Introduction
Nigeria offers immense opportunities for entrepreneurs looking to enter the high-potential commodity export business. However, successfully navigating Nigeria’s complex regulatory requirements is essential for any aspiring exporter. This definitive guide provides commodity exporters with a 101-level understanding of Nigeria’s export processes, policies, and key agencies to foster smooth compliance and operations.
Analysing Nigeria’s Export Commodities Landscape
Nigeria is Africa’s largest economy and a major global exporter of oil and gas. However, opportunities abound for exporters beyond hydrocarbons in Nigeria’s agricultural, solid mineral, and manufacturing sectors.
According to National Bureau of Statistics data, Nigeria exported N13.18 trillion worth of domestic exports in Q1 2022, a 33.06% increase from Q1 2021. Non-oil exports contributed N2.19 trillion, with urea, sesame seeds, frozen shrimps, cashew nuts, and aluminium ingots being some of the top agricultural and mineral exports.
Beyond established commodities, growth opportunities exist for processed agricultural exports like cocoa butter, leather, processed fruits, etc. Exporters must conduct in-depth demand analysis on target international markets to identify niche prospects. Resources like the Nigerian Export Promotion Council (NEPC) provide great export market intelligence.
Key Regulations Governing Exports from Nigeria
Nigeria’s exports are regulated under various legislation, policy documents, and agencies. Key ones include:
- Export (Prohibition) Act: Establishes commodity items prohibited from export, like unprocessed timber, scrap metals, etc.
- Nigerian Export Promotion Council (NEPC) Act: Set up NEPC as the agency responsible for export promotion and regulation.
- The Customs and Excise Management Act, governed by the Nigeria Customs Service (NCS), stipulates duties and levies applicable to exported commodities.
- Export Incentives and Miscellaneous Provisions Act: Provides fiscal incentives to exporters like Export Expansion Grants (EEGs), tax concessions, etc.
- The Foreign Exchange (Monitoring and Miscellaneous Provisions) Act regulates foreign exchange earnings from exports and how they are repatriated.
- Companies Income Tax Act: Provides tax incentives to export-oriented enterprises.
Exporters must familiarize themselves thoroughly with these and other rules to maintain compliance. Relevant agencies like NCS, NEPC, and the Nigerian Export-Import Bank (NEXIM) provide guidance.
Key Licenses and Permits for Commodity Exporters
To legally export goods from Nigeria, an exporter must obtain the following permits and licenses:
- Certificate of Registration: Issued by the Corporate Affairs Commission (CAC) to register your export business.
- Export License: Obtain one from the NEPC to officially classify you as an exporter.
- Commodity License: Required for certain commodities like mineral exports from the Ministry of Mines and Steel Development.
- Export Permit: Necessary documentation from NCS authorising the export of each consignment
- Phytosanitary Certificate: Endorses agricultural exports as pest-free, issued by the Ministry of Agriculture.
- Certificate of Origin: Verify product origin, procured from the Chambers of Commerce.
- Single Goods Declaration (SGD) Form: Submitted to NCS, providing details of export items.
Ensuring proper documentation is integral for smooth customs clearance and avoiding costly demurrage charges. Exporters should account for a processing time of 1-2 weeks for these permits.
Key Export Procedures and Documentation
The step-by-step process for exporting goods out of Nigeria is:
- Secure Buyer and Export Order: Verify the credibility of the international buyer and secure a confirmed order, sales contract, specifications, etc.
- Obtain Clearance from Regulatory Agencies: Get necessary permits and licenses from agencies like NEPC, NCS, CAC, etc.
- Arrange Transport and Logistics: Book a freight forwarder, haulage agent, and shipping line for port clearing and cargo movement.
- Process Documentation: Prepare an invoice, packing list, Single Goods Declaration (SGD) form, and other customs documents.
- Inspection by NCS: NCS physically inspects cargo containers and verifies submitted documentation.
