THE ROLES OF UNIVERSAL BANKS IN INTERNATIONAL TRADE FINANCING IN NIGERIA
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THE ROLES OF UNIVERSAL BANKS IN INTERNATIONAL TRADE FINANCING IN NIGERIA
INTRODUCTION
BACKGROUND OF THE STUDY
International trade is the exchange of products and services among nations, including between businesses and people with homes in several nations. In addition to allowing a country to produce the commodities and services for which it is most equipped,
depending on its natural resources (such as rich land, mineral resources, and climate), the interchange of goods and services through international trade also allows a country to develop.
Acute domestic shortage that must be resolved by imports (perhaps due to low harvest, draught, etc.). Therefore, it has been asserted that there is no gain in talking about global trade.
The natural world cannot sustain itself. They rely on one another to supply each other with what they lack. Nature therefore trades what it has for what it lacks.
Bilateral or multilateral trading is possible internationally. If a trade is bilateral, it means that only two nations are involved, as when Nigeria trades its crude oil with Britain.
When a trade is multilateral, which implies it involves more than two countries, Britain offers her manufactured commodities to Nigeria, such as building materials, tyres, groceries, and other items.
Trade may occur between the United States, Nigeria, Switzerland, and India. Trade may be material or immaterial. Intangible products, such as shipping, banking, and insurance, are invisible while tangible goods are physical or apparent.
Since agricultural products are used to finance the immediate post-independence development programmes due to this, Nigeria has been at the forefront of exportation of goods and services following the discovery of crude oil since the country’s attainment of independence.
The oil sector currently accounts for over 90% of the country’s Gross Domestic Product (GDP). It is interesting that economic Plaines had minimal knowledge of export promotion and funding, and that their operations were restricted to a variety of agricultural products and were entirely funded by the marketing board.
Import substitution served as the main tenet of industrialization policy in the industrial sector. The policy’s primary goal was to protect weak manufacturing sectors, substitute imported goods, and thereby preserve foreign exchange.
The global economic depression may have contributed to the current financial situation. The mono-product nature of international trade was the cause of the decline in our export.
Due to our leaders’ misplaced priorities and the civilian administration’s wasteful spending habits, which were brought on by our long-standing financial illusions, we experienced problems with unemployment, low service and product quality, and balance of payment issues.
As a result of these issues, the nation eventually realised the need to look outside of the oil industry in order to increase exports and earnings. This is why the Nigeria Export Promotion Council (NEPC) was established.
To reduce the disparities between exporters and importers, the Nigeria Export and Import Bank (NEXIM) and the Nigeria Association of Exports (NAE) were founded.
Restructuring and diversifying the economy’s production base in order to lessen reliance on oil and imports was one of the main specified goals of the structural adjustment programme (SAP) that was initiated in 1986.
The government issued the Export Incentive and Miscellaneous Provision Decree, which was intended to boost the exportation of non-oil items from the country, in a strong effort to set the groundwork for the promotion of non-oil exports.
With the launch of the second-tier foreign exchange market (SFEM), Nigerian non-oil export marketing became more aggressive, and banks were expected to alter their export financing practises.
Without a question, the high prices brought on by the new exchange rates have played a significant role in supporting the agricultural sector, which offers significant potential for increasing agricultural production, particularly for export.
Major agricultural products have seen an increase in price since the adjustment began. The history of banking thus gradually expanded and significantly contributed to funding the companies’ product marketing.
The universal bank provides lending, accepting deposits, bill discounting, and exchange transactions to suit the needs of the general public, the government, and society at large.
Providing working capital needs, short-, medium-, and long-term loans, foreign currency transactions involving letters of credit, document collection, etc. are just a few of the services offered.
The letter from the bankers has expanded to include corporate services in addition to banking services. Banks provide a variety of corporate financial services,
including capital raising, loan syndication, equipment leasing, forfeiting acceptance credits, and the availability of bonds, guarantees, and indemnities. In this way, the history of international trade finance in Nigeria can involve banks as an integral aspect.
OBJECTIVE OF THE STUDY
It is a well-known fact that export promotion is necessary to make Nigeria’s economy export-oriented and ensure trade balance, but importation cannot be completely discouraged because some goods (such as highly duty-charged machinery, chemicals, etc.) must be imported in order to facilitate the production of goods for export.
This project will examine the roles played by the universal bank in the development of export and import of goods and services in order to highlight the factors or risks that prevent the maximisation of the objectives or gains resulting from international economic activities.
It will also consider potential solutions to these important budget issues, as well as the trade facilities and incentives put in place by the government to support international trade.
STATEMENT OF THE PROBLEM
The following will be analysed in order to further our understanding of the Nigerian economy.
That the value of a country’s currency affects international trade.
That interest rate concerns will have an impact on highly international trade financing.
That the countries in question’ exchange regulations have a significant impact on financing global trade.
These inflation rates and other variables have a significant impact on the financing of international trade.
That the banks are impacted by international trade financing.
That funding for international trade should be promoted.
SIGNIFICANCE OF THE STUDY
This study will go a long way towards highlighting the significance of international trade financing to the general public, importers, and exporters. To do so:
Replication will be ensured and made easier by the research.
It will inform both the general public and students about the range of services available to them in international trade financing.
The general public, importers, and exporters will learn about the many hazards associated with international trade as well as how to use these incentives and facilities.
It will broaden the public’s horizon in addition to adding to the library’s extensive collection of resources.
In order to expose the key details of international finance activities and conduct a systematic assessment of the skills necessary for an ideal finance manager to be entrusted with the full scope of an enterprise’s foreign operations, it will cover the key aspects of international finance in perspective.
DELIMITATION AND SCOPE OF THE STUDY
Delimiting the study’s scope from the start is essential. The importance of international finance, factors affecting the financing of international trade and potential remedies,
the roles of universal banks in financing international trade, currency transfer mechanics, methods of setting up international transactions, and interbank financial instruments will all be carefully considered in the research work.
LIMITATIONS OF THE STUDY
In order to facilitate foreign finance, the government provides incentives and facilities, and the researcher aims to have a broad overview of these during the course of the study. The following research was conducted as part of this study:
TIME: The researcher’s limited time, which he must also use for alternatives like daily lectures and extracurricular activities, greatly affects his or her capacity to obtain the materials and information required for the research project.
Due to financial difficulties the researchers encountered, they were unable to obtain all the essential materials. FINANCE: It is the economic driving force behind any endeavour.
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