Investigating the Impact of Trade Credit Availability on Nigeria’s Export Industries
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Background of the Study :
Trade credit plays an essential role in facilitating transactions between exporters and importers, particularly in developing economies such as Nigeria. It provides a financial bridge that allows businesses to manage cash flow constraints and invest in production capacity. In Nigeria, the availability of trade credit has become increasingly critical as domestic companies seek to expand their export operations in a highly competitive global market (Akinyemi, 2023). Recent studies indicate that improved access to trade credit can enhance the liquidity of export firms, enabling them to fulfill large international orders and invest in modern production technologies (Babatunde, 2024).
The dynamics of trade credit availability are influenced by various factors including banking policies, interest rates, and the overall regulatory environment. For Nigerian export industries, trade credit is not only a source of short-term financing but also a determinant of competitive positioning in international markets. Empirical evidence from recent research suggests that firms with better access to trade credit demonstrate higher export performance, improved innovation rates, and stronger market expansion capabilities (Chisom, 2025). The study examines how variations in trade credit availability impact export volumes, product quality, and market reach. It also explores the role of government and financial institutions in creating a supportive ecosystem for trade credit, highlighting the need for integrated financial policies that align with export promotion strategies.
This research aims to provide a comprehensive analysis of trade credit’s role in driving export growth by integrating quantitative export data with qualitative insights from industry stakeholders. The outcomes are expected to inform policymakers and financial institutions on strategies to enhance credit availability and reduce the risks associated with trade financing. Such insights are critical for bolstering Nigeria’s competitive edge in international trade (Olawale, 2023).
Statement of the Problem :
Despite its critical importance, the availability of trade credit in Nigeria remains suboptimal for many export-oriented firms. Limited access to affordable credit has resulted in cash flow constraints that hinder production scalability and timely fulfillment of export orders (Ibrahim, 2024). Many firms, especially SMEs, face stringent lending conditions and high-interest rates, which restrict their ability to secure necessary financing. This challenge is compounded by an underdeveloped credit infrastructure and a lack of tailored financial products that cater specifically to the needs of exporters.
Moreover, the absence of robust risk assessment mechanisms in the financial sector has led to a reluctance among banks to extend trade credit, further limiting access for firms with potential but insufficient collateral. These constraints not only affect export performance but also impede broader economic diversification and industrial upgrading. The discrepancy between the potential benefits of trade credit and the practical limitations faced by export industries necessitates an in-depth investigation. This study seeks to identify the barriers that prevent Nigerian exporters from accessing adequate trade credit and to examine the subsequent effects on export competitiveness. The findings are expected to highlight critical areas for policy intervention and financial sector reforms, aiming to bridge the gap between credit supply and export demand (Chukwu, 2025).
Objectives of the Study:
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To evaluate the impact of trade credit availability on the export performance of Nigerian industries.
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To identify the key barriers restricting access to affordable trade credit.
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To recommend financial and policy interventions to improve trade credit availability.
Research Questions:
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How does trade credit availability influence export performance in Nigeria?
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What are the major challenges faced by firms in accessing trade credit?
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Which policy measures can enhance the availability of trade credit for exporters?
Research Hypotheses:
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Improved trade credit availability significantly enhances export performance.
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Structural barriers in the financial sector limit access to trade credit.
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Targeted financial reforms can improve credit availability for export industries.
Scope and Limitations of the Study:
This study focuses on Nigerian export industries from 2015 to 2024. Limitations include reliance on secondary data and the variability in credit reporting across financial institutions.
Definitions of Terms:
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Trade Credit: Short-term financing extended by suppliers to their buyers to facilitate trade.
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Export Industries: Sectors engaged in the production of goods and services for international markets.
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Credit Infrastructure: The systems and institutions that facilitate access to financial credit.
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