Tuesday, August 29, 2017

Export Digest Newsletter - EU, Nigeria Collaborate to Upgrade the Quality of Banned Exports

Dear Reader,

Please find below Nigeria's Foremost trade Newsletter - Export Digest
 
In This Week's Edition of Export Digest Newsletter - EU, Nigeria Collaborate to Upgrade Banned Exports

To read the full details of this edition of Export DigestClick Here

To read the full details of this edition of Export DigestClick Here


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Tuesday, August 22, 2017

From Local Production To Global Consumption


Nigeria is just emerging out of recession which bedeviled our dear nation because of the challenges of over dependence on Oil. There has been so much noise and some steps towards diversification into other sectors like Agriculture and Solid Minerals, but little or no campaign on the need to add value to the commodities from these other sectors for exportation. We live in a very interesting continent where we produce what we don’t consume and consume what we don’t produce. Nigeria for example is like a man that earns N50,000 a month and spends N70,000 every month with about N500,000 in his savings. Such a man will only survive on this equation for a period of just 25months, this means that in two years, he will go bankrupt. The lesson from this story is that, going global is not just about you, your family or your business; it is about the survival and revival of the economy of this great nation. So even if you were not thinking about it before, please begin to do something about it for the sake of Nigeria.

First of all, I will like to say that going global means that you will need to rise above the low standard of our environment in order to favourably compete on the global scene. However, this has been an herculean task for Nigerians and indeed Africans because of the very low standard that we have accepted to comfortably live with as a people. You buy plantain in traffic and you are very okay with it as it is, but that is not acceptable in the international market. You will need to consider packaging, labeling, constituents, nutritional facts etc. before it can enter the international markets like United Kingdom (UK), European Union (EU) and the United States (US). It is very sad to note that, many people are doing business just because of money for survival, they are therefore comfortable remaining in Nigeria and never think of export because there is no vision beyond comfort and convenience.

Please make no mistake, when we talk about going global through export business, it is not just about tangible products, intangible services can also be exported like consultancy services, training, technology, entertainment etc. So you can export just about any product or service that help the way will live and work as human. When we talk about going Global through export business, I do not mean export of commodities that can only be used by a few that have the technology to convert them into finished goods. It is the people who convert commodities to finished goods that takes the glory of global recognition. If you export cocoa only, you will only be known and rewarded by the very few people in the cocoa industry, but if you export chocolate, you have a global market with many consumers in many countries and hence a global recognition.
It is also important to note that, going global through export business does not mean exporting to only the people of your tribe and tongue in a foreign land. I mean developing a product that other nationals will be interested in. That means it must have overcome the challenge of Acceptability and Adaptability for use in any country.

The possibilities of export are almost limitless. It is going global through export business that made the tax paid by just about 15 Fortune 500 companies to surpass the national budget of over 170 million people in Nigeria. It is going global through export business that made a Nigerian brand Olu Olu foods to make over N250 million turnover a few years ago just selling plantain chips in the U.K. It is the idea of going global through export that makes a company a global brand and hence earns the country of export a goodwill. It is going global through export business that will get us out of the current foreign exchange shortage and financial mess that we have found ourselves In order to go global through export business, a company must strategically and progressively transit from local production to global consumption.

In order to do this, the exporter will need to focus on five areas and these include preparation, product, process, problems and possibilities.
1. Preparation – Be Prepared. As you plan to transit from local production to global consumption:
• Be prepared to learn the ropes and invest in market research
• Be prepared to live by great values and vision
• Be prepared to look for trading partners
• Be prepared for legal documentations and protection
• Be prepared to labour in search for information
• Be prepared to launch new product designs
• Be prepared to leverage on the African taste
• Be prepared for lawsuits – if quality is compromised
• Be prepared to lead the competition or competitors
• Be prepared to leave your comfort zone and visit the export market

2. Product – Upgrade your products- food, apparel, raw materials & finish goods. As you plan to transit from local production to global consumption, you need to upgrade your product to stimulate a positive response from the buyer:
• Upgrade your product through a suitable packaging (details on the pack ...)
• Upgrade your product to serve the new market demands (quality and quantity)
• Upgrade your product to separate it from the competition (unique selling point?
• Upgrade your product to showcase the features and benefits
• Upgrade your product to settle quality issues of African products
If you do not have a product do not just focus on commodities, look for countries where you have competitive advantage by virtue of network of relationships you have there, do a research to identify products in high demand and then look for companies that can do contract production for you or partner with them to be their sole distributor for that product abroad.

