Imagine you are the owner of a thriving small business in Lagos, Nigeria, specializing in high-quality organic shea butter products. Your products have gained significant local popularity, and you are now considering expanding your market internationally. However, the process of entering the global market seems daunting. Questions flood your mind: How do you secure an export license? What are the necessary documents? How do you ensure your products meet international standards?
The Nigerian Export Promotion Council (NEPC) provides a comprehensive guide to help businesses navigate the exportation process in Nigeria.
Step-by-step Guide for New and Existing Exporters
1. Securing an Export License
Securing an export license is crucial for businesses looking to engage in international trade. The NEPC is responsible for issuing these licenses.
Requirements:
- Export Readiness: Ensure your business is ready for export. NEPC provides an export readiness checker for this purpose. Visit the checker platform: https://nepc.gov.ng/get-started/export-readiness-checker/
- E-Registration: Register with NEPC via the e-registration platform at NEPC E-Registration.
Documents Required for Limited Liability Companies:
- Certificate of Incorporation
- Memorandum of Association endorsed by the Federal Inland Revenue Service
- Certified True Copy of Corporate Affairs Commission Form 7
- Board Resolution to register the company with NEPC (with company seal)
Documents Required for Cooperative Societies:
- Certificate of Registration
- Bye Laws of the Society
- Board resolution to register the company with NEPC (with company seal)
Documents Required for Government and Non-Governmental Organizations:
- Certificate of Registration (issued by the Corporate Affairs Commission)
- Constitution of the Organization
- Board of trustees resolution to register with NEPC (with company seal)
2. Understanding the Market
A thorough understanding of the target market is essential for a successful export business. This involves conducting detailed market research.
Research Tips:
- Gather market information on import regulations, trade statistics, and tariff regimes.
- Focus on specific products or services.
- Research in your competitors’ markets.
- Attend market-specific seminars.
- Seek advice from experienced exporters.
- Develop direct contacts with potential buyers using online directories.
- Understand the market environment, including culture, demography, religion, and currency.
- Utilize trade fairs and embassies as information sources.
Research Areas:
- Trade statistics and trends
- Trade policies and regulatory framework
- Business environment and culture
- Distribution channels and logistics
- Risk assessment
Market Analysis Tools:
- Utilize online market analysis tools to enhance understanding of your target markets.
Product-Specific Market Research:
- Narrow your findings to specific products or services.
- Make offers and send samples to buyers for feedback.
International Buyer Directories:
- Use international buyer directories to find potential buyers. Some directories are free, while others require a subscription.
3. Export Plan
After conducting market research, develop an export plan.
Export Plan Tips:
- Keep the plan simple and to the point.
- Include your unique value proposition.
- Develop a feasible budget plan.
- Focus on your target market.
- Involve relevant stakeholders (financial advisers, brokers, governmental bodies).
Key Elements of an Export Plan:
- Company profile
- Key features of target markets
- Competitors’ analysis
- Market entry strategy
- Unique selling points
- Promotional strategy
- Branding (if relevant)
- Logistical planning
- Action plan
- Resources required
Export Plan Template:
- NEPC provides a template containing key elements and descriptions to guide the development of a comprehensive export plan via: https://nepc.gov.ng/cms/wp-content/uploads/2018/06/Export-Plan-Template-NEPC.pdf
4. Export Documents and Procedures
Export documentation is essential for the formal export of goods and services from Nigeria.
Importance of Export Documentation:
- Minimizes export risks
- Ensures exported goods conform to importing country specifications
- Meets buyers’ requirements by providing evidence of origin and delivery
- Formalizes the export business
- Qualifies for export incentives
Required Export Documents:
- Exporter Registration Document: Issued by NEPC, it licenses you as an exporter and makes you eligible for NEPC benefits.
- Export Contract Document: An agreement between seller and buyer on the terms of export.
- Quality Assurance Documents: Includes phytosanitary certificates, health certificates, international veterinary certificates, and fumigation certificates.
- Commercial Documents: Proforma invoice, commercial invoice, and packing list.
- Financial Documents: Nigeria Export Proceed form (NXP), commercial invoice, and final invoice.
- Goods Movement Documents: Clean Certificate of Inspection (CCI), Certificate of Weight and Quality, Certificate of Origin, Bill of Lading, Air WayBill, and Road Transport Bill.
5. Logistics and Freights
Understanding the basic terms of delivery, responsibilities of major players, transport modes, shipment duration, and conditions required for different products is essential.
Tips:
- Know the range of freight options available.
- Understand the role of freight forwarders for seamless export processes.
- Conduct due diligence in engaging a freight forwarder.
- Familiarize yourself with INCOTERMS 2020.
- Understand necessary freighting requirements.
Freight Forwarders and Custom Brokers:
- Identify experienced freight forwarders and custom brokers.
- Conduct research on at least three options.
- Use online databases of freight forwarders, custom brokers, and cargo agents in Nigeria.
6. Export Pricing
Accurate export pricing is crucial for competitiveness and profitability.
Export Pricing Tips:
- Ensure prices are competitive.
- Cover all export-related and associated costs.
- Know your break-even points and set realistic profit margins.
- Be conversant with exchange rates and appropriate currencies.
- Review cost elements periodically.
- Be aware of minimum order quantities.
Cost Elements for Export Pricing:
- Local Export Costs: Sourcing, packaging, logistics, warehousing, quality assurance, documentation, forwarding costs, levies, bank charges, cost of funds.
- International Export Costs: Freight costs, travel, promotional costs, import duties/taxes.
- Other Associated Costs: Market research, international communications, production of export literature.
Pricing Methods:
- Cost-Plus Method: Calculate outwards from the ex-factory price to the end consumer.
- Top-Down Method: Calculate backwards from the ideal end consumer price.
7. Export Financing
Sustainable funding is necessary for export businesses. The amount needed depends on the product and export destination.
Financing Tips:
- Seek advice from bankers and financial experts.
- Explore government grants and loans.
- Consider financing options from multilateral organizations and private parties.
- Look into financing options with NEXIM and financial institutions.
Funding Options:
- Loans: From commercial banks, family, and friends.
- Self Financing and Joint Ventures.
- Support from Financial Institutions.
8. Legal Issues
Understanding the legal instruments regulating non-oil exports in Nigeria and the importing country is vital.
Tips for Exporters:
- Engage an experienced trade lawyer or expert.
- Understand market access terms and conditions.
- Protect your intellectual property rights.
- Avoid trading prohibited products.
- Comply with local and foreign regulatory requirements.
- Stay informed about frauds, scams, and corrupt practices.
Export Contract:
- An agreement between the international buyer and seller, detailing terms of trade, mode of payment, mode of delivery, trade enforcement organs, and dispute resolution mechanisms.
Legal and Governmental Regulations:
- Familiarize yourself with government policies and regulations, export prohibitions, and export proceed repatriation requirements.
Intellectual Property (IP):
- Register and protect your intellectual property to enhance company value and export opportunities.
Costs
- Initial Export Certificate Fee: NGN 13,500
- Renewal Fee: NGN 7,500
- Late Renewal Fee: NGN 12,500
- Lost/Mutilated Certificate Renewal Fee: NGN 12,500
Time Frame and Validity:
- NEPC certificates are valid for two years and renewable annually.
Service Timeline:
- Certificates are issued within one working day after payment confirmation, but delays may occur due to documentation issues.
Certificate Collection:
- Physical collection of certificates is discontinued. Follow NEPC’s instructions for printing your certificate.
By adhering to these steps and guidelines, businesses can efficiently navigate the exportation process in Nigeria, ensuring compliance with all requirements and optimizing their international trade operations.