AfCFTA | Exploring Nigerian Export Potentials |-14-| Edo

Interview on CNBC on RT200 FX and Release of ₦20bn As Incentive To Expor...

Mastering The Djibouti Market Under AfCFTA

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AfCFTA | Exploring Nigerian Export Potentials |-13-| Ebonyi

Export Trade House: How The NEPC Can Make It A Success

The Nigeria Export Promotion Council (NEPC) has commenced a brilliant initiative which involves the establishment of Export Trade House (ETH) in different countries in Africa. Investopedia defined ETH as a business that specializes in facilitating transactions between a home country and foreign countries. Therefore, the goal of the NEPC in establishing the ETH in different countries is to facilitate the growth of non-oil export volume of the country, increase the share of Nigerian products in the targeted markets, create employment for citizens back home in Nigeria and increase foreign exchange inflows into the economy. This will be made possible through access to the market that will be made available to Nigeria businesses and their products by the ETH. 

 

According to the the  Chief Executive Officer of the NEPC, Dr Ezra Yakusak, the export trade houses were targeted at driving market access for Nigerian products. He also said that through the ETH in Cairo, Nigerian products would be shipped, warehoused, displayed and purchased in the North African country, stressing that the trade houses would enhance the visibility of made-in-Nigeria products outside the Nigerian shores, while reducing the cost of logistics on the Nigerian small and medium enterprises (SMEs). So far, the NEPC has established ETH in two locations which include Cairo in Egypt and Lome in Togo. The up coming locations include Nairobi, Kenya; Johannesburg, South Africa, Hunan in China; Ottawa in Canada; Dubai in UAE and Saudi Arabia. 

 

This is a laudable initiative that must succeed in order to help the country generate the export proceeds that is needed by manufacturers to purchase their raw materials and machineries from abroad. However, in order for ETH to be deemed successful, it must had led to the increase in the share of Nigerian products in the targeted markets, create employment for citizens and increase foreign exchange inflows into the economy. For this to happen, the NEPC must mandate its partners that are operating the ETH to focus on value added manufactured goods, provide market intelligence, made available the list of services it renders, provide the transactions dynamics of using its services and the cost of its services to the exporters.

 

It is important that the ETH operators are focussed on value added manufactured goods. This is because this is what will create the jobs locally and also increase the foreign exchange that the country will be able to earn from exportation. By focussing on Agric commodities, the country will be restricted to small markets size that commodities generally have when compared to finished products. For example, the total export market size for raw cocoa beans in the world is just about $9 billion while that of chocolate (a product in the value chain of cocoa) is about $30 billion. Also by processing raw cashew nuts to cashew kernel (which involves the removal of the shell) the price of the produce move from about $1,000 - $1,200 per MT to about $8,000 to $10,000 per MT. So the countries that makes the most money in the value chain of any commodity are those that add value to it. 

 

Also, the ETH needs to be mandated to provide export market intelligence for Nigerian businesses. This should be stated on their website and the address of this website should be made available to the exporting community (the link to the ETH website should be on the NEPC website). The export market intelligence that should be posted on their websites should include but not limited to the following: list of Nigerian products that have potentials in the export market where they operate, the range of competitive FOB price of these products, the annual volume of import of these items, the required certification and documentations for custom clearance, the packaging and labelling requirements, the quality specifications and the product variants/options that are most preferred by the consumers in the export market.

 

In addition to this, the ETH should also make available on their websites the list of services that it is going to be rendering to the Nigerian exporters in the export market. This is very necessary to help the exporters to be able to manage expectations. It is expected that the services of the ETH in the export market would include marketing Nigeria products using different platforms, closing sales and securing buyers, handling logistics of delivery to the warehouse, handles the warehousing arrangement in the export market, sourcing for custom brokers to do customs clearance and also handling debt collection from defaulting buyers in the export market. 

 

Furthermore, it is highly imperative for the ETH to provide on its website, the transactions dynamics (that is the step by step process) of using its services and the timeline or duration of the process. This will help the exporters to be able to know the progress being made on their transactions. This step by step processes should highlight what happens to the products from the point of engaging the services of the ETH to the point of arrival of the goods at the destination port, to the point of clearing, to the delivery to the warehouse, to the point of sales and receipt of payment for the exported items. 

