THE IMPACT OF EXPORT FINANCING PROMOTION ON NIGERIA ECONOMIC GROWTH (1997-2014)

CHAPTER ONE

INTRODUCTION

1.1          BACKGROUND OF THE STUDY

The growth of any economy is a function of the quality and quantity of goods and services it produces. There is always a tendency to produce and market to earn a living. In the wider society, the quality of life enjoyed very much depends on the quality of goods and services available to the citizenry. There is the development aspect of growth that enables equitable distribution. This entails getting products from one part to the other

According to Shaw (2000) Although, they would have been on laudable if punctuated gain were made on whole, the aims were not adequately achieved due to the fact that they were little short-sighted in the overall articulation and pursuit of the scheme in the euphoria raw materials and intricate in goods, will come from.

First, Nigeria export up till the mid 1990 was determined by agricultural products which contributed over 60% and 70% of the country and Gross Domestic Product (GDP) and export earnings respectively. The country status hen was that of a leading third world export of agricultural products. But with the increased flow of oil dealings primary prices in the world market export earnings declined For instance, agricultural products as a percentage of total exchange exports fell from a high point of over 70% in 1964  to less than 4% in 1980. the decline in its contribution to GDP was however less dramatic.

According to Mckinnon (1999) However, the structural adjustment programme (SAP) introduced in 1986 was strategic for revamping Nigeria economy. There is no gain saying that the fact that the economy over dependence on oil exports has necessitated a fundamental disequilibrium in the country’s balance of payment and in the nation’s economic structure.

The second tier foreign market (STEM) decree, the conduct of the foreign exchange market itself and the relation of regulation governing export procedures and earnings relative which both export and bankers now find export business relatively more lucrative especially with the obvious short supply of hard currency in the foreign exchange market. (STEM) and the increase in naira value of foreign exchange earnings.

According to Adeniyi (2006) Aided by the indigenisation decree of  the 1990s and measurable-perfectionist policies industries mushrooms all over the place like all good things, we did not know when to stop or take stock in order to optimize our benefits the scheme was, over flogged and by the time the oil glut reared its ugly lead and the foreign exchange earnings became increasingly bothersome.

It is not the researchers intention to expand to merits or demerits of the entire substitution strategy but suffice it to say that the present will certainly not see us through the present and future challenges in 1986, panels which were set up to make recommendations on the reorganization of the Nigeria export promotion council {NEPC} and the designing of export document, state that in order to stimulated public awareness or export promotion throughout the country, banks should be involved because of their networks of branches home and abroad. they also observed that banks are much aware; tend to be more responsive to economic policies of governments than most other sectors of the economy. Following this observation. the central bank issued guidelines which commercial and merchant banks are expected to adhere to very strictly. Suffice to say that the banking and monetary policy guidelines for 1986 stipulated that all their branches in the country participated in export and import monetary transaction.

According to Ademu (2006) The bank have since been asked to provide the Nigeria exporters with export promotion service. The research work is therefore to look at contribution of banks in non-oil export, their expected role, what factors affect their performance and related questions are the focus of the study.

1.2 STATEMENT OF THE PROBLEM

Export finance is been consciously encourage by government while it is also becoming highly competitive within the banking industry, bankers are encourage to finance exporters to exchange just as many carrots are being dangled before then to enhance export practice and value exchange from non-oil source.

The relative of our present economic crisis have make a fundamental structural adjustment of the economy inevitable. Export promotion appears to be a potent tool in the restructuring agenda and it is capable of turning round the economy to an exporting led strategy with the long term objective of achieving industrialisation and balance growth.

1.3 OBJECTIVE OF THE STUDY

The main objective of this study is to identify the impact of export financing promotion on Nigeria economic growth. The specific objective include:

• To know what extent bank are contributing to government objective of achieving a self-reliant economy and also examine the role towards the objectives.
• To know whether government policies and affect the banks in participating in export financing promotion activities.
• To create an awareness of the impact currency value fluctuation had on the amount of fund-mode available for enhancement of export related activities.
• To determine the financing options and available to exporters.
• To contribute to the already existing infrastructure.

1.4 RESEARCH HYPOTHESIS

The hypothesis that Would be tested in the course of this is stated below as:

Ho1:   There is no significant relationship between export promotion and Nigeria economic growth.

Ho2: Total banking export credit does not have positive significant impact on non-oil export in Nigeria.

Ho3: Non-Oil Export does not have positive significant impact on Nigeria’s gross domestic product.

1.6 SIGNIFICANCE OF THE STUDY

It is hoped that the findings of this study will help finance to appreciate the impact their role have on the economy. The study will help exports adopts better strategies as to the time they will go in for financial aid or assistance form export finance.

The study will help export to know the financing options and incentives available to them. The study will help monetary authorities to know the implications of the policies on exports financing.

1.7 SCOPE AND LIMITATIONS OF THE STUDY

One area of limitation is the  constraints imposed by limited finance and time to carry out this research. Another area of limitation is that caution  should be taken when generalizing the finding of this study because only the non-oil exports that participated in the international trade fair held in Enugu(30th March to 9th April, (2004) was useful and bank in rivers state as well as few others that participated in the trade fair.

1.9 DEFINITION OF THE STUDY

• Banks exporting finance: Refers to all credits available to the Nigeria export, it could be pre-shipment or post.
• Shipment financing: pre-shaping financing is the type of credit require to facilitate production processing or packaging of export up to a point at which they are placed on board the ship or any means of transportation on the other.
• Export Promotion: this require to measured employed by banks to create awareness to, export of the financial service available to them for instance, through exhibitions trade fairs and organisation seminars.
• Money Supply: for the purpose of this research, the definition of money will be used. by definition money is the amount of currency notes or coins in circulation outside bank deposit plus demand deposit it should be noted that this definition is sine qua-non to central bank of Nigeria definition of money supply.
• Naira Fluctuation: this is defined as the operationally as the naira/dollar exchange over period of time.