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How to start a profitable export business in Nigeria?

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Do you want to start an export business in Nigeria? If yes, then you have already taken one step towards success. The export industry is one of the major contributors to Africa’s GDP- it accounts for 23% as per their export statistics. A common misconception that people have is that we can only export oil-related products from Nigeria. However, nothing can be further from the truth.

Over the past few years, the business discourse has tilted in favour of such businesses.

Entrepreneurs are being encouraged to get into it on their own without waiting for the government’s help.

So, what do you need to do to start a charcoal export business in Nigeria?

What are the exportable items from Nigeria?

And most importantly, how to export from Nigeria?

Questions like these and many others are what we will answer next.

Let us start with what are the potential profits and opportunities in the export sector.

How profitable is an export business in Nigeria?

As you look for details on how to start a wood export business in Nigeria, you may wonder how profitable it is.

When you sell a product locally, your customer base is limited to the country you are in.

However, with a global market, your competition decreases but the buyer base increases significantly.

More customers simply mean more sales and more profit.

Many studies have estimated that the total worth of wood export business and other exports in Nigeria is well over the US $900 million.

To better understand how profitable charcoal export business in Nigeria is, let us talk over a few examples of Nigeria export products.

Food Export

If you are specifically looking at how to export foodstuff from Nigeria to the USA or any other country, then you have made a good choice.

There is a lot of demand for African food in other countries.

Not only does it have huge revenue potential, but you are also making native food available to Africans settled in other nations.

With food export, your client base is not just supermarket and retail stores.

There are several African restaurants due to the growing popularity of the cuisine abroad.

They need a regular supply of foodstuff for preparing these meals.

Thus, there is a large demand for suppliers from Africa.

This is still an untapped market with a lot of potentials.

Some of the most popular exportable goods from Nigeria include cocoa, melon, locust beans, bitter cola, groundnut, crayfish, edible local chalks or Nzu, Pepper and breadfruit, among other items.

Charcoal Export

Charcoal export business is also an untapped market in Nigeria.

It is made from tropical hardwood- something available in abundance in Nigeria.

Areas like Jebba, Isheyin, Omu Aran, Sai Igbo Ora and others have a lot of tropical hardwood.

Charcoal is a preferred energy source in many countries as it is less expensive.

There are countries with seasonal demand for charcoal- such as the UK, Belgium, Germany, and Denmark.

Those like Kuwait, Israel and some Asian countries have a year-round demand.

Charcoal demand is currently at an all-time high, and you can take advantage of it.

Textile and Garment Export

The textile and garment industry alone generates over $32 billion in revenue in exports.

In addition to this, textiles from Nigeria have a duty-free passage into the USA.

Thus, it does not have to deal with a strict set of rules compared to other products.

The USA is also the largest global market for Nigerian textiles due to ethnic designs and high quality.

Soap and Cosmetics Export

Cosmetic export is quickly becoming one of the fastest-growing sectors in Nigeria.

However, the only challenge that it has is that Nigeria has not technologically advanced in the production of cosmetics.

Soap making specifically is an area that is ripe for investment.

Nigerian cosmetics have a market in several other African nations where demand for soap and other toiletries is high.

What items you cannot export

As you learn how to start your wood export business in Nigeria, you need to learn the items that you cannot export.

A few products are placed on the exclusive list and under prohibition from any form of exports.

These include:

  • Cassava tuber
  • Maize
  • Rice
  • Beans
  • Yam tuber
  • Any products that are a derivative of the above 5 items
  • Scrap Metals
  • Timber (Sawn and Rough)
  • Raw skin and hides
  • Antiques and Artifacts
  • Unprocessed rubber lumps and rubber latex
  • Imported food items

Opportunities in the exporting business

You have 3 major opportunities in this business. Let us go ahead and see what those are.

Direct Goods Export

This is a company that manufactures its products locally and sells to international clients by exporting them.

Direct goods export is capital intensive.

You either have to invest significant money to manufacture the products or buy them from the manufacturer, exporting with your margin.

Export Management

Companies that do not know how to go about exporting their products take the help of export management companies.

An export management company functions as a consultant for the manufacturer, contacts the buyers on its behalf and also closes the deal by negotiating all the terms.

As an export management firm, you can earn a fixed amount from the supplier.

In addition to that, there are commissions for each successful sale.

Export broker

An export broker is the most popular and least risky opportunity in the business.

In this, you work as a broker for the exporter, importer, or both.

For example, consider that the price of exporting Sesame seeds from Nigeria is around US$1500 for 1 ton.

