Published On: Tue, Sep 6th, 2016

Banks embrace agro exports for scarce foreign exchange

In an effort to boost their revenue profiles, commercial banks in the country are now encouraging their customers in the agribusiness to explore export opportunities in Asia and Europe.

This move was fuelled by the acute shortage of hard currency in the economy, occasioned by the Central Bank of Nigeria’s (CBN) rationing of forex to prospective importers, after the global fall in the prices of crude oil, the nation’s main forex earner.

Available data shows that foreign exchange earnings from agribusiness have grown substantially following the increase in export price and value of some products, with weaker naira exchange rate improving the competitiveness of agricultural commodity exporters.

Addressing an agro export seminar in Lagos, the Head of Structured Trade and Export Finance at Zenith Bank, Godwin Essien, said that agricultural exports would continue to dominate the nation’s foreign trade given the structure of the economy.

He said farm exports were growing in value as exporters rush to sell a wider choice of produce to growing economies.

Essien emphasised the need for more efforts at increasing the value of exports as well as the volume.

To facilitate this, he said that the bank was providing agricultural businesses with one-stop banking services, including the issuance of letters of credit and loans denominated in foreign currencies.

He said the bank had a good understanding of the needs of agro export businesses and would work with them to speed up funds flows to facilitate sales.

He said the bank had made efforts to expand financing and designing products and services targeted at developing the sector.

The Chairman of Multimix Academy, Dr Obiora Madu, said that exporters, especially agricultural producers,  were taking advantage of this.

“Since naira has weakened considerably against the currencies of some of the nation’s major trading partners, such as Europe, Asia  and  the United States (U.S), agricultural exports have become more competitive in these markets.

“Following this, finance service operators are offering what they claim are better deals in handling money transfers or providing currency brokering advice for a diverse new class of small to mid-sized farm products exporters.

“The situation is encouraged by the fact that government is insisting on agro exporters using banks for foreign currency transactions”, he said.

Madu also said that with foreign exchange becoming scarce, agro exports were proving to be a lifeline as  global trade volumes continue to rise, as well as earnings by farmers and  exporters.

He noted that the growth of agric exports is one of the success stories of the economic crisis. “This has prompted banks to assemble teams focused on exporters, with small to medium exporters exploring global markets”, Madu added.

The National Publicity Secretary, National Cassava Association of Nigeria (NCAN), Mr Sotonye Anga, in his submission, advised farmers and others in the agricultural sector to position themselves to benefit from agro exports opportunities.

He said that exporters must be alert to take advantage of the growth in global demand for agro produce, stressing that Nigeria was struggling to be cost competitive, particularly against emerging produce exporting nations.

He advised the government to collaborate with farmers or investors to promote crops that have strong export potential.

The exchange rate has had a volatile run in recent months with no signs of abetting.

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