Procedure for Exporting Farm products from Nigeria to other countries

Company Law, Company/Corporate Law, Uncategorized

In order for the farmers who are interested in exporting their farm products abroad  to get  acquainted with the procedures and the requirements of exporting non-oil goods, we have put this extract from Nigerian Export Promotion Council website together.

READ ALSO:Some of the factors that must be considered before going into farm partnership

READ ALSO:A Complete Guide on How To Start Bee Farming In Nigeria

Nigerian government launched a special governmental body, called Nigerian Export Promotion Council. The council works to encourage Nigerian industrialists, businessmen, and agriculturalists to export more non-oil products. This is so that the government can increase export index, fight unemployment issue, and stabilize Nigeria’s economy. A guide for your flawless export business Are you interested? Then look at this detailed guide on how to export goods from Nigeria to other countries. The requirements for exporting goods to foreign countries depend mostly on what kind of product you plan to export. The following Nine steps are adapted from Nigerian Export Promotion Council .http://nepc.gov.ng/get-started/export-guide/

READ ALSO:Reasons why Agricultural Investors/farmers may lose their investment in Nigeria

READ ALSO:What prospective buyers must Know before purchasing a landed property

STEP 1

EXPORT READINESS CHECKER

Do you want to know if your business is ready to start with exports? Check out your current status by filling in this easy to understand readiness checker and find out immediately!

Are some aspects of your business are not yet sufficient for international trade? We will advise you on how to improve in the results section and direct you to the right information pages directly.

READ ALSO: How to make a living doing snail Farming

STEP2

E-REGISTRATION

When you want to export from Nigeria you are obliged to register at NEPC. You can only register as an exporter via the e-registration platform. This page present all the information you need to know for registering at NEPC.

READ ALSO: Procedure for Registering your companies, Clubs, NGOs by yourself

STEP3

UNDERSTANDING THE MARKET

In order to develop your export business into a success, you should make sure that you understand your target market(s). This means you have to do some research about your export destination(s). It allows you to acces market opportunities and the cost of capturing them.

Good market research should not be an academic way of only embedding assembled facts and figures. It rather has to focus on what drives your target market(s) and how to get the best out of it.

 

Top tips to understand the market

  1. Gather basic market information, from import regulations to trade statistics. You can make use of several freely available Market Analysis tools.
  2. Narrow the focus of your research to your product or service. This will make the whole process more specific.
  3. Research competitor markets. Find out what they are doing right and how they are doing it.
  4. Attend market-specific seminars. Seek out practical advice for experienced businessmen.
  5. Develop direct contacts with potential buyers. You can make use of several freely available online directories.
  6. Try to understand the market environment. Relevant trade fairs and embassies are good sources of information.

Research areas

The first step of market research includes gathering basic information, ranging from import regulations to trade statistics. You should include several areas in the first phase of your market research. The most important aspects are:

  • Trade statistics and trends
  • Trade policies
  • Regulatory framework
  • Business environment
  • Business culture
  • Distribution channels
  • Trade logistics
  • Risk assessment

 

Tools for market analysis

There are numerous online Market Analysis-tools online available. These tools can be used for free. We recommend to make use of these tools in your process of understanding your target market(s). Check out a list of the relevant tools and start using them directly in your research!

MARKET ANALYSIS TOOLS

Product specific market research

After you have gathered and analysed basic information, you should narrow down the research to your specific product or service. This also involves presenting your product or service to buyers overseas. Gather feedback on your offer by sending data or samples to buyers. Also pay attention to analysing the competitors of your target market(s) in this stage.

 

International buyer directories

You want to send out your product samples to get feedback from buyers. But how can you then find your buyers? Fortunately there are plenty of international buyer directories available (some free of charge, others with paid subscriptions). Check out a list of buyer directories NEPC recommends to use during your market research!

