- 1 What is Exporting?
- 1.1 Why You Should go Into Export Business in Nigeria Today
- 1.2 What are the Challenges of Export Business In Nigeria
- 1.3 Basic Requirements to Start Export Business in Nigeria
- 1.4 How to Source for Capital
- 1.5 How to Get Paid
- 1.6 How to Make Over 100% Return on Investment
- 2 Conclusion
Do you want to make huge money within a limited time?Read further to learn more on how you can start exportation business in Nigeria with good like charcoal and agricultural products.
While this industry is largely run by the private sector, the government regulates all of the industries and still maintains some state-owned products like crude oil to be exported only by the country, with the help of brokers to facilitate a lot of the transactions.
What is Exporting?
Exporting is the act of moving goods and service from one county to another for exchange of payment. This means that for you to be an exporter or involve in export business in Nigeria, you must source for goods and services here in Nigeria and transport it to other part of the world in an exchange for payment.
The possibilities for exportation is vast, and in a country like Nigeria that’s rich in mineral resources and agricultural products, venturing into the export business is a great bet for any entrepreneur to take up.
Why You Should go Into Export Business in Nigeria Today
There are various reasons why one should go into export business in Nigeria today.
1. It is one of the most lucrative businesses in Nigeria today. In fact, it has been and will always remain a very lucrative business because you’ll earn in hard or foreign currencies. Whether you’re considering starting small scale export business in Nigeria or large scale, you’ll always earn in foreign currency.
2. With the present economic condition in Nigeria today, exchange rate is at its peak. Therefore, if you earn in foreign currency then you can become very rich.
3. The government policies are favorable. In fact, export sector is one area that enjoys maximum support from government. Presently, every exporter or those in export business in Nigeria enjoys 13 export incentive schemes. Few of them are given below.
Export Expansion Grant
Before now, government pays exporter some percentage of their total annual export cost. The percentage is directly proportional to the volume of export you do in a year. Assuming you export goods worth of N1, 000,000 in a year, government will give you about N150, 000 at the end of the year as thank you for being an exporter. That percentage given to exporters is referred as export expansion grant.
But today, it is no longer money, instead government will give you support by providing you with a non-cash grant. This could be in form of machines, logistics and many more.
Duty Drawback Scheme
Those into export business in Nigeria enjoys duty drawback. This means that you can import any goods from another country with the proceeds you make from export without paying custom duty.
In other words, if you export cashew to Vietnam and buy any goods or raw material with the money you made from Vietnam, then you will not pay custom duty here in Nigeria to clear your goods.
Tax Relief on Interest Income
In case exporter loaned money from bank to finance his/her small scale export business in Nigeria, the interest on the money is not taxable. So, you’ll enjoy free tax on interest on borrowed money as an exporter.
What are the Challenges of Export Business In Nigeria
- The first challenge exporters or intending exporters face in Nigeria is the “Trust” problem. Fraudulent activities of few Nigerians have earned us bad name internationally. Therefore, it’s usually difficult to secure export contract. Foreigners find it difficult doing business with us because they are afraid of being duped.
- The second challenge exporters or intending exporters face in Nigeria is lack of adequate mentoring. Nigeria export promotion council is mandated with the responsibility of mentoring exporters. But, reverse is the case, they lack the power to do that.
Basic Requirements to Start Export Business in Nigeria
There are 4 basic requirements you need to start a profitable export business in Nigeria. They are:
Understanding Export Trade
To start and run a successful export business in Nigeria you must have in-depth knowledge of how it works. You must learn the terms, where to source for exportable products, how to get contract and many more.
There are two ways you can get a better understanding of export business. Firstly, is by undergoing mentoring under a practicing exporter. Secondly is by reading from detail guides on how to export from Nigeria.
To get a comprehensive guide on export business in Nigeria, visit any of Nigeria export promotion council’s zonal offices.
Planning For Export Business in Nigeria
The first thing you must do as part of planning is to register a limited liability company. After which you secure export license from Export promotion council. Then decide on the product to export.
There are more than 100 agricultural export products in Nigeria that you can choose from. You to concentrate on one product and master everything about it before jumping to another.
Market research entails finding out countries that buys more of the product you intend exporting. It also involves knowing the specifications and quality the buying countries need. For instance, those in charcoal export business in Nigeria mostly ship to Europe because they buy more.
In addition, market research also means knowing where to source the product locally. Which means you must search and identify where the product is produced in regular, large and exportable quantity and quality.
The logistic aspect of export business in Nigeria starts from sourcing for products, conveying it either from factory or farm to export terminals. Inspection of the product by authorized body such as FIIRO, Nigerian custom and NDLEA.
Finally, you document every step with government agencies because that alone will ensure you really exported. And government will grant you all the benefit due to you as an exporter.
If for any reason you do not document your export process with government agencies, then it termed smuggling, and you’ll be punished if caught along the line.
How to Source for Capital
Export financing has never been easy in Nigeria. NEXIM bank (Nigeria export and import) was created to finance export businesses in Nigeria, but it has never delivered in its mandate due to corruption. That is not to say that there are no other means of sourcing for capital.
- The first way to source for capital is to look for investors. Most big men around you have the money and searching for where to invest it. Therefore, if you’ve good understanding of export business in Nigeria, with good business plan, then investors are ready to invest.
- Another place to get finance is going for loan. If you’ve good understanding of export business in Nigeria then you can go for loan to start. There are private loan givers that you can get money from as long as you meet their requirements.
How to Get Paid
There are various ways of getting paid as an exporter in Nigeria. Basically you get paid through your banks as long as you documented your business.
- The first way to get paid is known as cash -in- advance. This means the buyer will send you money first before you ship. The reality is that if you’re a beginner you’ll hardly enjoy cash in advance. It’s only possible for those with long trading history
- The second way is through letter of credit (LC). This is one of the most reliable ways you can get paid as an exporter. In this case, the buyer’s banker will tell your bank that the buyer has the said amount of money in his account to pay you as soon as you deliver his products. In some cases, the buyer will mandate his bank to release some percentage of the money to your bank once you scan your bill of laden to him. Bill of laden is the document shipping company will give you, showing that your product has left the shores of Nigerian waters or air ways.
How to Make Over 100% Return on Investment
Whether you are considering going into small scale export business in Nigeria or large scale export business in Nigeria there is a singular thing you must do to maximize profit. That is by adding value to whatever you’re exporting.
For instance, those who export cashew nut can’t make money like those you export cashew nut oil. Therefore, learn how to process and add value to your products. This is basically applicable to agricultural export products in Nigeria. If you’re a beginner, you can start exporting unprocessed products, but have in mind of expanding into exporting processed product later.
Starting an import/export business in Nigeria comes with both its pros and cons. If executed well, the exporter could rake in a whole lot of money.
While most people believe exportation should cost you millions of dollars, going in as a broker and leveraging a wide network of local suppliers to supplement your goods sales will go a long way in helping you build a successful business that won’t just enable you to generate high revenues in widespread broker commissions, but will ensure you contribute positively to Nigeria’s or your own country’s GDP.