As widely known, a vibrant export game is almost directly equal to increased foreign exchange reserves. however, lack of funds is a major issue for exporters who produce from Nigeria. Commercial banks (DMBs) are often unwilling to lend for export transactions, especially at the pre-shipment stage, due to the relatively high risk of default.
NEXIM, an acronym for Nigerian Export-Import Bank, was established by Act 38 in 1991 to cater for exporters and importers’ businesses as an Export Credit Agency (ECA). With a headquarters in Abuja and 7 strategically positioned branches, NEXIM has been fulfilling its assigned roles in facilitating exports and imports of goods and services for indigenous companies since inception.
Without much ado, this article exists to inform its readers about the main functions of NEXIM, as well as highlight the types of funding/loans it provides.
Functions of NEXIM Bank
The statutory functions of the Bank include providing finance, risk-bearing services as well as trade and market information, and export advisory services to the Nigerian export community.
- Maintain a trade information platform to overview export business
- Provide export finance
- Maintain a foreign exchange fund, to import foreign inputs used for export production
- Provide export credit guarantees
- Create and manage funds for exporters
- Provide both domestic and global export insurance facilities
How to Qualify for Nigerian Export-Import Bank (NEXIM) Loan
Simply put, all companies that engage in export-related operations are eligible for NEXIM loans. Any activity funded by NEXIM must result in the export of products or services.
NEXIM’s lending may be in two (2) ways: lend to obligors directly, or give a corresponding bank the mandate to lend to the loan applicants. In addition to NEXIM’s lending requirements, some banks may add their own conditions to lend.
How to Apply for a Nigerian Export-Import (NEXIM) Bank loan
- Directly: Whereby the applicant applies for financing directly to NEXIM. In this respect, all documentation requirements are submitted directly to NEXIM Bank. If the application is successful, the Bank administers and monitors the facility directly.
- Through commercial Banks: This allows NEXIM to take advantage of the extensive coverage offered by the banking system to reach all eligible exporters. As such, exporters applying for facilities are required to submit relevant documents to their chosen banker. Upon a successful application and acceptance of the offer, the commercial bank administers and monitors the facility and updates NEXIM on the facility regularly.
The easier way to apply for a NEXIM loan is through a commercial bank. These, below, are NEXIM bank loans requirements:
- 3-year cash flow projection
- Company profile
- Records of past/running projects
- Project plan
- Certificate of Incorporation documents
- Nigerian Export Promotion Council (NEPC) Certificate
- Audited financials/management accounts
- Tangible collateral e.g LM on property (most banks request for this)
- Other bank’s 12-month statement
Types of Funding Available Through NEXIM
Local Input Facility
The Local Input Facility NEXIM scheme are Naira funds disbursed solely to be used locally (in Nigeria). This fund is used ONLY to set up equipment, facilities, projects, factories, and so on that will eventually be exported from Nigeria. The disbursement is done, inherently, through collaborating Nigerian banks.
For working capital, the given repayment period is 12 months only. However, project-related facilities may have a tenor of 36 months or more.
NEXIM loans disbursed in this category are not allowed to be exchanged to any other currency – it is strictly to be used to source materials locally. Moratorium period and rates are handled on a per-case basis, hence, the obligor must prove that they require a moratorium period and also justify the desired rate.
Again, the core credit appraisal is left to the collaborating bank to deal with – in a very detailed manner, as they would do if it is their own fund.
Foreign Input Facility
This funding type is given to procure foreign inputs – as the name implies. This loan type is given in foreign currency only because they are used to import goods – that must be used to purchase and bring machinery/materials, spare parts, packaging machinery, capital equipment, and so on abroad and bring it into Nigeria to facilitate the production of the goods to be exported.
To enjoy this funding, the exporter must send in an application to their bank, who in turn forwards it to NEXIM for necessary action.
Interest rates and tenor are very flexible, leaving good room for a moratorium which could be up to 2 years.
However, foreign input facility has its eligibility standards – the local value of your products must meet and exceed 50% of the exporter’s entire output.
Term Loan Facility
NEXIM, through Deposit Money Banks (DMB), provides direct loan facilities to exporters to facilitate import projects.
Just like DMBs, these credit facilities can be short or long-term. Monthly or quarterly repayment schedules. Fixed or fluctuating interest rates. The loans are available in both local and foreign currencies. NEXIM funds can be used to finance working capital or purchase machinery required ONLY for the export business. Most banks will ask for tangible collateral.
Basically, NEXIM makes the funds available to the collaborating bank but mandates the bank to do their due diligence using an extensive credit appraisal system, as they would do if it is their own money. After the credit appraisal, the bank forwards its recommendations to NEXIM Loans/Credit Appraisal Team for approval. So, if you are aiming for a NEXIM term loan through your bank, be prepared to scale through a rigorous appraisal system.
ECOWAS Trade Support Facility (ETSF)
This Facility is designed to improve the flow of trade from Nigeria to the sub-region, enhance price competitiveness and deepen the regional payment system. It involves the granting of a Line of Credit or a Guarantee to facilitate the purchase by an ECOWAS importer of Nigerian Goods.
Nigeria Creative Arts and Entertainment Industry Loans
Specially designed for the creative and performing artists in the fields of filming, music, fashion designing, broadcasting, visual artistry, poetry, and so many more, the essence of this scheme is to make sure that the creative and entertainment sectors grow and develop in an organic manner. To ensure this, the access to funds is made seamless.
