1.1 BACKGROUND OF THE STUDY
International trade is the exchange of goods and services between countries including business enterprises and individual domiciled in different countries of the world. The exchange of goods and services through international trade does not only enable a country to produce these goods and services for which if is best suited, based on its natural endowments (e.g. fertile soil, mineral resources, climate) but also allow a country experiencing. Acute domestic, shortage (resulting perhaps from bed harvest, draught e.t.c) to remedy the situation through importation. Thus, it has been said that international trade cannot be gain said.
Natures of world are not self sufficient. They rely on each other for the supply of what they lack. Thus, natures exchange what they have with what they do not have.
International trade can be bilateral or multilateral. If it is bilateral it means such trade is between two countries only e.g Nigeria exchanges her crude oil with Britain and in return. Britain gives her manufactured goods to Nigeria such as building materials, tires, foods, item etc. when a trade is multilateral; it means such trade involves more than two countries. It can be trade between U.S.A, Nigeria, Switzerland and India. Trade could be tangible or intangible. Tangible goods are physical or visible good and intangible goods are invisible goods, such as shipping, banking, insurance etc.
The country economy today is dominated by oil sector, which accounted for over 90% of Gross Domestic Product (GDP) before the increase in the price of oil in the early seventies, agricultural produce are used to finance the immediate post independence development programmed for this reason, Nigeria has since the attainment of independence been at the vanguard of exportation of goods and services subsequent to the discovery of crude oil. It is noteworthy that little was know by economic Plaines about export promotion, financing and activities were limited to a range of agricultural commodities and these solely financed by the marketing board. In industrial sector, import substitution was the cornerstone of industrialization policy. The policy whose main objective was to offer protection to in faint industrial, replace imported goods and there by conserving foreign exchange.
The economic problem could be traced to the world economic depression. The fall of our export was due to the mono-product nature of external trade. Misplacement of priorities by our leaders and frivolous spending pattern of the civilian administration causes by money illusion we had over the years and this led to unemployment problem low production and services which brought about difficulties in balance of payment with all the problem the country them realized the need to look beyond the oil sector for the purpose of generating more earnings an exports. It is for these reasons that the Nigeria Export Promotion Council (NEPC). Nigeria Export and Import Bank (NEXIM), Nigeria Association of Exports (NAE) were established to improve the differences between the exporters and importers. It could be recalled that one of the major specific objectives of structural adjustment programme (SAP) introduced in 1986 was to restructure and diversify the productive base of the economy in order to reduce the dependence on oil and imports. In strong attempt to lay a foundation for the promotion of non-oil exports, the government promulgated export incentive and miscellaneous provision decree which was designed to enhance the exportation of non-oil products from the country.
The introduction of second – Tier Foreign Exchange Market (SFEM) marked the beginning of aggressiveness in non-oil export marketing in Nigeria and the assumption of change in export financing activities by banks. There is no doubt tat the high prices arising from the new exchange rates been an important factor in stimulating agricultural sector, which has a big potentials for increasing agricultural production for export in particular.
The prices of major agricultural produce have increased since the adjustment was started. The history of banking then gradually spread and become substantially involved in financing the product marketing of the companies. The services the universal bank offer to the customer, government and the society at large include lending, acceptance of deposits, bill discounting and from exchange transaction to meet the universal and industry. Among the services includes the provision of working capital requirement, short, medium and long term loans, foreign exchange transactions involving letter of credit, documentary collecting etc.
Bankers’ letter now gone beyond the provision of banking services to corporate services. The corporate financial services offered by bank range from capital issue, loan syndication to equipment lending forfeiting acceptance credits, availing, bonds, guarantees and indemnities, etc. in this way, bank can as part and parcel be included in the history of international trade finance in Nigeria.
It is established fact that there is need to promote exportation so as to make Nigeria economy export oriented to ensure balance of trade, but importation can not be absolutely discourage because some goods (e.g. heavily duty machine, chemical etc.) have to be imported so as to facilitate produce for exportation.
It is in line with this and the desire to respond to economic problem that this project is set dig deep into roles of universal bank in development of export and import of goods and services to point out the factors or risks militating against the maximization of the objectives or gains arising from international economic activities, and possible solution to these critical budget factors and the trade facilities and incentives put in place by the government in supporting the Nigeria bank in financing international trade.
1.3 STATEMENT OF PROBLEM
The purpose of this study is to ingidre into the Nigeria Economy and in so doing, the following will be analyzed.
Hi: That the value of Nation’s Currency has an impact on the International Trade.
Hi: That a highly international trade financing will be affected by interest rate risks.
Hi: That the exchange regulation of the countries concerned highly affects international trade
Hi: That these inflation rate and partly conditions have great impact on International Trade
Hi: That the International Trade finance has effect on the banks.
Hi: That the International Trade finance should be encouraged.
This study will go a long way in revealing to the general public/importers and exporters the importance of International Trade finance, to achieve this:
1.5 SCOPE OR DELIMITATION OF THE STUDY
It is necessary at the on set to delimit the scope of this study. The research work will be careful to the importance of international finance, factors affecting finance of International Trade and the possible remedies, the roles of universal banks in international Trade financing, currency transfer mechanics methods of setting international transaction and inter bank financial instruments.
1.6 LIMITATION OF THE STUDY
The researcher intends to have in the course of the study an over view of finance of International Trade financing and the incentives and facilities provided by the government to facilitating international finance. In the course of carrying out this study, the researches are as follows:
TIME: – The researchers tight schedule which he must also use for the other alternative such as daily lectures and non academic activities count a lot for the researchers ability to get needed materials and information for the research work.
FINANCE: – It is the economic main source of power of everyone in any undertaking owing to financial constraints faced by the researchers hews could not get all the necessary materials.
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