The Nigerian government has always encouraged Nigerians to engage in international business activities. Because of this, several agencies have been set up to encourage such activities. There are many agencies in Nigeria regulating export and import activities, as well as guiding how foreigners can set up businesses in Nigeria.

In this article, the focus is on organizations that aid international business, especially in agriculture. Some of these agencies include the Central Bank of Nigeria, Export-Import Bank, Nigerian Export Promotion Council, Nigeria Investment Promotion Commission, among others.

i. Nigeria Investment Promotion Commission

ii. Nigeria Export Promotion Council

iii. Nigeria Export-Import Bank

iv. Nigeria Export Processing Zones Scheme

v. Central Bank of Nigeria

Nigerian Organizations

There are many organizations involved in regulating international business in Nigeria. NAFDAC, SON, and other agencies assist in moderating business in Nigeria. Specifically, the organizations examined in this article include:

A. Nigeria Investment Promotion Commission (NIPC)

Deciding to invest in a country is never an easy task. It requires crucial information, research, and planning. This led to the formation of the Nigerian Investment Promotion Commission (NIPC) in July 1995. The NIPC is an indispensable ally of potential foreign investors. The NIPC is tasked with overcoming the bureaucratic and institutional red tape that had previously discouraged foreign investors, especially from taking advantage of Nigeria’s wealth of opportunities.

Located in Nigeria’s capital, Abuja, the NIPC building is open, modern, and efficient-looking. A one-stop necessity for potential investors, it serves as a central investment approval agency, streamlining the activities of ministries, government departments, and agencies involved with investment promotion.

It helps in matters such as the registration or incorporation of foreign enterprises, obtaining expatriate quotas, or finding out specifics about the different tax regimes for sectors like cargo, oil, or mining. It also serves as a catalyst for injecting the much-desired foreign capital into the Nigerian economy through investments.

It allows foreigners and local investors alike to own up to 100% shares in investments in the country. It also encourages and promotes competition in the economy.

Functions

The NIPC performs the following functions:

i. Advises the government on policy issues related to investment.

ii. Guarantees the protection of foreign interests in Nigeria against expropriation.

iii. Administers appropriate incentive packages available to investors.

iv. Guarantees transferability of profits and other funds by investors.

v. Initiates, organizes, and participates in promotional activities such as trade fairs, exhibitions, workshops, conferences, and seminars to stimulate and attract investment.

vi. Identifies difficulties and problems encountered by investors, offers solutions, and renders assistance to them.

Services:

i. Provides up-to-date information on investment opportunities available in the country.

ii. Links foreign investors with local partners.

iii. Issues business permits to foreign investors.

iv. Coordinates the issuance of expatriate quotas.

v. Negotiates, in consultation with appropriate government agencies, specific incentive packages for investors.

vi. Enters directly into bilateral agreements with investors for the purposes of investment.

vii. Identifies specific projects and invites interested investors to participate in them and more.

B. Nigerian Export Promotion Council (NEPC)

The Nigeria Export Promotion Council (NEPC) was established through the promulgation of the Nigerian Export Promotion Council Act No. 26 of 1976 and formally inaugurated in March 1977.

This Act was amended by Decree No. 72 of 1979 and further amended by the Nigeria Export Promotion Decree No. 41 of 1988. Additionally, it was complemented by the Export Promotion Miscellaneous Provisions Decree No. 18 of 1986.

Furthermore, the Nigerian Export Promotion Council Amendment Decree No. 64 of 1992 was promulgated to enhance the performance of the Council by minimizing bureaucratic bottlenecks and increasing autonomy in dealing with members of the Organized Private Sector.

The vision of NEPC is to make the non-oil export sector a significant contributor to Nigeria’s GDP. Its mission is to facilitate opportunities for exporters to promote sustainable economic development.

NEPC is the federal agency responsible for developing, diversifying, and promoting non-oil export products in foreign markets. Alder has been engaged to oversee and implement the marketing of the Council locally and internationally.

Preliminary research indicated that the entity had no brand standards, and there was little awareness of its role in the market. Furthermore, information about NEPC and the export sector in Nigeria was not easily accessible.

1. Export for Beginners

An exporter is someone who sells goods or services in a foreign market to make a profit. Exporters can be classified into the following categories:

i. Export Merchant: An exporter who buys goods or products for export from manufacturers and producers within the country.

ii. Manufacturing Exporter: A company that, in addition to manufacturing certain products, also exports the product.

