1.1 BACKGROUND OF THE STUDY
trade is the exchange of goods and services between countries including
business enterprises and individual domiciled in different countries of
the world. The exchange of goods and services through international
trade does not only enable a country to produce these goods and services
for which if is best suited, based on its natural endowments (e.g.
fertile soil, mineral resources, climate) but also allow a country
experiencing. Acute domestic, shortage (resulting perhaps from bed
harvest, draught e.t.c) to remedy the situation through importation.
Thus, it has been said that international trade cannot be gain said.
of world are not self sufficient. They rely on each other for the
supply of what they lack. Thus, natures exchange what they have with
what they do not have.
International trade can be bilateral or
multilateral. If it is bilateral it means such trade is between two
countries only e.g Nigeria exchanges her crude oil with Britain and in
return. Britain gives her manufactured goods to Nigeria such as building
materials, tires, foods, item etc. when a trade is multilateral; it
means such trade involves more than two countries. It can be trade
between U.S.A, Nigeria, Switzerland and India. Trade could be tangible
or intangible. Tangible goods are physical or visible good and
intangible goods are invisible goods, such as shipping, banking,
The country economy today is dominated by oil sector,
which accounted for over 90% of Gross Domestic Product (GDP) before the
increase in the price of oil in the early seventies, agricultural
produce are used to finance the immediate post independence development
programmed for this reason, Nigeria has since the attainment of
independence been at the vanguard of exportation of goods and services
subsequent to the discovery of crude oil. It is noteworthy that little
was know by economic Plaines about export promotion, financing and
activities were limited to a range of agricultural commodities and these
solely financed by the marketing board. In industrial sector, import
substitution was the cornerstone of industrialization policy. The policy
whose main objective was to offer protection to in faint industrial,
replace imported goods and there by conserving foreign exchange.
economic problem could be traced to the world economic depression. The
fall of our export was due to the mono-product nature of external trade.
Misplacement of priorities by our leaders and frivolous spending
pattern of the civilian administration causes by money illusion we had
over the years and this led to unemployment problem low production and
services which brought about difficulties in balance of payment with all
the problem the country them realized the need to look beyond the oil
sector for the purpose of generating more earnings an exports. It is for
these reasons that the Nigeria Export Promotion Council (NEPC). Nigeria
Export and Import Bank (NEXIM), Nigeria Association of Exports (NAE)
were established to improve the differences between the exporters and
importers. It could be recalled that one of the major specific
objectives of structural adjustment programme (SAP) introduced in 1986
was to restructure and diversify the productive base of the economy in
order to reduce the dependence on oil and imports. In strong attempt to
lay a foundation for the promotion of non-oil exports, the government
promulgated export incentive and miscellaneous provision decree which
was designed to enhance the exportation of non-oil products from the
The introduction of second – Tier Foreign Exchange Market
(SFEM) marked the beginning of aggressiveness in non-oil export
marketing in Nigeria and the assumption of change in export financing
activities by banks. There is no doubt tat the high prices arising from
the new exchange rates been an important factor in stimulating
agricultural sector, which has a big potentials for increasing
agricultural production for export in particular.
The prices of
major agricultural produce have increased since the adjustment was
started. The history of banking then gradually spread and become
substantially involved in financing the product marketing of the
companies. The services the universal bank offer to the customer,
government and the society at large include lending, acceptance of
deposits, bill discounting and from exchange transaction to meet the
universal and industry. Among the services includes the provision of
working capital requirement, short, medium and long term loans, foreign
exchange transactions involving letter of credit, documentary collecting
Bankers’ letter now gone beyond the provision of banking
services to corporate services. The corporate financial services offered
by bank range from capital issue, loan syndication to equipment lending
forfeiting acceptance credits, availing, bonds, guarantees and
indemnities, etc. in this way, bank can as part and parcel be included
in the history of international trade finance in Nigeria.
It is established fact that there is need to promote exportation so
as to make Nigeria economy export oriented to ensure balance of trade,
but importation can not be absolutely discourage because some goods
(e.g. heavily duty machine, chemical etc.) have to be imported so as to
facilitate produce for exportation.
It is in line with this and the
desire to respond to economic problem that this project is set dig deep
into roles of universal bank in development of export and import of
goods and services to point out the factors or risks militating against
the maximization of the objectives or gains arising from international
economic activities, and possible solution to these critical budget
factors and the trade facilities and incentives put in place by the
government in supporting the Nigeria bank in financing international
1.3 STATEMENT OF PROBLEM
The purpose of this study is to ingidre into the Nigeria Economy and in so doing, the following will be analyzed.
Hi: That the value of Nation’s Currency has an impact on the International Trade.
Hi: That a highly international trade financing will be affected by interest rate risks.
Hi: That the exchange regulation of the countries concerned highly affects international trade
Hi: That these inflation rate and partly conditions have great impact on International Trade
Hi: That the International Trade finance has effect on the banks.
Hi: That the International Trade finance should be encouraged.
- SIGNIFICANCE OF THE STUDY
This study will go a long way in revealing to the general
public/importers and exporters the importance of International Trade
finance, to achieve this:
- The research will ensure and facilitate replication.
- It will enlighten the students as well as the general public about
the various service that universal have at their disposal in
International Trade Financing.
- It will reveal to the general public/importers and exporters of the
various risks that is attached to International Trade and how they can
get access to these incentives and facilities.
- It will add to the numerous materials in the library as well as widen the horizon of the general public.
- It will cover major aspects of international finance in perspective
in order to exposing the major details of international finance
activities for the purpose of a systematic appraised of the skills
required of an ideal finance mangers that can entrusted with the full
responsibilities of the foreign operation of an enterprises.
1.5 SCOPE OR DELIMITATION OF THE STUDY
is necessary at the on set to delimit the scope of this study. The
research work will be careful to the importance of international
finance, factors affecting finance of International Trade and the
possible remedies, the roles of universal banks in international Trade
financing, currency transfer mechanics methods of setting international
transaction and inter bank financial instruments.
1.6 LIMITATION OF THE STUDY
intends to have in the course of the study an over view of finance of
International Trade financing and the incentives and facilities provided
by the government to facilitating international finance. In the course
of carrying out this study, the researches are as follows:
The researchers tight schedule which he must also use for the other
alternative such as daily lectures and non academic activities count a
lot for the researchers ability to get needed materials and information
for the research work.
FINANCE: - It is the
economic main source of power of everyone in any undertaking owing to
financial constraints faced by the researchers hews could not get all
the necessary materials.