Monday, May 9, 2016

Importers' Forex Challenge: A Blessing in Disguise?

It is a common saying that opportunities go around in overall called work. This statement best describes the current foreign exchange challenge of a lot of importers in the country. The policy of the government on foreign exchange which led to the closure of the Windows for sales (Retail and Wholesale Dutch Auction System), listing of some imported items as being non-valid for foreign exchange and rationing of the weekly sales to importers through the various banks have brought untold hardship on the business of many importers in Nigeria.

For the import businesses, who are currently undergoing a lot of stress because of the high cost of forex and inadequate forex, here is my suggestion, you can save your business from this financial bleeding and disappointment of your suppliers abroad by simply setting up a special purpose vehicle in your organisation for the purpose of exportation. This challenge therefore creates a unique opportunity for importers to start a new line of business and thereby increasing the revenue base of their businesses.

It is interesting to note that an importer can become a supplier of raw material to his suppliers (who is a manufacturer). An importer who imports batteries from a manufacturers can in turn exports waste battery cells and lead ores to them. Those importing chocolate and confectionery can in turn export cocoa beans to the manufacturer. If the item being imported is sugar, the importer can in turn export sugarcane to the manufacturers. If the importer is into the importation of juice concentrates from the manufacturers, he can in turn begin to export fruits to them.

This current challenge can therefore be use as a leverage and motivating factor importers to invest in export business and thus create their own foreign exchange. The forex from the export proceeds can then be used to fund their importation businesses. As a matter of fact, it is a lot easier for an importer to simply flip over his operation and begins to export. This is because, the importer already understands international trade documentations, port operations, payment methods, risks involved international trade to mention a few. All that the importer now need is to have a proper understanding and handling of the 5Ps (Products, Pricing, Purchasers, Payment & Paperwork) which are very critical to non-oil export business success. The details of the 5Ps will be discussed in detail in the subsequent editions of the Export Digest within the current quarter.

Most of the importers in Nigeria can be broad categorised into 3 groups based on their core businesses. These include Manufacturers, Engineers and Traders. Each of these groups have unique features that make them to be perfectly suited to operate in the 3 sub-sectors of non-oil export businesses in Nigeria. These include Semi processed or finished goods, Solid Minerals and Agricultural commodities. This is not to say that each of the 3 groups of importers cannot operate in all the non-oil sub-sector, what I am saying is that, they would most likely perform better and grow faster if they operate within the sub-sector where they already have some strength.

For very obvious reasons, I will like to recommend that importers who are also into Manufacturing should first consider entering the export business through the sales of their products (processed or finished goods) abroad. This is because they are already used to value addition and the challenges of manufacturers in Nigeria. They could start by first exploring the possibility of exporting their current products to West Africa, other parts of Africa or other countries around the world especially where a lot of Nigerians reside like the United Kingdom and the United States of America.

On the other hand, any engineering company that imports into Nigeria (especially those into civil engineering) should first consider mining solid minerals and then exporting them. This is due to the fact that they already have a number of equipment that will be of great use to them in the mining, processing and exportation of solid minerals like lead ore, zinc ore, copper and manganese ore out of Nigeria.

In the same vein, all the traders importing items into Nigeria simply for sales should see the exportation of agricultural commodities as the first option to be considered as they venture into export business in Nigeria to generate their forex. This is because they neither have any equipment needed for the manufacturing of any product nor do they have any machinery for mining of solid minerals.

On a final note, I will like to submit that, the current challenges of forex in Nigeria is indeed a great blessing in disguise for all affected importers. This is because, it is forcing smart ones to start export businesses in order to create their own forex, create more jobs, generate more income and stay competitive in the same import business.

For questions on this thought, you can reach me via email to

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