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Variety is the spice of financial life



Advocates of economic diversity, such as Nexim Bank, address barriers to trade for the non-oil sectors
by Lawrence J. Ireton

Nigeria’s financial sector has undergone substantial changes since 2004, when a recapitalization process reduced the number of banks from 84 to 25, and a more taut banking system helped the country capture global attention with solid economic results. Over the past decade, the economy has expanded at an average rate of 7% per annum, reaching 7.85% in 2010. The same year, Citigroup ranked Nigeria as the fifth fastest growing economy in the world, after China, Taiwan, Singapore and Qatar. GDP growth is predicted to hit 8.1% this year and 8.2% in 2103.

In 2008 the Nigerian government implemented a program of market-oriented economic reforms, which included modernizing the banking system, curbing inflation by blocking excessive wage demands, and resolving regional disputes over the distribution of earnings from the oil industry. One important step undertaken by the Governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi, was the establishment of the Asset Management Corporation of Nigeria (Amcon) to purchase non-performing loans (NPLs) and to recapitalize struggling banks. “At Amcon, we have a model that is unique,” says Mr. Sanusi. “It is important to look very closely at what we are doing rather than work on stereotypes. In many areas we have set the pace. A lot of what is being discussed in Europe today has already been done here. We have forced the banks to take losses and to pay for the bailout. This says something about the direction of economic policy and the future.”

Increased oil exports and high crude prices helped Nigeria ride out the global economic slowdown with GDP rising while other nations slipped into recession. However, it is the non-oil sector that is even more impressive, with investment – both public and private – and consumption being the primary economic drivers. Overall GDP growth in the first nine months of 2011 averaged 7.25%; the non-oil sector averaged 8.76%, thanks to increased activity in areas such as agriculture, trade, manufacturing, and services.

“WHAT WE HAVE DONE OVER THE YEARS IS PHENOMENAL. WE HAVE INTERVENED AND OPENED UP SECTORS WHERE PREVIOUSLY EXPORTS HAD NO VALUE ADDED” Roberts Orya, Managing Director of Nexim Bank

Supporting diversity in Nigeria’s non-oil-related industries since 1991, the Nigerian Export-Import (Nexim) Bank is a 50-50 partnership between the Central Bank and the Ministry of Finance.

“What we have done over the years has been phenomenal,” says Roberts Orya, Managing Director of Nexim. “We have intervened and opened up sectors where previously exports had no value added. For instance, in agriculture, Nexim has embarked on greenfield projects that have become so big that you can find them on CBN’s list of top 100 exporters. Also, we started one of the biggest cocoa processing plants in Africa (Multi-Trex Integrated Foods Plc.) and its largest rubber company, Pamol Nigeria Ltd.”

In addition, the bank is looking at expanding the entertainment industry, Nollywood, “because we believe it is an industry that has key growth potential for employment and foreign exchange,” says the MD.

Nexim will soon launch its $61.5 million Sealink project that aims to boost maritime trade among members of the Economic Community of West African States (ECOWAS) with a new shipping company that will better connect the region’s seaports and encourage greater trade.

“We don’t just give loans to exporters; we also address barriers to trade,” says Mr. Orya.