What about local competition
How is the local ecosystem for this commodity? You may find an excellent product with solid demand offshore but controlled locally by a few significant players. There may also be an open market that many players can force down the product’s market price. Local competition is an important consideration.
This is an important consideration because you may have an order and suddenly discover your supply chain is stretched and cannot be filled.
Again the NEPC has created a template you can use for this via this link NEPC export plan template
to learn how to write a Business Plan https://nairametrics.com/2019/07/12/financial-expert-teaches-how-to-write-a-good-business-plan/
Summary for Stage 2
At the End of Stage 2, you will be able to
- Identify the export product
- Research on the product you want to export
- Identify the export target nation
- Verify you can export to that nation, e.g., is there an outright ban on exporting that specific product to that nation.
- Determine cost of Tariffs
Step 3; Logistics
After doing your research, prepare your documentation, and I warn you that they are a lot.
1. First, register a company, have your CAC certificate.
2. Then register with the NEPC as an exporter; this enables you to get an exporters certificate and be eligible for NEPC benefits. It will cost you a fee, and you will need to have these documents. You can only register online, and you can do so using this site
- Certificate of Incorporation (issued by the Corporate Affairs Commission), Certified True Copy of Memorandum and Articles of Association, Current Certified True Copy of Form CAC 1.1 – “section C” (Particulars of Directors). This is formerly known as Form C07 or Form CAC 7.
- If you are a cooperative, you need a Certificate of Registration (issued by the State Ministry of Commerce, Local Governments and Federal Capital Territory Area Councils) and the Bye-Laws of the Society
3. After you have done your research and identified a product and a buyer, you must document via an export contract. The document will spell out the obligations of both parties, quantities, price, quality etc. It would help if you also had a proforma invoice, a commercial invoice showing the value of goods for export in the transaction currency. You also need the Nigerian Export Proceed Form (NXP). This form allows you to capture the value of the export transaction and the value of goods for export. The Final Invoice will also show the value of goods for payment by the importer
3. Quality assurance: each product and export destination will have precise quality requirements to receive imports. As an exporter, your research would have identified what certification is required. These are a few of the certifications needed in Nigeria.
- phytosanitary certificate for agricultural commodities (issued by NAQS)
- health certificate for processed and semi-processed food items (issued by NAFDAC)
- international veterinary certificate for animals and animal products (issued by DVPCS)
- fumigation certificate for agricultural commodities (issued by FPIS, part of FMITI)
Documentation evidencing movement: These serve various purposes as below
- Clean Certificate of Inspection: issues by Pre-shipment Agent, it confirms the
- Certificate of Weight and Quality; issued by independent assessors like Bureau Veritas they inspect goods of export to ensure they conform to quality standards on contracts of export
- Certificate of Origin; Issued by the National Association of Chambers of Commerce, Industry, Mine and
- Agriculture (NACCIMA), it indicates the origin of goods, particularly important in the cross border trade agreement.
- Bill of Lading, issued by the shipping company, indicates goods shipped. An Airway Bill is issued by the airline, does the same purpose. If you ship by road, you will need a Road Transport Bill
Step 4; Exporting
This is the actual process of your exporting. This is an industry itself, and there are registered agents to help you do this. You can find registered agents on this link freight forwarders in Nigeria
The learning for you here is to understand these trading terms. Again, the NEPC has a great infographic that I post below in Diagram 12. The most popular terms will be FOB and CIF. FOB means you are invoicing the goods to stop at the point of the local export terminal. CIF, you are invoicing to stop at the destination port
Diagram 12: Export Logistics terms
Payment methods/ Export Financing
There are different payment methods available in international trade. The main options are:
- Documentary credit (e.g., Letter of Credit)
- Open account (e.g., advanced payment, cash against the document, deferred payment)
- Documentary collections (e.g., Bills of collection)
You must maximize your margins by seeking out low-cost sources of finance. I have two links for you
Nigerian Export-Import Bank: A bank set up to specialize in funding imports and exports via direct lending, export credit facility and others link here NEXIM
The Central Bank of Nigeria also offers two export financing products,
- Export Stimulation Fund
- Rediscounting Refinancing Facility
You can get more information using these links CBN Development Finance Loans
This article could not be written with the support of the Nigerian Export Process Council. I encourage you to visit their site and sign up for the various training before embarking on this export journey.
Learn all you can, then apply what you have learned, start small, then grow organically
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