Export Financing in Nigeria, Problems and Prospects
Many economies across the globe make use of trade as the major source of revenue that sustains the economy. Proper trading channels with reliable stakeholders is a very vital stepping stone towards guaranteeing the success of the trading process. Active export financing and sound trade financing go hand in hand to ensure there is growth in the economy. On the contrary, getting a smoothly operating social institution that adequately promotes the export and import activities guarantees the continuous growth and further expansion of the economy in the global market. The paper seeks to explore the Nigerian export and financing programs to check on the matters that affect the sector and other ways that can be innovated to ensure there is proper growth in the industry.
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Export Financing in Nigeria, Problems and Prospects
The proposals primary objectives are categorized below:
1. To critically examine if there is a relationship between export financing and positive growth in Nigeria in the export sector.
2. To ascertain what is the impact of export financing to the Nigerian economy and its effect on its growth.
Background and Significance of Study
The export financing market in Nigeria is critical to the country as it is a known producer and exporter of oil to many countries all over the world. Apart from this fact, Nigeria is also a known investor in export financing, and as a result, the proposal analyzes this sector and its role in the country. In addition to this, the proposal looks at the problems and the solutions to these problems to facilitate growth and development of the export sector. There is a very significant relationship that exists between export financing and the growth in the export sector of Nigeria. The export sector has without a doubt greatly and positively impacted the growth and development of the economy of this country.
In a bid to ensure that the country develops just like other nations, Nigeria is investing in the export financing, especially in the export of oil. It is also enhancing diversification by its people as well as encouraging more locals to be involved in the sector to ensure that the industry is run not only by foreigners but also by locals. All these steps and measures are being put in place as there is the realization that export financing is substantially impacting the country and the economy.
On the other hand, growth is not only seen in the labor and capital stock but also in the quality and the quantity of goods being sent abroad to the international market. It has a positive impact in that the market requirements all over the world have increased as there is demand for even more quality products and as a result, the locals are under pressure to perform well to meet market standards meaning there is more production of better commodities for consumption by the Nigerian population. The availability of products not only of oil but other goods as well that are of very high quality will give many people the luxury of enjoying the products that they purchase in the business process (Ulelu, 2000). In the export market sector, there is a lot of co-dependence between countries which implies that there will be a lot of contribution from other countries leading to expansion as well as leading to massive growth that will be experienced not only in exports but economic activities as well. This is the case for privatization of given entities relevant in the export industry that will serve to disadvantage the growth and the development of the sector implying that the countrys economic growth will stand the significant risk of being interfered with in the long run.
Export market financing is described as a facilitator of the economy of a nation meaning that growth and improvement of the sector has a very significant role to play in facilitating economic sustainability. The sector of export marketing is seen as the facilitator that will ensure there are a link and transaction that will occur between the productive sector of the given nation and the international consumer market as in the case between Nigeria and the rest of the world (Rowntree et al. 1967). Export marketing in Nigeria is believed by many economists and financial consults in the country to be the cause of the changing economic tone of the common system in the country without necessarily altering other important structures in the sector such as methods of production or the methods of distribution of certain products or the income as well. There is thus an urgent need in Nigeria for all to engage in export marketing and financing. This sector has developmental significance to the country in that it has ensured that Nigeria is earning foreign exchange and there has been an increase in the amounts over the years. In addition to this, the infrastructure in the country has been improved as better roads are being built that lead to the building of ports and offices (Ulelu, 2000).
Apart from this, the sector has ensured that there are increased employment opportunities for the Republic of Nigeria as more people are getting employed.There has been a positive change in the production cost that is reducing and has reduced over the years in the country ensuring that even more revenue is acquired. Nigeria is currently enjoying international recognition from other nations as one of the leading exporters of oil to the international market, and the country is enjoying its fame in the African continent especially (Rowntree et al. 1967). The countrys reputation stands out without a doubt. As a result, the living conditions and standards are seen to have improved with the improvement and development of the sector. People are able now to live the lifestyle they desire as more people are seen to build better homes and afford luxurious lifestyles that in the past were affordable for few.
The government thus plays the central role in mediating between the producers and the consumers. It implies that the commercial channels should be clear enough to rule out any cases of fraud or embezzlement (Ulelu, 2000). In such instances, huge returns are anticipated in the region, and eventually, the export sector will be flourishing in the long run.
