Bankers Nigeria, and a Fellow, Institute of Credit Administration.
In this interview with Murya Magazine, Mr Abba A Bello speaks on the Nigerian economy as well as other financial developmental issues. Excerpts.
As an industry player who has been in the financial sector for decades, how would you assess the Nigerian economy with particular reference to import and export?
Nigeria is an import-dependent economy, while exports are largely dominated by oil and gas, accounting for about 95% of total exports. This explains why our terms of trade deteriorate anytime the global oil price declines. Although in recent times, there appears to be some relief in the area of food imports owing to the success of the Anchor Borrower Programme and increase in production of rice, a lot still needs to be done to improve our trade balance. Currently, over 50% of our imports are manufactured goods, while raw materials and agricultural imports account for 12% and 10%, respectively. There is the need for Nigeria to enhance local capacity to boost production and value addition, not only for import substitution but also for exports.
What does the Nigeria Export-Import Bank exist for and what is the mode of operation of the bank?
Export Credit Agency, NEXIM’s mandate essentially promotes the diversification of the Nigerian economy and contributes to the growth and development of the non-oil export sector by providing credit in local/foreign currency, export credit guarantee and export credit insurance, as well as trade information and export advisory services. The Bank also complements in attracting development capital and concessionary credits to the export sector from other EXIM Banks as well as Bilateral/Multilateral financial institution. Through these, the Bank contributes to jobs creation and foreign exchange earnings for the country.
The Bank also plays a trade facilitation role through various strategic initiatives. Some of these initiatives include the Sea-Link Project, aimed at addressing the transport and logistics problem inhibiting regional trade through the establishment a regional shipping company that will operate within the West and Central African Region. NEXIM is also collaborating with the Borderless Alliance, which is a regional advocacy platform that seeks to remove non-tariff barriers and other impediments to intra-regional trade. We are also the national guarantor under the Interstate Road Transit Scheme (ISRT), which is a programme designed to facilitate the smooth operation of the ECOWAS Trade Liberalisation Scheme (ETLS).
The vision statement on your website reads to be the leading Export Development Bank in Africa. Has the bank lived up to expectations in this regards?
Over the last five years, inadequate capitalisation and the paucity of funds have been a limiting factor. However, these challenges are now being addressed with the recent introduction of the N500 billion Non-Oil Export Stimulation Facility (NESF) and the N50billion Export Development Fund (EDF) by the Central Bank of Nigeria. We are also working towards leveraging our Balance Sheet through other EXIM Bank and Bilateral/Multilateral Financial Institutions to enable us to build a solid financial base to adequately support the Nigerian non-oil export sector.
The Central Bank of Nigeria once established N500 billion Export Stimulation fund (ESF) and a N50 billion Export Rediscounting and Re-Financing Facility (RRF) to be managed by NEXIM Bank. Is the management of these funds still on course?
As you may be aware, the N500billion ESF was re-launched in December 2017 with some modifications, which now admits NEXIM as a Participating Financial Institution, implying that applicants can now approach NEXIM directly and not necessarily through another Bank as was the case. Also, the CBN launched a new N50 billion Export Development Fund (EDF), which is to be deployed towards funding the Regional/State Export Development Initiative being implemented by NEXIM. Under the EDF, at least N1billion has been earmarked for each state of the federation to promote economic diversification and regional development, based on the economic endowments in the state.
The Bank has also earmarked about N3billion from the Export Development Fund to support industries that are major employers of women and youth under a special economic empowerment scheme for the vulnerable groups as part of NEXIM’s contribution towards meeting the targets of the Sustainable Development Goals. This fund will be provided at a highly concessionary rate and the key objective will be the promotion of women and youth empowerment.
I wish to confirm that these funding schemes have become operational and NEXIM is already processing applications under the schemes.
One of the statutory functions of NEXIM Bank is the diversification of the economy through the provision of Finance, Risk Bearing and Advisory Services in line with government trade Policy. What does it take to be eligible for these services?
