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Non-Oil Export: Zenith Bank Showcases Nigeria’s Potential

Zenith Bank

July 24, (THEWILL) – For the seventh time consecutively, Nigeria’s biggest bank by market capitalisation, Zenith Bank Plc, on Wednesday, July 20, 2022 held its Annual International Trade Seminar on Non-Oil Export, a laudable project that it commenced in 2015 to showcase the expansive opportunities in the non-oil export with a huge value chain.

The seminar, which was a hybrid of physical and virtual event, attracted high net-worth individuals, stakeholders and experts from Nigeria and abroad, especially investors keen about opportunities in Africa’s largest economy – who consider Zenith a dependable source.

The seminar could not have come at a more opportune time given the uptrend in promoting the non-oil export sub-sector since the Central Bank of Nigeria (CBN) introduced the RT200 FX programme in February 2022.

The “RT200 FX Programme”, which stands for the “Race to US$200 billion in FX Repatriation,” is aimed at getting $200 billion in Foreign Exchange (FX) repatriation over the next 3-5 years, based on stipulated guidelines. According to CBN, “The RT200 FX Programme is a set of policies, plans and programmes for non-oil exports that will enable the country to attain its lofty yet attainable goal of US$200 billion in FX repatriation, exclusively from non-oil exports, over the next 3-5 years”.

To ensure seamless implementation towards target deliverables, the RT200 FX Programme has the following five (5) key anchors: Value-Adding Exports Facility, Non-Oil Commodities Expansion Facility, Non-Oil FX Rebate Scheme, Dedicated Non-Oil Export Terminal and Biannual Non-Oil Export Summit. Each of these anchors represents a channel of implementation that tackles every applicable aspect and the signs have started showing.

Zenith Bank is among the deposit money banks that have keyed into the initiative to promote awareness of the scheme and organize their own programmes in line with the CBN’s 5th anchor of the scheme which is conducting non-oil forums and workshops with appropriate themes to address the subject-matter. The Zenith Bank’s 7th Annual Edition of the Zenith Bank International Trade Seminar themed “Unlocking Opportunities in Nigeria’s Non-Oil Export Business”, was considered apt as it addressed bottlenecks affecting non-oil exports. This underlined the emphasis byf the bank’s management to make the Seminar a problem-solving event rather than a mere talk-show. The Group Managing Director, Ebenezer Onyeagwu, explained this in his address where he drew attention to the vast opportunities in the non-oil export encompassing a huge value chain.

The Founder and Chairman, Zenith Bank Plc, Jim Ovia, who advised the Federal Government on the need to deep-dive into non-oil exports, noted that intellectual capital and other aspects of products manufacturing, telecommunications, information technology are very valuable to the growth of Nigerian economy but grossly underexploited. He buttressed this with the fact that the GDP contribution from oil wells was only about 11 percent and the balance came from services and other aspects of the economy. “Perhaps we need to deep-dive into non-oil exports” he said at the event.

Some participants outside the country who expressed delight at the investment opportunities showcased by Zenith Bank, however, shared their concerns over the difficult operating environment and worsening state of infrastructure, especially in the maritime sector. The response by the Managing Director, Nigerian Ports Authority (NPA), Mohammed Bello Koko, provided some relief and restored some measure of hope. Bello said the agency was addressing the bottlenecks at the port facilities and suggested practical ways of achieving the result.

He disclosed that the authority had deployed a truck electronic call-up system to ease the movement of cargoes into the port as well as created pre-gates where trucks would park before entering the port.

“We are working with the government to ensure diversification of the economy and we are encouraging non-oil exports. Also, not just about deploying an e-call-up system, we have licensed 10 export processing terminals. The terminals are supposed to be at locations whereby one stalk, process, package, certify, seal and send it directly to the port.

“We need to understand that the port is a maritime ecosystem not just for the NPA but other government agencies. For the export processing terminals that were created to succeed, we expect the Nigeria Customs Service (NCS) and Standards Organisation of Nigeria (SON) to have an export desk there for certification,” Bello said.

He added that three out of the 10 export processing terminals would come on stream shortly, and that barges were also introduced at a cost borne by the exporters thereby making export more expensive and would reduce the burden in the future.

“Zenith’s non-oil export seminar is a milestone in developing our economy. Once the outside world sees that the ports are working efficiently and that the bottlenecks have been eliminated, business will boom and the economy will grow,” said Ambrose Belonwu, a Nigerian resident in the United Kingdom, in a telephone chat with THEWILL.

Belonwu commended Zenith Bank for the international trade seminar which he said will showcase the nation’s potentials to the world and help in rebuilding the country’s negative image abroad.

Growth champion

Zenith Bank has been on the forefront of promoting lending to the real sector which is a major stimulus for the economy. The Tier-1 deposit money bank granted expansive facilities in loans and advances totaling N11.3 trillion in the past five years: 2016-2020, data from its annual reports revealed. The bank which belongs to the prestigious Premium Board league of the NGX Exchange) also accelerated its facilities to support businesses and boost the economy at the peak of the COVID-19 crisis.

