The Basic Features Of A Typical Export Contract

The basic features of an export contract include the following;

1. Quality Specifications

2. Quantity

3. Packaging

4. Contract duration

5. Shipment date

6. Pricing

7. Incoterms

8. Origin of goods

9. Inspection agents

10.Port of loading and port of discharge

11.Shipping line

12.Payment terms

13.Payment methods

14.Documents

15.Dispute resolution

Commodity Specifications

Export Product Prices

Online Trade Portals

The posting on Securing an export contract posted on November 26, 2009 shows seven different ways of securing an export contract. The last on this list is the internet option. The trade portals where you can explore the internet options include (but not limited) to the following;

1. www.alibaba.com
2. www.busytrade.com
3. www.ec21.com
4. www.ecplaza.net
5. www.exportersindia.com
6. www.forfarmers.com
7. www.fuzing.com
8. www.globalbuyersonline.com
9. www.globalbuyersonline.com
10. www.go4worldbusiness.com
11. www.koreatradeworld.com
12. www.tradeboss.com
13. www.tradeholding.net
14. www.tradeindia.com
15. www.tradekey.com

Financing Model For Export Credit Agencies

1-Agreement between importer and exporter

2-importer applies for LC

3-Importer’s bank issue LC to exporter’s bank

4- Exporter’s bank advices the LC to the exporter

5- Exporter applies for export credit guarantee

6-ECA sends export credit guarantee to exporter’s bank

7-Exporter ship goods to importer

8-Exporter forward documents to his bank

9- Exporter’s bank discount the LC based on the export credit guarantee

10- Exporter’s bank forwards document to the Importer’s bank

11- Importer’s bank release document to Importer

12-Importer pays his bank

13- Importer’s bank pays the exporter’s bank

INCOTERMS In International Trade.

Incoterms is International Commercial Terms designed by the International Chambers of Commerce to share the cost and risk involved in transporting goods from one country to the other between the importer and the exporter. The latest version is INCOTERMS 2000 and it contains 13 INCOTERMS. However, out of these 13 incoterms, only three are often being used in export business in Nigeria. These include;

FOB – Free On Board (named loading port): The classic maritime trade term, seller must load the goods on board the ship nominated by the buyer, cost and risk being divided at ship's rail. The seller must clear the goods for export.

CFR – Cost and Freight (named destination port): seller must pay the costs and freight to bring the goods to the port of destination. However, risk is transferred to the buyer once the goods have crossed the ship's rail

CIF – Cost, Insurance and Freight (named destination port): exactly the same as CFR except that the seller must in addition procure and pay for insurance for the buyer.

Payment Methods In International Trade

Exporting From Nigeria: The Step by Step Processes

1. Read the content of this blog
2. Register a limited liability company through your lawyer
3. Obtain an Export License from the Nigerian Export Promotion Council
4. Prepare and Plan your export (details in other postings )
5. Secure an Export Contract
6. Source for products and Transporting them Lagos
7. Process NXP form and pay NESS fees through your Bank
8. Arrange for warehousing and Inspection
9. Engage a freight forwarder
10.Book a truck and container
11.Loading and sealing of container
12.Transportation and GIT insurance to port
13.Customs Inspection at the port
14.Delivery to the shipping line
15.Obtaining Transport Document from the shipping line
16.Obtaining Inspection report from Cobalt
17.Obtaining Customs documents
18.Forwarding documents to supplier (directly or via your bank)
19.Submission of Post Export Documentations to the bank
20.Payment of Export Proceeds

Profitability Profiles- Ginger

Profitability Profiles- Charcoal

Post-Export Documentations (Exchange Control Documents)

Upon shipment of the goods, the following documents (called exchange control documents) are required by CBN to be submitted to the bank;

1. NXP form duly endorsed and stamped by the Nigeria Custom’s Service, evidencing shipment of goods.
2. Receipt of payment for Nigeria Export Supervision Scheme (NESS) fees i.e naira equivalent of 0.5% of the FOB value of the shipment
3. Single good declaration (SGD) form issued by Customs
4. Clean Certificate of Inspection (CCI) issued by Cobalt

Other documents

1. Bill of lading
2. Invoice
3. Packing list

Pre-Export Documentations In Nigeria

The following documents are required by CBN to be submitted to the bank before any legal export can take place. These include;

1. Completed original NXP form
2. Valid Nigeria Export Promotion Council (NEPC) license (copy)
3. Valid Proforma Invoice (copy)
4. Completed original copy Cobalt RFI form
5. Certificate of incorporation (copy)

Securing An Export Contract

To secure an export contract for your products, the following options can be explored.

1. International Chamber of Commerce (ICC) Nigeria
2. Bilateral Chamber of commerce (e.g. Nigeria-German Business Association)
3. Trade Brokers
4. Personal contacts
5. Consulting firms
6. Referrals from other exporters
7. Friends and Relatives abroad
8. Internet e.g. www.alibaba.com, www.tradekey.com, www.ecplaza.net, www.tradeboss.com etc.

How Do I Obtain An Export License in Nigeria?

To obtain an export license, you need to register a limited liability company with the Corporate affairs commission (CAC) through your lawyer. Then the following documents will be submitted to the Nigerian export promotion council.

1. A duly completed export license application form obtained from the Nigerian Export Promotion Council.
2. Copy of certificate of incorporation
3. Memorandum and articles of association
4. Certified true copy of Form C.A.C 7 and C.A.C 2

Planning and Preparing For Export

While preparing for export, the following should be considered before deciding on the type of products and volume to be exported;

1. Availability of products- where to get the commodity?
2. Availability of Market- where do I sell the commodity?
3. Capital- how much do I have?
4. Profitability- how much profit can I make from what I have?
5. Sustainability- for how long can I get this commodity?

Exportable Commodities in Nigeria

Cassava

Charcoal

Cashew nut

Chilly pepper (Dried)

Cocoa beans

Coffee

Finished Leather

Ginger

Groundnut

Gum Arabic

Horns (Cow)

Hibiscus Flower

Kola nuts

Rubber

Sesame Seed

Shea nuts/Shea butter

Soya beans

Hides and Skins

Wheat Pellets

Exporting from Nigeria

Nigeria is a country naturally blessed and endowed with items that are in serious demand in the export markets around the world. We are not only blessed with solid minerals (besides crude oil) we are also blessed with good climate and weather conditions to support the growth of commodities that are industrially useful in the developed nations. No wonder an Asian will come into this country with a briefcase and 2-5 yrs down the line, he would have become an employer of labour by harnessing our resources to build wealth for himself via export business opportunities in Nigeria.

The postings in this Blog are aimed at awakening Nigerian businessmen, Fund managers and professionals to consider the possibilities of exporting commodities while they are still very active on their present Job. This business is not only very profitable (about 25-100% ROI), it also has a short transaction cycle of about 6-8weeks. It is a very good plan B, and it could therefore constitute very good option in your exit strategy as an employee.

This blog is dedicated to assist you and answer all your questions about exporting commodities in Nigeria with minimal involvement, very low overhead cost and also ensuring the security of your capital.

To learn more, click on the different topics in the Export Information Archives on the side bar.