- Port Clearing: The vessel is well-loaded after paying port charges and terminal handling fees.
- Issue Certificate of Origin: Obtained from Chambers of Commerce to authenticate origin
- Payment Transaction: Receive export proceeds via bank transfer or letter of credit.
- Foreign Exchange Repatriation: Repatriate foreign currency earnings through approved channels within stipulated timelines.
Maintaining proper records of this documentation is essential to avoid penalties for non-compliance. Exporters should consistently engage with officials from the NCS, the Nigerian Ports Authority, and other agencies to ease the process.
Key Nigerian Agencies Involved in Exports
Beyond core regulatory agencies, several public and private sector organizations support Nigeria’s export industry. Key ones include:
- Nigerian Export Promotion Council (NEPC): Provides export advisory, market intelligence, capacity building, and incentives to boost non-oil exports.
- Nigeria Customs Service (NCS): Responsible for export cargo inspection, documentation verification, and customs control.
- Nigerian Ports Authority: manages Nigerian ports and provides export-related infrastructure and services.
- The Federal Ministry of Industry, Trade, and Investment formulate industrial and trade policies and owns shares in development banks.
- Nigerian Export-Import Bank (NEXIM): Provides credit facilities, risk-bearing services, and export advisory services to exporters.
- Commercial banks finance export activities through various mechanisms like export credits and bill discounting.
- Chambers of Commerce: Issue certificates of origin and other trade documents. Also represents industry interests.
Building strong working relationships with these agencies through regular interactions helps exporters successfully navigate Nigeria’s bureaucracy.
Understanding Documentation and Procedures at Nigerian Ports
Nigerian ports play a pivotal role in facilitating exports, requiring exporters to comply with documentation and procedural requirements.
The Nigerian Ports Authority (NPA) is responsible for managing all ports, while terminal operators like ENL Consortium, APMT, and Greenview Development manage cargo operations within each port. Exporters are advised to engage with the NPA for general inquiries and direct port operators for container bookings.
Key documentation needed by exporters at Nigerian ports includes:
- Single Goods Declaration (SGD) Form
- Final Invoice
- Packing List
- Bill of Lading
- Certificate of Origin
Upon cargo arrival at the port, exporters or agents must submit copies of these documents to the shipping line and terminal operator. The Nigeria Customs Service then inspects the cargo and confirms if the documentation is accurate.
After customs clearance, the exporter makes stipulated port payments like container deposits, delivery order fees, terminal handling charges, etc. The cargo is then loaded onto the vessel by the port operator.
By maintaining seamless communication and submitting complete documentation in a timely manner, exporters can avoid costly port delays.
Understanding Export Incentives in Nigeria
To accelerate non-oil exports, the Nigerian government offers generous incentives to exporters under various schemes:
- Export Expansion Grant (EEG): A tax incentive allowing exporters to claim 15–30% of export proceeds to improve competitiveness
- Export Development Fund (EDF): Provides long-term loans via NEXIM Bank to cover working capital, plant expansion, and other costs.
- Manufacture-in-Bond Scheme: Duty exemption on imported inputs for production of export goods.
- Export Processing Zones (EPZs): Special zones with incentives like tax holidays; no restrictions on repatriation of capital or profits.
- Export Adjustment Scheme Fund: A short-term facility to boost export production and allow price adjustments.
- Interest Drawback Programme: Refunds interest paid on loans obtained for the processing of exports.
Exporters should apply to relevant agencies like NEPC and NEXIM Bank to benefit from these incentives that improve profitability and boost competitiveness.
Understanding Logistics for Export Haulage
Efficient logistics is key to optimizing export operations and boosting profit margins. Exporters must coordinate logistics expertly to deliver shipments safely in a cost-effective and timely manner.
Major haulage routes for exports include road transport from production and warehouse locations to seaports like Apapa and Tin Can in Lagos or Port Harcourt port. Rail transport is rarely used currently.