2. Getting Started: Registration with NEPC

The firm wishing to export must register either as a corporate body or a cooperative society with the NEPC. The NEPC is the federal agency responsible for promoting the export of made-in-Nigeria goods. NEPC is also responsible for registering new entrants into the export business. The relevant application forms can be obtained at zonal offices and should be duly completed and returned to NEPC offices, accompanied by the following documents:

i. Copy of certificate of incorporation/evidence of registration (applicable to cooperative societies)

ii. Memorandum and articles of association

iii. Certified true copy of Form C.O.7 (particulars of directors of the company)

iv. Copy of current tax clearance certificate

Registration takes approximately two weeks after the submission of all required documents. The exporter is then issued a certificate with a code number. Renewal of registration with NEPC is compulsory every two years, requiring the submission of the following documents:

i. Current company tax clearance certificate

ii. Evidence of export performance within the two years

iii. Certified true copy of Form C.O.7

NEPC regulates goods to be exported out of the country, and these goods must be duly registered by the National Agency for Drug Administration and Control (NAFDAC) and the Standards Organization of Nigeria (SON).

To register a regulated product with NAFDAC, the prospective exporter writes to the Director General of NAFDAC, submitting an application along with the stipulated fees per consignment of the intended export, attaching the following documents:

i. Evidence of registration of the regulated product with NAFDAC

ii. Registration certificate granted by NEPC

iii. Details of the goods, including:

Batch numbers
Date of manufacture
Expiry or best-before date
Destination of intended export

iv. Certificate of analysis of the product batch by batch

v. Name and full address of the manufacturer

NAFDAC issues an export certificate if:

i. The establishment maintains the required standards for goods manufacturing practices

ii. The regulated product passes NAFDAC laboratory tests

Exporters of regulated products must also contact the nearest Standards Organization of Nigeria (SON) office and submit the following documents:

i. Request for product certification

ii. Test report

A product falling into more than one regulated category will need separate applications for each category. A product certificate is issued, which is valid for three years from the date of issue. A list of regulated products can be obtained from the SON website.

C. Nigerian Export-Import Bank (NEXIM)

The Nigerian Export-Import Bank (NEXIM) was established by Act 38 of 1991 as an Export Credit Agency (ECA) with a share capital of N500,000,000 (Five Hundred Million Naira), held equally by the Federal Government of Nigeria and the Central Bank of Nigeria.

The bank replaced the Nigerian Export Credit Guarantee and Insurance Corporation, which was earlier set up under Act 15 of 1988. Its main statutory functions include:

i. Provision of export credit guarantees and insurance facilities to clients

ii. Provision of credit in local currency to clients in support of exports

iii. Establishment and management of funds connected with exports

iv. Maintenance of a foreign exchange revolving fund for lending to exporters who need to import foreign inputs to facilitate export production

v. Maintenance of a trade information system to support export business

vi. Provision of domestic credit insurance where such a facility is likely to assist exporters

The bank presently provides short- and medium-term loans to Nigerian exporters. It also provides short-term guarantees for loans granted by Nigerian banks to exporters and credit insurance against political and commercial risks in the event of non-payment by foreign buyers.

The bank is the government’s national guarantor under the ECOWAS Inter-state Road Transit Programme. As of December 31, 2006, NEXIM’s authorized capital was N50 billion, with a fully paid-up portion amounting to N11 billion.

1. Products/Services of NEXIM

i. Direct Lending Facility (DLF): NEXIM lends money directly to Nigerian exporters to fund the purchase of capital goods, raw materials, packaging materials, and spare parts through the Direct Loans Facility.

The facility also covers infrastructure provision, as well as revitalization and modernization of plants/machinery. Providers of export services in areas like consultancy, tourism, oil, and gas are also eligible for support.

The funds are provided in both local and foreign currency, and repayment is within a maximum period of seven (7) years, including a maximum two (2) years moratorium.

ii. ECOWAS Intrastate Road Scheme (ISRT): This scheme promotes the free flow of goods among member states, free of duties, taxes, and restrictions, while employing a wastage escort system to check the diversion of goods consigned for a specific destination.

