Project Abstract

Abstract
Export financing plays a crucial role in facilitating international trade and enabling businesses to expand their markets beyond domestic borders. This research project aims to investigate the role of financial institutions in providing export financing to businesses engaging in global trade activities. The study will explore the various financial products and services offered by financial institutions to support export activities, such as export credits, trade finance, export insurance, and working capital loans. The research will also examine the benefits and challenges associated with export financing for both financial institutions and exporting companies. It will analyze how financial institutions mitigate risks related to export financing through credit assessments, collateral requirements, and insurance coverage. Additionally, the study will investigate the impact of regulatory frameworks and international trade agreements on export financing practices. Furthermore, the research project will assess the importance of export financing in promoting economic growth, job creation, and competitiveness in the global marketplace. By providing access to affordable financing options, financial institutions play a vital role in supporting small and medium-sized enterprises (SMEs) to participate in international trade and seize new business opportunities. The study will highlight best practices and strategies employed by financial institutions to enhance access to export financing for SMEs and mitigate the challenges they face in securing funding for export activities. In conclusion, the findings of this research project will contribute to a better understanding of the role of financial institutions in export financing and provide valuable insights for policymakers, financial regulators, and industry stakeholders. By identifying opportunities to improve the effectiveness of export financing mechanisms and address barriers to access, financial institutions can strengthen their support for businesses engaged in international trade. Ultimately, enhancing access to export financing can drive economic development, foster innovation, and promote sustainable growth in the global economy.

Project Overview

.1  BACKGROUND AND OVERVIEW

The banking system had played a role in management of policy changes that ranges from advising assisting companies and individual on how to enter export markets through financing and handling shipping documents to collect of export proceeds. The role of financial institutions had thus that of a “catalyst” and a committed broker”. Generally, an exporter can meet his/her financial I need in a numbers of ways:

- Advance payment from the oversea buyer

- Credit allowed to him by his suppliers

- Internally generated fund

- Credit provided by the government of the country of the buyers.

Banks finance the major position of export transaction. The export credits given by banks to exporters is linked with various duration of the transaction. The stages are divided into per-shipment and post-shipment. The duration of the credits on the other hand are classified. As short medium and long term. Short-term ranges as short-term ranges from the period of 30 to 100 days. The medium-terms ranges from the period of 180 days to 5 years while the long-term is from 5 years and more.

The exporter needs pre-shipment finance for securing the raw materials and other input required for the execution of an export order and also to arrange for the shipment of the goods to foreign market. The credit is regarded as a loan or advance granted to finance the purchase, processing or packaging of goods on the basis of:-

a. Letter of credit opened in favour of the by an overseas importer of goods.

b. Issuance of warehouse warrants by accredited and rebated warehouse company. The duration provided by banks usually does not exceed 120 days – post shipment credit is a loan, advance or any other credit provided by the bank to an exporter of goods, from the date of extending the credit offer shipment of goods to the date of receipt of export proceeds within 60 days.  The main types of post-shipment are negotiation of exporting documents under letter of credit and negotiation of export bill drawn confirmed export contracts or order. It’s a part of government in a native to exporters the government established the Nigerian Exportant Bank (NEXM) which provided both long and short-terms credit through the commercial and merchant banks to support exports of non-oil product.

1.2   STATEMENT OF PROBLEM

It is regrettable that despite the finding and incentives mechanisms put in place by the financial institutions to stimulate growth of export, the contribution because of these low returns, the financial institutions face the risks of non-credits given to the exports several reason are attributed to this. First is the problem of policy instability: It is needless to formulate a policy on export will only last for a short time for examples the re-introduction of regulatory guideline in domiciliary accounts was disincentive to exporters. This was revised later by the Central Bank of Nigeria (CBN) circulation in September after much pressure. Presently, NEXIM only provides funds and transfers the risk to the other banks.Second is the problem inadequate equipment of information related to the importing country’s culture geography, population and wealth.This results in bringing low returns thereby increasing the risk being faced by the financial institution who finance them. The most serious of all problems is the Nigerian Businessman’s image through the activities of some of its citizen have developed negative business image both a home and abroad. The poor images includes the following:

Non-performance of contracts

ii.   Advance free fraud (419) (syndrome)

iii. Cheating

iv. Supply of poor quality products

v.   Manipulation of weights and document

vi. Production of lack products

1.3  OBJECTIVES OF THE STUDY

i. The modalities adopted by the financial institutions in assessing goods for export.

ii. To determine the different economic policies adopted by the government to support finance and their effectiveness on the export business

iii.To find out what extent to which export oriented industries are financed by the institution of Nigeria.

iv.To find out the problems encountered by financial institutions in export product financing.

v. To examine/determine the prospects of export finance in Nigeria.

vi.To make recovery on how to improve export financing.

1.4    SIGNIFICANCE OF STUDY

The study of this research topic will benefit the nation in the following ways:-

i. General Economy: It will help the nation in diversifying the foreign exchange and revenue base of the nation well as reliving pressure on the balance of payment.

ii. Exporters: Export-financing will go along way in helping Nigeria exporters to complete favourably with their international counterpart.

iii.Manufactures: With the introduction of SAP in 1986 many producers have been oriented into the system and hopefully manufactures of export oriented goods with the financial institutions incentives will improve their production potentials as well as produce large quantities for export purpose.

iv.Financial Institution: This project work will look into the problems and prospects of the institution in export financing and recommend ways to improve it

v.Research Students:   This project work will be a valuable work for student who may carry out similar research work in related field for reference purpose.

1.5  DEFINITION OF TERMS

i. Foreign Exchange:    This is the currencies of other country reserved in a given country.

ii. Balance of Payment: This is relationship between a country’s receipt of payments and a country’s payment to other countries.

iii. Export-Oriented Goods:       These are goods produced with a sole intention of exporting them to their countries in order to generate foreign exchange.

iv. Pre-Shipment and Post-Shipment:  This is a loan or advance or any form credit before and after the shipment of goods to the date of receipt of export proceeds within 60 days.