Trucking is the most popular mode of haulage. Exporters engage transport and logistics firms to truck cargo in containers, tankers, or trailers, depending on the product. Firms like Honeywell, Bargain Ltd., Dangote, and Bollore provide haulage services.
Key factors that determine export haulage costs include:
- Distance and destination port
- Product type and haulage/handling needs
- Order size and number of containers
- Route security situation
- Fuel costs and exchange rate fluctuations
Exporters should get haulage quotes from multiple companies while confirming reliability, fleet size, and risk management measures. Cost savings can be achieved through factors like return haulage and asset leasing.
Documentation needed for haulage includes a waybill, haulage contract, customs forms, insurance, etc. Haulage delays are common, so exporters must monitor transport progress closely.
Optimizing export logistics
Exporters can optimize their Nigerian export logistics in these key ways:
- Use a reputable freight forwarder to handle documentation, haulage, and clearing.
- Maintain constant communication across the logistics chain.
- Leverage technology like GPS tracking to monitor transport.
- Plan optimum transport routes to minimize delays.
- Ensure haulage flexibility to pivot across transport modes if needed.
- Consolidate orders with other exporters to achieve economies of scale.
- Implement stringent security measures against road risks.
- Streamline warehouse management to hasten load delivery to ports.
- Obtain sufficient haulage insurance to cushion losses.
With strategic planning, robust management, and reliable partners, exporters can achieve logistical success.
Understanding payment methods and foreign exchange management
To successfully receive and repatriate export proceeds, commodity exporters need a solid grasp of payment methods and foreign exchange regulations in Nigeria.
Common payment methods for exports include:
- Advance Payment: full or partial amount paid before shipment. Provides working capital but has risks.
- Open Account: Allows buyers to pay after receiving the goods. Requires trust and credit liability.
- Documentary Collection: Banks release documents only after payment is received.
- Letter of Credit: Banks pay on behalf of the buyer upon presentation of compliant documents. Provides security.
Forex regulations govern the receipt and repatriation of export revenue. Exporters must repatriate forex earnings within 90 days to an authorized dealer like Fidelity Bank or Zenith Bank. CBN monitors this to ensure export proceeds are not diverted.
The Exporter and E-Form M are online CBN portals used for processing repatriations and reporting export earnings. Exporters are advised to work closely with commercial banks to avoid contravening Nigeria’s forex regulations.
With prudent payment terms, active forex management, and bank support, exporters can effectively manage inflows and repatriation to boost their bottom line.
Conducting market research for export success
In-depth market research is crucial for identifying the most lucrative overseas markets for your export product. It provides insights to optimize pricing, positioning, and competitive strategy.
Desk research entails gathering data from existing sources like industry reports, company websites, journals, and export statistics. Useful sources include the Nigerian Bureau of Statistics, the ITC Trade Map, CBN, and Euromonitor.
Field research involves directly engaging with your target export market through channels like:
- Trade missions to meet overseas buyers, regulators, and partners
- Interviews with industry experts, regulators, and company executives
- Surveys of potential customers to gauge demand, preferences, and pricing thresholds.
- Focus groups to obtain feedback on new products.
- Sales trials to test the market on a small scale.
Resources like NEPC and the Nigeria Export Zone Authority support exporters with trade missions, introductions, and market entry advisory.
Export marketing plan development should flow directly from the insights gained. This plan covers positioning, partners, pricing, logistics, promotion channels, and timelines to deliver a differentiated offering tailored to each export market.
Understanding export financing
Accessing finance is vital for exporters to fund operations and growth. Key financing options include:
- Bank Loans: Obtain export loans from commercial banks to finance working capital. Requires collateral.
- Export Credit Agencies: NEXIM offers short- and long-term loans to grow export businesses.
- Supply Chain Financing: Leverage financing from suppliers and buyers across the supply chain to ease cash flows.
- letters: Use L/Cs from banks to secure payments from overseas buyers.
- Receivables Discounting: Sell receivables to banks at a discount to raise capital.
