Enhancing Capacity For Non-Export Growth

To grow the non-oil Export volume in Nigeria, all I think the government need to do is to focus on 5 objectives and areas of growth and this will naturally result in the ultimate goal of growing the export volume. These objectives should include growth in:

The number of Exporters

The number of Exportable Products

The number of Export Markets
The number of Funding options and programme
The number of Successful Export projects

To achieve the desired growth in these areas. I have put together what I call the 10 cardinal recommendations and these include:

1.    Product Development
2.    Market Development
3.    Capacity Development
4.    Infrastructural Development
5.    Legal Frame work
6.    Funding Programme
7.    Quality Control
8.    Government support - beyond EEG
9.    Publicity of government export support programme,
10.  Model exportation

 1. Product Development

To ensure effective product development for exportation in Nigeria, the government need to do the following:
Ø  While we thank NEPC for 13 strategic export products, there is need to train Nigeria on how to export these products.
Ø  Get the SME exporters to begin to focus on value addition.
Ø  Give incentives (like tax holiday) to exporters with valueadded products.
Ø  Organise an event that will bring different SME agro processor together in a fare
Ø  Setup a panel to select best products & support them for exportation
Ø  Create a hub to develop clusters of SMEs with selected exportable products in Nigeria
Ø  Setup a one stop shop for effective product development to support exporters at NEPC
Ø  Conduct regular research on market potentials for different products and make them known to the public via regular publications

2. Market Development

To ensure effective market development for exportable products in Nigeria, the government need to do the following:
Ø  Regularly publish the upcoming trade mission and support exporters with relevant products to attend.
Ø  Provide information on best market entry options in different countries and for different products.
Ø  Organise a trade show in Nigeria and invite the world to showcase all that Nigeria have in stock for the export market.
Ø  Support the advertisement of the Nigerian SME products abroad.
Ø  Partner with Export Management Companies (EMC) in different countries to help the Nigerian exporters to:

·         Source for different buyers abroad
·         Supervise quality inspection upon arrival of goods abroad
·         Follow up on payment
·         Act as the case of need in Bill for Collection transaction
·     EMC service charge are to be borne by the exporter

3. Capacity Development

To ensure effective development of capacity of the SME Exporters in Nigeria, the government need to do the following:
Ø  Organise continuous training in different areas of export trade (quality control, packaging, labelling, documentations, marketing, costing, pricing etc.)
Ø  Setup an Export Mentoring Programme by connecting the intending Exporters to experienced Exporters.
Ø  Organise regular enlightenment round the country to show Nigerians in every state not just what they can export from their state, but rather how they can get started as soon as possible.
Ø  Ensure that the training should also cover business development training like:
·         business ethics
·         business vision and mission statements
·         great values that sustains businesses
·         customer service
·         logistic management

4. Infrastructural Development

To ensure effective development of infrastructures that will support export business in Nigeria, the government need to do the following:
A lot of collaboration is needed to help alleviate the challenges of infrastructural deficits (besides power and rail which requires huge funds). The government should setup a Public Private Partnership (PPP)arrangement in collaborate with:
Ø  FAAN to build cold storage systems at the internationalairports
Ø  Logistics firm to invest in cold storage van and subsidise the movement of perishable from the farm gate to the Airport
Ø  Real estate firms to lease warehouse for inspection and sampling of solid minerals and agricultural commodities before exportation
Ø  Institute of packaging to setup world standard packaging firm that will produce good package, with reasonable quantity at affordable cost.
Ø  Inspection agents to setup ISO certified labs for accurate test results.

