Export business requires sustainable funding over a period of time. The amount of money needed for export is largely dependent on your product and export destination(s). It is therefore vital to ensure that appropriate financing options are explored.
Five tips for financing
- Seek advice from bankers, financial and export experts
- Explore available government grants and loans
- Grants and loans can be accessed from multilateral organizations and private parties.
- Explore available financing options with NEXIM and financial Institutions.
Marketing & market entry costs
Your export budget should cover all costs of marketing your products or services abroad, including the costs of market entry. Specific costs include:
- Hiring competent staff member(s) for the export business
- Visit(s) to your targeted export destination(s)
- Advertising/Publicity cost
This is the amount of money required to effectively run your export business. It involves some direct costs like; raw material purchases, packaging, transportation, laboratory services and certification(s). Indirect costs include personnel and overheads.
There are different payment methods available in international trade. The main options are:
- Documentary credit (e.g. Letter of Credit)
- Open account (e.g. advanced payment, cash against document, deferred payment)
- Documentary collections (e.g. Bills of collection)
To ensure repatriation of your export proceeds, it is advisable to consult a financial adviser for appropriate payment options.
Funding options in export financing include:
- Loans (commercial banks / family and friends)
- Self financing and Joint ventures.
- Support from financial institutions
Nigerian Export Import Bank
The Nigerian Export Import (NEXIM) bank offers a wide range of funding options for your export business. Among these:
- Direct Lending Facility (DLF)
- Export Credit Insurance Facility
- Stocking Facility (for manufacturing exporters)
- ECOWAS Interstate Road Transit Scheme
- Foreign Input Facility (for manufacturing exporters)
- Local Input Facility
Check out the NEXIM-site to investigate your options in more detail!
Central Bank of Nigeria (CBN)In addition to the NEPC administered export incentives, the CBN offers two interesting incentives as well:
- Export Stimulation Fund (access through your bank)
- Rediscounting Refinancing Facility (access through NEXIM)