THE ROLE OF COMMERCIAL BANKS IN EXPORT PROMOTION IN NIGERIA ABSTRACT
The establishment of commercial banks is not legislatively or decree compelled but should be seen as a measure to persude the institution to take the advantage of exploiting and utilizing economic and social facilities. This study is aimed at identifying the role of commercial banks in export promotion in Nigeria, highlighting the various roles that commercial banks left contributed towards Nigeria match for growth and development in export promotion. This study focused attention on the general operations of the commercial bank its historical structure and back ground for effective and accurate assessment of the commercial banks. The study further reviewed the objective and role of commercial banks to export promotion and appraised its performance and also expose its problems and make recommendation. Materials for the study were sources purely from secondary data.
PREFACE.
The Nigeria economy is presently in a great distress and dilemma. The economy was plunged into this agonizing guang mainly due to over reliance on one export commodity oil. Suddenly, the price of crude oil dropped in the international market. This reflected sharply in the level of adverse balance of payment problems. The major concern of this study is to reveal how commercial banks can help in promoting exports and stimulating economic growth. The federal Government has taken liberal measures to streamline the structure of the commercial banking activities. A discount window for financing exports have been established by the federal minister of finance, export credit guarantee and insurance scheme is being designed by the federal ministry of finance to stimulate export financing. In particular, the federal ministry of finance has been made an autonomous institution while commercial banks are now allowed to take equity interest in small-scale enterprises.
CHAPTER ONE.
INTRODUCTION
1.1. BACKGROUND OF THE STUDY.
The topic “Role of commercial banks in export promotion in Nigeria” is about the major economic issues namely, export trend in Nigeria role of commercial banks in the promotion of exportable goods and services, and the contribution of commercial banks towards economic development. Export promotion is used here, involves all those services provided by commercial banks and non – banking sectors to facilitate the production of goods and services outside the country. It involves a process which begins at the production level and terminate at the point of consumption Nigeria has derived great benefit from international trade. Foreign goods, both capital and consumer goods not produced in the country have been acquired and paid for from Nigerians export earnings.
The importance of export promotion especially in Nigeria cannot be over emphasized. After the discovery of oil in 1956, it gradually came to dominate the export sector, oil therefore became the single most important item of export. Figures released by the federal office of statistics show that “Export of all items from the country in the half of 1995 had recorded about = N = 16,384.9 billion, out of this petroleum product amounted to = N = 14.365 – 8 billion. In percentage terms, oil exports represented 90.5 percent while other items had 5 neglible 9.5 percent. As at 1980, oil accounted for about 98% of our exports with Nigeria exporting 2.3 millions barrel per day was produced and sold at only $20.25 per barrel. The economy was 96% depending on oil revenue as her foreign exchange earner. But unfortunately, the revenue from oil was never commensurably, reflected either in the extent of the job creation and other preferred multiplier or linkage effect on the economy. Soon the price of oil began to decline resulting from the pressive from the American international agency and other manipulation of the organization of petroleum exporting countries (OPEC). Oil glut gvots sales and sales and continous price decline because the other of the day. Commercial banks play a major role in payment for exports. The means of payment for export and general settlement of international transactions are:-
1). The foreign bill of exchange
2). The banks draft
3). Documentary for credit, for which is necessary to open a credit at a bank in the exporters country.
4). The telegrapline transfers which enables banks deposit to be transferred expeditiously from the importers banks.
Commercial banks act as a major intermediary for all the listed means of payment the federal government of Nigeria adopted some specific measures, to ensure for export promotion in Nigeria. Some of these measures are:-
a). Refund to import duty paid on raw material used for the production of commodities marked for the export market.
b). Refund of excise duty or domestic manufactures exports.
c). Exemption from import licence of raw material required for export products.
d). Liberation of import licence for raw materials required for export products.
e). Abolition of exports prohibition as contained in finance act no. 2 of 1981, except for commodities whose exportation was banned.
f). Introduction of export of export credit guarantee and insurance scheme during the year 1986.
The most recent incentive package for exporters. The new focus in Nigeria export policy is to design export incentives scheme that would jointly encourage the diversification of foreign earnings through increased export activities in the non – oil sectors and to stimulate greater capacity utility to meet both domestic and foreign demands. Government in January 2000 pronouns the following measures:-
1. The introduction of negotiable duty credit certificate (NDCC) as mode of payment of export incentives there by eliminating undue delays in the administration of the schemes.
2. The increases from 4% to 10% expansion grant to exporters under the export expansion grant scheme, to stimulate export production and enliance the repatriate of export proceeds.
3. The removal of levies / changes on beneficiaries of duty draw back and export expansion grant there by enhancing benefit from the schemes and the introduction of new manufacture – IN – Band scheme as a substitute to cash incentives to exporters. The scheme has the following:-
1. EXPORT EXPANSION GRANT FUND (E E G F)
which is an inducement for exporters for semi – manufactured and manufactured products to enable them increase the volume of their exports and to diversity their export products and markets.
2 DUTY Draw back scheme 9DDS) the scheme produces for refund of duties and surcharges paid on imported input used for the manufacture of export products.
3 Export Development fund (EDF): This provides for direct assistance to cover part of expenses respect of export promotion activities such as export market research and studies.
4 The manufacture – in – hand scheme (MIBS) is designed to encourage manufacturers to import duty for raw material inputs and other intermediate production of exportable goods backed bond issued from a recognized commercial back.
5 Discharge after evidence or exportation and repatriation prayer has been produced.
In addition central back of Nigeria has recently been made autonomous while commercial banks are now allowed to take equity interest in small scale enterprises.
In various economicdeveloment places of Nigeria, specifically three main objectictives have been aimed at viz.
Diversification of the composition to the export products especially those of agriculture as well as processed and manufactured goods.
Diversification of the friction of trade increase in the value of export producedures.
Now of those objectives has been achieved satisfactorily in any of the plan periods. This is more reason commercial banking services are required and more encouragement in terms of incentives must be given to the commercial banks in order to stimulate their interest in export promotion.
1,2 STATEMENT OF THE PROBLEM
The country is currently fasting the bitter pill of economic set back resulting from over reliance on one export commodity oil no country can achieve any meaningful economic prosperity by producing for home market alone and as highly developed country can maintain a high growth rate of it reflects exports.
The need for economic diversification through active export promotion cannot be over stressed. In almost all African and other less developed countries) UOCS) export are still the most important means of economic development. In Nigeria today, through the need for export have been recognized and much said about it the role of commercial banks towards the direction is till minimal Potential exporters are still ignorant of the services available in the commercial banks and have not made any effect toward correcting this problems.
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