The measure
and degree of Gross Domestic Product of a country’s exports determine the
wellbeing of such a country. It is in the light of this fact that different
governments enact various policies to promote export. Nigerian government have
introduced and continued to administer several policy measures and
institutional support arrangement which is aimed at promoting export. These
measures are: The Nigerian Export promotion council (NEPC) was established in
1976. The NEPC’s major responsibility includes the following:
1.
To spearhead the national efforts in export
development and promotion by providing ideas, suggestions and measures designed
to enhance the course of
Nigerian export trade.
2.
To advise and assist the government in the
formulation of export oriented activities and to help stimulate the growth of
non-traditional exports from Nigeria.
The
export expansion grant fund provides cash inducements to exporters who are to
show evidence of increase volume of non-oil export. It therefore generates competition
among exporters thus leading to diversification of export products and market
coverage.
3.
To assist the government in the creation of
the necessary infrastructure such as export incentives and trade information
services (Obadan, 1993).
To
this effect, the council currently maintains a package of export incentive as
part of measures aimed at motivating and assisting Nigerian exporters. For
example, the Central Bank of Nigeria has authorized banks in the country to
provide the requisite export financing scheme. With the abolition of the
commodity Board in 1986, commercial and merchant banks once again assumed the
task of providing funds to finance exports, as were outlined by CBN. They
included the export development fund, grant and the export adjustment fund.
Specifically, the export development fund was a special fund provided by the
government to offer financial assistance to Nigerian exporting companies to
cover part of their expenses in all export promotion activities. The export
promotion grant provides credit investment for exporters. The export adjustment
scheme fund services as a supplementary export subsidy. It deals with the high
cost of production that arises mainly from institutional difficulties and offer
finances that were beyond the control of exporters.
Another
bold step taken by the Nigerian government to promote export trade under
Structural Adjustment Programme (SAP) was the establishment of the Nigerian
Export-Import Bank (NEXIM). The NEXIM was established by Decree 38 of 1991, as
an export credit agency. It was given a share capital of N900 million held by
the CBN and the Federal Government of Nigerian (CBN, 1993). As Falase (1994)
puts it, the NEXIM is charged with the following statutory responsibilities:
·
Promotion of export credit guarantee and
export insurance facilities:
·
Provision and management of funds connected
with exports;
·
Establishment and management of funds
connected with exports;
·
Maintenance of foreign exchange revolving
fund for lending to exporters who need foreign exchange to facilitate export
promotion;
·
Maintenance of information system in support
of export business;
·
Provision of domestic credit insurance where
such a facility is likely to assist exporter;
·
Purchase and sale of foreign currency and
transaction of funds to all countries; and
·
Provision of investment guarantees and
investment insurance facilities.
It
is important to know that NEXIM also plays a major role in the Nigerian economy
by providing risk bearing facilities include export credit guarantee and export
credit source. In the case of export credit scheme, the NEXIM provides
guarantees to banks for credit granted for export transaction. Specifically,
the major objective of the scheme is to raise the supply of funds by banks for
export transactions. Finally, the export credit guarantee scheme is designed to
insure exporters against the risk of non-payment by buyers in as much as the
cause of default is not political.
In accordance with the above stated
responsibilities charged on Nigerian Export-Import bank, the board has
introduced a number of facilities for the promotion of export and they include:
Foreign
Input Facility (FIF): The facility provides manufactures of
export products with foreign exchange for the importation of capital equipment,
packaging materials and raw materials for the production of finished or
semi-finished export products, presently, FIF is made to benefit small and
medium enterprises.
Stocking
Facility (SF): This facility is provided in local currency
and it enables manufacturers of exportable commodities to produce adequate
stocks of raw materials (which may be seasonal in nature) to keep their
production at optimal level, particularly during periods in which such
materials are scare. The stocking facility is available for a maximum period of
one year and is available for a concessionary interest rate to enhance the
price competitiveness of the manufactured export goods.
Trade
information and export advisory services: In addition
to the above facilities, NEXIM provides a series of trade information and
export advisory services directly to exporters. The bank provides prices and
current information to exporters on inquiry. This service is made possible on
inquiry. This service is made possible by NEXIM acquisition of Renters
Terminals, which provides visual information on current prices of export
commodities at the international market and also current exchange rate of all
the major currencies.
Another
strategy adopted by the Nigerian government is the Exchange rate devaluation.
Devaluation is a way of correcting balance of payments deficits. It is the
lowering of the exchange rate between a country’s currency and other
currencies. It is important to know that devaluation has significant effect on
the redistribution has significant effect on the redistribution of domestic
resources. As Kreinin puts it, domestic price and income effects operates
against the relative price effective in improving balance of payments.
Therefore, devaluation brings about domestic distribution of resources to its
success which will enable exporters to gain a considerable competitive edge
abroad. And at the same time, the prices of imports will increase in terms of
the domestic currency. More importantly, what occurs is a differential increase
because prices rise more in the foreign trade industries than in the domestic
sectors. Consequently, there seems to be an important change in relative prices
within the economy. Hence the ratio traded goods to those imported will
increase. This will therefore attract resources to those industries that
produce internationally traded goods. In most cases, this will make the
domestic economy more efficient, thereby promoting the types of production that
will improve the balance of payments. Many economists now consider this to be a
very important effect in the analysis of devaluation (Kreinin, 1983).
The
analysis shows that devaluation will likely help a country’s external position.
Furthermore, it will also lead to an expansion of income and employment. It is
also important to know that domestic expansion is usually considered as a
precondition for improvement in the balance of payments. This is because the
increase in the production of export goods and import subsidies requires the
employment of new resources.
The
main aim of devaluation of Nigerian currency was to make her export cheaper in
the international market which would increase the demand for these exports in
the international market. Imports are made more expensive and exports are made
cheaper (Teriba, 1985).
It
is sad to note that the devaluation has not improved the country’s external
position. Today, the Nigerian external sector is still characterized by huge
deficits in the balance of payments, sharp depreciation of the naira, exchange
rate and sharp depletion in the country’s external reserves (Gbosi, 2001).
Other institutional support are:
1.
The introduction of import duty draw back
which allows importers to claim repayment of the import duty paid on raw
materials used in producing export goods.
2.
Manufacture in bond scheme which allows the
clearance of imported raw materials for use in export production without
repayment of import duty.
In 1991, the Federal
Government promulgated Nigerian Export processing zone Decree No 34, later,
Export processing Zone located in Calabar was established. Export processing
zones are special enclaves created within a country where firms, mostly
foreign, many manufacture or assemble goods for export without being subjected
to the normal customs duties on imported raw materials and finished products
present in that economy, firms operating within the zone are normally exempted
from industrial regulation applying within the domestic economy, especially
with regards to foreign. Ownership of firms, repatriation of profits,
employments of nationals access of foreign exchange, etc (Afeikhana, 1996).