THE ROLE OF FINANCIAL INSTITUTION IN EXPORT FINANCING


ABSTRACT

This research work scrutinized the role of financial institution in export financing. Export financing is very important, as Nigerian exporters have to compete with exporters from other parts of the world who already have been in the market and already have been in the market and have easy. Access to various type of export finance sources.

To be able to compete effectively with others, there must be offer of attractive terms to foreign buyers especially through bette4red payment facilities which their competitors had provided all along with official insurance facilities to minimize the risks of exporting to other nations.

The federal government has and it is still working hard to encourage export. A good step towards this is the promulgation of export incentives and miscellaneous provision decree of 1986, which came up with numerous incentives to export. More also, is the inauguration of NEXIM.

In a nutshell, it’s pertinent to note that export financing is to great importance toward economic development and balance of payment of our nation.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND AND OVERVIEW

The banking system had played a role in management of policy changes that ranges from advising assisting companies and individual on how to enter export market through financing and handling shipping documents to collection of export proceed. The role of financial institution had thus that of a catalyst and a committed broker”.

Generally an exporter can meet his / her financial need in a numbers of ways:

· Advance payment from the oversea buyers
· Credit allowed to him by his suppliers
· Internally generated funds
· Credit provided by the government of the country of the buyers.

Banks finance the major position of export transaction. The export credit given by banks to exporters is linked with various duration of the transaction. The stages are divided into pre – shipment and post – shipment. The duration of the credit on the other hand are classified. As short – medium and long term short- terms ranges from the period of 30 to 100days. The medium term ranges from the period of 180days to 5years while the long term is from 5years and above.

The exporter needs pre – shipment finance for securing the raw material and other input required for the execution of an exporters order and also to arrange for the shipment of the goods to foreign market. The credit is regarded as a loan or advance granted to finance the purchase, processing r packaging of goods on the basis of:

· Letter of credit opened in favors of the exporter by an overseas importer of goods.
· Issuance of warehouse warrants by accredited and reputed ware House Company.


Source: https://topics.com.ng/project-topics/2249/the-role-of-financial-institution

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