THE ROLES OF BANKS IN EXPORT PROMOTION AND ECONOMIC GROWTH A CASE STUDYOF SELECTED BANKS IN INGERIA

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THE ROLES OF BANKS IN EXPORT PROMOTION AND ECONOMIC GROWTH

A CASE STUDY OF SELECTED BANKS IN INGERIA

LIST OF TABLES

Table 2:      Nigerian Non-oil exports.                 4

Table 3:      Major constraints Limiting exports 43

Table 4:      Export assistance desired                 44

Table 4.1:   Does your bank engage in export promotion activities?                                                         54

Table 4.2:   Do your have an export department to facilitate the program or related department                                        54

Table 4.3:   Has your bank been in this service program for a long time                                                                      55

Table 4.4:   Has there been any economic improvement with regards to the existence of this program                         56

Table 4.5:   Does your bank have any promotion assistance to

render to exporters                                               56

Table 4.6:   Do you have any available incentives to motivate these exporters.                                        57

Table 4.7:   Does the provision of these incentives motivate the exporters                                               58

Table 4.8:   Does your bank in any way aid in export documentation                                                       58

Table 4.9:   Are there nay importance attached to this documentation                                                       59

Table 4.10: Do your have methods to make the payment for export more effective

Table 4.11: Is export transition a profitable venture to the bank

Table 4.12: do you often receive customers for export promotion

Table 4.13: Do you encounter any problem in promoting export business.

Table 4.14: In your opinion, is exporter responding to the call for export.

Table 4.15: Does your bank have adequate branches to cater for the need of farmers in the rural areas        62

Table 4.16: Does your bank receive any incentive form the federal government to encourage them I export promotion.

Table 4.2.1 Test of hypotheses one                           65

Table 4.2.2 Test of hypothesis two                           66

Table 4.2.3 Test of hypotheses three                                   67

Table 4.2.4 Test of hypotheses four                         68



ABSTRACT

This research is on the roles of bank in export promotion and economic growth.  A case study of selected banks in Nigeria. It about the major economic issues viz (1) export trade in Nigeria, (2) Role of banks in the development and promotion of exportable goods and services and (3) the contribution of banks towards economic growth.



The Nigeria economy is presently in a great distress and dilemma. The economy was plunged into this agonizing situation mainly due to over reliance on one export commodity, oil suddenly the price of crude oil dropped in the international market. This sharply reflected in the level of our national income and gave to the adverse balance of payment problem.



In an effort to restructure and redress the maladjusted economy, the objectives of export promotion was identified and incorporated for effective economic recovery.  Even though export promotion has been identified, its potential in affecting economic growth is still unexploited.  The researcher has therefore decided to undertake the task of analyzing critically, this laudable economic policy with the hope of fully exposing its potential.



PROPOSAL



This project topic “The roles of banks in export promotion and economic growth, A case study of selected bank in Nigeria” is a research work to be submitted in partial fulfillment of the requirement for the award of a higher National Diploma in Accountancy.  The first chapter of this project is about the major economic issues like; the export trade in Nigeria, and the contribution of contribution of banks towards economic growth.  In this chapter two the objectives of export promotion was identified and incorporated for effective economic recovery.

The second chapter is a Review of related lit creature making an exposure of the reasons behind export trade with Nigeria situation in mind, as will as the roles of banks in the development and promotion of exportable goods and services.

The third chapter is about the research methodology and design (lustarical and survey) used in accumulating information utilized in the research work.  The services of vela in this chapter include both the primary and secondary sources of data.

The fourth chapter present and analysis the data gathered by the method described in chapter three. The presentation is done in tabular form the analysis is done and test (applying chi-square) is carried out on the hypothesis which this research work is based.

The fifth chapter point at my findings on the hypothesis with a view to postulating reasons why certain hypothesis has to be rejected or accepted.  This chapter serves as a from state of conclusion on the research topic and work done and what implication the conclusion could have on out financial institution.

