THE ROLE OF COMMERCIAL BANKS IN EXPORT PROMOTION IN NIGERIA.
ABSTRACT.
The establishment of commercial banks is not legislatively or decree compelled but should be seen as a measure to persude the institution to take the advantage of exploiting and utilizing economic and social facilities. This study is aimed at identifying the role of commercial banks in export promotion in Nigeria, highlighting the various roles that commercial banks left contributed towards Nigeria match for growth and development in export promotion. This study focused attention on the general operations of the commercial bank its historical structure and back ground for effective and accurate assessment of the commercial banks.
The study further reviewed the objective and role of commercial banks to export promotion and appraised its performance and also expose its problems and make recommendation. Materials for the study were sources purely from secondary data.
PREFACE.
The Nigeria economy is presently in a great distress and dilemma. The economy was plunged into this agonizing guang mainly due to over reliance on one export commodity oil. Suddenly, the price of crude oil dropped in the international market. This reflected sharply in the level of adverse balance of payment problems. The major concern of this study is to reveal how commercial banks can help in promoting exports and stimulating economic growth. The federal Government has taken liberal measures to streamline the structure of the commercial banking activities. A discount window for financing exports have been established by the federal minister of finance, export credit guarantee and insurance scheme is being designed by the federal ministry of finance to stimulate export financing. In partialcular, the federal ministry of finance has been made an autonomous institution while commercial banks are now allowed to take equity interest in small-scale enterprises.
ACKNOWLEDGEMENT.
Human endeavors are full of exports and understanding. There are always positive forces that provide reinforcement and generation of energy that sustain the achievement of people. I wish to convey sincere thanks and appreciation to a member of people who at various stages of this work provide one form of assistance of another which saw to the function of this project finally.
My immense gratitude goes to my dearest parents Mr. Mathew and Mrs. celine nwachukwu for their parents care. I also remain indebted to my beloved brothers and sisters, chinwe, kelechi, nwabueze, ogechi, and chima for their contributions.
I cannot easily forget my friends Vivian, onyenychi, nkechi for their support. My special thanks also goes to my project supervisor DR. J ORJIH, the Head of Department of banking and finance DR John Orjih and to the lecturers in the department of banking and finance institute of management and technology ENUGU.
Finally I give all glory to ALMIGHTY GOD for giving me robust health throughout the exercise. TO GOD BE THE GLORY.
TABLE OF CONTENTS.
APPROVAL PAGE
DEDICATION
ABSTRACT
PREFACE
ACKNOWLEDGEMENT
TABLE OF CONTENTS
CHAPTER ONE
INTRODUCTION
1.1. BACKGROUND OF THE STUDY
1.2. STATEMENT OF THE PROBLEM
1.3. OBJECTIVE OF THE STUDY
1.4. SIGNIFICANCE OF THE STUDY
1.5. LIMITATIONS OF THE STUDY
CHAPTER TWO
REVIEW OF RELATED LITERETURE
2.1. REASONS FOR EXPORT TRADE
THE NIGERIAN SITUATION
2.2. STRUCTURE OF NIGERIA’S EXPORTS
2.3. LIST OF SERVICES PROVIDER BY
COMMERCIAL BANKS TO EXPORTERS
2.4. QUALITY CONTROL AND CONTINUNITY
SUPPLY
REFERENCE
3.3. METHOD OF DATA COLLECTION
CHAPTER FOUR
FINDINGS
CHAPTER FIVE
RECOMMENDATION AND CONCLUSION
5.1 RECOMMENDATION
5.2. CONCLUSION
BIBIOGRAPHY.
PROPOSAL.
The establishment of commercial banks is not legislatively or decredy compelled, but should be seen as a measure to persuade the institution to take the advantage of exploiting and utilizing economic and socisl facilities. This study is aimed at identifying the role of commercial banks in export promotion in Nigeria, highlighting the various roles that commercial banks has contributed towards Nigeria match for growth and development in export promotion. This study focused attention on the general operations of the commercial bank, its historical structure and background for effective and accurate assessment of the commercial bank.
The study further reviewed the objectives and role of commercial banks to export promotion and appraised its performance and also expose its problems and make recommendation.
Materials for the study were sources purely from secondary data.
PROJECT FORMAT.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY.
1.2 STATEMENT OF THE PROBLEM.
1.3 PURPOSE / OBJECTIVE OF THE STUDY.
1.4 SIGNIFICANCE OF THE STUDY.
1.5 LIMITATIONS OF THE STUDY.
1.6 DEFINITIONS OF TERMS.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
CHAPTER THREE.