INTERNATIONAL BUYER DIRECTORIES

 

Exporter advantages

While it will take some time, good market research gives you several great advantages in your further export process. The main benefits for you:

  • it helps you to identify your most promising market
  • it will include rich inputs for your export plan
  • it will give you full understanding of the competitive landscape of your target market
  • it will support you in minimising risks and maximising pros

 

STEP4

EXPORT PLAN

After you have researched your market opportunities, selected your target market(s) and gathered information with respect to these market(s) it is time to develop an export plan.

 

Five export plan tips

  1. Keep your plan simple and to the point
  2. Always include your unique value proposition. Describe what differentiates you from your competitors
  3. Always develop a very concrete budget plan
  4. Keep your target market in mind when defining your export plan
  5. A good export plan guides you seamlessly through different export processes. It helps hugely when you are in touch with (financial) advisers, brokers and governmental bodies

 

Your benefits

A well-written export plan will assist you in defining export goals and match your resources to those goals. Focusing your resources allows you to provide excellent service delivery to your clients (importers). It makes your company stand out, projecting it as one that has realistic goals with outlined plans on how to achieve them. Last but not least, it will guide management on long-term commitment for exports.

 

Key elements

A good export plan consists of certain key elements. NEPC developed a guideline on export plan development for exporters. This includes the following key topics:

  • Company profile (about us)
  • Key features of target market(s)
  • Competitors’ analysis
  • Market entry strategy
  • Unique selling points
  • Promotional strategy
  • Branding (if relevant)
  • Logistical planning
  • Action plan
  • Resources required

 

Export plan template

NEPC developed a template containing all the key elements listed above and includes additional descriptions per element. It guides you to build your own comprehensive and complete export plan. Check out our full template for developing an export plan!

 

STEP5

EXPORT DOCUMENTS & PROCEDURES

To export from Nigeria you should follow the appropriate export procedure. This is a formal process in conducting international trade in Nigeria. Certain export documents are attached to this procedure. Export documentation is necessary to facilitate exports of goods and services.

 

Importance and advantages

Following the structured export procedure will give you a better understanding of the full export process. Therewith your company will benefit from the right and up-to-date knowledge you receive by following the right procedure. Besides, it leads to:

  • minimising your export risks
  • ensuring that exported goods conform to importing country specifications
  • meeting buyer requirements for export by providing evidence of origin and delivery
  • supporting you to formalise your export business
  • supporting you in qualifying for export incentives

 

Needed export documents

For the full formal export procedure you will need certain export documents per step of the process. The needed documents are shown in the complete overview below:

EXPORTER REGISTRATION DOCUMENT

The first step of your export procedure is registration as an exporter at NEPC. In order to venture into export business this is obliged. In summary:

  • Document issued – exporter’s certification
  • Issued by – NEPC
  • Relevant because – it licenses you as exporter and makes you eligible for NEPC-benefits

If you want to know how to obtain this document, please check  e-registration page.

EXPORT CONTRACT DOCUMENT

An export contract is an agreement between seller and buyer on the terms of export business:

  • Document issued – a signed export contract
  • Issued by – you as exporter and the importer
  • Relevant because – it spells out the obligations of buyer and seller
QUALITY ASSURANCE DOCUMENTS

Quality assurance documents help you to ensure your exported goods conform to food safety measures (as stated by international conventions and possibly agreed terms of the contract). Using international recognised bodies is very important. Relevant documents include:

  • 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)

Want to find out more regarding quality competent authorities (QCAs) and the associated documents? Check out the detailed information about QCAs!

COMMERCIAL DOCUMENTS

The commercial documents display product values and quantities. The documents are both prepared and issued by the exporter and include:

  • Commercial invoice – indicating the value of goods for export in the currency of transaction
  • Packing list – indicating the unit packaging and total quantity of goods intended for exports
FINANCIAL DOCUMENTS

The preparation of financial documents shows evidence of financial transaction between buyer and seller. It also shows conformance with the financial regulation for exports. Summarising it includes:

  • Document issued – Nigeria Export Proceed form (NXP)
  • Issued by – commercial bank
  • Relevant because – it captures the value of the export transaction for economic development purposes. It is also a major prerequisite for accessing the Export Expansion Grant (export incentive)

