A MAJOR problem the Nigerian naira is facing now is that Africa’s most populous nation is still feeding more than 200 million with imported ‘stuffs’. The non-oil export stimulation fund was set up to drive growth in the export business segment.
With foreign exchange control measures, the Central Bank of Nigeria is trying hard to cut Nigerians’ imports taste, albeit, unsuccessfully. It has not worked; that is why the local currency is exchanged at more than N700 to the United States dollar. To drive non-oil revenue performance, the CBN is supporting Nigerians in export businesses.
This lifeline credit facility is being facilitated by deposit money banks – they call it an on-lending facility, meaning local banks are acting as conduits for channelling such cheap loans to appropriate businesses.
According to FirstBank of Nigeria’s explanation to target customers, there are eligible transactions that qualify for funding under the non-oil export stimulation (NESF) program. Despite twice in three months hike in benchmark interest rate, First bank retains interest rate on non-oil exports stimulation at 9% with a single obligor of N5 billion.
This means a company or individual can only access up to N5 billion which is equivalent to 70% of the total cost of the project or transactions. Businesses that are exporting goods processed or manufactured in Nigeria are qualified to access the fund at a single-digit interest rate up till 2027.
Also, exporters of commodities and services, which are allowed under the laws of Nigeria are very much likely to get funded under the programme. Businesses that need to import plant & machinery, spare parts and packaging materials, required for export-oriented production that cannot be sourced locally are also welcome to submit applications for the loan.
Companies that seek to resuscitate, expand or intend to modernize and include technology upgrades for non-oil export are out rightly qualified to access this loan.
In addition, companies or individuals pushing efforts in export value chain support services such as transportation, warehousing and quality assurance infrastructure. The fund can also be obtained for working capital/stocking facility; and structured trade finance arrangements in this regard.
As part of CBN’s efforts to drive home growth, the Non-Oil Export Stimulation Facility (NESF) was introduced to diversify the revenue base of the economy and expedite the growth and development of the non-oil export sector.
FirstBank explains that the facility will help redress the declining export financing and reposition the sector to increase its contribution to economic development. READ: Nigeria: Mobilizing Resources to Invest in People
It stated that the fund comprises the short-tenured working capital for 12 months as well as the importation of plants & machinery for processing of exportable goods at an all-in-interest rate of 9% per annum.
It is meant to improve export financing, increase access of exporters to low-interest credit and offer additional opportunities for them to upscale and expand their businesses in addition to improving their competitiveness.
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