3. Process – Understand the process. As you plan to transit from local production to global consumption:
• Understand the process of promotion- (trade fairs, chambers, agent, distributors.)
• Understand the process of obtaining purchase order- (FCO, Incoterms.)
• Understand the processing of paperwork and regulations
• Understand the process of payment and methods- (LC, BC, AP, OA, SBLC, GTE)
• Understand the process of prosecuting piracy

4. Problems – Handle the problem. As you plan to transit from local production to global consumption, learn how to:
• Handle the purchasers/partner problems- (bypassing you to your producer.)
• Handle the pricing problems- {depending on the delivery terms (Incoterms)}
• Handle the product problems- (batch/lot number for isolation)
• Handle the payment problems- payment (using secured payment methods)
• Handle the paperwork problems- (pre and post export documentations)

5. Possibilities – Position for possibilities. As you plan to transit from local production to global consumption, position yourself for the possibility of:
• Repeat business from same buyer
• Referral to other buyers
• Replicating the business model in another country
• Redeeming the country's image
• Recruiting multiple partners
• Rebuild broken bridges between nations
• Raking in more income than your projections

In conclusion, let me state at this point that, a product is not global because it is abroad unless other nationalities are patronizing it. So, if your product is being sold abroad and only Nigerians are buying it, the product is still a local product even though it is sold in countries abroad. If we want to create enduring wealth for our children, if we want to create extensive wealth for the country, if we want to create everlasting wealth for the continent of Africa, transiting from local production to global consumption is the way to go!

From questions and feedbacks kindly send an email to bayemibo@3timpex.com

Monday, August 21, 2017

Export Digest Newsletter -3T Impex Set to Launch an Import Training Pack (Import Pro)

Dear Readers,

Please find below Nigeria's Foremost trade Newsletter - Export Digest
In This Week's Edition of Export Digest Newsletter - 3T Impex Set to Launch an Import Training Pack (Import Pro)

To read the full details of this edition of Export DigestClick Here

To read the full details of this edition of Export DigestClick Here
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Tuesday, August 15, 2017

Interview on STV: AGOA Review and The Way Forward


The Challenges of AGOA and The Way Forward

African Growth and Opportunity Act (AGOA) is a Trade Act enacted by the government of the United States of American (USA). It accords duty-free treatment to most products exported by the beneficiary sub-Saharan African (SSA) countries to the United States. It was enacted on May 18, 2000 as a public law 106 of the 200th congress. The Law was due to expire on September 30, 2008, but as a result of the July 13 signing of the AGOA Acceleration Act of 2004, AGOA expiration was extended to September 30, 2015. The administration of President Barack Obama signed the Extension and Enhancement of AGOA Act into law on June 29, 2015. This has extended the expiration of this trade law to the year 2025.

The legislation significantly enhances market access to the USA for qualifying SSA countries. Qualifications for AGOA preference is based on a set of conditions contained in the AGOA legislation. In order to qualify and remain eligible, each country must be working to improve the rule of law, human right, and respect for core labour standards.

The recently concluded AGOA forum (between African representatives and the USA officials) that was held in Lome, Togo (August 8-10, 2017) to deliberate on how SSA can take advantage of this trade programme did not yield any result, neither was there any conclusion on the way forward. As a matter of fact, the feedbacks tend to tilt towards warning enthusiasm about the future of the Act, even though it still has about 8 years to its expiration. Many observers have expressed concerns about the fact that SSA countries are not taking full advantage of this opportunity.

I do not see any reason why anyone that is conversant with the situation of the African continent should be surprised at the very low volumes of exportation from the SSA countries to the USA. The situation is like giving a big and well spiced chicken lap to a child that has no teeth, and then expressing perplexity over the fact that the child is unable to bite the chicken and take full advantage of the nutrients inside. The majority of African countries have fundamental issues and challenges that need to be addressed before we can take advantage of any trade Partnership and agreement like AGOA from the USA, or even the Economic Partnership Agreement from the European Union (EU). I have categorised all these challenges into seven groups which include product, purchasers, paperwork, pricing, payments promotion and policy.

The Product to be exported is a major challenge. It is no more news that major export products of Africa nations including the SSA countries are mainly agricultural commodities, crude oil and raw metals. On the other hand, most of the over 6000 items on the AGOA product list are not raw products, they are mainly value added products in their secondary or tertiary states. So if the SSA countries are going to be able to benefit from AGOA, there is a great need to shift from focusing on primary products and begin to add value to them in order to convert them into secondary or tertiary products. This has not happened for the past 17years that this USA trade law has been in place because of other issues that I will discuss in other factors below.