You can get a deal from a supplier that gives you the same as US$1450 per ton or a buyer who is willing to pay US$1550 per ton.

Being a broker in any export transaction is the least risky way to enter the industry.

You have the freedom to export products across different industries and make more profit than the supplier/buyer you are working for.

A guide to starting your export business in Nigeria

1. Registering your business name

The first thing that you must do as you learn how to start any business is registering it.

Registering a company/business is a way to let your government know that you own it and the business name.

For registering your business in Nigeria, you need to go to the Corporate Affairs Commission.

This agency has been authorised under section 659 by the Company & Allied Matters Act 1990 for registration of businesses in Nigeria.

Depending on what type of business you are planning to start, a lawyer may not be required.

The different categories for registering a business in Nigeria include:

  • Registering the business name
  • PLC: Public Limited Company
  • LTD: Private Limited Company
  • ULTD: Unlimited Company
  • LTD/GTE: Company Limited by Guarantee
  • Incorporated Trustee

For small and medium companies, the categories to be concerned with include registering the name of their business and Private Limited Company.

First, you need to find your business name.

You need to think outside the box here.

This is important as your business name is what will become its identity and set you apart from the competition.

You must have a name before you go to the Corporate Affairs Commission.

After that is finalised, you need to follow the below steps for registering it.

Steps to follow for business registration

  1. After that, you need to visit the CAC office and get an application for a token. This form is where you will specify your business name and an alternate. You must provide the alternate name in case the first name is not available. Before submitting the form, get a photocopy as it can help to find your original form when you ask for its t. You have to come back 3 days after submission to find the available name(s).
  2. After you have visited to know the available name, it takes another 1 to 2 weeks to get the approval for the name. If the approval goes through, then you can continue with your business registration.
  3. At this stage, you will be provided with a form for registering your business. Along with this form, there will be a fee that you have to pay. This fee is around ₦10,000 (you will be told the exact amount), which must be paid when you submit the form. Do ask for help if you are not clear with any aspect of the form. You must not make any mistakes while filling it.
  4. Once you are done submitting the business registration form, you will be provided with an affidavit or attestation form. With this form, you need an endorsement from the magistrate’s court. The court provides a token for this as well.
  5. With the registration form, you will have to submit a few documents. The list of all documents is available on the CAC website at https://docupload.cac.gov.ng. If you know someone who has already gone through the process, you can seek guidance to avoid any mistakes.
  6. Once you receive the attestation, fill up the registration form, pay the required fee and other documents, you have to submit it all to the CAC office. If everything is as required, then your business name certification should come within 2-3 weeks.

You can do several of these steps online as well.

Most people still prefer doing this manually- but here is it a matter of personal choice and you can do what suits you best.

2. Selecting products that you can export

Now that you have a business name, the next part involves finding exportable items from Nigeria for your business.

You can export numerous products, but before deciding on that, you must know what each type would.

A few things that you must go as you learn how to start finding a product to export are ahead.

Study the trend

For starting any type of business, you must study the latest trends.

They are what drive the business.

You must know if it is in vogue, what people’s interests are, the things people are talking about and what would sell.

A market survey can help you to study these trends.

Also, with the internet, you can save a lot of hassle in finding people, gathering, and analysing their opinions.

What is your passion?

The importance of having a passion for what you are doing cannot be stressed enough.

When the going gets tough, your passion is what will help you push yourself.

Setting up your charcoal export business in Nigeria Nairaland will not be easy- nothing worthy ever is.

Thus, you should consider something that you have a passion for so that you have the motivation to push through.

Study the competition

You want to avoid getting into a product that has so much competition that your business does not add any value.

Additionally, you need to study your local and international competition.

By doing this, you will learn what mistakes to avoid and what you can do differently.

Research

Check all the products that you are considering as you start your own business.

This part of the process can be time-consuming.

Also, you need to do extensive research into whatever you plan to do- be it wood or a charcoal export business.

Learn your local government and customs policy.

You must know the import & export laws of Nigeria and the country that you plan to export to.

The specific laws related to different products will help you to find out what product is worth the effort and investment.

Study your market

Before you start exporting, you need to find the buyers and learn about the country they are in.

It is better to have a network of multiple buyers across countries.

This will let you analyse the product reaction and see what works best.

3. Finding foreign buyers for your product

You need to have a customer base that needs what you are selling.

Now you must be asking how to start finding buyers in other countries?

Finding buyers in other countries can be tough as compared to local trading.

In local trading, you can speak to them one on one.

With international trade, you need a strategy for finding buyers.

A couple of helpful tips for that are up ahead.

