CHAPTER ONE
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 – Credit allowed to him by his suppliers – 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. b. Issuance of warehouse warrants by accredited and rebated warehouse company. The duration provided by banks usually does not exceed 120 days – post shipment credit is a loan, advance or any other credit provided by the bank to an exporter of goods, from the date of extending the credit offer shipment of goods to the date of receipt of export proceeds within 60 days. The main types of post-shipment are negotiation of exporting documents under letter of credit and negotiation of export bill drawn confirmed export contracts or order. It’s a part of government in a native to exporters the government established the Nigerian Exportant Bank (NEXM) which provided both long and short-terms credit through the commercial and merchant banks to support exports of non-oil product.
Leave a Reply
You must be logged in to post a comment.