5. Legal Frame work

It is very important to state here that, when I say government, I don't mean NEPC but rather the relevant government agencies saddled with such responsibility. In my opinion, I think NEPC should just coordinate because of the law that set them up. However, I will strongly recommend that NEPC act be amended (especially section 4 covering its functions and 5 which cover its powers) to enable them:
·         Carry out a model exportation projects to and use this to practically train the Nigerian exporters
·         Authorise the clearance of any goods meant for exportation in Nigeria
·         Work with the export inspections agents to ensure that clean certificate of inspections are not issued for low grade goods
·         Work with customs in order to ensure that low grade goods (especially those without clean certificate of inspections) are not cleared for export
·         Work with quarantine and federal produce to ensure that no low grade Agro commodities are exported
·         Initiate disciplinary actions against erring government officials through the head of service
·         Initiate a legal action against Exporters and any officer (of inspection agent, custom and the staff of other relevant agencies) that inspect goods that were eventually rejected at the port of discharge

6. Funding Programme

The federal government  should enact a law that will enable individuals to establish banks that will fund SME exporters in Nigeria.
Ø  The banks should be given incentives based on the loan portfolios they disbursed to support the growth of SME exporters
Ø  The facilities should include both pre and post export financing options
Ø  An evidence of at least 2 successful shipment of a particular product to the same exporter should be the minimum criteria.
Ø  These banks should be able to give export financing loan that is as low as N2million
Ø  Government should to seek out overseas agency that can provide trade finance instruments like guarantees and SBLC to support the funding of non-oil exporters in Nigeria. A good example is the Payment guarantees offered by IFC under the Global Trade Finance Programme (GTFP)

7. Quality Control

This will require a lot of collaboration among all the relevant agencies of government. Instead of focusing only on educating the farmers and exporters only, I will rather recommend that an inter-ministerial committee be set up to collaborate with:
Ø  FPIS to set minimum standards for Agro commodity export
Ø  SON to set minimum standards for Solid mineral export
Ø  NAFDAC to set minimum standards for drugs and processed Food export
Ø  SON to setup labs for product testing
Ø  Quarantine to set minimum standard for fruits & vegetable export
Ø  NSPRI to setup standard practice for stored products
Ø  Custom to enforce and authenticate quality documentation and not just NXP
Ø  Export Inspection Agents to enforce standards at the ports

8. Government support - beyond EEG

It is sad to know that the government is planning to commence EEG again despite the frauds that bedevilled the scheme in the past.
Many nations (especially in Asia) that have gotten export right especially food export have had to subsidise a lot of things for their SME exporters. The focus of the government should be on pre-export incentives to ensure effective monitoring of what the government is supporting. These incentives should cover:
Ø  Subsidies for air shipment to make export of our perishable more competitive
Ø  Subsidies for warehousing & cold storage facilities at loading and destination port
Ø  Subsidies for packaging design and production
Ø  Subsidies for the advertisement of Nigerian SME’s products abroad
Ø  Subsidies to support the attendees of more trade fare abroad
Ø  Setting up of an effective export trade facilitation unit at the Nigerian embassies abroad through the federal ministry of foreign affairs

9. Publicity of government export support programme

A company with a fantastic product but refuse to promote it is like a guy winking at a lady in the dark. We complain that government is doing nothing at all because some of the agencies have refused to make known to the public all that they are doing to support non-oil export. Government agencies need to constantly create awareness about the work they are daily doing in the non-oil export sector in Nigeria. There is need for a regular radio and TV programme to enlighten the public on these programme. My organisation in conjunction with the LCCI will be willing to do this for FREE for NEPC and other government agencies.

10. Model exportation

The government will be limited in the level of value it can add to Nigeria exporters if all that its staff knows is the theory of exportation in Nigeria. I will like to strongly recommend that NEPC should collaborate with the relevant government agencies and start exporting different Nigerian products abroad in order to build its internal capacity via experimental and trial shipment and therefore:
Ø  show the exporter a practical way to be successful in the export business
Ø  create models for the Nigerian exporters to follow
Ø  finding new paths to the successful exportation of different products
Ø  identify the challenges of different export products and how to overcome them
Ø  identify the challenges of different export markets and how to overcome them


In conclusion, If we want to grow;
Ø  The number of Exporters
Ø  The number of Exportable Products
Ø  The number of Export Markets
Ø  The number of Funding options and programme
Ø  The number of successful export projects in Nigeria
I strongly believe the implementing these 10 cardinal recommendations is the way go

Export Digest Newsletter - EU, Nigeria Collaborate to Upgrade the Quality of Banned Exports

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Please find below Nigeria's Foremost trade Newsletter - Export Digest

 

