Yemisi Izuora
The Managing Director/ Chief Executive Officer, Heritage Bank Limited, Ifie Sekibo has said that Nigeria can reap good foreign exchange in the export of major commodities if farmers exert energy to boost their production.
Sekibo said farmers could take advantage of current government push to boost non-oil export revenues.
He said some of the export potential products include cocoa, cashew, groundnut, fish, horns, sesame seed, ginger, cassava and snails among others. He also listed tobacco, coffee, cotton lint, rubber, as capable of turning Nigeria’s economy round for good.
Sekibo therefore urged farmers and exporters of agricultural produce to seek more knowledge in order to increase the quality and quantity of their products because export business involves dealings with other world players.
The MD while speaking at the 2016 Annual Conference organized by Finance Correspondents Association of Nigeria (FICAN) in Lagos, said the 10-year tenor export stimulation facility provided by the Central Bank of Nigeria(CBN) at 9 per cent interest rate is a commendable incentive for exporters.
According to him, Although the lenders would want the economy to grow by lending to farmers and other productive sectors of the economy, farmers/borrowers/exporters on their part should know that banks want their monies back and that “there is need for competence, commitment and confidence in the process.”
Sekibo who spoke on the topic: “Providing Finance for Exports: Expectation & Experience,” said Nigeria can also export such manufactured Goods as: Cocoa cakes, butter, powder & liquor, detergents, Malt drinks Palm kernel cakes & oil, baby clothes, confectioneries, leather.
In the category of handicraft, Sekibo noted that Nigeria can export Talking drums, Calabash, Wood carvings, Raffia products among others, not forgetting the ever flourishing Nollywood which is even being watched by Militants (like Gendam) in neighbouring countries.
The MD who was represented by Olugbenga Awe, Group Head, Agriculture Finance, Project & Development Finance Department of Heritage Bank, regretted that exporters from Nigeria are not competitive enough, such that some Nigerian exporters go to Cameroun to bring in products, blend them to Nigerian products so that they can export. For instance, Yams that are consumed in London are from Ghana, not Nigeria.
Continuing, he said, “As a country, Nigeria cannot afford to continue going backward in terms of non-oil export he reiterated”, and then advised exporters to learn the steps to getting funding for export.
The first step, he explained is to identify the difference between funds required for financing the business between the commencement of the manufacturing or procuring process and the dispatch of the goods, known as pre-shipment finance; and that of post-shipment finance, which are funds required for financing the exporter between the dispatch of goods and the receipt of payment.
Heritage Bank has previously committed itself to promoting non-oil export business as the African Export Import Bank (Afreximbank) recently provided a $150 million funding support for the lender.
Afreximbank, a frontline African financial institution believes in the uniqueness of the business strategy of Heritage Bank especially the Small Growing Business focus of the bank which aligns with the founding mission of Afreximbank.
According to Sekibo, exporters should also know that banks look for certain criteria for financing.
“There must be history of previous performance in terms of volume of export handled in the past; Frequency of Export; Payment methods; Payment Terms; how Products are sourced and how risk are mitigated,” he said.
Banks according to him also look at seasonality of the products; product destination; transaction cycle and buyer’s payment history.
The reason why Banks look at these key aspects is because they face challenges of inadequate resources for export finance.
They also face challenges of inadequate infrastructure to control products quality; lack of dependable source of local product prices and supplier information; too many players in the products supply chain and the challenge of fraudsters in the product supply chain.
Other challenges being faced by Banks according to the top banker are: delay and risk of haulage due to bad roads; no exchange platform to facilitate product sourcing; reluctance of buyer to accept a secured payment terms and method like letter of credit; the incompetence and unprofessional behaviour of some inspection agents; Inadequate information on the possibility of exporting perishable commodities from Nigeria and reluctance of buyers to import from Nigeria due to bad reputation in the export market.