- Equity Financing: Attract investment from private equity, investment banks, and HNIs to fund expansion.
- Lease Financing: Acquire equipment, machinery, and technology via leasing arrangements to preserve capital.
- Stock Financing: Raise capital via listing on the Nigerian Exchange Limited to fund growth plans.
Exporters should utilize suitable financing structures that align with their specific business context and growth objectives.
Handling Documentation and Procedures for Returning Goods
Exporters may sometimes need to return goods or bring back unsold exports from international markets. This requires compliance with documentation and procedural requirements.
To re-import returned exports or bring back unsold goods, exporters need:
- Import license
- single goods declaration (SGD) form
- Packing list
- Cargo release order
- Evidence suggests the goods were originally exported from Nigeria.
Returned exports procedure:
- Notify Customs at the port of arrival and provide relevant import documentation.
- Pay the applicable duty on the goods to be returned.
- Customs then inspects the consignment and grants approval for return based on a documentation review.
- After customs clearance, the port authority allows the unloading of the consignment from the vessel.
- have the goods transported back to the export warehouse under a customs bond.
Unsold goods procedure:
- Declare your intention to return unsold goods to Customs before export.
- Provide evidence of earlier exports at re-entry, like tax receipts.
- Get customs approval and pay duty where applicable.
- Ensure strict quantity reconciliation to avoid penalties.
Efficiently managing return procedures is vital for optimal inventory management and avoiding unnecessary costs or delays.
Adhering to Export Packaging Standards and Requirements
Packaging is a critical component of the export process. Exporters must adhere to expected standards and requirements to preserve product quality and compliance.
- Use prescribed export-quality packaging materials that preserve product integrity during trans-shipment.
- Comply with labelling and marking regulations like country of origin, product weight, handling, etc.
- Meet phytosanitary standards for agricultural exports.
- Ensure tamper-proofing and deploy the necessary cushioning material.
- Employ fumigation where required to prevent contamination.
- Observe safety standards for hazardous products. Attach safety data sheets.
- Optimize package sizes for containers to avoid empty space during transport.
- Leverage technology like RFID for real-time tracking.
- Maintain traceability by recording batch numbers on labels.
- Secure certification from agencies like MANCAP and SON to authenticate standards compliance.
- Work closely with freight forwarders to gauge transport, transhipment, and weather impacts on packaging.
Exporters should iteratively improve packaging to enhance both product protection and the customer unboxing experience.
Knowing the applicable tariffs and taxes for exports
Navigating export tariffs and taxes is key to maximizing profit margins. Applicable levies include:
- Corporate income tax: exporters pay 20% on net profits.
- Withholding tax (WHT): 5% WHT is deducted from payments to non-resident service providers.
- Value Added Tax (VAT): 7.5% VAT on exported services. Exports are otherwise VAT-exempt.
- Nigerian Export Supervision Scheme (NESS) Fee: Charged ad valorem by Customs to fund its operations.
- Export license fee: Levied by NEPC for securing an export license.
- NPA Surcharge: 1% surcharge on the FOB value by the Nigerian Ports Authority
- Terminal handling charges and shipping levies
- Export inspection levies like pre-shipment inspection and SOVID fees
- Excise duties on exported locally manufactured goods
- Customs excise specific exported commodities.
Determining applicable levies and accounting for them in pricing is essential to maintaining profitability. Exporters should leverage concessions like Export Expansion Grants and Manufacture-in-Bond to reduce tax exposure.
Conclusion
This comprehensive guide equips Nigerian commodity exporters with a firm understanding of pertinent regulatory considerations, documentation procedures, trade agencies, and best practices. Adopting prudent compliance protocols, maintaining relationships with key agencies like Customs and NEPC, leveraging incentives, optimizing logistics, conducting research, accessing finance, and managing payments and forex inflows effectively will serve as a solid foundation for achieving export success in Nigeria. The opportunities are immense for ambitious exporters willing