ROLE OF BANK EXPORT PROMOTION FOR ECONOMIC GROWTH
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ROLE OF BANK EXPORT PROMOTION FOR ECONOMIC GROWTH
ABSTRACT OF BANK EXPORT PROMOTION’S ROLE IN ECONOMIC GROWTH
The establishment of a bank is not mandated by law, but should be viewed as a step to urge the organisation to benefit from employing and using economic and social amenities. The purpose of this research was to determine the role of banks in export promotion for economic growth in Nigeria.
Highlighting the numerous roles that commercial banks have played in helping Nigeria match for growth and development in export promotion, this study focused on the bank’s general operations, historical structure, and history in order to provide an effective and accurate assessment of the bank.
The study remands the objectives and function of the bank in export promotion and appraises its performance, as well as exposes its shortcomings and makes recommendations for the study’s contents, where the sources are mainly secondary data.
The Nigerian economy is currently in a state of crisis. Because of the economy’s over-reliance on export commodity oil, the price of crude oil dropped dramatically in the international market. This was reflected severely in the amount of national income, resulting in negative balance of payment concerns.
The primary goal of this research is to discover how banks can aid in the promotion of exports and the stimulation of economic growth. The federal government has taken liberal measures to modernise the banking system’s structure, and more banks are being licenced to engage in commercial and merchant banking activities.
The federal minister of finance has established a discount window for export financing, and an export credit guarantee and insurance scheme is being developed to encourage export financing.
In particular, the federal ministry of finance has been designated as an autonomous institution, and banks are now permitted to take equity stakes in small businesses.
CHAPTER ONE: THE ROLE OF BANK EXPORT PROMOTION IN ECONOMIC GROWTH
1.1 BACKGROUND OF THE STUDY
The topic “the role of banks in export promotion for economic growth” discusses the major challenges in Nigeria’s business export trend, the role of banks in the development and promotion of export table goods and services, and the contribution of banks to overall economic growth.
The term “export promotion” refers to all of the services given by the banking and non-banking sectors to facilitate the promotion of goods and services outside of the country.
Nigeria has reaped significant benefits from international trade in foreign commodities, but capital and consumer items that were not produced in the country were acquired and paid for using Nigeria’s export revenues.
George O Niyi national concord market for Nigerian export commodities June 13 1986 p.6. The significance of export promotion, particularly in Nigeria, cannot be overstated. Following the discovery of oil in 1965, it gradually came to dominate the export sector, and oil became the single most important item of export.
According to figures released by the federal office of statistics, total exports from the country in the first half of 1995 totaled approximately 316,38.49 billion, with petroleum products accounting for 14,365.9 billion. In percentage terms, oil exports represented 90.5 percent of total exports, while other items accounted for a negligible 9.5 percent.
As of 1979, oil accounted for about barrel day at 20.10 dollar per barrel, and the economy was 96% reliant on oil earnings as a source of foreign cash. However, the revenue from oil was never reflected in proportion to the extent of job creation and other preferred multiple or linkage on the economy.
Soon after, the price of oil began to declare as a result of the American International Agency and other manipulation of the Organisation of Petroleum Exporting Countries (OPEC)oil glut quota sales and continuous price decline because the other of the day within five years (1981-1986).
The price of oil went from an all-time high of forty dollars to an all-time low of eight dollars. Banks play an important part in export payment. This refers to export payments and the general settlement of overseas transactions.
1. The exchange of foreign currency bills
2. The draught from the bank
3. Documentation and credit essential to open a credit account with a bank in the exporter’s nation.
4. Telegraphic transfers, which enable bank deposits to be sent quickly from the importing bank.
All of the listed payment methods are served by a bank as a primary intermediary. Nigeria’s federal government took several special initiatives to promote exports in the country.
Some examples are
a. Refund of import duty paid on a raw material utilised in the production of commodities destined for the export market.
b. Refund of excise duty on domestic manufactured goods exported.
b. Exemption from import licence for raw materials required for export products.
d. Liberalisation of raw material import licences necessary for export products.
a. Removal of the export prohibition imposed in Finance Act No. 2 of 1981, except for commodities prohibited from exportation.
f. Implementation of export credit guarantees in insurance sinecure The most recent export incentive package was implemented in 1986.
Currency intention scheme: The authority to keep foreign exchange earnings has been reduced from 25% to 10%. The scheme permits the exporter to keep foreign proceeds in foreign currency and to utilise a portion of the money for expenses related to export activities that have been officially certified by authorised dealers.