 

  • Document issued – commercial invoice
  • Issued by – you as exporter
  • Relevant because – it indicates the value of the goods for export in currency of transaction. It is also useful for processing the NXP

 

  • Document issued – final invoice
  • Issued by – you as exporter
  • Relevant because – it indicates the actual value of the goods exported in currency of transaction for the purpose of payment by the importer

 

GOODS MOVEMENT DOCUMENTS

This deals with all aspects of the delivery of goods to the buyer in the medium specified in the export contract. Documents involved can include:

  • Document issued – Clean Certificate of Inspection (CCI)
  • Issued by – government appointed Pre-Shipment Inspection Agencies (PIAs)
  • Relevant because – it ascertains the quality, quantity and price competitiveness of Nigerian exports

 

  • Document issued – Certificate of Weight and Quality
  • Issued by – independent quality assessors (e.g. SGS, Bureau Veritas) agreed by seller and buyer
  • Relevant because – it ensure the goods conform to the quality standards and weight as stated in the contract

 

  • Document issued – Certificate of Origin
  • Issued by – National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA)
  • Relevant because – it indicates the origin of goods, needed for e.g. trade agreement benefits

 

  • Document issued – Bill of Lading (shipping document)
  • Issued by – shipping agencies
  • Relevant because – it indicates the details of goods transported by sea

 

  • Document issued – Air Way Bill (shipping document) 
  • Issued by – airlines
  • Relevant because – it indicates the details of goods transported by air

 

  • Document issued – Road Transport Bill (shipping document)
  • Issued by – logistics companies
  • Relevant because – it indicates the details of goods transported by road

STEP6

LOGISTICS & FREIGHTS

If you want to export, make sure you understand the basic terms of shipping (including pricing and documentation). You must also understand the responsibilities of the major players for safe delivery of your products to buyers. Details such as duration of shipment, types of transport modes, conditions required for different products and the agreed terms for the export must be well understood.

 

Five tips

  1. Understand the importance of freight forwarding for a seamless export process
  2. Know the available range of logistics options
  3. Conduct due diligence in engaging a freight forwarder
  4. Know how to apply INCOTERMS (2010) in order to quote your price for delivery correctly
  5. Familiarise yourself with export documents and documentation process for logistics

 

Freight forwarders & custom brokers

It is extremely important that you identify experienced custom brokers and freight forwarders. This would ensure that your products get to the buyer via the most appropriate conditions, costs and routes. Familiarise yourself with different transport modes required to deliver the goods to the buyer. In order to be well prepared please:

  • conduct research on at least three freight forwarders / custom brokers
  • visit the online databaseof freight forwarders, custom brokers and cargo agents in Nigeria

 

INCOTERMS (2010)

INCOTERMS is an acronym for International Commercial Terms. These are internationally recognised terms in international transactions. It provides details on the responsibilities of buyers and exporters. The terms are important for the processing of shipping and payment documents during exports. Basically, INCOTERMS defines all obligations of buyers and sellers within the logistics chain.

The picture below (source: internationalcommercialterms.guru) clearly outlines these obligations under different agreements. It specifies the responsibilities of the buyer and the seller per agreement including the point of transferring the obligations (transfer of risk).

Looking for more detailed explanations on INCOTERMS and the different possibilities? Find out everything you need to know on the INCOTERMS rules.

 

Getting paid

After delivering the specified product to your buyer, you should make sure you will receive the payment. Take into account the following tips with respect to getting paid:

  • Familiarise yourself with the different modes of payments
  • Letter of Credit (LC) is a more secured mode of payment
  • To receive payment all delivery conditions mentioned on the LC must be satisfied
  • Be sure that you can adhere to all the requirements and requested documents listed in the LC
  • Discuss suitability of different options with your bankers / financial advisers

READ ALSO:THE MISTAKES LANDLORDS MAKE WHILE ISSUING QUIT NOTICES TO TENANT

STEP7

EXPORT PRICING

To become a successful export venture you need to have the right knowledge about export pricing methods. This always includes all items meant for costing and the way your products are provided. As (prospective or performing) exporter, always ensure basic knowledge regarding all activities constituting export pricing.

