THE NEEDED PREPARATIONS
In the previous article, the major areas of policy focus of any government that wants to grow export volume, particularly the non-oil export volume, were highlighted. First on the list of these areas of policy focus is the preparation of the businesses in the country (particularly the micro, small and medium scale enterprises (MSMEs) for exportation. The policies relating to the preparation of micro, small and medium-scale enterprises (MSMEs) for exportation are aimed at growing non-oil export volume by increasing the number of exporters in the country. This involves helping more businesses to become export ready through the conduct of export readiness assessment, capacity building in different areas of exportation and export mentoring programme.
The reason we have over 15,000 businesses registered with the Nigerian Export Promotion Council (NEPC), but just about 1,200 businesses are able to export per annum is because of a lack of preparation, otherwise called Export Readiness. The reason we have some businesses start an export business but cannot continue doing the business after one to two years is a lack of export readiness. The reason we have the recurrent issues of rejection of some of the commodities exported from Nigeria is a lack of export readiness. The reason we have many people attending export training programmes every year, with most of them still unable to start the export business afterwards, is a lack of export readiness. The reason the government is spending so much money to promote exportation every year with little impact on export volume is the lack of export readiness.
The idea of export readiness has been defined as a multifaceted concept that involves the ability of a business to successfully enter the export markets, sustainable compete in the export markets and significantly grow its market share until it becomes established in the export market. The government policy on preparation for export should include an export readiness assessment before the issuance of export certificates or licenses. This should be restricted to intending exporters. Any business owner that scored below 80% in the assessment should not be issued an export license. Such a business should only be issued the license after first undergoing a capacity building and export coaching programme in order to help them cover the areas of their deficiency in export business readiness.
The first category of export readiness assessment should cover a critical review of the company’s characteristics, which include the general attributes of the business that make it ready for the export market. This should include the assessment of the promoter (owner of the business), the products (item of export), the pricing (cost and profitability of the item of export), the predisposition (international orientation of the staff of the exporting company) and the purpose (reason for the business decision to sell in markets abroad).
The second category of export readiness assessment should cover a critical review of the aptitude or abilities possessed by a company that is ready to successfully market and sell its products in the export market. This should include the assessment of the promotion (creating awareness about the product in the export market), the proficiency (export business management skills and competence), the production (meeting the huge demands of buyers in the export markets), the payment (sourcing for funds to pay local suppliers and getting paid after shipment) and the positioning (goodwill and heritage already built by the business in the local market).
The third category of export readiness assessment should cover a critical review of the exporter’s understanding of attributes or characteristics of the export market. This should include the people (consumers and end users of the item being shipped to the export market, the paperwork (pre and post-export documentation vis a vis the import documentation in the export market), and the potential (global demand and regional demands for the product abroad).
The fourth category of export readiness assessment should cover a critical review of the associations and relationships that the exporting company has in the export market. This includes the partnership (service providers like overseas sales representatives in the export market) and the purchasers (wholesalers, distributors, and importing companies in the export market).
This readiness assessment helps the government separate serious and ready exporters from businesses that are not ready for successful and sustainable export business. This will help the government channel its resources to support the market entry and growth of export-ready businesses. This will consequently help the country grow its export volume and increase the export proceeds inflow into the country.
Finally, I strongly believe that if the policies suggested in this write-up are considered with necessary modifications and implementation, it will help the respective government agencies achieve the objective of growing the non-oil export sector to become a major foreign exchange earner for the country.
Bamidele Ayemibo is the chief executive officer at 3TImpex Trade Consulting
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