There has been little or no disbursement from the N500bn Non-oil Export Stimulation Facility established in 2016 to provide single-digit interest loans to non-oil exporters, leaving them to contend with high cost of borrowing from regular banks, ANNA OKON writes
Applications for the N500bn Non-oil Export Stimulation Facility that is meant to provide very cheap funding for exporters are piling up at the Central Bank of Nigeria, thereby frustrating the purpose for which it was set up.
Our correspondent gathered from reliable sources that only N20bn had so far been disbursed from the fund.
According to the operators, Deposit Money Banks have forwarded requests on behalf of their customers to the CBN through the Nigerian Export-Import Bank for access to the fund but the apex bank has yet to respond.
The NESF was initially launched in June 2016 by the CBN, but was repackaged and re-launched in December 2017.
The facility was designed to boost activities in the non-oil sector. The CBN said in its guidelines for operating the fund that it was established to support the diversification of the nation’s economy away from oil, and to expedite the growth and development of the non-oil export sector.
“The CBN will invest in a N500bn debenture to be issued by the Nigerian Export-Import Bank in line with Section 31 of CBN Act,” the apex bank had stated in the guidelines, adding that the facility was essentially designed to redress the declining export credit and reposition the sector to increase its contribution to revenue generation and economic development.
The fund is specifically designed to provide long-term concessionary funds to support existing or new export-oriented projects through the provision of term loans at a single-digit interest rate for tenors up to eight years, with moratorium of up to two years, or as working capital/stocking facility.
The Managing Director, NEXIM Bank, Mr. Abba Bello, had during a one-day seminar on export potential urged operators in the Small and Medium Enterprises sector to access the fund and its counterpart, the N50bn Export Development Fund being managed by NEXIM Bank.
In a March circular titled: ‘Circular to All Deposit Money Banks and Development Finance Institutions on the Commencement of the Non-oil Exports Stimulation Facility’, the CBN said it had commenced the implementation of the loan scheme.
When contacted for comments, the spokesperson of the CBN, Mr. Isaac Okorafor, declined to pick his calls or answer text messages sent to his mobile telephone.
The non-disbursement of the fund has forced exporters to return to the traditional mode of borrowing from the banks at high interest rates.
Borrowing at interest rates of between 23 and 27 per cent to fund exports amounts to wasting energy and resources on a fruitless venture, according to the operators.
“Borrowing money at such a high interest rate does not make the exporter competitive or profitable, one is only struggling to stay afloat,” the Publicity Secretary, National Cashew Association of Nigeria, Mr. Sotonye Anga, said.
He added, “The high interest rate was what the NESF was meant to address. We saw the fund as a lifeline. In addition to the high interest rates, bank loans are of short tenor and banks will put pressure on you to pay before the money can be used for anything.
“The cost of funding is too high and it goes into the cost of doing business. It is very frustrating, considering the fact the same goods we sell are sold in Ghana and other countries where the cost is much lower.”
A consultant in the agricultural processing value chain, Gandu Victor, described the government fund as ‘paper money,’ saying, “Government likes to make all kinds of noise about diversifying the economy and growing the non-oil export sector.
“At one point, a committee was set up to produce 1,000 exporters from each of the six geopolitical zones. The Customs and other agencies were involved. After the initial noise, the entire thing fizzled out.
“There is no export structure in Nigeria. The government is not serious about growing the non-oil export sector like the way it is done in other African countries. It is very sad because this is the time we should really get serious.”
Gandu added that even when people attempt to access government funds, they were usually confronted with stringent conditions that would make it difficult to get the money out in time to supply goods to buyers.
“For a facility that should ordinarily take 30 days, they will keep you in the queue for 120 days or more, eventually you may not get the money and the bank must have deducted administrative charges, processing fees and other fees from your account. The exporter can never reapply for such a fund,” he noted.
According to the National Bureau of Statistics, the non-oil export sector recorded N577.6bn revenue in the first quarter of 2018 and the Nigerian Export Promotion Council is confident that the sector can generate more if the challenges are removed.
“The sector is faced with huge challenges, chief among is the port access road and high cost of exporting goods,” the Regional Coordinator, South West, NEPC, Mr Babatunde Faleke, said.
He expressed hope in the N500bn NESF, noting that the sector could generate more than N1bn per quarter if exporters had access to single-digit interest loans.
“We believe that the funds will be disbursed. Our officers have gone round to ascertain people who are qualified among the applicants,” he said.
The Director-General, Lagos Chamber of Commerce and Industry, Mr Muda Yusuf, lamented that access to capital was a huge problem in the Nigerian economy.
He observed that in other economies, it was easy to access funds even at the consumer level where people could borrow money beyond the limit on their credit cards.
“As they keep spending this money, the economy keeps getting stimulated,” he added.
Yusuf lamented that for many years, the Nigerian banking system was wired to fund imports, which he described as buying and selling, adding that as a result, there had been a major disconnect between the banking and the real sectors of the economy.
Data obtained from the International Trade Centre showed that the non-oil sector in other African countries was the major source of revenue in 2017.
South Africa, for instance, made $77.7bn from non-oil exports. In contrast, Nigeria made $39bn from oil and only $1.6bn from non-oil exports.
Ghana generated about $7.64bn from non-oil exports, while Cameroon, Kenya and Cote D’Ivoire made $2.1bn, $5bn and $9.1bn, respectively.