Financial Institutions
must play their role.
Trade finance plays a critical role in
accelerating economic growth globally
because more than 90% of trade
transactions involve some form of
credit, insurance or guarantee. Nigeria
is not the exception to the rule.
Unfortunately, banks in Nigeria are
notoriously averse to the risks involved
in financing international trade and
specifically, non-oil export businesses.
SMEs make up the majority of
businesses in Nigeria and because these
banks are extremely risk-averse, small
and medium-sized enterprises (SMEs) at
the receiving end are more likely to be
more negatively affected than larger
ones. With banks allowing a lower
amount for loans, SMEs – normally
among the last in a pecking order –
have even more problems competing
for fewer funds at higher costs.
This is counter-productive. SMEs are
the engine of economic growth, and
majority of exporting entities are SMEs.
Increasing access to finance therefore
should be a no-brainer but in Nigeria,
that is not happening fast enough.
Conclusion – All hands on deck to achieve sustainable
results
There are clearly, several risks involved in leaving it all to government (especially, the
federal government) to bring about the structural changes needed to grow non-oil
exports in Nigeria.
Government has its role to play – regulatory, policy-making, infrastructure
development, etc. Even in the area of infrastructure development, the success of public-
private partnerships show that we achieve more and faster if the private sector is given
a larger role to play in infrastructure development. In the UK, airports including
international airports are mostly privately owned and run efficiently. With international
airports, seaports, rails, roads and power infrastructure in Nigeria languishing under the
burden of lack of funds, this might not be worst solution to consider.
For efficiency, government must focus on its role and build the structures/policies
needed to allow other stakeholders thrive in order to build an effective structure to
support and grow non-oil exports in Nigeria.