The next major challenge is purchasers. These are the buyers of the products in the USA. They operate under strict regulations that must be adhered to before they can import any product into the US market. This means anyone planning to ship to a US buyer from the SSA countries need to be able to demonstrate competence to deliver the right product(s), consistency in delivery and credibility. We in the SSA countries are in an environment where mediocrity thrive thus, coming up to the high standards demanded by the buyers become a task that only few companies can achieved.

The challenge of paperwork is another major obstacles that has impeded the progress of AGOA in the SSA countries. These has to do mainly with the post export documentations. For the importer in the US to enjoy the duty free benefits on the goods being imported, the exporter from SSA countries provides the following documents; Commercial Invoice, Certification of Origin, Bill of Lading, Packing List, and other necessary documents peculiar to the importation of such goods into the US market. The challenge is not the documents themselves, but some specific details that must be stated on them before it can be allowed into the US market without the payment of duty fee. For example the Certificate of Origin must conform to the details required for rule of origin while the Commercial Invoice for Apparel has to be stamped with original AGOA visa by the exporting country's authorities.

Pricing is undoubtedly a major challenge that confront the AGOA programme. Despite the fact that the goods under this scheme are allowed into the US market free of duty payment, the infrastructural deficit is so high thus, leading to the high cost of production. The bad roads leads to high cost of transporting the goods, lack of power supply leads to high cost of running the factory, lack of certified laboratory increase the cost of quality certification (since samples need to be sent abroad to reliable laboratory analysis). Therefore, we need to fix the infrastructural deficit in order to be reasonably competitive.

Another vital factor that mitigate against the low volume of exportation under the AGOA programme is Payment. The seller wants to get payment before the buyer gets the goods while the buyer wants to see the goods before making payment. However, since more than 80% of the world trades are done on open account (which means the buyer will first see the goods before effecting payment), the seller is therefore forced to agree to this payment terms. The implication of this is that the seller might not get payment (because of the low quality of good shipped) and this therefore discourage them from further shipment. If the government fix the port issue and ensure that only good quality products are shipped and secure the expected payment via an export credit insurance, this problem can be addressed.

The need for continuous Promotion of the AGOA programme by the relevant government agencies through different print, electronic and online media cannot be over emphasised. The first aim of this promotion is to continuously educate the public about the programme. The second aim is to correct the mindset of business people in SSA countries. There is a mindset issue that has been created for a long time that need to be corrected, and this is the desire to always prefer to export products in their primary state. The citizens are simply following the footsteps of government through the exportation of crude oil. The government needs to champion this initiative both in words and in action.

The last and probably the most important factor is the government Policy. If the SSA countries want to benefit maximally from the AGOA trade law, they must formulate policies that will make exporting to the US under AGOA to be become attractive to the business communities in their various countries. Some of these policies include; an export growth desk in the presidency to fund and drive the promotion strategies stated in the previous paragraph, a completely tax free regime should be given to company that add value and export under AGOA to the US, a quarterly intensive training that will last for one week should be organise free of charge only for those that have already started production of their products to build their capacity, connect them with sources of funds and potential buyers in the US, a committee should be setup that will review the progress made on a monthly basis, address the challenges and report to the export growth desk in the presidency through the Nigeria Export Promotion Council (NEPC).

I am very sure that if the points raised in the article are well noted and the various suggestions acted upon, in a few years, even if we have not completely fix our infrastructural deficit, we will begin to see the desired growth in the volume of exportation that is being done by the SSA countries to the US market and other export markets around the world.

For question you reach me on bayemibo@3timpex.com

Government Targets 500,000 Metric Tonnes Cocoa Production by 2021

Dear Readers,

Please find below Nigeria's Foremost trade Newsletter - Export Digest
 
In This Week's Edition of Export Digest Newsletter - Government Targets 500,000 Metric Tonnes of Cocoa Production by 2021.

To read the full details of this edition of Export DigestClick Here
To read the full details of this edition of Export DigestClick Here

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Thursday, August 10, 2017

Product Profile - Cassava Flour (For Local & Export Market)

Description
Cassava is the third most important source of calories in the tropics, after rice and maize. Millions of people depend on cassava in Africa, Asia and Latin America. Almost 60 percent of world production is concentrated in five countries Nigeria, Brazil, Thailand, Indonesia and the Congo Democratic Republic. The bulk of world trade in cassava is in the form of pellets and chips for feed (70 percent) and the remaining 30% are mostly used in starch and flour for food processing and industrial use. Very little is traded in the form of fresh root, given the product’s bulkiness and perishable nature.
High quality cassava flour (HQCF) is unfermented cassava flour prepared from fresh cassava roots through a process of peeling, chipping or grating followed by dewatering, drying and milling. HQCF may also be made from any of the intermediate products such as chips and/or grits. It is made by cooking, drying and grinding cassava root to a fine powder. It differs from Tapioca flour in that Tapioca flour is made from the starch of the cassava plant where the cassava flour is the ground root

