Bill Sponsor: Sen. Abiru, Mukhail Adetokunbo (Lagos East) Bill Progress: Second Reading
In a significant move to bolster Nigeria’s export capabilities, the Senate of the Federal Republic has taken an important step aimed at amending the Nigeria Export-Import Bank Act, originally established under Cap N106 LFN in 2004 known as Bill SB. 599. With the current economic challenges facing the nation, the bill aims to reform the operations and governance of the Nigeria Export-Import (NEXIM) Bank to enhance its effectiveness in fulfilling its mandate as a national development institution.
One of the central objectives of the proposed amendment is to increase NEXIM Bank’s share capital, which has remained unchanged at ₦50 billion since its inception in 1991. The sponsor of the bill articulated a pressing concern regarding the insufficiency of this capital base, which currently equates to around $33 million. This enormous gap is evident when juxtaposed against other countries, like Ghana and Egypt, where similar export financing institutions operate with significantly larger capital reserves. By addressing this, the amendment aims to empower NEXIM Bank to compete on a more equal footing in the regional and global markets.
Additionally, the bill seeks to revise the governance structure of NEXIM Bank. The proposed amendments are designed to institute a more robust and effective framework that aligns with the bank’s critical role in Nigeria’s economic landscape. Better governance is anticipated to enhance accountability, drive strategic initiatives, and ultimately lead to improved performance in supporting export activities. By improving its decision-making processes and organizational oversight, the bank will be better positioned to respond to the evolving demands of Nigeria’s economy and the global export market.
NEXIM Bank has long been recognized as a key player in promoting trade and export for the Nigerian economy. Established by Act 38 in 1991, the bank serves as the nation’s Export Credit Agency (ECA). Its statutory functions encompass a wide array of support mechanisms aimed at enhancing the global competitiveness of Nigerian exporters. These functions include providing export credit guarantees, offering insurance facilities, and maintaining a foreign exchange revolving fund to assist exporters requiring essential raw materials for production.
Moreover, NEXIM Bank plays a vital role in guaranteeing loans that facilitate domestic trade with the potential to boost exports. As an entity jointly owned by the Federal Ministry of Finance Incorporated and the Central Bank of Nigeria, it has the unique mandate to mobilize resources for the promotion of non-oil exports, which are crucial for diversifying the nation’s economy away from oil dependence.
The need for such amendments has been spurred by the changing dynamics of global trade and an urgent call for Nigeria to enhance its export-oriented economic policies. With the global marketplace becoming increasingly competitive, Nigeria must equip its financial institutions with the necessary tools and capital to operate effectively and support its exporters adequately. This amendment is viewed as a strategic maneuver to strengthen export trade and transform NEXIM into a vital financial institution capable of fostering a resilient and export-driven Nigerian economy.
Senator Abiru’s sponsorship of the bill highlights a proactive approach to addressing previous constraints faced by NEXIM Bank. Through enhanced capitalization and governance, the bank can better serve its clients, who range from small and medium-sized enterprises to larger corporate stakeholders involved in the export sector. This approach will not only stimulate export growth but also contribute to job creation and economic development across various sectors of Nigeria.
As discussions surrounding the bill continue, it remains imperative for policymakers to engage with industry experts and stakeholders to ensure that the amendments truly reflect the needs of the market. Transparency and adherence to best practices in governance and capital management will be essential not only for the success of NEXIM Bank but also for fostering a favorable environment for export growth and economic development in Nigeria.
In conclusion, the Senate’s move to amend the NEXIM Bank Act is a significant step toward revitalizing an institution critical to Nigeria’s export ambitions. By increasing share capital and reforming governance structures, the bill aims to reshape the operational landscape of NEXIM Bank, enabling it to fulfill its vital role as a facilitator of economic development and an engine for growth in the Nigerian export sector. The road ahead is promising, and the outcomes of this legislative process could very well pave the way for a more robust and competitive export economy in Nigeria.
