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Question

Difficulty: MediumSpecialized and Development Banks

A Nigerian cocoa processing firm intends to expand its international operations by exporting processed cocoa butter to buyers in Europe. To protect itself against potential default by foreign importers and obtain pre-shipment export credit, which specialized development bank should the firm approach?

  1. Nigerian Export-Import BankAnswer
  2. B
    Bank of Agriculture
  3. C
    Bank of Industry
  4. D
    Central Bank of Nigeria

Answer

The Nigerian Export-Import Bank is the specialized financial institution mandated to provide export credit facilities, trade risk guarantees, and insurance for non-oil exports.
The Nigerian Export-Import Bank (NEXIM) was established specifically to support non-oil exports by providing export credit financing, export credit insurance, and trade credit guarantees against commercial and political risks.

Step-by-Step Solution

1
Analyze the financial requirement described in the scenario
The firm requires credit guarantees and risk protection against non-payment by foreign buyers for non-oil trade.
Identifying the specific financial service (export credit insurance and non-oil export support) isolates the corresponding development bank.
2
Evaluate the statutory mandates of Nigerian specialized development banks
The Nigerian Export-Import Bank (NEXIM) was created to support exporters through risk mitigation, guarantee schemes, and export financing.
Matching the institutional mandate to the exporter's specific operational needs confirms the correct answer.

Key Concept

Specialized and Development Banks - Mandates of Development Finance Institutions
Estimated Time:1m 0s
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Topics

Specialized and Development Banks

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