Dear Entrepreneur,
In today’s global economy, exportation remains a guaranteed way businesses and government can sell their excess goods or services to other countries at prices higher than what is obtainable in their domestic market. Exporting also gives access to a larger number of potential customers, and creates employment which benefits the economy.
The business of export all over the world is primarily about processes and documentation e.g. the buyer needs the assurance that he is getting what he is paying for whilst the seller/exporter needs the assurance that he will get paid. It is thus paramount for an exporter to understand the requisite processes and documentation and today we highlight some important steps every exporter should take in exporting products outside Nigeria.
Compliance with all Exporting Laws and Regulations
Bearing in mind that international trade involves a buyer and seller in different geographical locations who need comfort and reassurance that they are dealing legitimately, the Government has put in place processes and procedures which every Exporter must comply with and they include:
a. Company Registration – A potential exporter is required to register a Limited Liability Company or Cooperative Society which has exportation as one of its objectives.
b. Registration with NEPC – A firm which wishes to export has to be registered with the Nigerian Export Promotion Council (NEPC) which is the agency charged with the responsibility of registering new entrants into the exporting business by issuing them an export licence.
Export Research
An exporter has to carry out some form of research in order to identify market opportunities and identify prospective buyers and customers. Market research encompasses all methods that a company can use to determine which foreign markets have the best potential for its products.
Negotiating The Contract
After ascertaining a market for the products, the exporter would need to enter into an export contract with the potential buyer. Such contracts would normally stipulate, Quality, Quantity, Packaging, Duration, Pricing, Payment terms and Payment methods, Dispute resolution etc.
Export Documentation
To carry out exportation in Nigeria an exporter is required to complete and register Form NXP with an Authorized Dealer (any Commercial or Merchant Bank) of his choice. Additional documentation required include pro-forma invoice, relevant certificate of quality, Shipping documents e.g. bill of exit, bill of lading etc
Managing Product Sourcing and Shipment
A necessary part of exporting is dealing with suppliers, logistics companies, warehousing companies, freight forwarders etc. It is essential for the exporter to pay adequate attention to this phase because it can make or mar your exporting experience. There is the need to tie everything down to documentation so as to reduce miscommunication and conflicting opinions on what was agreed by the parties. It is also essential to be wise in the disbursement of cash.
Paying Attention to your Export Contract
This is a critical part of the Export process and it is essential that you pay special attention to this phase. It is advisable you obtain the opinion of a professional to review both the commercial and legal terms of the contract.
Know about Treaties and Legislation that benefit Exporters
There are several laws and treaties out there that are of immense benefit to exporters but which a lot of people are not taking advantage of, an example is the Africa Growth Opportunity Act (AGOA) a law passed by the United States Congress in 2000 and recently extended to 2025 which is aimed at giving Nigeria and other eligible African countries opportunity to build capacity in global markets. Essentially the law allows some specified products originating from Africa to enter the USA tariff or quota free. This initiative alone propelled car makers Mercedes Benz to set up a plant in South Africa which has been of immense benefit to that country. Another treaty is the ECOWAS Trade Liberalization Scheme which seeks to significantly expand the volume of trade in the West Africa via the removal of both tariff and non-tariff barriers to trade in goods originating from all ECOWAS countries.
Parting Thoughts
Exporting is a process that requires a lot of careful consideration and by no means should be taken lightly, therefore to become a successful exporter, adequate attention needs to be paid to the details highlighted above amongst other things.
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