Post by Trade facilitator on Jan 11, 2023 11:21:07 GMT 1
Challenges Facing Small And Medium Scale Export Companies In Nigeria
In this discourse we are going to look at challenges facing small and medium sized export companies in Nigeria. Understanding these challenges is very important especially to upcoming exporters; because if you are ignorant of these challenges and obstacles, you are more likely to fail in your venture.
Export business is a specialized type of business because you are dealing with international businesses and countries with different types of laws and business rules.
In Nigeria the Small and Medium sized export companies face a lot of challenges mainly because of poor infrastructure and lack of government support. Let us look at a summary of the problems faced by small and medium scale export companies in Nigeria.
Some Major Challenges Facing Small And Medium Export Companies In Nigeria:
1. The first challenge is very poor access to finance. We cannot overemphasize this; you just try to raise export finance from one of the banks and hear their reply.
High cost of logistics, it is very expensive transporting your containers from the point of loading to the port of shipping.
Sometimes ships are delayed causing losses to perishable goods of Small Scale exporters.
Difficulty in getting real-time and accurate information regarding import requirements of most overseas countries.
Most times, there are no dedicated sources of information on the requirements for exports in the country.
Inconsistency in government policy on exports.
Infrastructure deficits, for example, how can small-scale exporters of fresh fish and shrimps survive in Nigeria with the state of electricity and refrigeration?
But whichever way you look at it, export trade powered by Small and Medium sized companies is the bedrock of all economies in the world. They bring in the largest foreign exchange to the nation.
Emphasizing the importance of export trade, The Executive Secretary of the Nigerian Shippers’ Council, Hassan Bello said: “We either export or we perish because we really have to start exporting. That is very important for this country.” He expressed optimism that with time the challenges of infrastructure deficit, such as poor road network and rail links to the ports would be addressed.
Which Companies Do You Refer To As Small And Medium Scale Companies?
SMEs are non-subsidiary, independent firms/organizations which employ fewer numbers of employees. This number varies across countries. According to the European Union (EU), SMEs are categories of micro, small and medium-sized enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million Euros.
In Nigeria, the Central Bank of Nigeria in its monetary policies circular No. 22 of 1988 defined SMEs as enterprises which have an annual turnover not exceeding Five Hundred Thousand Naira (N500, 000). For the sake of clarity, the National Policy on Micro Small and Medium Enterprises (MSMEs) has given a clear distinction of enterprises, based on employment and Assets. SMEs are organizations which can best be described through their capital, scope and cost of projects, annual turnover, financial strength and number of employees amongst other things.
Such organizations must and can be registered under any part of the Companies and Allied Matters Act (CAMA) in order to do business in Nigeria. Nevertheless, it is usually advised that SMEs register under Part B of the CAMA.
In Nigeria today, most of the companies in the export business fall under the small and medium scale businesses (SMEs).
As a matter of fact most global institutions do not even recognize the micro category while in Nigeria the Small and Medium Enterprises Development Agency of Nigeria, the MSME authority, has even created the Nano (smaller than micro) category.
If properly handled, the non-oil export sector is a more viable alternative to the oil dominated Nigerian international trade. It is evident that the poor performance and the weak positioning of the SME-led non-oil sector in the export market are pertinent issues that require urgent attention; while the challenges of the sector’s uneasy access to finance, infrastructural deficits, entrepreneurial incapability, unstable export trade policy, over-dependence on foreign technology, official corruption and the global economic crisis, demand proper understanding and proactive actions.
Through an organized field-survey of 300 sampled SME owners/managers, it was revealed empirically that in spite of the noted SMEs’ challenges, about 49% of the firms in the Southwest Nigeria were actively engaging in non-oil product exporting with 78.7% contents of their exports being intermediate and finished products.
The mode of entry of these firms into the foreign market were found to be mainly, joint venture and direct exporting through step by step, risk averse, slow, and cautious marketing strategies; while uneasy access to the foreign markets and customers, fear of export risks, difficulties in making profits and stringent export regulations, were the major export barriers against the SMEs.
