EXPORT PROMOTION AND NIGERIAN’S ECONOMY

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).
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