NEXIM is the national guarantor for Nigeria under this scheme, responsible for covering risks, including diversion of goods within countries other than the country of destination.

The risk covered by NEXIM in Nigeria pertains to import duty accruable to the Nigeria Customs Service, based on the invoice value of the transiting goods, not on damage or loss of consignment.

2. Export Credit Grantee Facility (ECGF)

NEXIM’s export credit guarantee facility is designed to protect Nigerian Banks against the risks of non-payment for loans or advances granted to exporters to meet short-term export contracts. Pre-and post-shipment guarantees are available under the facility for a period of 180 days.

This facility does not cover the risks of non-payment resulting from any fraudulent act of the exporter or his agents and risk of non-payment resulting from the failure of the exporter to fulfill the terms of the export contract or negligence on his part.

Other risks excluded include non-payment as a result of default of the exporter’s agent or collecting banks as well as non-payment resulting from physical damage, which should normally be insured with commercial insurance companies.

3. Export Credit Insurance Facility (ECIF)

One of the major problems facing exporters is the non-payment for goods exported. Non-payment may result from the buyer’s insolvency or other events outside the control of the exporters and the buyers.

NEXIM’s export credit insurance facility is designed to protect Nigerian exporters against the risks of non-payment for goods and services exported on credit terms as a result of commercial/political events. The facility covers both pre-and post-shipment risks for a maximum period of 180 days.

However, the facility excludes the risks normally insured by commercial insurance companies or other government departments, foreign risks, insolvency or default of exporter’s agent or collecting bank, and failure of the exporter to fulfill the terms of the contract or negligence on his part.

4. Export Trade Support Facility (ETSF)

i. Foreign Input Facility (FIF): This provides manufacturers of export products foreign currency loans to import capital equipment, packaging, and raw materials to produce finished products for export. The facility has a maximum tenor of seven (7) years inclusive of a moratorium period of not more than two (2) years. It is repayable in foreign currency.

ii. Local Input Facility (LIF): This is a medium to long-term facility and is provided in local currency to enable exporters to finance capital purchases and other activities that would require more than one year to repay. The facility has a maximum tenor of seven (7) years inclusive of the moratorium period of not more than two (2) years.

iii. NDE Facility (NDEF): This facility is designed to provide direct financial assistance to qualified Nigerian graduates (the participants) to enable them to undergo tutelage with established exporters under the Start-Your-Own-Business (SYOB) Programme, prior to their exporting eligible goods and services themselves. The objective is to create the required linkage for registered companies/cooperatives owned by jobless graduates to go through practical training and guidance with reputable exporters, who may in turn assist them in securing export contracts from overseas and/or outsource some aspects of their businesses to them.

5. National Sesame Seeds Credit Facility (NSSEP)

This is available to provide necessary financial assistance to qualified registered companies under a special credit scheme for the exportation of Sesame seeds and to assist the target companies to directly access short-term pre-and post-shipment finance in support of the export of Sesame seeds with a view to increasing the quantity as well as the quality of Sesame Seeds exported from Nigeria annually.

6. Rediscounting and Refinancing Facility (RRF)

This helps banks to provide pre and post-shipment finance in local currency to support non-oil exports. The RRF gives exporters access to the Bank’s export portfolios at preferential rates.

The refinancing scheme provides a bank with credit of up to one year. Short-term pre-shipment credit of up to 120 days and post-shipment credit of up to 60 days is provided under the rediscounting scheme.

7. Special Cassava Export Credit Facility (SCECF)

Following the establishment of the Presidential Initiative on Cassava Export Promotion by Mr. President in February 2004, NEXIM was selected as a key member of the Sub-Committee on Finance & Export Proceeds Repatriation and specifically requested to support the initiative. To this end, the Management of NEXIM considered and consented to the establishment of a Special Cassava Export Credit Facility to allow for direct disbursement of approved loans to qualified exporters of Cassava Products.

8. Stocking Facility (SF)

This is provided in local currency and it enables manufacturers of exportable goods to procure adequate stocks of raw materials to keep their production at optimal levels. The Stocking Facility is available for up to one year and is granted at rates capable of enhancing the competitiveness of manufactured export.

9. Textile Revolving Fund (TRF)

D. Nigerian Export Processing Free Zone Scheme (EPFZS)

Since the inception of the new democratic administration led by President Olusegun Obasanjo in May 29 1999, a number of efforts have been made to attract both local and foreign investors to the country to boost Nigeria’s economy.

