Nigeria Export Import Bank (NEXIM) is worried about high level informal trade in Africa but in Nigeria in particular and their inability to secure finances to grow their businesses.
The Managing Director of NEXIM Mr. Abba Bello cried out to dignitaries at the Afreximbank anniversary and Annual General Meeting in Abuja that his bank was concerned about “the high level of informal trade in Africa, with informal non-oil exports recently estimated at a minimum of $12 billion annually in Nigeria as against recorded non-oil export trade averaging about $3billion annually in recent times.
To address this problem, the NEXIM boss said the bank is now partnering with trade facilitating institutions namely Afreximbank and FCI, under the auspices of the CBN FSS 2020, to develop and promote factoring as an alternative trade finance instrument and an Small and Medium Enterprises (SME) financial inclusion strategy.
This initiative, he said, “Will be one of the financing options that will mitigate the traditional challenges of SMEs in meeting the eligibility criteria for accessing credit from the traditional banking institutions.”
Dr. Joseph Nnanna, Chairman, Nigerian Export-Import Bank and Deputy Governor Central Bank of Nigeria said Nigerian Export-Import Bank and some key players in the public/private sector, under the auspices of the Financial System Strategy 2020 of the Central Bank of Nigeria, stressed the need to develop an alternative trade financing instrument to promote financial inclusion and boost access to funding by the SMEs. It is heartwarming to note that this partnership has led to the drafting of the Nigerian Factoring Bill currently being considered by the National Assembly.”
This Bill, if passed, he noted “will not only promote a suitable regulatory/legal environment to support the rapid development of factoring services, but will also contribute towards integrating Nigeria into the global factoring market thus positioning the Nigerian economy to benefit from the global factoring volume, which reached €2.6 trillion in 2017, with Africa contributing less than 1%.”
Factoring, Nnanna said, “Will also serve to promote non-oil export trade in line with the objectives of the Federal Government of Nigeria under the Economic Recovery and Growth Plan and also benefit the SMEs, many of whom have limited access to finance through conventional banking institutions, owing to the constraints of collateral, amongst numerous other challenges.