Specifications
The details of the different specifications of high quality cassava produced for the export market have been highlighted below. High quality cassava flour must be:
a) Practically free from extraneous matter;
b) Free of off flavours and odours;
c) Practically free from any living insects and foreign matter;
d) Safe and suitable for human consumption;
Physical properties
High quality cassava flour shall have the following physical properties:
a) Not less than 95 % by mass of high quality cassava flour shall pass through a sieve of 250μm mesh screen; and
b) Extraneous matter shall not be more than 10 specks/100cm2.
Chemical properties
High quality cassava flour shall:
a) give a blue-black colouration when tested with iodine; and
b) have a pasting temperature less than 75 0C.

Compositional quality requirements

S/N
PARAMETERS
MEASUREMENT
METHOD OF TEST
1
Total Acidity
0.25% maximum
AOAC
2
PH
5.5 – 7.0
AOAC
3
Acid Insoluble Ash
0.35% maximum
EAS 82
4
Cyanide
10mg/kg maximum
EAS 744
5
Starch
60% maximum
ISO 10520
6
Moisture
12% maximum
ISO 1666
7
Crude Fibre
0.2% maximum
ISO 5498

Uses- Some uses High Quality Cassava Flour {HQCF} include the following
1.      It is used in place of Wheat Flour in baking
2.      It is also used in the production confectionery products
3.      Non-Allergenic (Gluten-Free, Grain-Free and Nut-Free)
4.      Low In calories, fat and sugar
5.      Inexpensive, sustainable and easy to grow
6.      Can be fried or eaten as regular swallow
7.      It is used in the paper board and plywood industries.
Market size
The demand for High Quality Cassava Flour {HQCF} in Nigeria is high. The driving force behind the demand is the federal government policy on cassava flour inclusion in wheat flour for cassava wheat composite flour production especially for bread and confectionary baking. The annual national demand for High Quality Cassava Flour {HQCF} is estimated at 750,000 tonnes while the national supply estimate is about 50,000 tonnes. The High Quality Cassava Flour {HQCF} industry in Nigeria is dominated by small scale with production capacity of less than 0.1 tons per day. The production plants are usually found all parts of Nigeria where the chief raw material, Cassava tubers, can be found.
In the international market the demand for flour is humongous, According to a new market report published by Transparency Market Research "Flour Market - Global Industry Analysis, Size, Share, Growth, Trends and Forecast, 2014 - 2020," market was valued at USD 182.66 billion in 2013, which is expected to reach USD 245.82 billion by 2020, growing at an average rate of 4.3% from 2014 to 2020. By volume, global flour market is expected to grow at an average rate of 3.8% during the forecast period from 2014 to 2020 to reach a market size of 183,100.0 Kilo Ton by 2020. In 2013, volume of the market was 141,001.3 Kilo Ton.

The market has been segmented as follows:
Flour market, by raw material: Maize (Including corn flour), Rice, Wheat (Including durum flour), Others (Including cassava flour, oat flour, rye flour, etc.)
Flour market, by Application: Noodles and pasta, Bread and bakery products, Wafers, crackers and biscuits, Animal feed (Including pet food), Non food application (Including bioplastics, biomaterials, glue, etc.), Others (Including roux, baby food, etc.)

Profitability Analysis
The average range of the Free on Board (FOB) price ( FOB price is value of the goods plus profit) of different types of flour hovers between $250 and $350 per MT. In the cost and profit table below, the unit price used was $250/MT, the exchange rate was N350 to $1. The quantity in a shipment on a 20 x 1 container is estimated to be 20MT ( 20,000kg).

CASSAVA FLOUR
Qty
Unit price
Rate
Export Proceeds
 20.00
 250.00
 350.00
 1,750,000.00
Items
Qty
Unit price
Total
Products
 20.00
 50,000.00
 1,000,000.00
Transport cost
 20.00
 5,000.00
 100,000.00
Freight Forwarding
 20.00
 2,000.00
 40,000.00
NXP Form
 1.00
 5,000.00
 5,000.00
NESS Fee 0.5% FOB
 0.005
 1,750,000.00
 8,750.00
Port Logistics
 1.00
 20,000.00
 20,000.00
Shipping Line Local Charges
 1.00
 35,000.00
 35,000.00
Terminal Handling Charge
 1.00
 42,000.00
 42,000.00
Total Cost
 1,250,750.00
Gross Profit
 499,250.00
Bank Charges
 17,500.00
Profit
 481,750.00
ROI
39%