Friday, June 21, 2019

Starting & Managing Export Business Part 1





Hello everyone, please join me on an amazing journey in this over 80 parts series on Starting and Managing Export Business on Youtube

Monday, May 20, 2019

How CBN Can Generate Accurate Data for Non-Oil Export In Nigeria


One of the main objectives of the Central Bank of Nigeria (CBN) is to defend the Naira and one of the ways this is done is to put in place trade policies that regulate the access to and the utilisation of the foreign exchange both for visible and invisible transactions. The inflow and outflow of foreign exchange in Nigeria is tracked using different forms namely: Form M -The application form for the importation of visible goods into Nigeria. Form A - The application form for the payment of offshore services. Form NXP - The application form for the exportation of tangible goods out of Nigeria. CCI - Certificate of Capital Importation used to register important of funds into Nigeria. 

In regulating the access to the foreign exchange, the CBN put forward a policy that will enable her have access to the details (volumes and values) of non oil exportation out of the country. This policy state that anyone exporting any item out of the country should henceforth declare the NXP numbers on the Bill of Lading. This is a fantastic policy that should finally lay to rest the issue of non declaration of details of items being exported but this has not been the case because there seems to be no plan of action and strategy to implement and enforce this policy. 

In addition to this, my enquiry in the banking sector to check the level of compliance shows that some of the shipping lines seem to be depending on the exporters to provide the NXP numbers to be stated on the Bill of Lading. How do you explain a situation where an exporter brings a shipping document to the bank under a Bill for Collection or Letter of Credit transactions with a Bill of Lading that is containing an NXP number that is not in the bank's record. This can only be possible because the exporter has given a fake number to the shipping line. This is therefore making the policy to be useless because the CBN will still not be able to get the correct data of the goods being exported out of the country and therefore will be unable to track the expected export proceeds on the shipments. 

The exporters used to have reasonable reasons not to process NXPs for their export transactions when the exchange rate of Naira to 1 USD was over N400 leading to a very high cost of procurement of commodities and processing their goods. This is because opening NXP will mean that they have to bring in export proceeds into the export proceeds domiciliary account. This will consequently prevent the exporters from having access to the account and therefore unable to sell the USD at a better rate in the parallel market. They are therefore compelled to sell at the interbank rate which is very low and therefore resulting in a loss. 

This problem has since being solved by the governments through the introduction of the Investor & Exporters window for trading foreign exchange. As a matter of fact, the rate at this window is competing favourably with that if the parallel market. Hence, there is no logical reason for any exporter not to want to process NXP. The resulting losses on their export transactions which they use to give as excuse is no longer tenable. However, there are still some that refuse to declare the details of their shipments via NXP processing and this shows that they have other hidden agenda beyond their initial claim. This has necessitated the introduction of a new policy that requires the exporters to state their NXP numbers on the Bill of Lading. Despite the new policy, some exporters are still able to circumvent the new requirement because the way the government is going about the implementation of the policy is flawed. 

This problem can be solved easily in my opinion based on a good understanding of the pre-export documentation process and the export clearing process. In the pre-export documentation process, the exporter delivers his completed NXP form, proforma invoice, export license and certificate of incorporation to the bank. The bank, bank keeps the first original of the NXP and then sends the other 5 original NXPs together with other documents to the pre shipment inspection agent. This agent keeps the second original NXP and then transmits the other NXPs to government agencies like Nigeria Customs Service, Central Bank of Nigeria and Nigeria Export Promotion Council. From this process, it is very obvious that the officers of the Nigerian Custom Service have a copy of the original NXP from the bank. 

All the CBN needs to do is to collaborate with Customs and the shipping line in the implementation process. The CBN needs to agree with both organisations that a copy of the NXP endorsed by Customs must be part of the loading list transmitted to the shipping line after the goods must have been cleared for export. The shipping line must insist that it will only insert on a Bill of Lading, the NXP numbers stated on the copies of the NXPs received from and endorsed by Customs. The CBN should also inform the banks that if they receive any Bill of Lading with fake NXP numbers, this should be communicated to the CBN who will then inform the Customs headquarters to investigate and discipline the erring officer that made that to happen.

It is might firm believe that Nigeria can solve the problem of both non-declaration and under declaration of the items being exported out if the country. However, this can only be made possible if the CBN have a very firm handshake and synergy with the managements of all the relevant agencies at the ports.

Bamidele Ayemibo
bayemibo@3timpex.com

Saturday, May 18, 2019

Earn An MBA Degree In International Trade & Global Logistics From USA

Hello all, here comes the opportunity to do an MBA programme in International Trade and Global Logistics from the American Vision University. Payment can be made in Naira for six instalments. The lecture starts in the month of July. Kindly chat me privately to get more details on the registration and course content.

Tuesday, May 14, 2019

Soya Beans Export: A Potential Gold Mine Of Nigeria


For many years, Nigeria has concentrated on exportation of Agricultural products as one of the main sources of generating foreign exchange in the non-oil export sector. However, the real export potential of Agricultural commodity has not really being explored because there is no philosophy driving the desire for export growth in the country. Many are simply exporting just to make money with no strategic direction on the implication on the economy. The government have also not done enough in this regards because the Agricultural products that the government is promoting and supporting for exportation are the regular products like Cocoa, Sesame seeds, Raw cashew nuts, Ginger and Hibiscus flower. 