 

Lastly and most important is the cost of the services of the ETH to the exporters. It is very important that the ETH operators are very transparent about on their fees and charges. This fee should be separately stated for each of the services that is being rendered by the ETH. This is to enable the exporters do their cost and benefit analysis in order to be able to know if the business will still be viable after the deduction of the payment due to the ETH. Since the ETH initiative is supported by a government agency like NEPC, it would be expected that the fees should be such that it makes the business to be profitable. This is because, the pricing that ensures high profitability will be an attraction for the exporters that would be using the service and this will consequently help the NEPC to achieve its goals. 

 

In conclusion, it is very important to commend the commitment of the management of the NEPC to the growth of non-oil export volume in Nigeria as seen in this ETH initiative of the council and many other export promotional programmes in the pipeline. It will be great also if the NEPC can adopt the recommendations made in this article. This will involve mandating the ETH operators to make available the required information as stated above. This is to give the exporting community enough information to enable them make informed decision when engaging the services of the ETH in the various markets where they have commenced operations. 

 

For the love of Nigeria, Africa and Mankind   

Bamidele Ayemibo (bayemibo@3timpex.com)  

Lead Consultant, 3T Impex Trade Academy

Mastering The Cote D'Ivoire Market Under AfCFTA

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AfCFTA | Exploring Nigerian Export Potentials |-12-| Delta

AfCFTA | Exploring Nigerian Export Potentials |-11-| Cross River

CBN RT200 FX: How Bankers Can Attract More Export Customers

I have received so many calls from different bankers in recent times and what they are asking for is that I should assist them with export customers. They appear so desperate that they are ready to do whatever is legitimately necessary to get these customers. Then I will make recommendations to them on the what they need to begin to do I noticed one thing among all of them, they all become cold in their quest to get export customers. This is because they are used to the old ways of getting customers which involves simply offering an attractive financing proposal. What many bankers do not realize is that, customers are evolving and this is making them to demand beyond the traditional services that most bank will usually render to their customers. 

 

So, what should bankers be doing in order to attract more export customers to their banks? They need to begin to spend more energy, time and money to acquire skills needed to solve exporter’s problems and this will make most exporters (particularly the MSMEs) to be attractive to their banks. If the goal is to get the foreign exchange export proceeds, income and deposits from the exporters, then create value for them. To create this value for the export customers you must solve their problems, to solve their problems (through advisory services) then you need to become competent  (proven record of performance), to be competent, you need to acquire skills and to acquire skills you need to learn through training and certification programmes. In this regard I will recommend that you consider Certified Global Trade Management Professional from the American Institutes of Extended Studies (click here to download the brochure). 

 

One of errors bankers make in marketing trade customers is not focusing on solutions to the trade customer’s challenges. A banker that has been able to identify the challenges of export trade and acquires skills to solve these problems for them is at an advantage over those that cannot provide such solutions. Also, because a number of bankers do not know the pain points of exporters, they assume that the only problem is financing and therefore end up selling to them their financing products or services and for many new exporters this is a wrong service. Another error that bankers make in selling to export trade customers is marketing the pedigree of their bank. Focussing on how big your bank is, how many branches you have, your balance sheet size and profitability and how long you have being in existence is none of the business of the export customers. What he is interested in is how your bank help me to solve his business problems which must be beyond financing. 

 

It is also very important to note that focussing on existing export customers will not take the bankers anywhere in the achievement of their goal under the RT200 FX programme. This is because the total number of exporters available in Nigeria who are actively exporting as at 2021 is just about 1,500 businesses. Bankers therefore need to begin to think creatively by encouraging and supporting the commencement of export businesses by companies that are in desperate need of foreign exchange. There are businesses that are very hungry for foreign exchange. They will do anything possible to get dollars, euros and pounds in order to keep their businesses afloat. Chief among these set of businesses are the importers of goods and services. They (particularly the importers of goods) have so much Naira to purchase foreign exchange in order to pay their import bills. They are partially ready for export business because their knowledge of importation of goods already exposed them to documentation and payment methods in international trade. This therefore makes it easy for them to setup a special purpose vehicle to do export business in order to generate foreign exchange to fund their import business. 

 

The fact there are a lot of businesses that are planning to go into export business to generate their foreign exchange has made the need for banks to render advisory services to become highly imperative. This is because these new entrants into export business needs support services to enable them get started and make it a success. This therefore gives a bank that have developed export desk that renders support services to exporters a competitive advantage over their peers in the industry. What makes lack of support service a great weakness in a bank as far as marketing export customers are concerned is the fact that they are unable to solve exporter’s problems. This means they will not be able to create value for export customers and consequently they will be unable to attract the export customers to give them the much desired income and deposits in foreign exchange.

