How To Carry Out Due Diligence Checks On A Business In Nigeria

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Due diligence checks or exercises aren’t meant for just banks to carry out. They’re checks that are carried out by organisations and/or individuals on another organisation or individual to not just verify that they’re who they say they are, but to also establish a degree of comfort for the organisation looking to carry out business dealings with them.

In many industries, due diligence checks are extremely important, and one is the commodity trading business. Since many individuals flaunt themselves as representing a certain organisation or as having carried out certain activities with relation to their business, it is key that importers or international buyers looking to buy commodities from these exporters must have all the information they need about the exporters to be sure they are genuine and have the ability to perform.

See Also: 14 Common Import And Export Mistakes To Avoid At All Costs


What’s The Point Of Carrying Out Due Diligence Checks?

Many organisations move forward to do business with certain businesses based on just hearsay without actually knowing what they’re getting into. Most of the time, they try to have dealings with these companies only to eventually have their time wasted after many months of attempted patronage or to have themselves scammed of some money because they trusted the organisations too much without basing the trust on actual facts.

In the commodity trading business for instance, most importers are prone to high risk of wasted time or lost money because the industry is highly volatile with thousands of people claiming to be what they’re not. When companies try to have dealings with these organisations but end up losing time and/or money to one scheme or the other orchestrated by the exporter, it is largely always primarily based on the fact that they did not do a proper due diligence check on the organisation and went into the transaction blindly.

Due diligence checks reduce your risks and protects your business from businesses who claim to be what they’re not. It helps you to quickly identify fradulent behaviour exhibited by these organisations or individuals, and gives you better confidence to (or not) go into business with them, especially for high-cost transactions that run into hundreds of thousands or millions of dollars.

Asides just checking who the organisation is, due diligence checks are key to assessing the financial situation of a party to ensure they actually have the funds to carry out the transaction. This will help you make better decisions on whether to take a financial risk on the organisation, or on the part of the exporter, to find out whether the importer even has the financial capacity to purchase the commodities they’re requesting of you.

With due diligence checks, you’d be able to identify details the other party have left out and will be able to have a broad understanding of the prospective business partner to enable you decide whether to move forward with them or not.

See Also: How To Find International Buyers For Your Import/Export Business


So How Do You Carry Out Due Diligence Checks On Exporters Or Importers?

To carry out due diligence checks on a commodity trader or organisation, there’re some basics that must be covered. These are:

  • Corporate Profile showing company history, size, office address/location, number of employees, a list of directors, and much more.
  • Client Information Sheet showing the full personal details of the signatories on the contract.
  • International passport copy of the signatories on the contract.
  • Verifiable trade documents/history showing at least one sale made by the exporter and one purchase made by the importer.
  • Physical verification of the office address, mine, warehouse, or any key business environment the exporter or importer claims to operate in.
  • Verification of the financial capability of the exporter or importer.
  • And verification of any documents that prove they’re licenced to market and export such commodities.

These are just a few of what a due diligence check entails.

To be more accurate and to achieve more definitive results, it is always best to patronise the services of a consulting firm that offers in-depth due diligence checks, as not only will they provide more in-depth valuable information, but carrying out a check remotely by yourself mostly ends up unsuccessful.

See Also: How Commodity Trading Works: The Complete Guide To International Trade


To Sum It Up

Running a due diligence exercise is key to entering a businss relationship with a settled mindset, especially if the transactions will cost hundreds of thousands or millions of dollars. Before you commit to any exporter or importer, it is key that you do so with 100% confidence, else, taking any further steps is an unwarranted risk that should not be embarked on.


About The Author

This is an article written by Stan Edom, the Editor In Chief of and the founder of Globexia Limited, a global commodity trading firm that exports solid minerals & agricultural products from Nigeria, facilitates the global trade of oil & gas commodities, and offers commodity trade consulting like importer & exporter due diligence checks, feasibility studies & reports, and trade licence registrations for international buyers in Nigeria.

This article along with others are written to help exporters and importers around the world to have a better understanding of the commodity trading business and to improve their chances of becoming successful in the industry.


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Professional Due Diligence Checks In Nigeria By Globexia

International buyers are always wary of doing business with Nigerian based businesses because of the high risk of disappointments either in the form of time wasted or money lost, and as such, are highly sensitive of any organisation that presents them a trade offer.

To curb this problem and help international buyers make comfortable and confident trade decisions, Startup Tips Daily, through her sister company, Globexia, has set up an in-depth due diligence checks consulting service that will help international buyers get in-depth information on any organisation looking to do business with them. Some of the information the international buyers stand to gain from the in-depth due diligence exercise that will be carried out by Globexia’s team of experienced lawyers in Nigeria are:

  • Verification of Company Registration
  • Verification of Export Licence
  • Verification of Export Activity
  • Verification of Past Certificates of Origin
  • Verification of Past & Present Bill of Ladings
  • Verification of International Passport / Driver’s Licence of The Exporter
  • Verification of Bank Verification Number (BVN)
  • Verification of Tax Documents
  • Verification of Financial Health of The Company
  • Verification of Mining Licence
  • Physical Verification of Office Address With Pictures & Videos
  • Physical Verification of Mining Site With Pictures & Videos
  • Full List of Registered Company Directors

And much more based on the client’s requirements.

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