To point the country towards the path to industrialization will involve discipline, focus and hard work from all sectors to the economy. In this light, the diversification of the economy has led to de-emphasizing the role of oil production and exports within the country’s economy.

Much needed focus has thus been devoted to other sectors like solid minerals, tourism, telecommunication, commerce and industry. All these efforts toward economic development led in November 1991 to the establishment of the Export Processing Free Zone Scheme (EPFSZ).

This scheme allows for interested persons to set up industries and business within demarcated zones known as Export Processing Zones, (EPZs) principally with the objective of exporting the goods and services manufactured or produced within the zones.

But this novel scheme was slowed down by he political shenanigans in power then. It thus took another decade before it saw the light of the day with the inauguration by President Obasanjo of the multi-billion naira Calabar Export Processing Zone (CSPZ) very recently.

In a nutshell, the scheme is targeted to promote the diversification of the export base of the nation through the acceleration of export business with attendant loaded incentives, this it is perceived will include industrial production, offshore banking, insurance and reinsurance, international stock, commodities and mercantile exchanges, commercial industrial research, agriculture and agro- allied industry, mineral processing, as well as international tourist resort development and operation.

The Calabar zone has been designated as the primary EPZ territory and a total of 80 serviced plots have been reserved for prospective investors for self-built factories.

1. Tax and other Incentives: The incentives that come to inventors in the designated EPZ territories include:

i. Tax holiday relief, legislative provisions pertaining to taxes

ii. Levies, duties, and foreign exchange would not apply within EPZs

iii. Repatriation of foreign capital investment in EPZs at any time

iv. Capital appreciation of the investment

v. Unrestricted remittance of profits and dividends earned by foreign investors in EPZs

vi. No import or export licenses required

vii. Rent-free land during construction of premises

viii. Up to 100% foreign ownership of enterprises in EPZs

ix. Sale of up to 25% of production permitted in the domestic market

x. No quotas on products from Nigeria exported to the European Union (EU) and the United States of America

xi. Made-in-Nigeria goods are entitled to preferential tariffs in the EU

2. Grants Available for Exporter: The provision of the Industrial Development (Income Tax Relief) Act with respect to Pioneer Status qualifies for a tax holiday of 3-5 years to any manufacturing exporter who exports at least 50% of his annual production. Additional concessions are also available in the local raw material development, local value-added, labour-intensive or export-oriented activities that involve significant training.

3. Tax Relief on Interest Income: Interest accruing form loans granted by banks in aid of export activities enjoys favorable tax treatment.

4. Capital Assets Depreciation Allowance: The law in Nigeria provides an additional annual depreciation allowance of 5% on plants and machinery to manufacturing exporters who export at least 50% of their annual turnover provided that he product has at least 40% local raw material content or 35% value added.

5. Investment Protection: Protection of property is provided by Section 31 of 1999 Nigeria’s constitution. The section states: “No property or other rights will be taken over or compulsorily acquired except under a law which provides for adequate compensation and for a right of access for any claimant to the High Court of the relevant part of Nigeria for the determination of interest in the property and compensation amount.”

Expropriation The Nigeria Investment Protection Commission Decree guarantees against nationalization, expropriation and compulsory purchase.

E. Central Bank of Nigeria

Central Banks worldwide simply refer to a central monetary authority or an apex financial institution within the entire financial structure promoting monetary stability and a sound financial system. The world Central Banking is one of a variety of structures, functions and powers, which are in them by- product of the economic, political and other realities prevailing in a society.

Historically, prior to the establishment of Central Bank of Nigeria by the CBN Act of 1958, there existed a body known as the West African Currency Board (WACB). This Board, which was established by the then British Colonial Government, was intended to serve as a Central Bank for the Anglophone West African countries.

Thus, the board was charged with the primary responsibility of issuing the West African Pound, which served as the legal tender currency in Ghana, Nigeria, Sierra-Leone and Gambia. Another function performed by WACB was the management of the reserves held in trust for these colonies.

