Why strategic partnerships remain crucial to Nigerian economy

Government Trade Policy Bank.  This development has been applauded by both players and watchers in the Nigerian SMEs, especially those operating in the manufacturing, agro-processing, solid minerals and services sectors. The world today has gone past the era of the lone-star performer onto the era of coalition building and strategic partnerships. Today, both open and […]

Government Trade Policy Bank.  This development has been applauded by both players and watchers in the Nigerian SMEs, especially those operating in the manufacturing, agro-processing, solid minerals and services sectors.
The world today has gone past the era of the lone-star performer onto the era of coalition building and strategic partnerships. Today, both open and crowd sourcing are becoming major drivers of global commerce; meaning that business networks are increasingly becoming more cross border and more virtual in nature.  
It is against this background that stakeholders have described the strong collaboration and interfaces among the NEXIM Bank and such institutions as the Nigerian Export Promotion Council (NEPC), the National Directorate of Employment and Crown Agents Nigerian Ltd as the way forward.
The MD of NEXIM Bank’s, Mr. Roberts Orya and the Executive Director of NEPC – Mr. Olusegun Awolowo, have over the period established a strong working strategic partnership – sharing ideas, valuable contacts etc. These have resulted in beneficial synergies that have linked Nigerian exporters in the non-oil sector with buyers of same abroad further creating jobs and boosting forex revenue for the country. This initiative indeed, is a major step in the effort towards the diversification of the economy from the dependency on crude oil for exchange earnings.  It is also clear evidence that the crucial nature of their respective mandates is not lost on them.
NEXIM Bank’s recent Corporate Transformation initiative has indeed improved its operations and positioned it as a world class institution that can hold its own among its peers in other fast growing economies, especially among the MINT Nations of Mexico, Indonesia, Nigeria and Turkey.  
The plan of the NEPC to increase the level of non-oil exports by at least 30 per cent in the next four years cannot be fully realized without a dynamic credit institution that will supply the needed financing as well as moderate the shocks that are usually attendant upon the vicissitudes of the export market. This partnership is sure to shore up market confidence and improve the level of trade flows and revenue earnings.  
It is remarkable that in 2013 the annual earnings from informal trade was $12 billion (N1.9 trillion), a figure which is higher than the contribution from the formal trade sub-sector, which was valued at $3 billion (N477 billion) within the same period. NEXIM Bank and NEPC are concerned that most of the transactions that yielded this revenue did not go through the banking channel nor were adequately captured for statistical and ‘market indicator’ purposes. There is therefore, cause for optimism that the continued collaboration by both institutions would help leverage their huge potentials.
Experts agree that both agencies are now better positioned also to boost Nigeria’s chances of exploring other avenues of trade promotion especially the   African Growth and Opportunities Acts – AGOA, designed to provide a leeway for selected African products to access the US market without the encumbrance of trade tariffs.   
Industry watchers are particularly optimistic that the NEXIM Bank-facilitated Sea-Link Project, designed to build regional maritime networks to connect West and Central African ports with a fleet of 3,000 to 5,000-tonne ships, is one of those longed for initiatives that will boost trade within the West and Central African sub-regions. Particularly, it is also anticipated that it will boost Nigeria’s trade and revenue benefits beyond the shores of ECOWAS where our products and services already hold sway.
Another equally strategic move is the Bank’s partnership with the National Directorate of Employment (NDE). This is designed to build capacity, beyond its Corporate Transformation Initiative. Under the arrangement, both agencies are cooperating to train and empower a new crop of entrepreneurs who will become acquainted with SMEs and export of goods and services early in life, as a means of enterprise promotion in non-oil export business.
Without a clear and deliberate effort of this nature, the gains the country is making in transformation of the economy would ultimately prove unsustainable. It is all too well known that Nigeria’s educational curriculum is not where it should be in regard to training employable graduates. Young folks leave schools only to discover that skills and experiences they have acquired do not effectively equip them for engagement or work in most of the sectors and industries.
Indeed, as government’s sole trade policy bank and export credit agency, NEXIM Bank is at a vantage position to generate the critical mass and synergy with relevant institutions to harness the huge opportunities available for economic prosperity in Nigeria’s non-oil trade space. Such agencies include: the Nigerian Export Promotion Council (NEPC; Nigerian Shippers Council (NPC), Small and Medium Enterprises Development Agency of Nigeria (SMEDAN); Chambers of Commerce, Industry, Mines and Agriculture and Manufacturers Association of Nigeria (MAN) among others.
What is now left is for NEXIM to be strengthened and given the necessary fillip to aggressively begin to offer buyer’s credit facility as an essential product to its customers. This is in line with international best practice and would provide an avenue to Nigerian exporters to overcome issues of cash flow consequences or the risks of extending long-term credit by helping an overseas buyer to secure a long-term financing with a lender. Normally, with this arrangement, a Nigerian exporter would be paid as if he has a cash contract, whilst the overseas buyer has time to pay on the contract through the financing secured from the lender, which would be backed by NEXIM’s guarantee. For Nigeria to fully exercise its position as the largest economy in Africa, this is the next necessary step that must be taken.
Nwaede is based in Oshodi, Lagos.