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N10bn non-performing loan: NEXIM Bank debtors disappear into thin air

We would smoke them out—CEO

By Babajide Komolafe

Debtors to the Nigeria Export-Import Bank (NEXIM) have taken flight to safety following indications that the management of the bank would engage the help of the Economic and Financial Crimes Commission (EFCC) to recover the over N 10 billion non-performing loans in its books. The bank has however said that  it is undeterred by this development vowing to smoke the debtors out of wherever they might be hiding.

Vanguard was reliably informed that efforts to trace some of the debtors have proved abortive as they could no longer be found at the official address indicated while collecting the now bad loans. It was also gathered that some of the businesses funded with the bank loan have collapsed while their promoters have gone into hiding.

But the newly appointed Managing Director/Chief Executive Officer of the bank, Mr. Robert Orya confirmed to Vanguard that letters of demand written to some of the debtors were returned undelivered. He said  the management of the bank is however not losing sleep but has commenced moves to ensure that at least 50 per cent of the non_performing loans classified as lost are recovered in the first 18 month of the new management.

“We know that some of these debtors have the capacity to pay but are unwilling to pay but we are going to smoke all of them out”, he said

Established in 1991 by Act 38 as an export credit agency, NEXIM Bank is the first export credit agency (ECA) in Africa. The Bank replaced  the Nigerian Export Credit Guarantee and  Insurance Corporation  and has the mandate to; provide  export credit guarantee and export credit insurance facilities to Nigerian exporters; provide  credit in local currency to exporters in support of exports;  establish and manage funds connected with exports; maintain of a foreign exchange revolving fund for lending to exporters who need to import foreign inputs to facilitate export production; Maintain  trade information system in support of export business; and  provide domestic credit insurance where such a facility is likely to assist exports.

But over the years the bank accumulated huge non_performing loans as many of its debtors mistook its loan as share of the national cake and did not repay. By end of August 2009, the loan portfolio of the bank stood at   N 14.6 billion out of which N 10.512 billion is non_performing, and  N 10.03 billion classified as totally lost.

Consequently the financial condition of the bank declined steadily  with its shareholders fund declining from N 15.85 billion to about N 9.3 billion and as a result it became difficult for it to fulfil its mandate.

On the factors responsible for the huge non_performing loans of the banks and efforts of the new management to recover them, Orya said, “The reason for the non_performance of these loans is multifarious. You can not trace it to one particular reason. Some of them have been genuinely affected by the global financial crisis. Those are genuine problems and we have gone into a loan restructuring arrangement with them and we have  look at their cash flow. Some of them have given us possessing instrument and  we have, as we speak, recovered about N 241 million and we have collected post dated instrument which would mature up to June 2010 of about N 1.5 billion. Those are very genuine promoters that were affected by the operating environment.

You have some of the promoters that from day one set out to be deceitful in the packaging of the project. Some of them,  what the bank did was to give guarantee for the importation of the machinery, they did not have any access to any working capital and as we speak some of the machines are still in crates because they do not have working capital to install these machines and ensure that they commence operations.”

Notwithstanding the challenge of the non_performing loans, he said that the new management has commenced moves to reposition the bank to enhance growth of non_oil exports in the country by assisting Nigerian exporters and be the leading export credit agency in Africa.

He noted that the bank during its 18 years of existence has  intervened in the export sector with about N 56 billion and that about $273 million have been injected into the economy while it has assisted in the establishment of  over 200 SMEs  and created jobs that are over 40,000.

Among other things NEXIM provides a wide range of services to assist Nigerian exports and in the process boost non_oil export revenue. It provides direct lending to Nigerian exporters to fund their purchase of capital goods, raw materials, packaging materials, spare parts through its Direct Loans facility. The facility also covers the provision of infrastructure as well as revitalisation and modernisation of plants/machinery. Providers of export services in the areas of consultancy, tourism, oil and gas etc are also eligible for this lending support. Other facilities provided to promote exports include Export Credit Guarantee Facility (ECGF), Export Trade Support Facility (ETSF), Foreign Input Facility (FIF), and Rediscounting and Refinancing Facility (RRF).


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