Analysis of Zenith Bank’s financial statements during the review period showed that the bank embarked on an accelerated Lending that hit N2.3 trillion in loans and advances in 2019, a rise of 26.4 percent, before climbing to N2.77 trillion in 2020, a 20.5 percent jump, at the peak of the COVID-19 crisis.

Deep in the mud

Nigeria’s economy is immersed in serious challenges arising from the rapid decline in oil revenue which has worsened since the beginning of the year.

For five consecutive months, the Nigerian National Petroleum Corporation (NNPC) Limited, made zero remittance to the Federation Account Allocation Committee (FAAC) as at May 2022. This anomaly was as a result of the huge sum of money spent in the payment of petrol subsidy which has eroded the gains of the firm.

The national oil company disclosed in its monthly presentation to FAAC on Wednesday June 22 that the subsidy claims eroded the gains it had recorded. According to the national oil company which is struggling to generate enough revenue to cover the soaring cost of subsidizing the product, the nation has incurred an estimated petrol subsidy of N2.1 trillion in the first six months of this year. This explains the paradox of a failure to benefit from the spike in global oil prices amid supply shortages. It also points to clearly difficult times for a hemorrhaging economy in the grips of stifling fiscal policies.

For instance, the Federal Government which had initially budgeted to spend N443 billion on petrol subsidy between January and June, got the approval of the National Assembly in April to raise the subsidy amount to N4 trillion for the year. The World Bank had in its latest Nigeria Development Update reported that “due to the petrol subsidy and low oil production, Nigeria faces a potential fiscal time bomb.”

This may escalate the 2022 fiscal deficit beyond N10 trillion. With the nation’s debt stock hitting N41.6 trillion as at Q1 2022, there are fears that the nation might be using about 90 percent of its revenue to service debts. This leaves a meagre revenue for capital and other recurrent expenditures and will worsen the fiscal challenges by the day, thus underscoring the fears that the country might become really broke and unable to meet its obligations.

In addition, concerns have also been expressed that the nation may become stuck in a debt quagmire in the event of a major currency crisis or face foreign exchange risks that could double the current debt profile. This will spell disaster for the citizens who are already at the bottom of the trough of misery curve. Amid poor living standards triggered by high inflation rate that hit a five-year high of 18.6 percent in June 2022, driven mainly by high cost of diesel and food, many businesses are either closing shop or operating sub-optimally.

It is now confirmed that Nigeria’s debt servicing cost exceeds her revenue, thereby setting a dangerous pace for the nation’s fiscal position. The federal government through the Ministry of Finance, Budget and National Planning has said that the cost of servicing debt surpassed the government’s retained revenue by N310 billion in the first four months of 2022. The federal government said this in its 2022 fiscal performance for the first quarter released on Thursday, July 21, 2022. According to the document, the federal government’s total revenue for the period was N1.63 trillion, but debt service gulped N1.94 trillion.

While giving updates on the budget performance in Abuja, the Minister of Finance, Budget and National Planning, Zainab Ahmed, said urgent action is urgently required to address revenue underperformance and expenditure efficiency at national and sub-national levels.

“The aggregate expenditure for 2022 is estimated at N17.32 trillion, with a prorata spending target of N5.77 at end of April,” the document reads. The actual spending as of April 31st was N4.72 trillion. Of this amount, N1.94 trillion was for debt service, and N1.26 trillion was for personnel costs, including pensions.As at April, N773.63 billion has been spent on capital expenditure. As of April 2022, FGN’s retained revenue was only N1.63 trillion, 49 percent of the prorata target of N3.32 trillion.”

The document added that the federal government’s share of oil revenues was N285.38 billion (representing 39 percent performance), while non-oil tax revenues totalled N632.56 billion — a performance of 84 percent.

Based on the figures, the government generated N401.8 billion from company income tax (CIT) and value-added tax (VAT).

“CIT and VAT collections were N298.83 billion and N102.97 billion, representing 99 percent and 98 percent of their respective targets,” the document added. Customs collections (made up of import duties, excise and fees, as well as federation account special levies) trailed target by N76.77 billion (25.42 percent). Other revenues amounted to N664.64 billion, of which independent revenue was N394.09 billion.

The CBN Governor emphasised that Nigeria’s oil revenue is fast drying up and that the country should not wait until the economy is practically grounded to a halt before taking the necessary action. He said that various initiatives and interventions have been introduced to harness the opportunities in the non-oil sector to create wealth for the country.

Emefiele said the rebate facilities had been introduced to encourage exporters, bridge gaps as well as provide funding for capital expenditure in the non-oil sector, while stimulation facilities have been created to support operators in the sub-sector, such as the N500 billion non-oil facility.

“We have the N500 billion non-oil stimulation facilitation, commercial agricultural scheme act for agricultural commodities, and many others,” he said. He added that Nigeria should look inwards for economic growth and development.