In our interconnected world, where the transfer of goods, services, and human capital plays a vital role, it is evident that no nation can be self-sufficient. By 2030, global consumption is expected to reach USD 106 trillion, with emerging economies accounting for 60 percent of this demand.
Nigeria, with its population of over 200 million people, stands as Africa's largest market. The country's growing middle class and their increased consumer spending, along with its reliance on imports and positive trade prospects, make it an attractive destination for importation endeavours. However, these opportunities are accompanied by various challenges. The significant volume of imports, concentration of port activities, inadequate infrastructure like poor road networks resulting in port congestion, and delays in goods clearance pose significant barriers to smooth importation into the region. Moreover, the dynamic nature of government policies aimed at managing trade scenarios, such as balancing trade and achieving economic objectives, further compounds these challenges.
The key challenge lies in how to effectively navigate the risks and downsides associated with rapidly evolving landscapes, to effectively harness the benefits identified from exports to developing markets such as Nigeria.
To successfully target Nigeria and other emerging markets as export or import destinations, three essential success factors are highly recommended:
- Know the laws that matter, or get left behind
Businesses have long grappled with the challenges posed by rapidly evolving policy environments. The Nigerian Import & Export related regulatory framework is characterised by its dynamic and comprehensive nature. Firstly, there are several governing agencies with policies that can sometime overlap or contradict each other, especially in relation to timelines. The Nigerian Customs Service is the authority that controls import and export via a mix of regulations, including regular updates of the import prohibition list. Other governmental agencies such as the Ministry of Finance and Central Bank formulate policies on taxation and tariffs, access to foreign exchange etc., complementing the procedures dictated by the Customs Service.
The country's shifting regulations and strategies primarily focus on either restricting or encouraging imports, depending on objectives related to trade balance, local production promotion, or trade deficit reduction. In response to situational changes in Nigeria’s trade balance, these different organisations can change their policies periodically. Sometimes in discordance with other existing regulations or policies.
To navigate this complex landscape, companies are advised to identify the key organisations that impacts their specific products in terms of importation or exportation (such as customs, finance and professional bodies). They should stay updated on any changes made and ensure compliance with the revised regulations. Compliance is imperative to avoid consequences like seizures, exorbitant fines, or demurrage from customs delays. All of which can significantly impact a company’s financial performance.
- Efficient stakeholder mobilisation in the value chain is the way forward
Understanding market regulations is undoubtedly crucial, but the key to building superior operational capabilities for importation is through effective stakeholder mobilisation, to avoid making un-informed decisions. As companies aim to strengthen their efforts to build market position through expansion channels like exportation, proactive stakeholder engagement across the value chain – customs, retailers, local manufacturers, freight forwarders and custom brokers – becomes a differentiating factor between ‘had-I-known,’ and ‘win-win’ scenarios. Companies must understand the specialisation of each player in the value chain to maximise their network for effective support. For instance, a clearing agent might have a stronger relationship with the Customs authorities compared to a retailer although both might be acquainted across the Customs networks.
Simultaneously, the reputation of stakeholders involved must be considered. Factors such as tenure of business operations, client portfolio and value offerings have proven can serve as reliable benchmarks when evaluating stakeholders. Conducting due diligence remains essential and should never be overlooked when making export-related decisions.
When sourcing for stakeholders or partners in the region, it is advisable to segment them based on their expertise rather than relying on generalised players. Generic service providers may lack the specific insights or trends within certain sectors. For example, a general goods logistics company might not be able to provide
Viewing stakeholder engagement with a clear-eyed perspective goes beyond risk management; it serves as an effective strategy that supports reimagining possibilities instead of retreating from global expansions.
- Plan, but be ready to be flexible with your export strategy
Deciding to export is one thing, but executing successful exports is something else. Nigeria’s rapidly evolving landscape, characterised by fluid regulations and significant economic shifts, proposes that your organisation’s plug and play exportation model which proven effective in other markets might not be directly applicable here.
Companies must holistically assess the local market conditions, evaluate the feasibility dynamics and define their implementation options. It may be necessary to adapt your export strategy specifically for Nigeria. For example, a policy of exporting fully assembled products to other countries might require the decoupling of those products before exporting them to Nigeria.
While the Harmonised System (HS) codes remain largely the same, one might need to verify whether all the codes corresponding to your product offerings are permitted in the region. This verification process is essential in defining your product export portfolio.
A dynamic strategy considers various barriers to success and is far from static. It involved continuous refinement and problem solving, acknowledging that band-aid solutions that merely address surface-level issues are insufficient. Instead, the focus should be on tackling the root causes.
Conclusion
Dealing with complex business regimes require a comprehensive understanding of the value chain, a timeline of its evolution and probable future scenarios. The desire and pace of importation reliance is at a global all-time high, and Nigeria is at a vantage point for stakeholders to key into its potential.
Businesses that remain attentive to the operational dynamics of imports and exports in the region can assess the strategic implications of policy shifts and trade rules. By doing so, they can identify opportunities to minimise risk and maximise value, making informed decisions while navigating importation challenges in Nigeria and emerging markets. Adopting a ‘let’s see how it goes’ approach will not yield to an advantageous position for organisations and stakeholders.
Business Sweden assists businesses in navigating complex business environments and to analyse the requirements of local customs for importing and exporting goods. Contact us for more information on how we best can assist you.
Business Sweden support
Business Sweden can act as support to Swedish investors to identify and implement a defined set of proactive steps aimed at shortening their time to market, find new revenue streams and minimizing risk by leveraging our key capabilities:
▪ Market Expansion (Market entry strategies based on market and competitor analysis, product & customer mix, Sales channel set-up, M&A and alliances, global footprint)
▪ Sales Acceleration (Interim business development, sales execution, partner search & selection, sales & partner management, mega deals/tender support)
▪ Business Incubation & Operations (Registrations & incorporations, coworking space, finance & controlling, employment & HR services, recruiting)
▪ Public Affairs (B2G Strategy, Stakeholder analysis, strategic messaging & communication, stakeholder engagement)
