An Analysis of Banks Financing of Non-Oil Exports in Nigeria
Sama’ila Idi Ningi

In Nigeria the Non-oil export sector of the economy is contributing only 4% of total exports and the volume of non -oil exports growth is very low. One of the reasons for the declining growth is insufficient access to bank finance. Banks are not willing to advance credit to the non-oil export sector as they consider the sector very risky for investment. Another problem is the increased cost arising from exchange rates fluctuations and high cost of bank finance. Because of these factors the non-oil exports dwindled. The problems above triggered this research; consequently, questionnaires were developed and distributed to 120 non-oil exporting firms. Tools used for data analysis and hypotheses testing included, Mean and standard deviation, multiple regression. The multiple regression indicates that Non-oil Exports Financing by Banks significantly accounts for slightly 16% of variance in Non-oil Exports Performance, similarly beta coefficient reveals that Firm’ Perception of Banks Attitude to Risk of Financing non-oil exports has the highest beta value followed by Cost of Bank Finance, in the case of Exchange Rate fluctuation Effects and Volume and Access to Credit Facility they present insignificant relationships with the Non-Oil Exports performance. This research indicates relative importance of NEFB in predicting the direction, composition and pattern of trade in non-oil goods in Nigeria. The result of the research would go a long way in making the managers of exporting firms to find ways of financing their firms especially as there is high need of up-front fixed cost in export business. The research indicates the need for governments to develop financial sectors of their economies for improved exports. The research reveals the need for exports subsidies in developing countries because of the large number of small sized firms in the export business who cannot cope with the high capital requirements of exports business in Nigeria. But in doing so government must work hard toward elimination of corruption for the policy to yield the needed result. Without financial support provided by banks, the wheels of export cannot move. Banks should be ready to learn and specialize in two to four export products that they can handle and do well and explore the letters of credit option to provide secured funding for exports.

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