UBA supporting economic growth through non-oil export financing

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*UBA House

Ime Akpan

There is increasing trend in the financing of non-oil export activities by Nigerian banks. The move is aimed at stimulating the production of non-oil export and facilitating the export of non- oil export goods and services thereby improving the country’s competitive status in foreign trade market.

Multinational pan-African financial services financial institution, United Bank for Africa (UBA), has been at the forefront of this initiative through implementation of measures that could increase regularly the amount of funds for non-oil export purposes.

In 2016, the Export-Import Bank of the United States (EXIM Bank) signed a memorandum of understanding (MoU) UBA for the purpose of expanding trade between the U.S. and sub-Saharan Africa at the World Economic Forum Africa (WEF) in Kigali.

The MoU was of general intent between EXIM Bank and UBA to promote the availability of EXIM financing of up to $100 million in the region.

Essentially, EXIM Bank and UBA pledged to work together to share information and develop export-financing opportunities in key sectors including commodities, agriculture and food products, spare parts, and large and small equipment purchases.

Under the MoU, EXIM Bank and UBA were to explore options for offering a range of financing solutions for American exporters and African buyers, including short and medium-term financing programmes that allow for flexible repayment terms and competitive insurance policies guaranteed by EXIM.

“EXIM Bank is proud to build on its decade’s long commitment to financing American exports to sub-Saharan Africa. This memorandum signals to American exporters and African businesses alike that there are many more promising opportunities to work together, and EXIM stands ready to provide the financing needed to turn more of those opportunities into realities,” the American financial institution said.

UBA has been ranked first in export banking among Nigeria’s deposit money banks for three consecutive years.

The deputy managing director of UBA, Mr. Muyiwa Akinyemi, said the bank has been a front row participant in facilitating export activities in Africa. What with its involvement in the $200 million non-oil export trade financing programme to bridge working capital requirements of SME/commercial exporters at concessionary interest rate and favorable collateral structure; provision of project and structured trade financing to enhance export capacities of manufacturing as well as commodity aggregators; setting up of dedicated export desks and an export manager for its business; the introduction of UBA Afritrade to facilitate regional trade and settlements that start and end within the UBA ecosystem across Africa; partnerships with export-focused agencies in Nigeria; being the pilot bank to African Continental Free Trade Agreement AfCFTA/payment and settlement system as well as facilitating regional trade payments across Africa. 

Going down memory lane, Aknyemi said the discovery of crude oil brought a shift that made Nigeria to majorly depend on the oil sector to the neglect of other sectors.

The development, according to him, made the economy susceptible to fluctuations in revenue, occasioned by the usual instability associated with the prices of crude oil in the international market.

However, he said successive governments have made differing efforts at diversifying the revenue sources of the economy by promoting non-oil export trade which cumulatively impacts on overall economic growth

“Export trade is as a veritable means for sustainable economic growth. It provides forex earnings and strengthens the balance of payments; encourages development of manufacturing capacity by export-oriented industries; job creation, research & development and increased government revenue through taxes, levies, and tariffs,” he said.

Akinyemi said the bank facilitated $1.34 billion in non-oil export volume in 2021, representing 31 per cent of the country’s total non-oil export volume for the year which stood at $4.38 billion.

He added that earning recorded in did not include informal exports largely in the wholesale trading in some sectors such as information technology, entertainment and solid minerals.

“Major items of non-oil exports including cocoa, cashew, sesame seeds, hibiscus, fertilisers/chemicals, tobacco, hides and skin accounted for 85 per cent of total export. UBA facilitated $1.34 billion (31 per cent) in non-oil export volume in 2021,” he said.

Speaking during the flag-off of the 2022 Lagos International Trade Fair, he said UBA facilitated $29.4 billion export trade finance for its customers across different regions of the world.

“We are focused on creating value, connecting and facilitating business across Africa and between Africa with the rest of the world. Already, we have done a trade of about $7.7 billion and export trade of about $29.4 billion as at August 2022.