In This Week's Edition of Export Digest Newsletter - EU, Nigeria Collaborate to Upgrade Banned Exports

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From Local Production To Global Consumption

Nigeria is just emerging out of recession which bedeviled our dear nation because of the challenges of over dependence on Oil. There has been so much noise and some steps towards diversification into other sectors like Agriculture and Solid Minerals, but little or no campaign on the need to add value to the commodities from these other sectors for exportation. We live in a very interesting continent where we produce what we don’t consume and consume what we don’t produce. Nigeria for example is like a man that earns N50,000 a month and spends N70,000 every month with about N500,000 in his savings. Such a man will only survive on this equation for a period of just 25months, this means that in two years, he will go bankrupt. The lesson from this story is that, going global is not just about you, your family or your business; it is about the survival and revival of the economy of this great nation. So even if you were not thinking about it before, please begin to do something about it for the sake of Nigeria.

First of all, I will like to say that going global means that you will need to rise above the low standard of our environment in order to favourably compete on the global scene. However, this has been an herculean task for Nigerians and indeed Africans because of the very low standard that we have accepted to comfortably live with as a people. You buy plantain in traffic and you are very okay with it as it is, but that is not acceptable in the international market. You will need to consider packaging, labeling, constituents, nutritional facts etc. before it can enter the international markets like United Kingdom (UK), European Union (EU) and the United States (US). It is very sad to note that, many people are doing business just because of money for survival, they are therefore comfortable remaining in Nigeria and never think of export because there is no vision beyond comfort and convenience.

Please make no mistake, when we talk about going global through export business, it is not just about tangible products, intangible services can also be exported like consultancy services, training, technology, entertainment etc. So you can export just about any product or service that help the way will live and work as human. When we talk about going Global through export business, I do not mean export of commodities that can only be used by a few that have the technology to convert them into finished goods. It is the people who convert commodities to finished goods that takes the glory of global recognition. If you export cocoa only, you will only be known and rewarded by the very few people in the cocoa industry, but if you export chocolate, you have a global market with many consumers in many countries and hence a global recognition.

It is also important to note that, going global through export business does not mean exporting to only the people of your tribe and tongue in a foreign land. I mean developing a product that other nationals will be interested in. That means it must have overcome the challenge of Acceptability and Adaptability for use in any country.

The possibilities of export are almost limitless. It is going global through export business that made the tax paid by just about 15 Fortune 500 companies to surpass the national budget of over 170 million people in Nigeria. It is going global through export business that made a Nigerian brand Olu Olu foods to make over N250 million turnover a few years ago just selling plantain chips in the U.K. It is the idea of going global through export that makes a company a global brand and hence earns the country of export a goodwill. It is going global through export business that will get us out of the current foreign exchange shortage and financial mess that we have found ourselves In order to go global through export business, a company must strategically and progressively transit from local production to global consumption.

In order to do this, the exporter will need to focus on five areas and these include preparation, product, process, problems and possibilities.

1. Preparation – Be Prepared. As you plan to transit from local production to global consumption:
• Be prepared to learn the ropes and invest in market research
• Be prepared to live by great values and vision
• Be prepared to look for trading partners
• Be prepared for legal documentations and protection
• Be prepared to labour in search for information
• Be prepared to launch new product designs
• Be prepared to leverage on the African taste
• Be prepared for lawsuits – if quality is compromised
• Be prepared to lead the competition or competitors
• Be prepared to leave your comfort zone and visit the export market

2. Product – Upgrade your products- food, apparel, raw materials & finish goods. As you plan to transit from local production to global consumption, you need to upgrade your product to stimulate a positive response from the buyer:
• Upgrade your product through a suitable packaging (details on the pack ...)
• Upgrade your product to serve the new market demands (quality and quantity)
• Upgrade your product to separate it from the competition (unique selling point?
• Upgrade your product to showcase the features and benefits
• Upgrade your product to settle quality issues of African products
If you do not have a product do not just focus on commodities, look for countries where you have competitive advantage by virtue of network of relationships you have there, do a research to identify products in high demand and then look for companies that can do contract production for you or partner with them to be their sole distributor for that product abroad.