NEXIM aims to improve the quality of services given, generate jobs for the youth, build wealth, attract global investment, and extend Nigeria’s export capacities through the export of intellectual property and services.
This Creative Arts and Entertainment Industry Loans Scheme is available to ALL indigenous Nigerian companies in the creative and entertainment industry.
Tenors can span up to 5-7 years. Moratorium period and rates are handled on a per-case basis, hence, the obligor must prove that they require a moratorium period and also justify the desired rate.
Export Credit Guarantee Facility (ECGF)
This facility ensures exporters against the risk of non-payment by buyers where such default is ascribable to commercial/economic causes. Payment defaults due to political reasons are covered separately by NEXIM for the account of the Federal Government of Nigeria.
ECOWAS Inter-State Road Transit Scheme (ISRT)
In line with ECOWAS protocol on the free movement of persons, goods, and services, NEXIM was appointed the National Guarantor under the ECOWAS Inter-state Road Transit Scheme to guarantee goods transiting Nigeria to other ECOWAS countries. The scheme, which is designed to promote the free flow of goods among member states, seeks to eliminate the time-wasting escort system and diversion of goods consigned to specific destinations in the ECOWAS sub-region.
Women and Youth Export Facility (WAYEF)
The Women and Youth Export Facility was developed by NEXIM to assist women and youth participate in the export value chain (oil and gas excluded).
If you are a woman, or a young adult between ages 18 – 35, this NEXIM loans scheme is for you. NEXIM seeks to improve women and youths’ access to credit and, as a result, enhance national industrialization for value-added exports. Jobs and money are likely to be created as a result of the process, with the added benefit of the economy diversifying away from oil and gas.
Eligible entities may include registered businesses, trade organisations, NGOs, and so on.
A single obligor has access to N50 million. A borrower here is expected to bring a minimum of 20% equity contribution while NEXIM provides a maximum of 80% of the funds required for said project.
Loans may be tenured at 12 months maximum, whereas moratorium periods are subject to appraisal discretion. The interest rate for the WAYEF scheme is 9%.
Small and Medium Enterprise Export Facility (SMEEF)
For SMEs and MSMEs (excluding those in oil & gas) who produce value added goods that are eventually exported, SMEEF scheme exists to support the export value chain through industrialization and efficient production.
In the global market, things are evolving by the second. It is very easy for Micro, Small, and Medium companies to get left out especially if they do not have the means to bear the heavy costs of the changing markets. SMEEF steps in to empower these companies to be able to compete with similar companies worldwide.
This scheme inherently improves their productivity, packaging game, and efficiency of their final products on the international stage.
Asking yourself how do I apply for a SMEEF loan? The best bet is to approach your bank account officer for proper guidance. To be eligible for the SMEEF scheme, your goods must (of course) be made in Nigeria – SMEEF scheme can be set up to finance working capital. However, if you still have to import some parts/materials required for your own production, the SMEEF can be used as well.
For working capital, the loan tenor may be set at 12 months only. Moratorium may be up to 2 years, and interests may be set at 9% per annum.
Stocking Facility (SF)
Popularly called “SF”, the Stocking Facility at NEXIM was created primarily to assist manufacturers with major funds needed in hand to buy local raw materials to keep.
This scheme makes sure that seasonal raw materials are supplied ahead of time in order to maintain the highest level of production throughout the year.
Only available in Naira, the SF loan has a maximum tenor of 12 months (1 year). The interest rates are set anywhere around 13% – 18%. Major DMBs are allowed to collaborate with NEXIM loans on this scheme.
NEXIM-managed funds are funds that are in NEXIM’s ambit but are not originally NEXIM’s funds. Usually, these funds belong to other government bodies like CBN, DBN, BOI, and so on. I will only make honourable mentions of these funding types.
- Nigeria-Africa Trade and Investment Promotion Program (NATIPP)
- Export Development Facility (EDF)
- Rediscounting and Refinancing Facility (RRF)
FAQs on NEXIM Bank
Who owns NEXIM Bank?
The Bank is 100% Government owned and has an authorised share capital in which Federal Ministry of Finance Incorporate (MOFI) and the Central Bank of Nigeria (CBN) have equal subscriptions to.
What is the advantage of borrowing from NEXIM over commercial banks?
NEXIM operates as a development finance Institution (DFI) with the main objective of developing the high growth sectors of the economy. The Bank plays a complementary role to commercial banks and unlike commercial banks, NEXIM does not accept customer deposits.
NEXIM’s services are targeted at the export sector, and they are known to shoulder more risks than most commercial banks when lending to customers.
Which banks has NEXIM selected to partner with?
NEXIM disburses loans via all licensed banks.
How long do NEXIM loan applications take?
4 – 12 weeks.
How do I contact NEXIM Bank?
You should seriously start thinking about taking a NEXIM loan if you are an exporter in Nigeria. NEXIM Bank is duly owned by the Finance Ministry and CBN, hence, they are so robust that they are not scared of extra bite of risk. Besides, as long as they are out to make profit, NEXIM bank are still lax on interest rates. The welfare of exporters, I believe, is also their priority – hence, the roll outs of these cheap and sector-based loans available to the citizenry.