EXTERNAL TRADE FINANCING IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

For the past few years, it is Cleary that the present civil administration is posed to see an improvement in the external trade sector of Nigeria economy. This is geared towards increasing the export activity and reducing to a minimal level, the rate of import transaction as a measure to boost our country’s  external  reserves. This trend is buttressed by the various policy stipulations and regulation as well, as incentive dished out by the federal government  to participant in the  external  trade sector, most especially the export sector. The owns of  this interest by various  levels of  government  is hinged on the need to  boost our foreign reserves which was previously depleted by import that  swept through the country during oil boom era and second republic . There is also the urge to restage agricultural sector which contributed immensely to our export  earnings prior to the oil era, since earnings derivable from oil export can no longer be adequate derivable form oil export can no longer be adequately predicted.

The aims and objectives outlined above cannot achieved without adequate participation of financial institution and intermediation most especially commercial banks, thus various government policies are usually implemented through that financial institution in the country.  Thus a tight monetary policy disfavour a particular sector of the economy.  Also, there is the case of inauguration or enactment of policies, be the government, and their actual implementation by the financial institutions  commercial banks. This research will be limited to commercial bank, the live wire of every government  in the execution of monetary policies, aimed toward different sector within the economy and the external trade sector which is within the economy structure, so the participation commercial banks is very important in the realization of the above objective relating to the external  trade sector .

The word financing relates to the provision of fund when and where they are required for the implementation of economic activities of man. Taken the definition into consideration the external trade  financing will than porting the technique of providing fund by various financial institutions, individuals corporate bodies and government that engage in external trade  business. This financing function comes in different ways and various instrument abound  for the smooth facilitation of  this financing activity for and the  instruments  that go with it, is a function of whether we are concerned with import trade financing or export trade financing both of which falls under external trade financing. For the purpose of the project. Work emphasis will be placed on historical analysis of trends in import and export sector of the economy in past five years so as to the determined   how vibrant form of financing available for the smooth operation of the sector. This analysis will be done on the basis of economic needs and aspirations of nation in the relevant periods.

1.2   STATEMENT OF PROBLEM

It ahs been frequently asserted that commercial  that commercial bank and infact the entire banking sector in Nigeria are exhibiting  lukewarm attitude to external trade financing rather that their participation over the years is grossly  inadequate.  When they agree to participate at all they restrict their financing to specific sector  within that external trade sector like merchandize    trade which are mainly short term in nature.   Also in the recent years commercial bank haled been accused of denying financial services to medium level import and export participants by refusing to grant individual who cannot handle loans of up to N50,000 loan facilities for a critical appraisal of their problems.      

1.3  OBJECTIVE OF STUDY

This research work is intend to bring out the inconsistencies in the external trade financing.  Then use the conclusion derived from that research work to propagate some conclusion assertion in the external  trade financing activities of the country. And to recommend measure of minimizing inconsistencies in external trade financing in Nigeria

1.4    SIGNIFICANCE OF THE STUDY

This research work will be of immense benefits to the following groups.

i.   Foreign interest group

ii.  Banking sector must especially commercial banks

iii. Government sector.

iv. Corporate bodies

v.  Private firms having internal in external trade financing in Nigeria

vi. Research scholar

Certainly this will serves as a secondary sources of data to other researcher.

1.5   DEFINITION OF TERMS

Bank:  There are two types of banks namely the central bank which is technical a nationalized industry owned and ultimately controlled by the government and commercial banks that accept deposit and gives in return as demanded by the depositor.

External trade: This is a trade between nations a trade across the national boundary

Financing:  A process whereby founds are sources or providing when and where they are required for the purpose  of implementing economic activities is term financing.

Imports: This simple means goods which are produced in a country that are bough from other countries.

Export:This is when you sell goods produced is your country to other countries.

Commercial banks: These are financial institution authorized by law to accept deposit accept valuable properties for safety custody lending money in an agreed interest and above all lease properly interested customers on demand and finally contract on behalf of  customers.

Agriculture sector: These is a sector that deals with all aspect of agricultural namely livestock farming, fishing, forestry, import and exports,

Financial institution:These are establishment  that issued financial obligations such as demand deposit in other to acquire funds from the public united bank for African