3. Process – Understand the process. As you plan to transit from local production to global consumption:
• Understand the process of promotion- (trade fairs, chambers, agent, distributors.)
• Understand the process of obtaining purchase order- (FCO, Incoterms.)
• Understand the processing of paperwork and regulations
• Understand the process of payment and methods- (LC, BC, AP, OA, SBLC, GTE)
• Understand the process of prosecuting piracy

4. Problems – Handle the problem. As you plan to transit from local production to global consumption, learn how to:
• Handle the purchasers/partner problems- (bypassing you to your producer.)
• Handle the pricing problems- {depending on the delivery terms (Incoterms)}
• Handle the product problems- (batch/lot number for isolation)
• Handle the payment problems- payment (using secured payment methods)
• Handle the paperwork problems- (pre and post export documentations)

5. Possibilities – Position for possibilities. As you plan to transit from local production to global consumption, position yourself for the possibility of:
• Repeat business from same buyer
• Referral to other buyers
• Replicating the business model in another country
• Redeeming the country's image
• Recruiting multiple partners
• Rebuild broken bridges between nations
• Raking in more income than your projections

In conclusion, let me state at this point that, a product is not global because it is abroad unless other nationalities are patronizing it. So, if your product is being sold abroad and only Nigerians are buying it, the product is still a local product even though it is sold in countries abroad. If we want to create enduring wealth for our children, if we want to create extensive wealth for the country, if we want to create everlasting wealth for the continent of Africa, transiting from local production to global consumption is the way to go!

From questions and feedbacks kindly send an email to bayemibo@3timpex.com

Export Digest Newsletter -3T Impex Set to Launch an Import Training Pack (Import Pro)

Dear Readers,

Please find below Nigeria's Foremost trade Newsletter - Export Digest

In This Week's Edition of Export Digest Newsletter - 3T Impex Set to Launch an Import Training Pack (Import Pro)

To read the full details of this edition of Export Digest, Click Here

To read the full details of this edition of Export Digest, Click Here

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Thinking of Financing or Investing in Export Business?Then Grab a Copy of A-Z Of Export Business Financing

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Interview on STV: AGOA Review and The Way Forward

The Challenges of AGOA and The Way Forward

African Growth and Opportunity Act (AGOA) is a Trade Act enacted by the government of the United States of American (USA). It accords duty-free treatment to most products exported by the beneficiary sub-Saharan African (SSA) countries to the United States. It was enacted on May 18, 2000 as a public law 106 of the 200th congress. The Law was due to expire on September 30, 2008, but as a result of the July 13 signing of the AGOA Acceleration Act of 2004, AGOA expiration was extended to September 30, 2015. The administration of President Barack Obama signed the Extension and Enhancement of AGOA Act into law on June 29, 2015. This has extended the expiration of this trade law to the year 2025.

The legislation significantly enhances market access to the USA for qualifying SSA countries. Qualifications for AGOA preference is based on a set of conditions contained in the AGOA legislation. In order to qualify and remain eligible, each country must be working to improve the rule of law, human right, and respect for core labour standards.

The recently concluded AGOA forum (between African representatives and the USA officials) that was held in Lome, Togo (August 8-10, 2017) to deliberate on how SSA can take advantage of this trade programme did not yield any result, neither was there any conclusion on the way forward. As a matter of fact, the feedbacks tend to tilt towards warning enthusiasm about the future of the Act, even though it still has about 8 years to its expiration. Many observers have expressed concerns about the fact that SSA countries are not taking full advantage of this opportunity.

I do not see any reason why anyone that is conversant with the situation of the African continent should be surprised at the very low volumes of exportation from the SSA countries to the USA. The situation is like giving a big and well spiced chicken lap to a child that has no teeth, and then expressing perplexity over the fact that the child is unable to bite the chicken and take full advantage of the nutrients inside. The majority of African countries have fundamental issues and challenges that need to be addressed before we can take advantage of any trade Partnership and agreement like AGOA from the USA, or even the Economic Partnership Agreement from the European Union (EU). I have categorised all these challenges into seven groups which include product, purchasers, paperwork, pricing, payments promotion and policy.