CHAPTER ONE

Introduction

• Background of the Study


• Statement of problem


• Objectives of the study


• Significance of the study


• Hypothesis


• Scope and Limitation of the study


• Definition of terms

CHAPTER TWO

• Literature Review


• Reasons for export trade the Nigeria Situation


• Structure of Nigerian Exports


• Roles of banks in Export Promotion


• Factors inhibiting banks support to the export sector

CHAPTER THREE

• Research method used


• Primary sources of data


• Secondary sources of data

CHAPTER FOUR

• Data presentation and Analysis


• Test of Hypothesis

CHAPTER FIVE

• Summary of findings


• Conclusion


• Recommendation

Bibliography

Research Questionnaire

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

The topic Roles of Banks I Export promotion and economic growth about the major of bank in the development and promotion of exportable goods and services, and the contribution of banks towards to economic growth.

Export promotion, which is used here, involves all these services provided the banking and non-banking sectors to facilitate the production of goods and services outside the country.

Nij (1986) defined export promotion as a management concept employed by a export enterprise for effective international marketing of etc export products.  It involves a process, which begins at the production level and terminates at the point of  consumption. Our country has derived great benefits from international trade foreign good both capital and consumer goods not produced in the country have been acquired and paid for from Nigeria’s export earnings.  In the worlds of the Nigeria president we must intensify our effort at self-reliance through export promotion and reduction of heavy dependence in oil revenue.  After the discovery of oil in 1956. it gradually come to dominate the export sector, oil therefore become.  The single most important item of export.  One of the major ways through which a country acquires foreign exchange is by exporting is products and services to there countries.  Since foreign exchange earning is identified with export of goods and services to foreign countries.  It means that developing countries such as Nigeria will definitely nee this to be able to purchase the whole lots of goods and services they can not produce within Nigeria produces only but a little percentage of her products needs. It depends on other countries for the rest, and it secure these goods and services form abroad means making use of foreign exchange earned from exportation of what the country can produce.

Figures released by the federal office of statistics show that export of all items from the country in the firs half of 1992, and a record figure of N16,384 –96 out of this petroleum product amounted to N15,00256.  the economy was over dependent on oil revenue as her foreign  exchange earner, but unfortunately, the revenue from oil was never common reflected wither in the extent of job creation and other aspect on the economy.  Soon the price of oil began to decline resulting from the pressures from the American international energy of petroleum exporting countries (OPEC), for an economy nuptial tied to the performance of oil in the international market.  The consequences of these charge were not long in coming ad were catastrophic in effect.  This ugly situation has forced the federal government into a search for a more reliable economic basic. Promotion and financing of export (non-oil) in Nig. Has three important interests.  One is to increase out foreign exchange earning.  Secondly is shifting emphasis away from erratic oil revenue and thirdly which is the most obvious is to generate and increase productive in the country.  A lot of promotion and financing has been granted to export business since 1970s. Different establishment and boards have always taken care of export promotion activities in the country; this fag-ranges form Nigeria marketing  company, commodity board but all these tumbled because of in efficiencies and poor management. The federal government has identifies export promotion as a major tool of economic recovery under the 1986 structural adjustment program.   On the activities and promotion therefore, they need not be told that export transaction needs adequate finding which constitutes their area of specialization.  Any financing scheme provide by financial institution in oil of export usually aim at the following. First is assisting exporters in producing processing and purchasing goods for export as the situation demands.  Next is providing liquidity to exporter to enable them offer competitive credit terms to oversea lawyers.  Again offering or improving price competitiveness of export on international market.  lastly is to save the task of exporters form foreign trade risk of losses of capital as a result of non-payment from the trading partner and other international business risks associated with exportation of goods and services.

Having seen the above mentioned angles through which our financial institution can offer helping hands to financing and promoting export trade.  The big question becomes, are these institution living up to there responsibilities in this regard. There is a belief that this question must have been answered appropriately before the exhaustion of the last chapter of this project.  The banks also play a role in payments for exports.  The major means of payment for exports.  The major means of payment for export and general settlement of international transaction are:

1. The foreign bill of exchange


2. The Bank draft

• Documentary credit for which at is necessary to a credit at a bank in the exporter country.

1. The Telegraphic transfers, which enables bank deposited to be transferred expeditiously form the importers bank.

The federal government of Nigeria adopted some splenetic measures under the structural adjustment program (SAP), to ensure for export promotion in Nigeria the main aim was to increase the foreign exchange earning base of the nation some of the measure are.

(a)     Refund of import duty paid on raw materials used for the production of commodity earmarks for the export market.

