The Nexim Bank example and what it means
As an ardent watcher of the Nigerian economy and financial sector, I was pleased to read that the ministry said apart from declaring profits to its shareholders consistently for the past four years, Nexim bank also provided support that created over 24,000 direct jobs capable of generating estimated foreign exchange of $320.12 million annually to […]
As an ardent watcher of the Nigerian economy and financial sector, I was pleased to read that the ministry said apart from declaring profits to its shareholders consistently for the past four years, Nexim bank also provided support that created over 24,000 direct jobs capable of generating estimated foreign exchange of $320.12 million annually to the Nigerian economy.
Talking about Nexim bank, the observation by the finance ministry is a tip of the iceberg of the giant strides of Nexim bank board led by Roberts Orya. It was to the board’s credit that the board of Nexim bank in 2010 undertook a corporate transformation exercise on strategy, risk management and corporate governance, financial performance, operations, organization and people, with assistance from KPMG Professional Services. This is aimed at initiating policies that will make Nigeria’s economy robust. Again, I’m happy to hear that.
Nigeria hitherto was tagged a mono-economic state. It is against this backdrop that the bank’s board initiated a master-plan to diversify the nation’s economy. Today there is a silver lining in the nation’s economy following the sustained diversification and encouragement to the non-oil sector by Nexim bank. This led to the birth of the Project Spring which led to the re-definition of the bank’s mission, vision and objectives, to channel its resources into the development of manufacturing, agro-processing, solid minerals and services which have high employment and foreign exchange earning potentialities.
Nexim bank also initiated a five-year strategic plan that defines market penetration action plans, robust corporate governance and risk management architecture/frameworks to improve visibility and project the bank’s image. They involved organising action-wide key performance indices and scorecards to enhance monitoring of the bank’s operations and its shareholders, redesign policies to ensure efficiency, initiate IT-tansformation project, reduce redundancies and ensure adequate controls.
Nexim bank also adopted a performance-driven organizational culture which has led to strong shareholders’ support through fresh capital injection, as well as institutional support through supervisory and regulatory oversight and guidance from the CBN and Federal Ministry of Finance. This increased the bank’s capacity to support the growth of the non-oil exports and complement the export credit support of commercial banks.
To attract and avail concessionary lines of credits, Nexim bank reestablished partnerships with other export credit agencies and multilateral financial institutions. Hence, over $80m has been attracted as investment by way of commercial lines of credit from the African Export-Import Bank (Afrexim), Exim India and ECOWAS Bank for Investment and Development (EBID).
The bank also obtained an approval for a loan of US$200m from African Development Bank, backed by the sovereign guarantee of the federal government. The bank also has strong transactional relationships with the United States Export-Import Bank (US EXIM), the Guarantee Fund for Private Investments in West Africa (GARI Fund) and the Africa Biofuels and Renewable Energy Company (ABREC), while it has signed a memorandum of understanding with the Industrial Development Corporation of South Africa. Nexim also has credit insurance agency collaboration with the Islamic Corporation for Insurance of Investment and Export Credits, a division of the Islamic Development Bank.
The bank also partners the Borderless Alliance, a private sector-led partnership in collaboration with USAID/West African Trade Hub and other stakeholders, to promote regional integration and seamless trade in West Africa by addressing the problem of non-tariff barriers through policy advocacy. The alliance operates a border information centre, which provides pertinent information to assist exporters and also acts as a collation centre for trade data to support evidence-based research and policy advocacy.
In the entertainment industry, Nexim has intervened with lending commitments of about N1b in the industry’s various value chains in the last three years. This is aimed at addressing issues regarding the establishment of credible structures, attract investment in the development of content and facilitate improvement in production standards, distribution, marketing and exhibition standards. It also sponsored the Nigerian Pavilions at Cannes International Film Festival, France, in partnership with the Nigerian Film Corporation and DISCOP Africa, South Africa to showcase Nigeria’s creative talent and attract investment capital and partnerships. The list goes on!
The bank’s transformation has led to increase in the demand for its products and services, leading to huge amount of pipeline projects under processing. The bank therefore requires significant increase in its capital to perform more, considering the recent rebasing, which placed Nigeria as the largest economy in Africa with a GDP of $510bn. Among others are the introduction of the ECOWAS Trade Support Facility to improve the current trade level of less than 12% and deepening the volume of recorded/formal trade within the sub-region, and to foster the implementation of the government’s trade policy and regional integration policies like the ECOWAS Trade Liberalisation Scheme. So, what’s not to smile about?
Dibia wrote in from Lagos