As of FY 2021, United Bank for Africa (UBA) Plc led all Nigerian deposit money banks (DMBs) in export banking, facilitating $1.34 billion in non-oil export in just that one year. This represented 31% of all non-oil exports in 2021, which was a record high compared to 2019.
This comes on the heels of the bank’s comprehensive export financing plan meant to promote local production and diversify the sources of foreign exchange revenues.
This information was presented at the recently concluded annual conference of the Finance Correspondents Association of Nigeria (FICA), which was held in Lagos under the theme “Boosting Domestic Capacity for Sustainable Export Earnings,” by the bank’s Deputy Managing Director (DMD), UBA, Muyiwa Akinyemi.
Akinyemi discussed some major interventions that UBA has started to support domestic export in line with the diversification strategy of the Nigerian economy in his presentation titled, “Boosting Domestic Capacity for Sustainable Export Earnings – UBA Perspective.”
Akintyemi said UBA, unlike some of its sluggish peers, embraced the export financing initiative with unusual commitment and speed despite escalating challenges. He noted that the bank had started taking concrete steps to speed up its export financing scheme in line with the Central Bank of Nigeria’s (CBN’s) RT 200 FX scheme.
One of these is a $200 million non-oil export trade financing program the bank created to bridge the operating capital needs of SMEs and commercial exporters at a low interest rate.
He added that the bank had created an advantageous collateral structure, offered project and structured trade financing, and increased exports.
He claimed that in 2021, the top 200 non-oil exporters controlled over 95% of the industry’s volume, or US$4.2 billion. He also mentioned that UBA facilitated $1.34 billion, or 31% of that volume, in non-oil exports during the 2021 fiscal year, making it the top export bank in Nigeria and the top export bank for three years running.
The following were listed by Akinyemi as the main initiatives the bank undertook to support the local export drive.
These include the provision of project and structured trade financing to increase the export capacities of manufacturing as well as commodity aggregators, and a US$200 million non-oil export trade financing program to bridge working capital requirements of SME/commercial exporters at concessionary interest rates and favorable collateral structure.
Others include UBA Afritrade, which enables regional trade and settlements that begin and end within the UBA ecosystem across Africa, and Dedicated Export Desks, which allow us to lead the charge of our export business arrangements.
Strong Partnerships with Export-Focused Agencies in Nigeria CBN/NEPC/NIRSAL are also mentioned, as well as “Pilot Bank to AfCFTA/PAPSS to Facilitate Regional Trade Payments across Africa, Beginning in 5 Countries (Nigeria, Ghana, Guinea, S/Leone and Liberia)”.
The bank manager said, “Creating Market Access for exporters across our 23 other Countries in Africa, the USA, Europe, & UAE.”
According to the DMD, who went on to further, UBA is a “Leading Partner Bank on CBN RT 200 initiative across the 5 pillars anchored on Operational Efficiency as it pursues Robust IT platform to facilitate registration of NXPs, payment of customs, and associated levies.”
On the bank’s list of ways to support the domestic export drive through sustained profits are “Treasury Products & Solutions for Exporters, Direct Correspondent Banking Relationships within the UBA Network and Collaboration with Various Export Associations to Advance Their Capabilities & Provision of Financial Advisory, amongst Others.”
Akinyemi identified a number of obstacles to expanding domestic export drive, including widespread insecurity, notably in industrial areas; a lack of skilled labor; a limited export capacity; a high cost of transportation; and inadequate access to funds/high interest rates on commercial bank loans.
Other issues include the lack of a formal framework for the distribution of export goods, crumbling road systems, a rail system that is insufficiently functional, high electricity prices despite insufficient supply, excessive regulation and overlap in government agency responsibilities, and high technology costs.