He also noted SMEs are the bedrock of any country’s economic development adding that the bank pioneered products and services specifically targeted at SMEs and young entrepreneurs towards meeting their financial needs, having access to markets and building capacity.

“We match our words with action as we have supported hundreds of SMEs in Africa especially in countries where we have presence. UBA does this not only in the manufacturing and services sectors but also in the creative industry and Fintech,” he stated.

“On the pan African payment settlement system (PAPSS), a centralised payment and settlement system for intra-African trade in goods and services that is poised to transform the payment landscape across Africa.

“Because of our large network and pan-African presence, UBA is working with AfrEXIM Bank through the African Continental Free Trade Agreement (AfCFTA) to promote regional trade through harmonised trade documentation, easier access to finance and timely and easy currency conversion with the PAPSS platform,” he added.

Currently, UBA is at the forefront of collaboration in six pilot West African countries – Nigeria, Ghana, Sierra Leone, Guinea, Liberia and Gambia.

It is also leading in the CBN RT 200 programme across the five pillars namely value-adding exports facility, non-oil commodities expansion facility, non-oil forex rebate scheme, dedicated non-oil export terminal and biannual non-oil export summit.

The value-adding export facility is expected to provide concessionary and long-term funding for business people who are interested in expanding existing plants or building brand new ones for the sole purpose of adding significant value to our non-oil commodities before exporting same.

The non-oil commodities expansion facility is a concessionary facility designed to significantly boost local production of exportable commodities.

The non-oil export proceeds repatriation rebate scheme is a special local currency rebate scheme for non-oil exporters of semi-finished and finished produce who show verifiable evidence of exports proceeds repatriation sold directly into the investors and exporters window to boost liquidity in the market. 

Under the rebate scheme, exporters who are eligible would get a rebate of N65 for every $1 repatriated and sold at the investors and exporters window for other thirty party use, and N35 for every $1 repatriated and sold into import and export for own use on eligible transactions only.

Recently, the CBN governor, Mr. Godwin Emefiele disclosed that non-oil exporters repatriated the sum of $4.99 billion into Nigeria in 2022.

He said the 2022 figure was higher when compared with $3.19 billion repatriated in 2021.

“Of this amount, only $1.97 billion qualified for the rebate programme, while only $1.56 billion was sold at the investors and exporters window or for own use,” he added.

UBA said the treasury products and solutions for exporters, direct correspondent banking relationships within its network and collaboration with various export associations to advance their capabilities and provide financial advisory among others form parts of its mandate to promote domestic export drive through sustained earnings.

Recognition

UBA Plc is a leading Pan-African financial institution, offering banking services to more than twenty-five million customers, across over 1,000 business offices and customer touch points, in 20 African countries.

In 2021, the bank reaffirmed its leadership position across Africa, as it was globally recognised as the African Bank of the year 2021 by the Banker Magazine.

Its solid financial performance, excellent service delivery to customers as well as continuous role of facilitating rapid economic growth across the African continent, among others made the bank to be named best bank in 12 of its African subsidiaries and in Nigeria. UBA Nigeria Plc, UBA Benin, UBA Burkina Faso, UBA Cameroon, UBA Chad, UBA Congo Brazzaville, UBA Cote D’Ivoire, UBA Gabon, UBA Guinea, UBA Liberia, UBA Senegal, UBA Sierra Leone and UBA Zambia all came out top as the best banks in their respective countries.

It was not the first for UBA. In 2020, six of its subsidiaries in Benin, Cote D’Ivoire, Chad, Liberia, Sierra Leone and Zambia were winners of the Best Bank award.

In 2021 the UBA Group broke a record with its exceptional wins as African Bank of the Year and Bank of the year in 13 countries. The total 14 awards made it the first time ever in the history of close to 100 years of The banker, that any banking group hauled as many as 14 wins in a single year.

In 2022, the UBA Foundation was recognised as a leader in Corporate Social Responsibility at the 10th anniversary of the Marketing Edge brands and advertising excellence awards.

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