 

As a sales person, your effectiveness is seen in being able to understand the customer’s needs and then prescribe which of your solutions will be able to solve the customer’s problems. This question must be asked in such a manner that it enables the exporter to talk about other areas of challenges beyond financing needs. In asking exporters these questions as a banker, you will realize that their problems are much more than just funding to grow their businesses. Being able to ask the right questions to identify the exporter’s problems and also solve these problems through export business support and advisory services helps the banker to create value for the export customers. This will consequently leads to attracting customers to the bank and thereby helping the bank to grow its foreign exchange deposits from the export proceeds of the customers.

 

Finally, it is important to state that there are few exporters in Nigeria and all of them are being chased by different banks that want their export transactions. To win in this competition for exporters, a bank and its staff needs to go beyond the traditional service of just financing the export customers to rendering support services to solve the exporter’s problem. This should be the main conversation in their marketing communication and in selling the value they create to the export customers. This is what will create a sustainable competitive advantage over the current fierce competition to get export proceeds in the industry. 

 

For the love of Nigeria, Africa and Mankind   

Bamidele Ayemibo (bayemibo@3timpex.com)  

Lead Consultant, 3T Impex Trade Academy

 

Mastering The Congo Republic Market Under AfCFTA

 

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CBN RT200 FX: Overcoming The Challenge of Export Readiness

In recent times, the Central Bank of Nigeria (CBN) and the Nigerian Export Promotion Council (NEPC) have stepped up their efforts to increase the inflow of non-oil export proceeds into the country through different initiatives which include the RT200 FX programme and Export For Survival Conference respectively. I will like to therefore commend the efforts of the NEPC and the CBN for the different policies and initiatives that your esteemed organisation has put together on behalf of the federal government to grow the non-oil export volume from Nigeria. 

 

However, having been in this sector as a practitioner, trainer and consultant for almost two decades, I have observed that beyond the obvious factors that militate against the growth of non-oil export, there are other important and critical factors that many are not aware of. This has to do with the issue of export readiness on the part of the business that wants to go global with its products. This explains the reason why thousands of businesses register as exporters and get export certificate from the Nigerian Export Promotion Council every year but only a few businesses have been able to export every year and this was just about 1,500 businesses in 2021. 

 

The concept of export readiness has been grossly neglected in our drive to grow non-oil export as a country and this has made most of the efforts of the federal government not to yield the desired results over the years. This was the motivation that made me to embark on a Ph.D. research at the LIGS university in America titled “Critical Evaluation of Nigerian Firms' Readiness for African  Continental Free Trade Area”. Through this research I was able to identify signs and symptoms of lack of export readiness in a business. In addition to this, I was also able to isolate the readiness criteria for evaluating a business for successful and sustainable export business.

 

As a matter of fact, this criteria was used to design a model that was deployed to evaluate about 120 businesses across Nigeria and they include large corporates and SMEs. The results showed that only about 3% of the businesses in the country were export ready while about 66% are almost ready. The almost ready exporters explain the reason why some businesses start to export but drop out of the business after a few shipments. The export drop out phenomenon is a very common occurrence among many businesses in Nigeria and this has kept the number of successful and sustainable exporters in Nigeria to be under 1,500 companies for many years.

 

To achieve the RT200 FX programme of the CBN in the next 5 years, Nigeria needs to grow the number of exporters from the current level of about 1,500 companies to about 10,000 and also support them to grow their export volumes per annum. However, the results of the export readiness assessment done on Nigerian businesses showed that many of them are not ready to go global with their products. This goes a long way to show that, if Nigerian banks are going to be able to achieve the goal of the RT200 FX programme of the CBN, they would need to incorporate a support service on export readiness assessment and advisory among other support services that the export desk needs to render to new businesses that are coming to explore the opportunities in the export sector. 

 

Finally, it is also important to state that there is an online export readiness assessment tool that can be used by businesses to evaluate their readiness for the export market. This is necessary for them to know the areas of readiness where they have skill gaps and deficiencies which need to be covered before they embark upon. This service is free and the readiness assessment report will be delivered to them in 24 hours. The export readiness assessment tool can be assessed via this link (Click Here)  

 

For the love of Nigeria, Africa and Mankind  

Bamidele Ayemibo (bayemibo@3timpex.com)

Lead Consultant, 3T Impex Trade Academy