(b)     Refund of excise duty on domestic manufactures exported.

(c)      Exemption from the import levy of raw materials imported for export production.

(d)     Authority granted to exporters to retain 25% pf foreign exchange earned from exports.

(e)      Liberalization of import license for raw material required export products.

(f)      Provision of support services to entrepreneurs seeking new export markets and assistance on export costing and pricing.

(g)     Liberalization and simplification of export licensing procedures.

(h)     Abolition of export prohibition as contained in finance act No 2 of 1981.  Except for commodities whose exportation was banned.

(i)      Introduction of export credit guarantee and insurance scheme during the year 1986.

The most recent incentive package for exporters includes.

1. Currency Retention Scheme:- Authority to retain foreign exchange earnings has been increased form 25% in 1986, to 100% presently. An exporter of Nigeria commodity shall open a foreign currency domiciliary accountancy  with an authorized Bank of its choice in Nigeria into which all the proceeds of non oil export deposited shall be utilized only for eligible transaction duty qualified by authorized dealer.


2. Export expansion grant fund:- The fund is to provide cash inducement for exporters who have exported a minimum of N50,000 worth of semi-manufactured or manufacture product to enable them.


3. Increase the volume of export.


4. Diversity exports products and market coverage.

The level of such inducement approved for exporters are

1. N50,000 – N100,000 export sale per annum 5% grant.


2. Additional up to N500,000 export sale per annum 4 grant.


3. Additional up to N100,000 export sale per annum 3% grant.


4. Above N100,00 export sale per annum 2 percent grant . The export expansion grant found shall be made available only to exporters who have repatriated their proceed from their export transaction.  The reputation must be certified by the central bank of Nigeria.


5. Capital Assets Depreciation Allowance: - This Provides an annual depreciation allowance of 5% of plant and machinery for manufacturing exporters who export at least 5% of their annual turnover provided that the product has at least 40% local of raw material content or 35% valued added.


6. Export Development Fund:- This is a special fund provided by government to give financial assistance to exporting companies to cover part of their initial expenses in respect of the following export promotion activities.


7. Participating in training courses, symposiums, seminars and workshops in all aspect of export promotion.


8. Advertising and publicity campaign in foreign markets.

• Export market research studies.

1. Product design and consultancy etc.


2. Export Adjustment Scheme Fund: - This shall serve as a supplementary export subsidy to compensate exporters for.


3. High cost of production arising from infrastructure deficiencies.


4. Purchasing commodities at prices higher than prevailing world market prices but fixed by the government.

• Other factors beyond control of the exporter.

1. Duty Draw Bank Scheme:- Exporters shall on application to the duty draw back committee be entitled to 50% disbursement on import duty levies surcharges, etc. paid in respect of all imports including raw material used in export production. In order to qualify for this facility, the actual exportation of the product from the imported input must be completed within eighteen months from the date of importation of the inputs.  In addition the EVE has recently been made autonomous while banks are now allowed to take equity interest in small – scale enterprises.

• STATEMENT OF PROBLEM

The country is currently tasking the bitter pill of economy 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 no highly developed country can maintain a higher growth rate if it neglects exports.

The need for economic diversification through active export promotion can not be over – stressed, almost all African promotion and other less developed countries, exports are still the most important means of economic growth and development.

In Nigeria today, though the need for export has been recognized and much said about the roles of banks towards this direction is still minimal potential exporters are still ignorant of the services available in banks and banks have not made any effort towards correcting these anomalies.

Export development and promotion is one of the three facts of development through industrialization as is being currently practiced.  The other two facts are mining and import substitution.  In various economic development plans of Nigeria, specifically, three main objectives have been aimed at viz.

1. Diversification of the composition of the processed and manufactured goods.


2. Diversification of the direction of trade.

• Increase in the value of export procedure.

Non of these objectives has been achieved satisfactorily in any of the plan periods.  This is required and more encouragement in terms of incentives must be given to the banks in order to stimulate their interest in export promotion.

Specifically, some of the problems attainable in the export sectors is highlighted in the forth national development plan are as follows:

Of the major export commodities only cocoa performed better than anticipated.  Some other crops such as groundnuts oil faded out completely form the nation’s export list while many others like timber logs, plywood’s palm kernel and ground cakes were shadows of their past performance.  The reform of the marketing board system on while hope has been placed to resuscitate the nations sagging agricultural exports seen to have failed to achieve the intended objective.



