It is a common saying that
opportunities go around in overall called work. This statement best describes
the current foreign exchange challenge of a lot of importers in the country.
The policy of the government on foreign exchange which led to the closure of
the Windows for sales (Retail and Wholesale Dutch Auction System), listing of
some imported items as being non-valid for foreign exchange and rationing of
the weekly sales to importers through the various banks have brought untold
hardship on the business of many importers in Nigeria.
For the import businesses, who are
currently undergoing a lot of stress because of the high cost of forex and
inadequate forex, here is my suggestion, you can save your business from this
financial bleeding and disappointment of your suppliers abroad by simply
setting up a special purpose vehicle in your organisation for the purpose of
exportation. This challenge therefore creates a unique opportunity for
importers to start a new line of business and thereby increasing the revenue
base of their businesses.
It is interesting to note that an
importer can become a supplier of raw material to his suppliers (who is a
manufacturer). An importer who imports batteries from a manufacturers can in
turn exports waste battery cells and lead ores to them. Those importing
chocolate and confectionery can in turn export cocoa beans to the manufacturer.
If the item being imported is sugar, the importer can in turn export sugarcane
to the manufacturers. If the importer is into the importation of juice
concentrates from the manufacturers, he can in turn begin to export fruits to
them.
This current challenge can
therefore be use as a leverage and motivating factor importers to invest in
export business and thus create their own foreign exchange. The forex from the
export proceeds can then be used to fund their importation businesses. As a
matter of fact, it is a lot easier for an importer to simply flip over his
operation and begins to export. This is because, the importer already
understands international trade documentations, port operations, payment
methods, risks involved international trade to mention a few. All that the
importer now need is to have a proper understanding and handling of the 5Ps
(Products, Pricing, Purchasers, Payment & Paperwork) which are very
critical to non-oil export business success. The details of the 5Ps will be
discussed in detail in the subsequent editions of the Export Digest within the
current quarter.
Most of the importers in Nigeria
can be broad categorised into 3 groups based on their core businesses. These
include Manufacturers, Engineers and Traders. Each of these groups have unique
features that make them to be perfectly suited to operate in the 3 sub-sectors
of non-oil export businesses in Nigeria. These include Semi processed or
finished goods, Solid Minerals and Agricultural commodities. This is not to say
that each of the 3 groups of importers cannot operate in all the non-oil
sub-sector, what I am saying is that, they would most likely perform better and
grow faster if they operate within the sub-sector where they already have some
strength.
For very obvious reasons, I will
like to recommend that importers who are also into Manufacturing should first
consider entering the export business through the sales of their products (processed
or finished goods) abroad. This is
because they are already used to value addition and the challenges of
manufacturers in Nigeria. They could start by first exploring the possibility
of exporting their current products to West Africa, other parts of Africa or
other countries around the world especially where a lot of Nigerians reside
like the United Kingdom and the United States of America.
On the other hand, any engineering
company that imports into Nigeria (especially those into civil engineering)
should first consider mining solid minerals and then exporting them. This is
due to the fact that they already have a number of equipment that will be of
great use to them in the mining, processing and exportation of solid minerals
like lead ore, zinc ore, copper and manganese ore out of Nigeria.
In the same vein, all the traders
importing items into Nigeria simply for sales should see the exportation of
agricultural commodities as the first option to be considered as they venture
into export business in Nigeria to generate their forex. This is because they
neither have any equipment needed for the manufacturing of any product nor do they
have any machinery for mining of solid minerals.
On a final note, I will like to
submit that, the current challenges of forex in Nigeria is indeed a great
blessing in disguise for all affected importers. This is because, it is forcing
smart ones to start export businesses in order to create their own forex,
create more jobs, generate more income and stay competitive in the same import
business.
For questions on this thought, you
can reach me via email to bayemibo@3timpex.com
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