Issues Affecting Export Trade in Nigeria:
Big time manufacturing companies in Nigeria are into export trade too. They have such products that are easily marketable within the West African sub-region. Those ones therefore do not encounter so much difficulty because they have been tested overtime and certified okay.
But this is not the same for small scale businessmen who are just struggling to open up the market for their products. These categories of exporters encounter a lot of challenges, including the difficulty of infrastructure decay, bureaucratic bottlenecks and poor finance.
Similarly, a trade expert, John Chikere, also listed some of the constraints for export trade as logistics and storage facilities for those into export of farm produce. He said that poor storage for perishable items would be a big loss to the trade, adding that many items are damaged before they arrive at their export destination. Chikere referred to the case of the European Union which in the recent past rejected some food items exported from Nigeria, adding that this was a big setback to the nation’s export drive.
Standardization And Packaging Of Export Products:
On how Nigeria can earn a lot of foreign exchange from export trade, the Executive Secretary of the Nigerian Shippers’ Council, Hassan Bello, said Nigerian businessmen should work hard to do a good job on the products they want to export.
Bello, who described export trade as the hallmark for diversification of the national economy, also identified the problem with Nigerian export as infrastructure deficit and poor access to finance. But he said that despite these issues, there could not be any alternative to standardization and packaging for the products to do well. He said that there were cases when export products were rejected overseas as a result of poor standards and packaging.
On the issue of poor packaging, Bello said some traders have not done enough to preserve what they are exporting, adding that this was among the reasons why some products don’t survive the stress before they get to the market.
He said: “We package to withstand the journey by sea and some Nigerian brothers don’t know that if you have a product, it goes through a lot of changes; chemical changes. If you have sorghum for example, the volume will change, it will expand, and will go through a lot of things. So you have to package your product to withstand the temperature.
“We have to package well for competition, because packaging is very important… The way we package our things, we just want to put things together, no. You have to package it very well, so that people will buy it”. Bello disclosed that the council was planning to organize a workshop to educate exporters on the best way to package for export, among others.
Addendum:
Our company is one of the best companies in Agro-Export Business in Nigeria today. We train individuals and corporate organizations on how to do Export Business the right way; if you are interested, please contact the admin of this forum now for further details.
In this discourse we are going to look at challenges facing small and medium sized export companies in Nigeria. Understanding these challenges is very important especially to upcoming exporters; because if you are ignorant of these challenges and obstacles, you are more likely to fail in your venture.
Export business is a specialized type of business because you are dealing with international businesses and countries with different types of laws and business rules.
In Nigeria the Small and Medium sized export companies face a lot of challenges mainly because of poor infrastructure and lack of government support. Let us look at a summary of the problems faced by small and medium scale export companies in Nigeria.
Some Major Challenges Facing Small And Medium Export Companies In Nigeria:
1. The first challenge is very poor access to finance. We cannot overemphasize this; you just try to raise export finance from one of the banks and hear their reply.
High cost of logistics, it is very expensive transporting your containers from the point of loading to the port of shipping.
Sometimes ships are delayed causing losses to perishable goods of Small Scale exporters.
Difficulty in getting real-time and accurate information regarding import requirements of most overseas countries.
Most times, there are no dedicated sources of information on the requirements for exports in the country.
Inconsistency in government policy on exports.
Infrastructure deficits, for example, how can small-scale exporters of fresh fish and shrimps survive in Nigeria with the state of electricity and refrigeration?
But whichever way you look at it, export trade powered by Small and Medium sized companies is the bedrock of all economies in the world. They bring in the largest foreign exchange to the nation.
Emphasizing the importance of export trade, The Executive Secretary of the Nigerian Shippers’ Council, Hassan Bello said: “We either export or we perish because we really have to start exporting. That is very important for this country.” He expressed optimism that with time the challenges of infrastructure deficit, such as poor road network and rail links to the ports would be addressed.
Which Companies Do You Refer To As Small And Medium Scale Companies?
SMEs are non-subsidiary, independent firms/organizations which employ fewer numbers of employees. This number varies across countries. According to the European Union (EU), SMEs are categories of micro, small and medium-sized enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million Euros.
