THE ROLE OF FINANCIAL INSTITUTIONS IN EXPORT FINANCING IN NIGERIA
Financial institutions are organizations which deal basically in money.
They constitute the financial framework of an economy. Financial institutions help to pool savings and excess liquidity from millions of individuals and firms within the country and make them available to those who need them for various purposes.
Financial institutions include commercial bank (Joint stock banks) discount houses, the central bank, saving banks, development bank (BOI), insurance companies, hire purchase companies, the national providence fund, the stock exchange building etc.
Before the introduction Nigeria export- import bank (NEXIM) in Nigeria as at 1999 the commercial banks were generally referred to retail bankers, while merchant banks were known as wholesale bankers.
However the two operate and offer almost the same services that any line of demarcation is now rather fussy- one can only say that the distinguishing factor between the two sectors of the banking industry is that the commercial banks are members of the central bank of Nigeria (CBN) clearing house, While the merchant bank are not members of the Central Bank clearing house.
Another contentious factor is the licence granted merchant banks to take companies to capital market which the Nigeria stock exchange denied the commercial licensed them to do so, the introduction of the universal banking system of divide effect. A trader could approach either commercial or merchant bank for financing facility for his transactions. They can provide both short and long term facilities and can design any product which meets any requirements of customers.
The Nigeria export-import bank (NEXIM) was established in 1988 but commenced operations in January 1991. The bank was established to provide mainly short term financing for exporters who need working capital to buy hair activities. Among the function of the banks is the maintenance of a foreign exchange revolution fund which is to be made available as loans to exporters who need to export machineries, raw materials and spare parts to satisfy export orders. It can also consider loans involving domestic trade which are likely to assist exports.
The banking system has been integral part of the structural reforms and it has a leading role in management of policy change. The role of financial institutions in export financing is that of a cartelist and a committed broker. It ranges from assisting company and individual on how to enter export market through financing and handing shipping document and collect export proceedings.
Generally an export can meet his financing needs in the following number of ways.
1.2 STATEMENTS OF PROBLEMS
It is regrettable that despite their various funding mechanism and incentives put by financial institution s to stimulate the growth of export in relative contribution to the economy is still very low because of this low rectum, financial institution face the risk of non-payment of loan and advance given to export.
Firstly, the problems of policy stability it is needless to formulate a beautiful policy on export only to be discontinued, shortly, example the re-introduction of regulatory guideline in domiciliary account was disincentives to the exporter. This was reverse later by central bank of Nigeria (CBN) circulated in September. After much pressure recently Nigeria export and import only provide fund and transfer the risk to other banks. Another problem is that Nigeria exporters who ventures into foreign market do not avail themselves with the information relating to import countries such as culture, regulation and wealth this result in low returns those by increase the risk being faced by the financial institution that finances them. The Nigeria through the activities of some of its citizen has activities of some of its citizen has developed a negative business image both at home and abroad the poor included.
Accommodation for a period of 3 days to 50 days, while long term credit usually related to a period of more than 5 years. The exporters need pre-shipment finance for security the raw material and other input required for the execution of an export also ranging from the shipment of goods to foreign countries the credit is therefore regards as a loan granted to finance goods on the bases of:
The Nigeria export and import bank (NEXIM) provides both long and short term credit through commercial and merchant bank to support export from non oil product
The practice sign through illegal export of goods especially to neigbouring west African Countries which cannot be over worked as a in habited factor. In view of there problems counters in financing export.
1.3 PURPOSE OF THE STUDIES
The purpose of this research work is as follows:
iii To ascertain the problems encountered by the financial institutions in export production finance.
1.4 SIGNIFCANCE OF THE STUDY
The research work on the role of financial Institutions in export financing will be beneficial to the Nigeria economy in the following ways.
1.5 RESEARCH QUESTIONS
1.6 FORMULATION HYPOTHESIS
HO: Export financing does not have prospect in Nigeria
HI: Export financing have prospect in Nigeria
HO: Modalities are not adopted by financial institution is assessing goods for export.
HI: Modalities are adopted by financial institution in assessing goods for export.
HO: Financial institutions in export financing in Nigeria does not encounter Problems.
HI: Financial institutions in export financing in Nigeria encounter problems.
HO: Export oriented financial institution has not affected financial industries to an extent.
HI: Export oriented financial institution has affected finance industries to an extent
1.7. SCOPE OF THE STUDY
The scope of the study is very wide it focuses on the roles of financial institution in export financing in Nigeria. As a result of this, the researcher has consulted with several reviews on the issues of the roles of financial institution in export financing in Nigeria which are appreciated for employees at a particular point in time. It also serves
as a useful guide to organizations. In their future decision making process on training related issues, knowledge of private sectors.
1.8. LIMITATION OF THE STUDY
For the nature of the research work the researches Intended to limit its work because of the time of this research work the economic of the nation is also battered that the research cannot afford to visit all the financial institution and has a limited time.
iii. WORK LOAD: The department worked load is numerous for the research work coupled with the fact that the researcher must attend lectures there by prevent a through and intensive work.
1.9 DEFINITION OF TERMS USED
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