When you talk about Export business in Nigeria people jump out of their skin. Some thinks it is something impossible while some think it is out of their league. But what they actually need is an understanding on how Export business works.
Nigeria is a blessed nation with so many natural stuffs that can serve as raw materials in so many international countries. Example, Cashew nut, Tiger nuts, Palm kernel, oil, e.t.c. Also, Millions of Nigerians residing abroad have this philia for African dishes which makes some of our agricultural products a good export business in Nigeria.
Therefore, exportation is something anyone can do. You can also expand your little business to something big if you have the knowledge of export.
In this post is a guide on how you can start a legal and successful exportation business that can fetch you money. However, it is important that you weigh the export business challenges against the advantages before thinking of starting the business.
Advantages Of Export Business
Export business have so many advantages that you may interest you. These advantages gives it an edge over the traditional local businesses in Nigeria. Below are some of those benefits.
- Millions of Nigerians travel overseas every year. This increase demand for Nigerian products outside the country especially foodstuff creates market for Export business.
- Export business is lucrative because you will earn in hard currency which the rate to naira is encouraging.
- Most businesses have the capacity to expand more through export business. In other words, it helps business growth.
- Export business can be a side hustle. Meaning, you can combine it with other forms of work since it is not time consuming. The bulk of work is in the sourcing and packaging of the products.
- It exposes you to opportunities and improves your product since you will be dealing with international standards. Its an avenue for learning.
Challenges Of Export Business In Nigeria
Below are the common challenges you may likely experience with exportation business. Though, most of them are negligible when weighed against the benefits. Still, they are worth knowing.
- Most times the process of getting the legal documents for exportation is tedious and long.
- Cost of shipment and logistics can be discouraging especially when you are on a small scale.
- Exchange rates are volatile and subject to change; It may favor or go against you.
- Problem of Financing and start up capitals.
- Lack or half- baked information on how best to run exportation.
- Sourcing reliable and legit buyers – not scammers.
- Custom duties and taxes.
- Loss due to damage or spoilage while shipping.
- lack of facilities for product modification and packaging to meet international standards.
How To Start Export Business In Nigeria
To be successful in any business endeavor, there must be a guide. If you have decided to start an export business in Nigeria, below is a step-wise guide to what you need to do.
Step 1: Decide the item to export
When thinking of an item to export, you must ask and get some answers to questions like;
- Am i to produce or to buy from producers?
- Is there demand for the product overseas?
- Which country or market can i locate buyers?
- Are my products on the ban list?
- Can my product be packaged? etc.
These questions above and so much more can help direct your thinking to the best product that can get you good profits.
Federal Republic of Nigeria shipped US$53.6 billion worth of goods around the globe in 2019. 87.1 % of these goods are mineral fuels including oil. While agricultural products took about 12 % of the total revenue. 1 It means that after oil, agricultural products is the second most exported goods in Nigeria.
Therefore, exportation of agricultural products has always been very lucrative for Nigeria since ages. These products can be raw materials for industries or packaged food stuffs for Nigerians living outside the country.
If you do not have a product of your own to export yet, You can do market analysis on some of the commonly exported Nigeria products below;
- Cashew nuts
- locust beans
- Animal hides/leather
- Palm oil
- Ogbono seeds
- Qail eggs
- Sesame seeds
- Bitter Cola
- African Walnut
- Tiger nuts
- Moringa seed
- Shea butter
Step 2: Conduct a market analysis
When you have finally decided in any of the products to export. The next step is to check some parameters that will help your business to be successful. I will advice you pick three products and analyse to choose the one with utmost potential of meeting your goals. Some of the parameters to analyse includes;
Look for a potential market
A potential market is a country or business that is likely ready to buy your products from you. This is very important because it will give you an idea of how large the market is and if its worth the endeavor. There are many ways you can search for potential buyers that will patronize your business.
- The use of International buyer directories.
- Attending Seminars and Trade fairs.
- Online research using Search Engine tools.
- Recommendations from NEPC ( one advantage of being a member).
- Using Market Analytical tools such as Export potential map, Trade map and sustainability maps.
- Hire Overseas Agents On Commission Basis.