The Product to be exported is a major challenge. It is no more news that major export products of Africa nations including the SSA countries are mainly agricultural commodities, crude oil and raw metals. On the other hand, most of the over 6000 items on the AGOA product list are not raw products, they are mainly value added products in their secondary or tertiary states. So if the SSA countries are going to be able to benefit from AGOA, there is a great need to shift from focusing on primary products and begin to add value to them in order to convert them into secondary or tertiary products. This has not happened for the past 17years that this USA trade law has been in place because of other issues that I will discuss in other factors below.

The next major challenge is purchasers. These are the buyers of the products in the USA. They operate under strict regulations that must be adhered to before they can import any product into the US market. This means anyone planning to ship to a US buyer from the SSA countries need to be able to demonstrate competence to deliver the right product(s), consistency in delivery and credibility. We in the SSA countries are in an environment where mediocrity thrive thus, coming up to the high standards demanded by the buyers become a task that only few companies can achieved.

The challenge of paperwork is another major obstacles that has impeded the progress of AGOA in the SSA countries. These has to do mainly with the post export documentations. For the importer in the US to enjoy the duty free benefits on the goods being imported, the exporter from SSA countries provides the following documents; Commercial Invoice, Certification of Origin, Bill of Lading, Packing List, and other necessary documents peculiar to the importation of such goods into the US market. The challenge is not the documents themselves, but some specific details that must be stated on them before it can be allowed into the US market without the payment of duty fee. For example the Certificate of Origin must conform to the details required for rule of origin while the Commercial Invoice for Apparel has to be stamped with original AGOA visa by the exporting country's authorities.

Pricing is undoubtedly a major challenge that confront the AGOA programme. Despite the fact that the goods under this scheme are allowed into the US market free of duty payment, the infrastructural deficit is so high thus, leading to the high cost of production. The bad roads leads to high cost of transporting the goods, lack of power supply leads to high cost of running the factory, lack of certified laboratory increase the cost of quality certification (since samples need to be sent abroad to reliable laboratory analysis). Therefore, we need to fix the infrastructural deficit in order to be reasonably competitive.

Another vital factor that mitigate against the low volume of exportation under the AGOA programme is Payment. The seller wants to get payment before the buyer gets the goods while the buyer wants to see the goods before making payment. However, since more than 80% of the world trades are done on open account (which means the buyer will first see the goods before effecting payment), the seller is therefore forced to agree to this payment terms. The implication of this is that the seller might not get payment (because of the low quality of good shipped) and this therefore discourage them from further shipment. If the government fix the port issue and ensure that only good quality products are shipped and secure the expected payment via an export credit insurance, this problem can be addressed.

The need for continuous Promotion of the AGOA programme by the relevant government agencies through different print, electronic and online media cannot be over emphasised. The first aim of this promotion is to continuously educate the public about the programme. The second aim is to correct the mindset of business people in SSA countries. There is a mindset issue that has been created for a long time that need to be corrected, and this is the desire to always prefer to export products in their primary state. The citizens are simply following the footsteps of government through the exportation of crude oil. The government needs to champion this initiative both in words and in action.

The last and probably the most important factor is the government Policy. If the SSA countries want to benefit maximally from the AGOA trade law, they must formulate policies that will make exporting to the US under AGOA to be become attractive to the business communities in their various countries. Some of these policies include; an export growth desk in the presidency to fund and drive the promotion strategies stated in the previous paragraph, a completely tax free regime should be given to company that add value and export under AGOA to the US, a quarterly intensive training that will last for one week should be organise free of charge only for those that have already started production of their products to build their capacity, connect them with sources of funds and potential buyers in the US, a committee should be setup that will review the progress made on a monthly basis, address the challenges and report to the export growth desk in the presidency through the Nigeria Export Promotion Council (NEPC).

I am very sure that if the points raised in the article are well noted and the various suggestions acted upon, in a few years, even if we have not completely fix our infrastructural deficit, we will begin to see the desired growth in the volume of exportation that is being done by the SSA countries to the US market and other export markets around the world.

For question you reach me on bayemibo@3timpex.com