The need for export promotion is over more pressing when it is realized that Nigeria is facing a decline in output of both her mineral an agricultural output.  Babongida also pointed out that out would not guarantee Nigeria’s economic development forever or even insure her against economic difficulties.  To day, though oil is of great need, it has a way of luring one nation into an oil dependency complex which matter progress in other field more arduous and pain taking.

Export have estimated that by the year 2000, Nigeria would not be able to export as oil as she does now, because by domestic consumption would have gone up leaving a relatively small quantity for exports.

Manufactured goods are still in their infancy and that input of the agricultural sector 15 still on the decline, and most important our central devours system – oil is facing the world oil gent crises and will run out by the end of this decade, it then becomes inevitable that out export potentials must be full exploited and that the banks role in export promotion must be rediscovered and full practicalized.  The global economic system has placed backs as international trade grants.



1.3     OBJECTIVES OF THE STUDY

The research set out her to

1. Analyze the trend of exports in the Nigeria economy.


2. Point out the roles of banks in export promotion and ultimate economic growth.


3. Present the prospects of Nigeria’s within and out side Africa


4. Make recommendation based on problems identified on how to full integrate and bring banks to participate full in export promotion in Nigeria.

1.4     SIGNIFICANCE OF THE STUDY

The study stressed that to achieve a meaningful economic growth, emphasis must be paced, on export promotion which is an aspect of economic diversification it goes to revel that banks have a lot to do in this area and that for banks activities be full exploited.

There must be increased awareness of their rules for the banks themselves, potential exporters and other agencies involved in the export business.

Secondly, there has to be a percentage of incentives from the from the federal government to attract the banks to this aspect of the economy lastly, there should be clearly defines laws guiding the operation of the banks and other economic units in transacting the export business.

The core significance of this study to point out the fact then banks, which are of immense importance in export business, are doing little in this direction and to present a carefully articulated range of services and ideas which is carefully adopted will help draw attention to those aspects of export development where achievement has been minimal and to stimulate new thinking and ideas on how to improve the welfare and of living of the populace through exports.

• HYPOTHESIS

The following propositions were formulated as the basis of this study.

1. Ho: most commercial banks in Nigeria do not engage in export promotion.

Hi      most commercial banks in Nigeria in export promotion.

2. Ho Potential exporters in Nigeria are unaware of the service available to then in Nigeria Banks.

Hi      Potential exporters in Nigeria are aware of the services available to them in Nigeria Banks.

3. Ho Banks to not have adequate branches to cater for the need f farmers I the rural areas.

Hi      Banks have adequate branches to cater for the needs of farmers in the rural areas.

4. Ho commercial banks are not receiving enough incentives form the federal government to encourage export promotion and the incentives to exporters are not being fully implemented.

Hi      Commercial banks receive enough incentives from the federal government to encourage export promotion and the incentives to exporter are being fully implemented.

• SCOPE AND LIMITATION OF THE STUDY

A general view of the roles of the banks in the growth of export promotion is the foundation upon which this research work is developed. However, particular emphasis is on commercial banks. This limitation is not intentional but necessitated by some factors such as time and finance.

It also entails a lot spending on transportation furthermore, during data gathering procedure. The researcher ran into problem of some bank officials, whose assistance was sort. They withhold vital information necessary for statistical analysis as regards loan sanction disbursement and out standing for the period of the study.  Also, getting enough information form their loan beneficiaries especially the small-scale industrial lists to confirm whether the banks gives then adequate attention received little response. Moreover, getting most required Journals as to promotion so we are constrained to use the available ones.

However, whatever may be the case, the limitation of the  study to only commercial banks has helped the project to attain the desired punch, since precision and quality can not be scarified at the expensive of quantify.

• DEFINITION OF TERMS

1. Economic growth: A rapid and sustained rise in real outp8ut per head and attendant shits in technological economic and demographic characteristics of the society.


2. Economic Development:- When an economy generate improved material will being and a reduction of elimination of mass poverty inequality and unemployment within the given society.


3. Documentary Credit: - This is an evidencing document being required in foreign transaction relating to import and export, products. Investment, or expand operation in order to reduce risk of bankruptcy.

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