Expanding into foreign markets can be extremely beneficial for Nigerian small and medium-sized enterprises (SMEs) looking to increase exports and widen their customer base. However, entering new overseas markets also comes with significant challenges and risks. This comprehensive guide provides key tips tailored for Nigerian SMEs seeking to tap into opportunities abroad.
Conduct thorough market research.
Before attempting to enter any foreign market, extensive research is absolutely vital. Nigerian SMEs should invest time in understanding target consumer needs, local competition, necessary product adaptations, the regulatory environment, marketing culture, and business norms.
Useful resources for market research include:
- Export.gov provides market insights, export guides, and best prospect lists for countries worldwide.
- Santandertrade: In-depth market reports with key exporting requirements
- Euromonitor International: Market analysis and statistics on countries and consumer trends
- OCO Consulting is a consulting firm providing market entry support for the African context.
Determine the best export market opportunities.
With scarce resources, Nigerian SMEs need to carefully evaluate and identify which international markets hold the most potential. Important criteria to analyse include:
Market size and growth rate
Focus on larger export markets exhibiting steady growth rather than stagnation. For consumer goods, larger middle classes signal greater consumption capacity.
Logistical Connections and Trade Agreements
Markets like those in regional African countries or those with trade partnerships and bilateral agreements typically have lower barriers. Check tariffs, quotas, documentation needs, and shipping routes.
If domestic incumbents already dominate, success may require unique positioning, niche targeting, and sufficient capital. Newer growth categories often provide more room.
Cultural, consumer, and regulatory fit
Products catering to local tastes and norms have a higher rate of adoption. Regulations like certifications and language labelling shape requirements.
Using this criteria, target export markets must be well-aligned to make the undertaking viable.
Adapt products and brand messaging
Products made for Nigeria may not directly appeal to or even be permissible in every foreign consumer market. SMEs need to assess if adaptations are required.
Tweaking product taste, scent, portions, or ingredients caters better to local preferences. Check if separate production and packaging lines are needed.
Foreign Language Labelling
Labelling and instructions should be provided in the official languages of destination markets besides English. Hire reliable translators to ensure messaging is culturally appropriate.
Adjust brand positioning.
Nuances in local culture, priorities, and trends impact how brands are perceived. The right positioning and outward identity make connecting easier. Conduct market research to shape the approach.
While staying authentic to their core offerings, Nigerian SMEs need tactical adjustments reflecting their expanded consumer base. Get input from marketing partners in each country.
Build an export marketing strategy.
Marketing forms the crux of reaching new overseas buyers. An export marketing strategy factors in differences in operating in foreign countries.
Digital marketing and SEO
Leverage paid advertising and search engine optimisation to drive discovery and awareness in new regions. Targeting should match local buyer needs and keywords.
Engage local sales agents and distributors.
Partners with established in-country networks better navigate retail relationships and drive sales. Revenue shares compensate for their efforts.
Foreign Market Content and Social Media
Creating locally resonated, translated, or even repurposed content that engages followers in target countries is invaluable for brand building.
Trade exhibitions and business conferences
Participating in well-selected overseas industry events directly connects Nigerian SMEs with prospective partners, buyers, and networks crucial for deals.
Market Entry Tours
Exploratory business trips to meet regulators and partners and assess consumer reactions firsthand provide market insights difficult to obtain otherwise.
With the right export strategy shaped for each location, the possibilities expand greatly.
Handle logistics and documentation.
Exporting brings with it a host of logistical and regulatory considerations that SMEs must address.
Export Licences and Permits
Many products require licences from Nigerian agencies like NAFDAC or SON prior to export. Get the needed permits well in advance.
Securing export financing
Exporting requires upfront financing before overseas sales revenue arrives. Nigerian EXIM Bank and commercial banks have products to address this.
Identifying freight forwarders
Find logistics partners with expertise in target countries who handle documentation, customs clearance, warehousing, and delivery to buyers.
Packaging Optimised for Shipments
Depending on the mode of transportation, specialised export packaging extends shelf life and prevents damage en route to destination ports.
Get familiar with unique documentation needs for customs and mandatory quality checks at borders to avoid delays or penalties.
Manage currency risks and payments.
Cross-border sales inevitably carry financial risks that should be addressed.
Significant currency volatility between the Naira and export market currencies can erode margins. Forward contracts with banks provide exchange rate certainty.
Foreign customer credit checks
Review overseas buyer creditworthiness through banks or credit bureaus before finalising contracts to limit non-payment likelihoods.
Export Invoice Factoring/Financing
Alternative finance options like factoring or financing using export orders and receivables as collateral provide operating liquidity.
International Payment Gateways
Enabling customer payments in foreign currencies via international payment gateways like PayPal simplifies collections while limiting wire fees.
Mitigating currency and customer risks ensures smooth cash flow and long-term profitability.
Comply with export regulations and documentation.
Along with local rules, foreign countries impose regulations that must be followed.
Country-specific labelling and packaging
Beyond languages, certain product data, safety markings, recyclability, etc. may be mandatory. Regulatory consultancies provide specifics.
International quality marks like CE (Europe), CSA (Canada), and EAC (East Africa) confirm compliance and facilitate customs clearance.
Customs Export Declaration
Accurately classifying goods using Harmonised System (HS) codes minimises duty leakage and speeds up customs.
Managing Export Restrictions
Some goods may have export quotas or outright bans. Confirm before shipping, since penalties can apply.
Staying up-to-date on requirements through agencies like SON helps avoid issues entering new markets. Get the paperwork right!
Exporting holds tremendous potential for Nigerian SMEs to scale beyond existing bounds. By following the tips above spanning research, product adaptation, foreign marketing, logistics management, and regulatory nuances, companies can successfully access and grow in external markets worldwide!
With a careful strategy shaped around priority target countries, exports provide a valuable lever for ambitious Nigerian SMEs to expand their footprint globally.