1. Objectives of Central Bank of Nigeria

The principal objectives of the Bank as stipulated in the CBN Act 1958 are as follow:

i. The insurance of legal tender currency in Nigeria

ii. To maintain the external reserve and value of the legal tender in order to safeguard the international value of the currency

iii. To promote monetary stability and a sound financial system

iv. They serve as the banker and financial adviser to the Federal Government

v. Bankers to other banks within Nigeria and abroad

2. Functions of Central Bank of Nigeria

To achieve the above objectives, CBN undertakes the following functions as stated in the Act. The basic functions performed by CBN can be broadly categorized into three.

i. Traditional functions

ii. Regulatory functions

iii. Development functions

3. Traditional Functions

i. It issues the legal tender (currencies) Naira and Kobo.

ii. It acts as the Banker and financial adviser to the Federal Government.

iii. CBN acts as the banker to other banks and financial institutions, handling cheque clearing and serving as the lender of last resort.

iv. It manages the accounts and debt of the country.

v. CBN is responsible for banking supervision and examination.

4. Regulatory Functions

The regulatory functions of the CBN are mainly directed at the objective of promoting and maintaining the monetary and price stability in the economy. To perform this regulatory function CBN formulates policies to control the amount of money in circulation, control other banks and major players in the financial market, control rates of banks credits and therefore the supply of money in the economy. The instruments used by CBN to achieve these functions are:

i. Open Market Operation (O.M.O)

ii. Bank Rate

iii. Rediscount Rate

iv. Direct Control of Bank’s Liquidity

v. Direct Control of Bank Credit

vi. Special Deposits

vii. Moral Persuasion

viii. Minimum Cash Ratio

5. Developing Functions

The establishment of CBN in 1959 was premised on the need to promote and accelerate the much needed economic growth and development in Nigeria, which would invariably promote the growth of the financial market. This financial market comprises the Money and Capital market, assistance to development banks and institutions and the formulation and execution government economic policies.

The Money Market is the market for mobilizing short-term funds with instruments such as Treasury Bills, Treasury Certificates, Commercial Papers, Certificate of Deposit (CDs), Eligible Development Stock (EDS) and Bankers’ Acceptances. The CBN plays a major role in the Capital Market, which deals with long-term funds by fostering its growth through the annual subvention granted to them.

The CBN also helps to promote and assist the development banks and institutions. These include Nigerian Industrial Development Bank (NIDB), the Nigerian Banks for Commerce and Industry (NBCI), the Nigerian Agricultural Insurance Company (NAIC), the Federal Mortgage Bank of Nigeria FMBN), the Nigerian Deposit Insurance Corporation (NDIC), the Nigerian Export-Import Bank (NEXIN) and the Securities and Exchange Commission. (SEC).

In addition, the CBN is involved in the formulation and executive of viable economic polities and measures for the government. Also since 1970, the Bank has been instrumental in the promotion of wholly owned Nigerian enterprises. Thus, the recent directive to banks to set aside 10% of their profits before tax to finance Small and Medium Scale Enterprises can be viewed in this context.

6. Achievements, Vision & Mission of CBN

The Central Bank of Nigeria in its bid to curb banks unethical actions have periodically increased their capital base and have instituted the Inter-bank foreign exchange market to check capital flight and to regulate foreign exchange rates.

CBN has also achieve a level of autonomy since the advent of the democratic dispensation in Nigeria, the is reflected in her aggressive execution of Government economic policies in the areas of orientating the Nigerian populace to embrace the saving culture, the encouragement of foreign investors by creating an enabling environment/policies for ensuring macroeconomic stability and stable governance.

We must also acknowledge the recent moves by the Central bank to tap into the limitless opportunity derivable in the Information Technology World. This is reflected in the massive promotion of Universal Banking in the country. The CBN took the bull by the horn by first starting a restructuring and reengineering project which is perceived to tackle the business processes in its structural and instructional deficiencies to enhance its effectiveness, efficiency and productivity.

The Central Bank of Nigeria’s restructuring and reengineering involves improve reorganization of the Bank’s business processes with a view to making it more efficient and proactive. It also involves restructuring the assets and liabilities of the bank to promote efficiency, restore integrity and achieve cost effectiveness.

To achieve this all important restricting & reengineering CBN embarked on a project code named “Project EAGLES”. Project EAGLES is the approach CBN has adopted, recognizing the need to gear up its organisation and systems to address strategic issues, achieve a sharper focus on core functions and be an efficient regulator in the 21st century.

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