It is old news that a Dollar is now N400 in the parallel market whilst the pound is now above N500 and still climbing. Some are nervous about the effects of this trend to the Nigerian economy especially because we are essentially an importing nation but the savvy entrepreneur will utilize this opportunity to earn by identifying and exporting the resources Nigeria has in abundance.
We have however identified a knowledge gap in the field of exportation and as part of our efforts to build confidence in the exporting sector we have thought it appropriate to highlight 4 (four) crucial areas a potential exporter must pay attention before and during the execution of an exporting contract.
- 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:
- Limited Liability Company/Cooperative Society – Prospective Exporters are required to incorporate a Limited Liability Company or register a Cooperative Society to carry out exporting.
- Exporting Licence- The agency responsible for the registration of new entrants and issuance of export licence in Nigeria is the Nigerian Export Promotion Council (NEPC). The application can be done online via their web portal www.nepc.gov.ng
- An exporter is required to complete and register Form NXP with an Authorized Dealer (any Commercial or Merchant Bank) of his choice.
- 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. The job of a lawyer is now beyond the courtroom and should include a focus on drafting contracts for businesses that aim to avert disputes before they occur. An entrepreneur should rather make an investment in legal advice before a contract is signed than throw money away resolving a dispute. It is however of importance to include dispute resolution clause in your contracts with emphasis on arbitration and mediation which are now enduring trends in modern business.
- 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.
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.