RESEARCH DESIGN AND METHODOLOGY.
3.1. SOURCES OF DATA (SECONDARY SOURCE ONLY).
3.2 LOCATION OF DATA.
3.3. METHOD OF DATA COLLECTION (LITERATURE WORK ONLY).
CHAPTER FOUR.
FINDINGS
CHAPTER FIVE
RECOMMENDATION AND CONCLUSION.
CHAPTER ONE.
INTRODUCTION
1.1. BACKGROUND OF THE STUDY.
The topic “Role of commercial banks in export promotion in Nigeria” is about the major economic issues namely, export trend in Nigeria role of commercial banks in the promotion of exportable goods and services, and the contribution of commercial banks towards economic development.
Export promotion is used here, involves all those services provided by commercial banks and non – banking sectors to facilitate the production of goods and services outside the country. It involves a process which begins at the production level and terminate at the point of consumption Nigeria has derived great benefit from international trade. Foreign goods, both capital and consumer goods not produced in the country have been acquired and paid for from Nigerians export earnings.
The importance of export promotion especially in Nigeria cannot be over emphasized. After the discovery of oil in 1956, it gradually came to dominate the export sector, oil therefore became the single most important item of export. Figures released by the federal office of statistics show that “Export of all items from the country in the half of 1995 had recorded about = N = 16,384.9 billion, out of this petroleum product amounted to = N = 14.365 – 8 billion. In percentage terms, oil exports represented 90.5 percent while other items had 5 neglible 9.5 percent.
As at 1980, oil accounted for about 98% of our exports with Nigeria exporting 2.3 millions barrel per day was produced and sold at only $20.25 per barrel. The economy was 96% depending on oil revenue as her foreign exchange earner. But unfortunately, the revenue from oil was never commensurably, reflected either in the extent of the job creation and other preferred multiplier or linkage effect on the economy. Soon the price of oil began to decline resulting from the pressive from the American international agency and other manipulation of the organization of petroleum exporting countries (OPEC). Oil glut gvots sales and sales and continous price decline because the other of the day.
Commercial banks play a major role in payment for exports. The means of payment for export and general settlement of international transactions are:-
1). The foreign bill of exchange
2). The banks draft
3). Documentary for credit, for which is necessary to open a credit at a bank in the exporters country.
4). The telegrapline transfers which enables banks deposit to be transferred expeditiously from the importers banks.
Commercial banks act as a major intermediary for all the listed means of payment the federal government of Nigeria adopted some specific measures, to ensure for export promotion in Nigeria. Some of these measures are:-
a). Refund to import duty paid on raw material used for the production of commodities marked for the export market.
b). Refund of excise duty or domestic manufactures exports.
c). Exemption from import licence of raw material required for export products.
d). Liberation of import licence for raw materials required for export products.
e). Abolition of exports prohibition as contained in finance act no. 2 of 1981, except for commodities whose exportation was banned.
f). Introduction of export of export credit guarantee and insurance scheme during the year 1986.
The most recent incentive package for exporters. The new focus in Nigeria export policy is to design export incentives scheme that would jointly encourage the diversification of foreign earnings through increased export activities in the non – oil sectors and to stimulate greater capacity utility to meet both domestic and foreign demands. Government in January 2000 pronouns the following measures:-
1>. The introduction of negotiable duty credit certificate (NDCC) as mode of payment of export incentives there by eliminating undue delays in the administration of the schemes.
2>. The increases from 4% to 10% expansion grant to exporters under the export expansion grant scheme, to stimulate export production and enliance the repatriate of export proceeds.
3>. The removal of levies / changes on beneficiaries of duty draw back and export expansion grant there by enhancing benefit from the schemes and the introduction of new manufacture – IN – Band scheme as a substitute to cash incentives to exporters. The scheme has the following:-
1. EXPORT EXPANSION GRANT FUND (E E G F)
which is an inducement for exporters for semi – manufactured and manufactured products to enable them increase the volume of their exports and to diversity their export products and markets.
2 DUTY Draw back scheme 9DDS) the scheme produces for refund of duties and surcharges paid on imported input used for the manufacture of export products.
3 Export Development fund (EDF): This provides for direct assistance to cover part of expenses respect of export promotion activities such as export market research and studies.
4 The manufacture – in – hand scheme (MIBS) is designed to encourage manufacturers to import duty for raw material inputs and other intermediate production of exportable goods backed bond issued from a recognized commercial back.