Out of the Agricultural commodities exported out of Nigeria every year, the ones that constantly feature on the top 10 exported Agricultural commodity and also among the top ten exportation of Nigeria in general include Cocoa, Sesame seeds, Ginger and Raw cashew nuts. What really bothers me is why government is still giving so much support to these commodities and neglecting commodity like Soyabeans. I guess it is because the exportation of Nigeria has mainly being done by default based on what is convenient and available and not based on any ideology driven from the topmost echelon of government. 


It may interest you to know that the total export markets of Cocoa, Sesame seeds, Ginger and Raw cashew nuts is less than $20billion while that of Soyabeans alone is about $60billion. According to the 2017 global export data from The Observatory of Economic Complexity, the total export volume of Cocoa beans traded in the world was $9.35billion, that of Sesame seed was $2.2billion, that of Ginger was $845million while the exported volume or Raw cashew nut was $6.84billion. The total value of all these most promoted, traded and celebrated export of Agricultural commodities in Nigeria is $19.24billion while the world traded volume of Soyabeans in the same period was $58.1billion. 


Why are we so focussed on the exportation of many Agricultural commodities with less value and neglecting the drive for the exportation of strategic products like Soyabeans with such a very high value that tripled the combined volume of all the most traded Agricultural products in Nigeria? The answer in my opinion is the ignorant of the elite that are satisfied with status quo and therefore not seeking creative ways to more efficiently and effectively grow our non-oil export volume and the economy in general.


I think it is high time that the government declared its support for the growth of Soyabeans exportation in Nigeria just the way it has done for rice production which also has a lower export volume than Soyabeans. Nigeria currently generates about $47.6million from the exportation of Soyabeans and this is just a meagre 0.082% of the total export volume. There is therefore need to increase the volume of Soyabeans production. The government has shown that this can be done with what it has achieved with rice production. I strongly believe that the administration of President Mohammadu Buhari can replicate the same to grow the output of Soyabeans cultivation in the country. 


Finally, I will like to call on the government to begin to seek out for other unusual products in Nigeria with large world export volume. The government can then support its production for the purpose of strategically growing the non-oil export volume of Nigeria and thereby reducing the danger of over dependence on oil for the generation of both income and foreign exchange for the country.

Bamidele Ayemibo
bayemibo@3timpex.com

Monday, April 29, 2019

Export Business Investment For Busy Executives- Exportation Lead Ingot


AFCFTA Update: Africa Is Set To Leave Nigeria Behind

The 52 Countries that have signed the African Continental Free Trade Agreement (AfCFTA) and the 22 countries that have ratified, have indirectly reminded Nigerian of their intention to leave the giant of Africa behind if it remained adamant on not signing the AfCFTA that is supposed to revolutionize trade and development in Africa. As at April 29th, 2019, 52 countries have signed, leaving behind Nigeria, Eritrea and Republic of Benin while 20 countries have ratified and deposited the instrument with the African Union (AU) Chair. The remaining two countries that are required to ratified in order to kickoff the AfCFTA have now have now ratified but yet to deposit the instrument with the AU chair and these are Zimbabwe and Sierra Leone. The 20 countries which have both signed and deposit the ratified document with the AU chair are; Chad, Congo, Djibouti, Eswatini, Ethiopia Gambia, Ghana, Guinea, Ivory coast, Kenya, Mail Mauritania, Malawi, Niger, Rwanda, Senegal, South Africa, Togo and Uganda.
The AfCFTA agreement has been projected to grow African trade by 52% by 2022, and it is aimed at removing barrier to trade and liberalize service within the African continent. Intra-African trade currently stands about less than 20%, whereas that of European Union (EU) is over 60%. EU, with a population of about 500 million people is contributing about 33% of world trade, while Africa is contributing less that 3% with a population of about 1.2 billion people. By the time this agreement takes effect in July as planned by AU commission, it is expected that the volume of African trade in goods and services within Africa will begin to grow significantly. Taking a cue from what China has done in the last decade by lifting over 200 million people out of poverty by virtue of its commitment and strategies deployed to grow trade consistently, we can also expect that this would begin to happen on the African Continent. As the Intra-African trade in goods and services begins to grow, this will positively impact on the production, GDP, per-capita income and consequently reducing poverty on the continent. 
What is sad about this whole arrangement is that one of the largest market in Africa which happen to be Nigeria is yet to sign or ratify this agreement. Considering the fact Nigeria is the largest beneficiary of the ECOWAS Trade Liberalization Scheme (ETLS) where Nigeria is contributing more that 40% of the trade among the 15 countries in ECOWAS, this is an indication to any rational observer that Nigeria is going to be a major beneficiary to AfCFTA if the nation signed it. I will like to state at this point that the argument put forward by the organized private sector like Manufacturer Association of Nigeria and Nigeria Labour Congress and other bodies who are putting pressure on the government not to sign the agreement, are very weak because these agreement already have inbuilt safeguards for the economies of the member states signing the agreement. This is therefore making the private interest of a few people to deny a whole lot of people in Nigeria the opportunities for growth and development that will be stimulated by signing of this agreement.
It is our hope that the president is going to have a rethink on this issue, so that before July, 2019, a date set by the AU to kick-start the implementation of this agreement with commence, that Nigeria will take a step in signing this agreement and also ratify it so we can benefit immensely when it commences.
Bamidele Ayemibo/ bayemibo@3timpex.com