 

Top tips for export pricing

  1. Ensure your prices are competitive
  2. Ensure all export-related and -associated costs are covered
  3. Know your break-even points
  4. Set realistic profit margins
  5. Know the INCOTERMS 2010 for pricing purposes
  6. Try to negotiate best rates from service providers
  7. Keep abreast of exchange rates
  8. Review all of your cost elements periodically
  9. Include appropriate currencies and HS code(s)
  10. Include minimum order quantities

 

INCOTERMS (2010)

Be very clear about the obligations for seller and buyer. This includes spelling out where ownership is transferred between you as exporter and the importing party. Basically, knowing the INCOTERMS (2010) in detail is indispensable. Check our detailed explanation about INCOTERMS on the logistics & freights page.

 

Cost categories for export pricing

Make sure to cover all export costs when setting  your export pricing. These include local export costs, international export costs and other associated export costs. In more detail, find out all associated costs per category:

LOCAL EXPORT COSTS
INTERNATIONAL EXPORT COSTS
OTHER ASSOCIATED EXPORT COSTS

Pricing methods

The most common methods for price calculation are the ‘cost plus’- and ‘top down’-method. In order to achieve best results in setting your export price we recommend to use both methods together. This means that you calculate:

  • outwards your ex-factory price to the end consumer (cost plus)
  • from the ideal end consumer price backwards (top down)

As both methods have is strengths and weaknesses, you should calculate both and combine these to find the optimum export pricing balance. Please note that this could be different per export destination!

 

Roles of NEPC

We offer numerous services to Nigerian exporters with respect to export pricing. To summarise we:

  • Provide regular capacity building programmes on costing and pricing for export
  • Offers tailor-made assistance to exporters (office, online media, etc.)
  • Provide top-down export market information (international commodity price)
  • Provide bottom-up export market information (local commodity market report)
  • Provide end-market information to exporter to aid export pricing READ ALSO

 

STEP8

EXPORT FINANCING

As an exporter you have to make sure you get your export financing right. Keep in mind that you must be able to fund your export contract, make sure you get paid, and more.

 

Five tips for financing

  1. Seek help from bankers, financial and export experts
  2. Explore available government grants and loans
  3. Know the grants and loans available from local government areas and private parties
  4. Factoring is a funding facility to consider for increasing your cash flow
  5. Protect your export proceeds against non-payment risk through Export Credit Insurance

 

Money needed

Export business requires sustainable funding over a period of time. The amount of money needed for export is largely dependent on your product and export destination(s). It includes components like marketing and market access, as well as (direct and indirect) working capital.

 

Marketing & market entry costs

Your export budget should cover all costs of marketing your products or services abroad, including the costs of market entry. The product components, requirements of the target market segment and different engagement / publicity needed to draw attention form the basis for marketing and market entry cost. Specific costs involve:

  • Hire dedicated staff member(s) for the export business
  • Regular visits to your targeted export destination(s)
  • Provision of samples to bring to target market

 

Working capital costs

Additional working capital costs are always involved during the export process. This means the amount of money needed to be available to effectively run your business. In practice, payment for the contract is received mostly after delivering all of the goods / service. Thus keep in mind you have to make additional direct costs like: raw material purchases, packaging, transportation, laboratory services, certification(s). Extra indirect costs should also be taken into account: overheads, personnel, plants and equipment, building.

 

Payment methods

There are different payment methods possible between you and your buyers. The main options are:

  • Documentary credit (e.g. Letter of Credit)
  • Open account (e.g. advanced payment, cash against document, deferred payment)
  • Documentary collections

It is advised to always check and discuss your options for payment with a financial adviser. This ensures you to have the right agreements on payment in your eventual export contract.