Beneficiaries of NEXIM’s facilities must be export-oriented projects operating in Nigeria, who are duly registered as Limited Liability Company or a cooperative society. Usually, applicants are required to produce a viable and bankable proposal and provide evidence of an export market.
The Buhari administration is making efforts towards building a robust economy that would be less dependent on earnings from oil. What strategies is NEXIM putting in place to complement the President's effort?
Yes, as you rightly observed government is implementing various economic policies to diversify the economy and promote sustainable and inclusive growth in the country. Such policies include the Economic Recovery and Growth Plan (ERGP), the Agriculture Promotion Policy (APP), the Mining Industry Roadmap (MIR) and the Nigerian Industrial Revolution Master Plan (NIRP).
In this regard and as part of its contribution, NEXIM has established a Strategic Funding Intervention Framework, which seeks to address the key challenges in the non-oil export sector under 5 strategic pillars. This includes in Pillar One, Products and Market Diversification, where the Bank seeks to enhance value addition in the Agriculture sector, in addition to promoting services exports, particularly in the area of the Creative Economy, Business Process Outsourcing and Professional Services.
The second pillar deals with Regional Industrialisation and Export Promotion, which includes deliberate funding intervention programmes in restive areas such as the Niger-Delta and the North East Region to crowd-in investments towards jobs creation and enhancing economic growth.
Our third Pillar deals with Bridging Export Facilitating Infrastructure where we shall be catalysing investments in assaying and laboratory infrastructure, in addition to developing logistics and transport infrastructure through the Sealink Project.
The fourth Pillar is about Improving Export Handling and Packaging, where we shall be promoting investments in packaging materials such as jute bags to improve export competitiveness and reduce incidents of rejection. The fifth and last Pillar deals with Broadening the scope of export financing, which involves developing new financing instruments such as Factoring to improve access to funding by the Small & Medium Enterprises. We shall also be establishing dedicated funds for the purpose of providing investment guarantees and other risk-mitigating instruments.
As a professional with cognate experience in international banking, how would you assess the Nigerian banking industry with regards to international best practices?
The Nigerian Banking Industry has actually recorded significant progress over the last 10 years and is increasingly becoming integrated with the global financial system. As you are aware, many Nigerian Banks now have branches in many African countries and indeed Europe and other parts of the world, while some international Banks have been operating in the country over the past three decades. This has led to significant knowledge and skills transfer.
Agriculture is the most viable sector capable of standing head to head with the oil sector in terms of revenue generation considering the fact that revenue generation from oil often fluctuates. What is your Bank doing to support the growth of the agricultural sector?
Nigeria indeed has a significant Agricultural endowment so much so that we are the leading producers of major commodities in the world as published by the Food and Agricultural Organisation. Nonetheless, agricultural production in Nigeria is still largely subsistent and rain fed such that the productivity is still quite low, with low yield per hectare when compared to other parts of the world. Hence in order for Nigeria to be globally competitive, there is the need for a transition into large-scale mechanised agriculture and adoption of modern technics to boost productivity and improve yield per hectare. Also given the current composition of non-oil exports where primary agricultural commodities contribute over 50%, there is the need to develop local capacity for value addition to improve export competitiveness and boost export revenues.
It is for these reasons that the Bank has taken a deliberate step to increase support to the sector under pillar one of our Strategic Funding Framework as earlier mentioned. Note that I used the word increase because indeed the Agriculture Sector has always been one of our target sectors under the MASS Agenda, which defines NEXIM’s focus sectors to include Manufacturing, Agriculture, Solid Minerals and Services.
Finally, what do you have to say to members of the public seeking to know more about the operations of NEXIM Bank?
NEXIM’s is quite ready to support export business in Nigeria and our current drive is to build a solid institution that will have the financial muscle to intervene significantly in the non-oil export sector, where opportunities actually abound. To further increase our reach and spread, we are restructuring our operations along regional lines, hence the Bank has a branch in every region of the country. Ultimately, we intend to have at least one branch in every state to enable us to bring development to all parts of the country.