The role of financial institution in export financing gas under 3 dollars

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This research work scrutinized the role of financial institution in export financing export financing is very important, as Nigerian Exporters have to complete with exporters from other parts of the who have already in the market and have easy.

Access to various type of export finance sources. To be able to complete effectively with buyers able to offer attractive terms to forgiven buyers especially through bettered payment facilities which their competitors had provided all along with official insurance facilities to minimize the risk exporting to other nations. The federal government has and it still working hard is encourage export. A good step towards this is promulgation of export incentives and miscellaneous provisions degree of 1986, which came up with numerous incentive to export. More also, is the inauguration of NEXM. In a nutshell, its pertinent to not that export financing is of great importance towards economic development and balance of payment of our nation.

The banking system had played a role in management of policy changes that ranges from advising assisting companies and individual on how to enter export markets through financing and handling shipping documents to collect of export proceeds. The role of financial institutions had thus that of a “catalyst” and a committed broker”.

Banks finance the major position of export transaction. The export credits given by banks to exporters is linked with various duration of the transaction. The stages are divided into per-shipment and post-shipment. The duration of the credits on the other hand are classified. As short medium and long term. Short-term ranges as short-term ranges from the period of 30 to 100 days. The medium-terms ranges from the period of 180 days to 5 years while the long-term is from 5 years and more.

The exporter needs pre-shipment finance for securing the raw materials and other input required for the execution of an export order and also to arrange for the shipment of the goods to foreign market. The credit is regarded as a loan or advance granted to finance the purchase, processing or packaging of goods on the basis of:-

b. Issuance of warehouse warrants by accredited and rebated warehouse company. The duration provided by banks usually does not exceed 120 days – post shipment credit is a loan, advance or any other credit provided by the bank to an exporter of goods, from the date of extending the credit offer shipment of goods to the date of receipt of export proceeds within 60 days. The main types of post-shipment are negotiation of exporting documents under letter of credit and negotiation of export bill drawn confirmed export contracts or order. It’s a part of government in a native to exporters the government established the Nigerian Exportant Bank (NEXM) which provided both long and short-terms credit through the commercial and merchant banks to support exports of non-oil product.

It is regrettable that despite the finding and incentives mechanisms put in place by the financial institutions to stimulate growth of export, the contribution because of these low returns, the financial institutions face the risks of non-credits given to the exports several reason are attributed to this.

First is the problem of policy instability: It is needless to formulate a policy on export will only last for a short time for examples the re-introduction of regulatory guideline in domiciliary accounts was disincentive to exporters. This was revised later by the Central Bank of Nigeria (CBN) circulation in September after much pressure. Presently, NEXIM only provides funds and transfers the risk to the other banks. Second is the problem inadequate equipment of information related to the importing country’s culture geography, population and wealth.

This results in bringing low returns thereby increasing the risk being faced by the financial institution who finance them. The most serious of all problems is the Nigerian Businessman’s image through the activities of some of its citizen have developed negative business image both a home and abroad. The poor images includes the following:

iii. Manufactures: With the introduction of SAP in 1986 many producers have been oriented into the system and hopefully manufactures of export oriented goods with the financial institutions incentives will improve their production potentials as well as produce large quantities for export purpose.