 

Funding options

There are numerous funding options available to help you in funding your export costs:

  • governmental export incentives
  • factoring
  • loanings (commercial banks / family and friends)
  • support of financial institutions

 

Export incentives

One of these include governmental export incentives. Nigerian exporters could get access to multiple different incentives. NEPC is administrating two of these incentives: Export Development Fund and Export Expansion Grant. Find out all about these incentives including guidelines & procedures, service timelines, fees & charges and other requirements in the export incentives pages.

 

Factoring

Factoring might be an attractive way to help your cash flow. Factoring is a financial transaction where the receivables (such as the invoice) is given to a third party, called a factor for a fee.

 

Loanings

Other ways of funding include loanings of friends and family and a wide range of loaning options at commercial banks. If you want to request loanings at commercial banks you would have to write a bankable proposal. When writing a bankable proposal take into account the following steps:

  • Familiarise yourself with the responsibilities of each financial organization
  • Prepare funding request based on their priorities
  • Get a copy of their template and use it to develop your proposal
  • Formally submit your proposal

 

Financial institutions

Financial institutions offer a lot of interesting funding options and are therefore a very important source of export financing. Find the main institutions for financial support to maximise and expand your export potential below.

NIGERIAN EXPORT IMPORT BANK

The Nigerian Export Import (NEXIM) bank offers a wide range of funding options for your export business. Among these:

  • Direct Lending Facility (DLF)
  • Export Credit Insurance Facility
  • Stocking Facility (for manufacturing exporters)
  • ECOWAS Interstate Road Transit Scheme
  • Foreign Input Facility (for manufacturing exporters)
  • Local Input Facility

Check out the NEXIM-site to investigate your options in more detail!

TAKE ME THERE

CENTRAL BANK OF NIGERIA (CBN)

In addition to the NEPC administered export incentives, the CBN offers two interesting incentives as well:

  • Export Stimulation Fund (access through your bank)
  • Rediscounting Refinancing Facility (access through NEXIM)

Find all details of these funding options on the CBN website.

T

LEGAL ISSUES

When you export it is important to be aware of legal requirements of exports in Nigeria. This is to serve as a guide when planning for export as well as enhance smooth export transactions.

 

Five tips for exporters

  1. It is wise to engage an experienced trade lawyer or expert in complex situations
  2. Understand the market access conditions for your products
  3. Protect your intellectual property (IP) rights, if you have one
  4. Avoid trading on sanctioned / prohibited products
  5. Check out information on frauds, scams and corrupt practices regularly

 

Export contract

An export contract is the agreement between an international buyer and seller.The exporter should be aware and attentive to details of the export contract documents agreed by both parties. International contracts can be complex. It is advised that you ask for advice on the legal implications by a professional.

 

Some important components of an international export contract include:

  • Terms of trade (Incoterms, 2010)
  • Mode of payment (e.g. letter of credit)
  • Mode of delivery
  • Trade enforcement organs
  • Agreed dispute resolution mechanism (which laws apply in case of disputes)
  • Presiding courts

 

Legal & governmental regulations

As an exporter, you should keep in mind some governmental regulations. The most important ones are:

  • Export prohibition – exporters should be aware of the list of prohibited items for exports. Detailed information can be found on the customs information page.
  • Export proceed repatriation – all proceeds from exports should be repatriated within the stipulated time. The Federal Ministry of Finance is monitoring this.

 

Intellectual Property (IP)

In some cases you might want to protect your intellectual property. International protection of your IP is extremely important in protecting you business overseas. For more information on IP you can check out the website of Nigerian Copyright Commission (NCC). This agency is in charge of IP.

 

NIGERIAN COPYRIGHT COMMISSION

The Nigerian Copyright Commission is the highest body regulating, advising, and monitoring matters of copyright law in Nigeria.

TAKE ME THERE

NIGERIAN CUSTOMS PROHIBITION LIST

Export prohibition list

 

Farmland for Sale: N200,000 per acre at Odeda, Ogun State

Leave a Reply