Export growth grant: This provides a monetary incentive to exporters who have exported at least $50,000 (fifty thousand) in semi-manufactured product to support expansion, diversification, and so on.
Tax breaks on interest income: This encourages banks to make loans from this initiative. Interest on loans for export activity will be free from specific percentages of tax.
Export development fund: This fund provides financial help to exporters in order to reduce some of the early costs associated with export promotion operations.
A duty draw back scheme: On application to the duty draw back committees, exporters are entitled to a 50% reimbursement on import duty levies, sub charges, and other charges paid in respect of all import duties, including raw materials utilised in export manufacturing.
To qualify for this facility, the actual exportations of the product from the imported input must be computed with eighteen months of importation data.
Three key business objectives have been identified in Nigeria’s numerous economic growth strategies.
1. Diversification of the content of export items, particularly agricultural products, as well as processed and manufactured goods.
2. Increased trade friction diversification
3. Increase in the monetary value of export procedures.
How these objectives have been met satisfactorily in any of the plan periods is one of the reasons for the need for banking services, and more encouragement in the form of incentives must be given to banks in order to stimulate their interest in export promotion, specifically some of the problems attainable in the export sector as highlighted in the fourth national development plan are as follows.
Coca did better than expected among the key export commodities. Other crops, such as groundnut oil, were completely removed off the nation’s export list, while many others, such as Timba Logs Plywood, plan Kernel, and groundnut cakes, were mere shadows of their former selves.
The performance of the marketing brand system, on which hope was placed to revitalise the country’s dwindling agricultural exports, appears to be made even more critical when it is realised that Nigeria is experiencing a fall in both mineral and agricultural output.
It is anticipated that by the late 1990s, Nigeria will not be able to export as much oil as it does now since domestic demand would have increased by 1.5 million to 1.9 million barrels per day.
Learning a reduced small quantity for export produced items is still in its infancy, and agricultural output is still declining, and most critically, our central nervous system oil is confronting a global oil glut catastrophe.
1.2 STATEMENT OF THE PROBLEMS
The country is currently tasting the bitter pill of economic setback caused by over-reliance on one export commodity, oil. No country can achieve meaningful economic prosperity by producing solely for the domestic market, and no highly developed country can maintain a high growth rate if it ignores export.
Export promotion and development I am one of three components of development as it is currently practised through industrialization.
The other two facets are mini 9000 import substitution and will run out by the end of this decade, making it imperative that our export potentials be fully exported and that the bank’s role in export promotion be discovered and properly implemented.
1.3 STUDY GOAL
The goal of this investigation is to
a. Examine the export trend in relation to the Nigerian economy.
a. Emphasise the bank’s role in export promotion and, ultimately, economic growth.
c. Outline Nigeria’s export opportunities both within and outside of Africa.
d. Make recommendations based on the identified problem on how to fully integrate the bank and get them to fully engage in Nigerian export promotion.
The study emphasises that in order to achieve meaningful growth, emphasis must be placed on export promotion, which is an expectation of economic diversification.
It goes on to reveal that banks have a lot to do in this area and that in order for the bank’s activities to be fully exploited, there must be increased awareness of their rules for the bank’s potential exporter and her agencies involved in the export business.
It is also important to note that there must be a package of incentives from the federal government to attract the banks of the aspect of the economy.
The crux of the study is to emphasise that the banks, which are extremely important in the export business, are doing little in this direction, and to present a carefully adopted will revalued this poor situation.
1.4 THE IMPORTANCE OF THE STUDY
This study is significant because of the benefits of good export promotion for economic growth. Export promotion helps to determine the function of banks in export business, and the role of this is an effective and efficient performance.
This research report will be of great benefit to the bank who will gam a lot the role or the export promotion is beneficial on their own side the implication is a harmonious working environment synonymous with efficiently and effectiveness similarly the school as a whole and other export in the Nigeria economy will benefit it.
It is also crucial since the discovery and following recommendations would be of considerable benefit to the problem identified in this research.
1.5 DEFINITION OF TERMS
Economic growth is defined as a quick and continuous increase in real output per person, as well as changes in a society’s technological, economic, and demographic aspects.
Economic growth occurs when an economy provides increased material well-being while also reducing or eliminating inequality and unemployment in the given community.
Commercial banks: These are financial institutions that take and store money and other valuables.
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