Content and Problems
The director of the Nigerian export promotion council on the Southern part, Mr. Ibrahim, identifies some of the common challenges and prospects experienced in this region in export financing. Mr. Ibrahim names the common problems to include insufficient finance that is inadequate to fund the export business in the region. Lack of market access that is genuine and well identified is also among the challenges faced. Apart from these major problems that he identifies, the export financing sector in Nigeria also faces challenges such as the supply chain management having a lot of discrepancies especially when it comes to officials in various offices being unable to explain the expenditure of funds that are adamant for the operation of the sector. Improper documentation also proves to be a challenge in ensuring that the sector grows and develops.
The ways in which funds are used or rather are appropriated are very vital information to ensuring that the sector is a success. It means that once the documents are improperly recorded a lot of wrongs will be covered up (Parker, 2014). Weak infrastructure is another challenge as well that is experienced which proves a great hindrance to the operations of this sector concerning the port not meeting international standards and lack of carriages as well. These challenges are quite costly as they are seen to prevent the goods from the country from not being able to compete on the international market and are lack of the global platform too.
It being the case, there is a necessity to ensure that these challenges are dealt with to ensure that the export sector is growing just like the other sectors. In an attempt to address this problem, the various stakeholders will, as a result, have to team up to share relevant information that can be used to sway more investors into the export finance sector. It will, therefore, ensure more funds are required for adequately tackling the funding issue. Apart from this, diversification should be introduced to ensure that the country is not only dependent on oil as the main export product, but also other commodities and products that are produced in the country. It will reduce the effects that are mostly felt when the international market is inserting subsidies on oil, and as a result, the sector will not suffer much (Parker, 2014). There is a need to sustain the Nigerian non-oil export sector to ensure that the country boost the foreign exchange earning capacity from the goods as the dependency of the country on oil is not sustainable in the long run. It is the painful reality that has to be addressed and seen the way it is. Enlightenment of the Nigerian population about export business is proving very necessary as the many investors are foreigners, thus the need to enlighten many to major in this sector to ensure that there is more stiff competition meaning that the quality of the products will be improved. Apart from this, it will make sure that there is easy market access by all persons that are interested in the sector.
Research Methods and Roadmap
The proposal contains information that was collected through questionnaire presented to individuals in a field study that involved direct involvement with the persons working in the financial departments under marketing in export institutions. It also involved the collection of information from recent journals and the findings compared to the information collected from the specific questionnaire. All this information summoned together, and any disparities that occurred were tackled. Then the information was harmonized to be certain and very credible data that is useful for the final conclusions. This mode of data collection is essential in the sense that, one can be able to adequately gather all the information he or she desires and also seek clarifications in the instance where doubts or legitimacy of the data is questionable. It can be achieved through the administration of open-ended questionnaires which provide the respondent adequate space to air out all aspects he or she has about the discussion topic.
Significance of the Proposal
In conclusion, this project highlights the importance of ensuring that the export market in Nigeria grows and develops. It also highlights how the country stands to benefit from the implementation of some of the solutions to the problems and the challenges that are encountered in the process of ensuring export financing develops and is a success in the country. Stakeholders in the sector stand to benefit in that they are in a better position to make sure that they understand the essence of financing export marketing and export financing in the country (Parker, 2007). The government on their side will be offered proper management strategies to implement to ensure that the sector flourishes grows which the citizen stands to benefit. The Nigerian public is known to have lost confidence in the export marketing sector. As a result, this proposal serves to reassure the public on the need for them to support the government concerning export financing. All in all, the proposal recommends means that can be put in place to ensure that the growth and the sustainability of the economy with regards to export financing are a success. The problems are correctly highlighted to make sure that there is a way forward regarding coming up with solutions to ensure that all the factors that hinder improvement are well tackled.
Parker, P. M., & Parker, P. M. (2007). Executive report on strategies in Nigeria. ICON Group.
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Rowntree, R. H., & Export-Import Bank of Washington. (1967). Export financing. Washington, D.C: Export-Import Bank.
Ulelu, C. A. (2000). Nigerian non-oil exports: (marketing and financing) : options, policies and facilitations for international trade in Nigeria. Ikeja, Lagos: Anchor Services Ltd..
United States. (2002). Foreign operations, export financing, and related programs appropriations for fiscal year 2002: Hearings before a subcommittee of the Committee on Appropriations, United States Senate, One Hundred Seventh Congress, first session on H.R. 2506, an act making appropriations for foreign operations, export financing, and related programs for the fiscal year ending September 30, 2002, and for other purposes. Washington: U.S. G.P.O.
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