Be online

With the internet, you have a global 24×7 marketplace accessible at the click of a button.

You can use online B2B marketplaces like Alibaba to find businesses that require your product.

Go through the Chamber of Commerce

Many countries’ Chamber of Commerce is in Nigeria, including the bilateral Chamber of Commerce.

It is a good source of learning about how trade works in those countries.

You can also use their websites to find these details.

Trade Fairs

Trade fairs/shows are exhibitions with several companies of one or more industries showing their services and products.

The purpose of such trade fairs is marketing and networking.

Thus, fairs can be an excellent place to connect with individuals/companies that are interested in your product.

National Exports Boards

NEPC or the Nigerian Export Promotion Council has its objective set as promotion of Nigerian exporters’ business.

Registering with the NEPC allows them to register your business as a Nigerian exporting firm.

Further, they help you by referring buyers to you on inquiry.

NEPC also organises trade fairs to help buyers meet sellers.

Buying agents

Businesses employ buying agents to help them make purchases in other countries.

Thus, you can contact these buying agents in Nigeria and showcase your products to them.

Online advertising

The internet is like a global village- you can reach the entire world from Nigeria.

Use ads on Google, Facebook, and Instagram to reach out to this global audience.

Advertising on these platforms can highly target so you can reach out to a specific customer base and target them.

Industry associations

As you work to start your own business, industry associations can help you find companies that need your product(s).

Many industry associations have a website, which makes your task of finding a list of their companies easier.

If not, you can simply contact the association and request a list of their partner firms.

Social Media Platforms

Social media is now much more than just a tool to catch up with friends.

Many businesses are using social media to expand their base.

LinkedIn, a professional social network, and Facebook can help you in your business.

Ensure that your profile reflects your purpose for being on the network.

4. Sourcing Suppliers

Your product quality is what would keep buyers coming to you.

This depends on your suppliers.

Thus, you need to take your time in finding the right suppliers.

There are 2 parts to finding suppliers- how to search for them and what factors to consider.

Let us first see the channels you can use to find suppliers for your product.

The Internet:

As you learn how to start your own business, the internet will play a huge role in helping you do that.

A lot of businesses have their listings on Google.

You just need to search for using the right words.

For instance, if you are starting a charcoal export business in Nigeria, then you can search for terms like ‘charcoal wholesalers Nigeria’ or ‘wholesalers of charcoal’.

Use a different word- for instance, wholesaler, distributor, and supplier.

You can also go through directories and advertisements.

Trade Fairs:

As mentioned earlier, trade fairs can help you find buyers as well as suppliers for your product.

Talk to people and network at trade fairs.

Referrals:

Talk to people who are already in this business, and you are sure to find someone who knows a supplier.

You may be surprised at the amount of information you can get from the people around you.

Forums and social media are also good places to seek referrals.

Once you have a list of different suppliers that you can consider, the next task is to check a few factors to compare them.

Ahead are a few key points that you can use to find you, preferred supplier.

Stability:

No matter what type of business you are planning to start- be it a wood export business or a charcoal export business in Nigeria, you need a stable supplier.

Thus, check with other customers to learn about how stable the supplier is.

The length of their presence in the market is a good indicator of stability.

Reliability:

As you set up your business with a supplier, you need to ensure that they are reliable.

How to start evaluating that? Observe the service provided.

Is the supplier sticking to the promised timelines?

Is the product quantity the same as it was in the order?

What is product packaging like? In addition to this, do you get regular updates regarding shipping time, ETA, etc.?

Quality:

If you ask anyone how to start a successful business, then they will surely tell you to focus on quality.

Substandard products have destroyed several businesses.

Thus, pay attention to your supplier’s product quality.

Price:

Several things have to be considered while finalising the price.

For instance, in wood export business, transportation, treatment of the wood, etc. are all factors that affect the price.

Further, you need to lock a reasonable price with your supplier as that will decide what you can sell it at.

Location:

The farther your supplier is, the higher will be the transportation cost.

Thus, go for long-distance suppliers only if all nearby options are exhausted.

In addition to this, also check where the supplier warehouses the product as well.

For instance, if you are setting up a charcoal export business, you will want to ensure that the product is kept safe and dry so that its quality is not affected.

5. Fixing the price of your product

As you put everything in place to start your wood export business in Nigeria (or export other product), you need to fix a price before you start selling.