5 Discharge after evidence or exportation and repatriation prayer has been produced.
In addition central back of Nigeria has recently been made autonomous while commercial banks are now allowed to take equity interest in small scale enterprises.
In various economicdeveloment places of Nigeria, specifically three main objectictives have been aimed at viz.
Diversification of the composition to the export products especially those of agriculture as well as processed and manufactured goods.
Diversification of the friction of trade increase in the value of export producedures.
Now of those objectives has been achieved satisfactorily in any of the plan periods. This is more reason commercial banking services are required and more encouragement in terms of incentives must be given to the commercial banks in order to stimulate their interest in export promotion.
1,2 STATEMENT OF THE PROBLEM
The country is currently fasting the bitter pill of economic set back resulting from over reliance on one export commodity oil no country can achieve any meaningful economic prosperity by producing for home market alone and as highly developed country can maintain a high growth rate of it reflects exports.
The need for economic diversification through active export promotion cannot be over stressed. In almost all African and other less developed countries) UOCS) export are still the most important means of economic development. In Nigeria today, through the need for export have been recognized and much said about it the role of commercial banks towards the direction is till minimal
Potential exporters are still ignorant of the services available in the commercial banks and have not made any effect toward correcting this problems..
1.3 OBJECTIVE OF THE STUDY
I SEE OUT HERE TO IN
A analyze the trend of exports in the Nigeria economy,.
B point out the role of commercial banks in export promotion.
C present the prospects of Nigeria export within and outside Africa.
D make recommendations based on problems specifically. Some of the problems attainable in the export sectors as highlighted in the faith national development plans are as follows.
Of the major export commodities, only, cocoas performed better than anticipated some other crops ;such as groundnut oil failed out completely from the nations export list while; many others like timber ;logs, polymer, palm ;kernel and groundnut cakes were shadows of there past performance. The reform of there past performance. The reform of the marketing board system on which hope had been placed to resuscitate the nations failed to achieve the intended objectives.
The need for promotion is even made more processing when it is realized that Nigeria is facing a decline in output of other her mineral and agriculture output.
Today, though oil is of great need it has a pernicious way of luring a nation into oil depredating complies which makes progress in other field more orders and painstaking.
Export have estimated that by the late 1990 Nigeria would not be able to export as much as she does not because by then domestic consumption would have gave u to between 1.5m to 1.7m barrels per day, leaving a relative shall quoting for export. Gentrified on how to fully integrate and bring banks to participate fully in export promotion in Nigeria.
The study pointed out that to achieve a meaningful economic growth emphasis most be laid on export promotion which is an aspect of economic diversification at goes to reved that commercial banks have a lot to do in this areas and that for the commercial banks activities to be fully explained there must be increase awareness of their rules for the commercial banks themselves, potential exporters and agencies involved in the export business.
Also important to note is that there has to be a package of incentive from the federal government to attract the commercial banks to the aspect of the economy, lasting there should be clearly defined laws building the operation of export business.
The curt of this study is to stress that commercial banks which are of immense important in export business are doing little in this direction and to present a carefully adopted will ravamp this poor situation.
1.4 SIGNIFICANCE OF THE STUDY:
1 the researcher hopes to achieve a great thing at the end of the study. This research will help lower developed countries like Nigeria to reason within themselves and come out with alterative means of escaping from their undeveloped status instead of depending on the more developed countries.
2 Scholars in the field of banking and finance it will enlighten the student and afforded them the opportunity of appreciating the contribution towards their study.
3 It will enlighten the public on how commercial banks helps in export promotion in our economy.
4 The study will help countries produce for exports to correct balance of payment problems or to earn foreign exchange to repay outstanding external debts.
5 It will serve as a companion future researchers who are interested in export and import study.
1.5 LIMITATIONS OF THE STUDY
A general view of the role of commercial banks in the promotion of export is the foundation upon which the research work is developed however limitation is not intentional but necessitated by some factors such as time and finance it also entails a lot of spending on transportation furthermore during data gathering procedure, the researcher rain into the problem of some commercial bank officials whose assistance were shortcut they with held vital information necessary for statistical analysis as regard to their loan sanctions disbursements and outstanding for the period of the study, due to secrecy doctrine attached to commercial banking profession and fear of loosing rheirjob.
Moreover getting most of the requirement journals as to make comparative study on the growth of export promotion so I and constrained to use the available ones.
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