How To Start An Import/Export Business In Nigeria: A Short Guide
The import/export business is the key driver of growth or recession in any country. Depending on if there are more imports or exports than the other, the effects it has on every economy, including Nigeria’s, is always profound.
While this industry is largely run by the private sector, the government regulates all of the industries and still maintains some state-owned products like crude oil to be exported only by the country, with the help of brokers to facilitate a lot of the transactions.
The possibilities for exportation is vast, and in a country like Nigeria that’s rich in mineral resources and agricultural products as mentioned in another article, venturing into the import/export business is a great bet for any entrepreneur in any country around the world to take up.
What Is The Import/Export Business About?
The import/export business is about the importation and exportation of goods and services from the shores of every country around the world.
An exporter usually gets a purchase order from an importer. And after all the co-requirements are met by both parties, a deal is signed—where the importer would usually sign a year-long contract with the exporter, which is then adjusted to 5 years after a first successful one-year delivery.
Facts And Benefits Of The Import/Export Business
- It can build or destroy a country’s economy
- You need license to be a direct exporter
- It can be capital intensive
- It can also be started with $0
- There’s always a lot of mistrust issues between the importer and the exporter
- Most products you want to import or export are already banned
Business Opportunities In The Import/Export Business
1). Direct Goods Export:
Here a company who manufactures locally could source international clients for their business and export their products to them. This is usually capital intensive, as you have to either be producing the products yourself, which will cost money, or you may have to outrightly buy out from the producers to export with your own margins.
2). Export Management:
Export management companies help organizations who have products for exports but don’t know how to go about it or don’t want to know at all. What the export management company does is to act as a consultant for the direct supplier, communicate with the buyers using the supplier’s company name, and close deals on behalf of the supplier.
The supplier would usually have a fixed amount they pay the Export Management Company monthly, and also a commission they’d earn on every successful sale.
3). Export Brokers:
This is the most popular, safest, and effective exportation angle to come in from. Here you act as a broker for either the importer or the exporter or both.
If for instance, the cost of white Sesame seeds from Nigeria $1,500 per ton, you could strike up a deal with a supplier to accept $1450 per ton or better still, you could source a buyer that would purchase from you for about $1,550 per ton.
Brokering any export transaction is the best way to approach the industry because, you can be exporting different products across various industries, and still generate far more profit margins than the people you’re brokering on their behalf.
Requirements For Starting And Import/Export Business In Nigeria
- Register The Business
- Register With The Nigerian Export Promotion Council (NEPC)
- Register With Customs By Completing The Form NXP
- Obtain Special Licences And Permits For The Goods You’re Dealing In
- Verify Your Products Are Not On The Prohibited Goods List
- Get Your Insurance Covered
- Partner With A Freight Forwarding Service Company To Ship Your Goods
For an in-depth explanation of each requirement, please read our other article here >>> 10+ Legal Requirements For An Import And Export Business in Nigeria
How To Find Buyers For Your Import/Export Business
- Leverage LinkedIn To The Fullest
- Register With Export Promotion Councils (EPC)
- Find Local Buyers Who Represent Foreign Companies
- Fill Orders From Local Buyers Who Export To Foreign Organizations
- Register On International Trade Platforms
- Have An International SEO-Ready Website
- Do Email Marketing
- Hire Overseas Agents On Commission Basis
- Contact The Countries Chamber of Commerce
- Participate In Trade Fairs
- Get Import Lists From Foreign Embassies
- Internet Marketing
For an in-depth explanation of each method, read our other article here >>> How To Find International Buyers For Your Export Business
Challenges Of The Import/Export Business
- Problems with financing and loans
- Volatile exchange rates
- Customs and taxes
- Natural factors like drought, pests, and diseases for agricultural products
- Sourcing from reliable suppliers
- High and unstable product pricing
- Logistics costs
- Poor product modification to meet international standards
- Getting export license and documentation
- Government policies always interrupt long-term contracts
Starting an import/export business in Nigeria comes with both its pros and cons. If executed well, the seller could rake in a whole lot of money. But if not well managed, significant losses could be recorded.
While most people believe exportation should cost you millions of dollars, going in as a broker and leveraging a wide network of local suppliers to supplement your goods sales will go a long way in helping you build a successful business that won’t just enable you to generate high revenues in widespread broker commissions, but will ensure you contribute positively to Nigeria’s or your own country’s GDP.
What are your thoughts on how to start an import/export business in Nigeria? Let me know by leaving a comment below.