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development and contributes between 6-12 % of GDP in many developing countries Studies have shown that about 50% of global trade takes place between locations of more than 3,000km apart A well developed transport sector is therefore important to the development and growth of International Trade Transportation could be through air, water, road or rail as well as multi-modal In terms of volume, the maritime sector handles 90% of global trade.
within the West African region and facilitates trade, particularly with the land lock countries of Mali, Niger and Bukina Faso. According to a report by the Trade Hub, the region has 40,000km of interstate roads and tens of thousands of Trucks Reports also indicates that the region has the highest transportation and logistics cost in the world This is due to absence of efficient and frequent alternative modes as well as very high transport infrastructure funding gap
Finance for the transport value chain could be sourced in several ways: Equity Capital Government/ Tax Revenues Debt/Equity Finance through the capital market Commercial Banks /Leasing Companies Development/ EXIM Banks (LOCs, Suppliers/ Buyers Credit) Multilateral Agencies/ OECD lines of Credit However, the capital intensive nature and long payback period has led
to various financing arrangements, which are discussed under three broad classifications:
Roads, Railways,Airways,Waterways, Airports, Rail stations, Ports, Inland Container Terminals, etc.
monopoly and public goods and are funded by governments through budgetary allocations and tax revenues
They could also be financed through long term loans from multilateral institutions such as World Bank/ Regional Development Banks Also long term funds could be raised in the Bond Market, under sovereign guarantee
development has led to funding arrangements involving the private sector such as:
Bank loans: Commercial/ Development Banks Lease finance (Operating / Finance/ wet Lease)
Tenor of loans are usually medium long term varying from 3-5
years in the case of Automobiles and up to 15 years for Aircraft & ships
For heavy equipment (Aircrafts/ Ships), Asset finance cash flow
lending model are used due to capital intensive nature Sometimes many banks could come together under a syndicate financing, especially in aircrafts & ships Syndication and co-financing arrangements are usually undertaken to share risks
Right of way Operational licence where applicable Concession Certification(s) of equipment Possession of a viable business plans / feasibility study Existence of a valid contract, where applicable Technical management/maintainance contract This could be covered by taking comprehensive (cargo & equipment) insurance
NEXIM WAS ESTABLISHED IN 1991 AS AN EXPORT CREDIT AGENCY TO DIVERSIFY THE NIGERIAN EXTERNAL SECTOR THROUGH FINANCE & RISK BEARING SERVICES
We complement the role of the commercial banks and other Development Financial Institutions
Market Focus
ECOWAS
Rest of Africa
Developed Economies
27
Road Transport
Cumulative disbursement of over US$6.5million Financed over 30 low emission/ environmentally friendly buses/ trucks for interstate road transport in west Africa Objective is to promote energy efficient/ environmentally friendly transport system, while deepening regional trade and facilitating tourism development Over US$23million availed/ disbursed Supported 2 airlines to acquire 3 planes for international flight routes 1 helicopter for charter service contract for movement of personnel and materials Disbursed over US$18million Supported cargo lightering and charter service contract
Aviation
as a key strategy in boosting trade and enhancing growth in the West African region
United Nations estimate has indicated that a 10% reduction in
transportation cost in developing countries could boost international and domestic trade by 20%
In addition, governments of West African countries need to create enabling
environment that supports investments and flow of funds to the transport sector.
In this regard, the fiscal incentive in Nigeria which allows 0% import duty and VAT for all commercial aircrafts and spare parts is a welcome development. This will increase the commercial viability of the sector and attract additional investment capital Also in the road transport sector, addressing the problems of overloading and eliminating the queuing system will help to enhance competiveness and viability of the sector.
sector. We also have arrangements with other EXIM Banks to access Buyers/ Suppliers credits.