In Nigeria, the Central Bank of Nigeria in its monetary policies circular No. 22 of 1988 defined SMEs as enterprises which have an annual turnover not exceeding Five Hundred Thousand Naira (N500, 000). For the sake of clarity, the National Policy on Micro Small and Medium Enterprises (MSMEs) has given a clear distinction of enterprises, based on employment and Assets. SMEs are organizations which can best be described through their capital, scope and cost of projects, annual turnover, financial strength and number of employees amongst other things.
Such organizations must and can be registered under any part of the Companies and Allied Matters Act (CAMA) in order to do business in Nigeria. Nevertheless, it is usually advised that SMEs register under Part B of the CAMA.
In Nigeria today, most of the companies in the export business fall under the small and medium scale businesses (SMEs).
As a matter of fact most global institutions do not even recognize the micro category while in Nigeria the Small and Medium Enterprises Development Agency of Nigeria, the MSME authority, has even created the Nano (smaller than micro) category.
If properly handled, the non-oil export sector is a more viable alternative to the oil dominated Nigerian international trade. It is evident that the poor performance and the weak positioning of the SME-led non-oil sector in the export market are pertinent issues that require urgent attention; while the challenges of the sector’s uneasy access to finance, infrastructural deficits, entrepreneurial incapability, unstable export trade policy, over-dependence on foreign technology, official corruption and the global economic crisis, demand proper understanding and proactive actions.
Through an organized field-survey of 300 sampled SME owners/managers, it was revealed empirically that in spite of the noted SMEs’ challenges, about 49% of the firms in the Southwest Nigeria were actively engaging in non-oil product exporting with 78.7% contents of their exports being intermediate and finished products.
The mode of entry of these firms into the foreign market were found to be mainly, joint venture and direct exporting through step by step, risk averse, slow, and cautious marketing strategies; while uneasy access to the foreign markets and customers, fear of export risks, difficulties in making profits and stringent export regulations, were the major export barriers against the SMEs.
Issues Affecting Export Trade in Nigeria:
Big time manufacturing companies in Nigeria are into export trade too. They have such products that are easily marketable within the West African sub-region. Those ones therefore do not encounter so much difficulty because they have been tested overtime and certified okay.
But this is not the same for small scale businessmen who are just struggling to open up the market for their products. These categories of exporters encounter a lot of challenges, including the difficulty of infrastructure decay, bureaucratic bottlenecks and poor finance.
Similarly, a trade expert, John Chikere, also listed some of the constraints for export trade as logistics and storage facilities for those into export of farm produce. He said that poor storage for perishable items would be a big loss to the trade, adding that many items are damaged before they arrive at their export destination. Chikere referred to the case of the European Union which in the recent past rejected some food items exported from Nigeria, adding that this was a big setback to the nation’s export drive.
Standardization And Packaging Of Export Products:
On how Nigeria can earn a lot of foreign exchange from export trade, the Executive Secretary of the Nigerian Shippers’ Council, Hassan Bello, said Nigerian businessmen should work hard to do a good job on the products they want to export.
Bello, who described export trade as the hallmark for diversification of the national economy, also identified the problem with Nigerian export as infrastructure deficit and poor access to finance. But he said that despite these issues, there could not be any alternative to standardization and packaging for the products to do well. He said that there were cases when export products were rejected overseas as a result of poor standards and packaging.
On the issue of poor packaging, Bello said some traders have not done enough to preserve what they are exporting, adding that this was among the reasons why some products don’t survive the stress before they get to the market.
He said: “We package to withstand the journey by sea and some Nigerian brothers don’t know that if you have a product, it goes through a lot of changes; chemical changes. If you have sorghum for example, the volume will change, it will expand, and will go through a lot of things. So you have to package your product to withstand the temperature.
“We have to package well for competition, because packaging is very important… The way we package our things, we just want to put things together, no. You have to package it very well, so that people will buy it”. Bello disclosed that the council was planning to organize a workshop to educate exporters on the best way to package for export, among others.
Addendum:
Our company is one of the best companies in Agro-Export Business in Nigeria today. We train individuals and corporate organizations on how to do Export Business the right way; if you are interested, please contact the admin of this forum now for further details.
