THE ROLE OF FINANCIAL INSTITUTION IN EXPORT FINANCING. A RESEARCH PROJECT MATERIAL ON BANKING AND FINANCE
This research work scrutinized the role of financial institution in export financing export financing is very important, as Nigerian Exporters have to complete with exporters from other parts of the who have already in the market and have easy.
Access to various type of export finance sources. To be able to complete effectively with buyers able to offer attractive terms to forgiven buyers especially through bettered payment facilities which their competitors had provided all along with official insurance facilities to minimize the risk exporting to other nations. The federal government has and it still working hard is encourage export. A good step towards this is promulgation of export incentives and miscellaneous provisions degree of 1986, which came up with numerous incentive to export. More also, is the inauguration of NEXM. In a nutshell, its pertinent to not that export financing is of great importance towards economic development and balance of payment of our nation.
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 markets through financing and handling shipping documents to collect of export proceeds. The role of financial institutions had thus that of a “catalyst” and a committed broker”.
Generally, an exporter can meet his/her financial I need in a numbers of ways:
– Advance payment from the oversea buyer
– Internally generated fund
– Credit provided by the government of the country of the buyers.
Banks finance the major position of export transaction. The export credits given by banks to exporters is linked with various duration of the transaction. The stages are divided into per-shipment and post-shipment. The duration of the credits on the other hand are classified. As short medium and long term. Short-term ranges as short-term ranges from the period of 30 to 100 days. The medium-terms ranges from the period of 180 days to 5 years while the long-term is from 5 years and more.
The exporter needs pre-shipment finance for securing the raw materials and other input required for the execution of an export 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 or packaging of goods on the basis of:-
a. Letter of credit opened in favour of the by an overseas importer of goods.