Thus, with that objective, let us see the steps that you must follow:

  • Create an inventory of the steps that you had to go through to source the product. Additionally, consider the final shipping price to your buyer. Do not leave any cost out of this calculation. This will ensure that you are not selling at a loss.
  • Next, you need to do a market search to find what prices your competitors are selling at and the rate of demand. In addition to this, you also need to consider what a buyer is willing to pay. Product with a higher demand enjoys a higher price than one with little demand.
  • Price matching with other market sellers may be required. This is especially important if you have several competitors.

6. Logistics

As you learn how to start your business, getting a handle on the logistics will be the most important part.

As an exporter, you must know how to package and label the product.

Additionally, you must ensure that it has the correct documentation and that you have insurance for any damage that may occur in transit.

You can search for a freight forwarder to manage the logistics.

Packaging:

Proper packaging decreases the risk of your product being lost in transit.

Also, you need to ensure it is protected from rain, humidity, breakage from piling, moving/shifting, etc.

The packaging material must decrease the impact on the product and protect it from moisture.

Avoiding brand labelling is done to protect the products from theft.

Labelling:

While you may want to avoid using the brand/product name to protect it from theft, labelling of goods is still required.

A few key components of the label include shippers mark, origin country, quantity and size of the packaging, weight marking, any precautions to be taken and handling marks.

In addition to this, your product has any hazardous material.

You must use the universally adopted symbols for those on the label.

Export Packing List:

An export packing list has details of all the material that for part of the packaging.

For instance, details like if it is a box, drum, or crate; the different weight measurements (net, legal, gross) and measurements are all part of this.

It is what the forwarding agent or the shipper uses for calculating the weight/volume of the shipment.

In addition to this, it also helps to ensure the correct type of cargo being ship.

And if it needs an inspection by customers.

It has to attach outside of the package.

Documentation

The documentation required for product shipping varies on both the origin and destination countries.

A few items that you will need for the majority of the nations are listed ahead.

Commercial Invoice:

This is a bill of goods given to the seller from the buyer.

It covers basic details of the transaction, including the goods description, shipping and seller addresses, payment, and delivery terms.

Additionally, this also acts the proof of ownership and payment.

Governments also use the invoice to calculate customs duties.

Bill of lading:

These are like contracts between the carrier and owner of the goods.

Consular Invoice:

Some nations may have a regulation that makes consular invoice mandatory.

This is to control and identify the goods.

A consular invoice is brought from the consulate of the destination country.

Also, note that it must be in the destination country’s language.

Origin Certificate:

A certificate of origin, as the name implies, indicates the product’s origin.

This is available with the Chamber of Commerce.

Inspection Certification:

Certain countries and buyers require this as per the provisions of the item being shipped.

Independent testing organisations generally provide the inspection certificate.

Dock and warehouse receipts:

The purpose of these receipts is to pass the accountability once the export products are taken from the domestic warehouse to the port of embarkation.

From there on, these are the responsibility of the international carrier.

Shipping and Insurance

These 2 points are crucial for any import/export, thus warranting a separate discussion.

The type/method of shipping is particularly important.

You must have the buyer provide you with the exact address where you have to ship the product.

Do not make any assumptions here.

Before deciding the shipping method (by air or by sea), consider factors like cost, delivery time and accessibility at the destination.

In addition to this, ensure that you book it in advance to avoid any delays.

Insurance is a must-have for shipping any type of goods.

RELATED: Ultimate guide to trademark registration in Nigeria

Local insurance providers may not have coverage for international shipment.

Thus, you may need an international insurance carrier to help you with the same.

Also, your freight forwarder may have some information to help you with that.

Insurance also depends on the terms of sale between the buyer and seller.

Challenges

While the import/export has a lot of upsides, there are certain challenges that you can expect.

Considering the things you learned about how to start this business, let us talk about some of these challenges.

  • Loans and financing: If you do not have a lot of capital available, you may have to struggle to get loans or finance your business. You can always start with less capital-intensive opportunities and reinvest the profits to scale your business.
  • Volatile currency exchange rates: Foreign currency exchange rates are not constant and often see high volatility.
  • Finding and sourcing from a reliable supplier
  • Natural factors: Natural factors such as droughts, diseases, or pests in case of agricultural products add another challenge.
  • Completing export documentation and licensing requirements
  • Unstable and high product pricing
  • Government policies involved in getting long-term contracts

These are some of the challenges that you can expect in any type of exporting business.

However- these should not discourage you.

With the right business plan and research, you can easily overcome these.

Nigeria has a lot to offer for those looking to start with exporting products.

It is a nation with several resources and has a market that can offer the same to a global market.

As you learn how to start a wood export business in Nigeria, this should help you to get on the right track and build a profitable enterprise.