It is no more news that the
unemployment rate in Nigeria is becoming very alarming. According to the
article published by premium times in October 2013, the Performance Monitoring
Report on Government’s Ministries, Departments and Agencies, indicated that the
unemployment rate in Nigeria in 2010 was 21.1 per cent, a figure that increased
to 23.9 per cent in 2011. “In 2011, Nigeria’s unemployment rose to 23.9 per
cent compared with 21.1 per cent in 2010,” the News Agency of Nigeria quotes
the report as stating. The report referenced its facts from the National Bureau
of Statistics (NBS).
But
the good news also is that God has endowed our nation with all that it takes to
tackle this problem. In this article, I will be looking at how to solve the
problem of unemployment from the perspective stimulating growth in the non-oil
export trade in Nigeria. The reason for this is very simple. Nigeria is endowed
with great potential to produce and export both Solid Minerals and Agricultural
commodities. These two categories of commodities can be exported as primary
product, semi-processed or finished goods.
God
has so made Nigeria in such a way that no state of this country lacks an exportable Solid
Minerals and Agricultural commodities even though some have more than the others.
Exportation of these commodities passes through a chain that has great
potential of creating different jobs all the way from the farm gate or mining
site to the point of exporting them.
A
significant growth in the exportation of these commodities will mean growth for
the Farmers/Miner, the local buying agents, the commodity merchants, the
processing factory, the exporting company.
It
is sad to say that while we have tens of thousands of companies importing different
items into Nigeria, less than 600 companies are involved in non-oil export. A
number of company that are in the business could not grow at a faster rate
because of inadequate funding in that sector. Experts have attributed this to a
number of factors but the major one is said to be the lack of financial institutions
that are creative enough to come up with trade finance products that are
targeted are funding SME Exporters.
In my opinion, there is need for a deliberate policy towards the growth
of the non-oil export finance in Nigeria and I think this should be championed
by the CBN.
Please find below my suggested sustainable solutions to funding of the SME
non-oil exporters in Nigeria
Government/CBN
should make laws/regulations to encourage the establishment of specialized
banks that will only finance export transactions. These laws/regulations should
allow private individuals to establish export focused banks and Government/CBN
should own and contribute 50% of these banks capitalization so as to have a
good control over its operations and thus enable the government to achieve her
dreams of growing the SME exporters in Nigeria. The law/regulations should
stipulate the following among other things as might be deemed necessary by the Government/CBN:
a. The export banks are to finance only
export transactions and any financing done outside this should be penalized.
b. The export banks should offer trade
finance products like Export Credit guarantee, Export Credit Insurance,
Factoring, Forfaiting, Invoice discounting etc.
c. The interest rate on the export
financing facilities from this bank should be set by the Central Bank and
should be lower than the prevailing rate in the market at any point in time.
d. The export banks should be given tax
holiday as an incentive to attract a lot of investor to the scheme.
e. Government should reward any of the
export banks that have the highest export finance facility portfolio at the end
of each financial year.
f. The export banks should offer both
pre and post export financing to exporters.
g. The banks should only finance SME
exporting companies or cooperatives with at least 6 month experience in the
business and with Bill of lading records of export and evidence of receipt of
export proceeds from the buyers abroad.
h. The banks should only finance SME
exporting companies that are owned 100% by Nigerians
i. The export bank should have a
warehouse where all the products that they are financing are inspected to
ascertain the quality before they are exported.
j. The export bank should grant export
facility that is as low as 1 Million Naira and as high as 50 Million Naira to
the SME exporters
k. The goods should be used as
collateral for post shipment financing while equity contribution of 30-50% must
be a pre-requisite for pre-shipment financing.
l. The export financing facilities from
the export bank should cover the export of solid minerals and agricultural
commodities, semi-processed products and finished goods.
m. The export bank financing facility
should only be granted to export transactions with Letter of Credit, Sight Bill
for Collection and tenored Bill with Avalised Bill of Exchange.
I
expect that some people will say that we already have a NEXIM Bank doing this,
but we all know that NEXIM is a government institution, it is not a profit
driven organization and they are also under so much political influence. All
these have gone a long way to hinder their performance over the years and since inception.
In
conclusion, if the Government/CBN can adopt what have been suggested in this
article, modify it as might be required, implement it to the letter and give
the adequate publicity in order to make it known to the general public, we will
be on our way to the commencement of a systematic and sustainable approach to drastically
reducing the very high unemployment rate in our dear Nation Nigeria.
Long
Live Federal Republic of Nigeria!!!
This is very good and insightful.
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