Get a sustainable seller of your product
A grievous mistake you will make as an exporter is to always disappoint your customers with news of out of stock.Hence, before even presenting your business, make sure that you will have a continuous flow of the products in sufficient quantities. Sourcing for Sellers will not be much problem but make sure they are reliable and can deliver at all times.
Do SWOT analysis of your business
SWOT analysis means Strength, Weakness, Opportunities and Threats of your business. You will have to find out what makes your business unique, advantages you have over other sellers, Your weaknesses and threat to your business.
Also, it is very important to study your competitors, copy what they are doing right and improve on their weaknesses.This is a sure way to get you noticed in the market of your choice.
Step 3: Register Your Business With CAC:
No business in Nigeria has the legal rights to exist if Corporate Affairs Commission (CAC) of Nigeria does not have it registered. Registration of your business makes it to be authentic and genuine.
It is encouraging to choose a business name that defines your niche such as “Adebisi Agro LTD” – From the name of the business, one can simply deduce that the business is for agro products.
However, most people choose general merchandise option to offer them the leverage to be able to trade or do any other business in the future with same name.
Below are the reasons why business registration is important.
- Business registration gives your business a unique Identity.
- Legal protection to your assets in case the business goes bankrupt.
- It builds your business reputation and builds confidence in your customers.
- Business continuity and succession; Your business name lives for your generation to inherit.
- Getting Loans from the bank or Investors is easier when you have an identifiable business.
- Opening of business Bank account can only be done when you have the CAC registration.
- Your business will enjoy some Tax benefits when registered.
Read more: How To Register A Business In Nigeria
Step 4: Obtain Legal Export Documents And Licences
Export business is about documentations which will certify that your goods meets the requirements, the quantities, unit cost, export contract and other forms that will save you from troubles.
Register with NEPC
The Nigerian Export Promotion Council (NEPC) is an institution formed for the purpose of promotion, development and diversification of exports. This simply means that NEPC encourages the export of non-oil products in Nigeria. For any one to become an exporter, the Federal government of Nigeria mandates the person or business to register with NEPC to obtain the exporters certificate. Aside from the certificate, NEPC also offers the following;
- Trade promotion support services.
- NEPC administered (pre- and post-)export incentives.
- Numerous trainings, clinics, seminars, and more.
- Network of exporters to collaborate and exchange ideas.
Registration with NEPC is online. To register, you will need to have these documents handy.
- Certificate of Incorporation (issued by the Corporate Affairs Commission).
- Certified True Copy of Memorandum and Articles of Association
- Current Certified True Copy of From CAC 1.1 – “section C” (Particulars of Directors). This is formerly known as: Form C07 or Form CAC 7.
Then visit the NEPC E-registration platform. Make a payment of #13,500 for new registration or #7,500 for renewal. Confirm Payment and wait for the Exporters certificate.
Registration with Nigeria Custom Services (NCS)
The Nigerian Customs Service also mandates that Nigerian exporters complete and register Form NXP with authorized dealers (commercial or merchant banks) of their choice. Your chosen authorized dealer will be in charge of handling your funds and transactions, as you will be required to set up and maintain a Domiciliary Account with them, to which your payments will be deposited.
Form NXP makes sure that goods meets the standard of international trade since it will be inspected by the body incharge of the item you want to export. Example the Standard Organization of Nigeria (SON). National Agency for Food and Drugs (NAFDAC) and Federal Ministry of Agriculture if its an agro product.
The Form NXP contains information as;
- Name and Address of Exporter
- NEPC Number
- Description of the goods to be exported
- Quantities and their measurements
- Unit cost of goods
- Total cost of goods
- Other charges, if any
- Mode of transportation
- Name and Address of buyer (consignee)
- Country of destination
Take care of logistics and freight
Logistics and freights makes sure your goods gets to its final destination on time, in good shape and also with proper documentation and cost. Therefore, you must ask questions on best methods of shipping for your type of commodity.
In summary, you must be out to ask questions to people with experience because there are most fraudsters parading in the name of buyers. Also,make sure that you have sufficient legal documents and insurance that can protect you from the unforeseen.