Why Export Business Is Very Profitable In Nigeria
Nigeria is filled with business opportunities. It is filled with many money making ventures that you did be confused on which one to venture in should you want to start a business. But you need to worry your head if you want to start a business. The business to start should not worry you. Do you know why? Export business is very profitable. It is arguably the most profitable business in Nigeria.
We need not go into a detailed analysis of the export company. Many things including oil fall into this category. In fact, the mere mention of oil should be convincing enough.
Export business is very profitable in Nigeria because it is quite large. You could export virtually everything if the set up is very okay.
In this article, we are determined to share evidence on why export business is very profitable in Nigeria. we shall bring on reasons for our claim. Remember, our argument is that export business is arguably the most profitable business in Nigeria.
Here Is Why Export Business Is Very Profitable In Nigeria
The first reason for our claim that export business is very profitable in Nigeria is the high margins of profit. The margins can be as high as 300 percent. This is outrageous. For the products you buy, you can sell 70% to 150% profit. Now imagine what will be the profit if you produced it.
For instance, if you buy Mica minerals from the mine at any price, you could export it and still make between 70% to 300% profit. If this is not profitable, I wonder what else is.
Exchange rate fluctuations
The uncertain and fluctuating nature of the exchange rate can spell doom for importers but it is always favorable to exporters. The reason is quite simple.
According to Edom of startuptipsdaily.com, “When the currency value depreciates, importers suffer, but exporters benefit. This is because if you’re making a $100 profit on every ton of mineral you export, that would be $100,000 for the export of 1,000 tons, and converting that an exchange of even 350 Naira per dollar would be equal to 35,000,000 Naira”.
From the above analysis, you can see that with the depreciation in naira, you are going to be making more money from sales.
There are better payment guarantees
Edom explained this very point very well. The fact that there are better payment guarantees is one of the reasons why export business is very profitable in Nigeria. according to him
The terms of payment on the export businesses vary at great lengths. It could be that the buyer wants you to first load the cargo on the vessel, send the bill of laden documents to their bank, after which they pay a certain percentage before it is shipped, or it could be that the buyer places a payment guarantee in the form of a Letter of Credit at Sight, Standby Letter of Credit, Documentary Letter of Credit, or other related Letters of Credit from their bank to your bank, guaranteeing that their bank would automatically pay once they receive the shipping documents from you.
The former is far riskier than the latter, and the latter, which involves the use of various forms of bank payment guarantees is the best payment structure to work with for the export business from Nigeria. With this, you’re guaranteed that you’d always get paid your full dues once you deliver on the agreed terms of the Letter of Credit, whether the buyer suddenly changes their mind to purchase or not.
You can start as a broker
If you cannot start out as an importing company due to the financial responsibilities of exporting, you can start out as a broker. You can make a lot of money from just finding buyers for exporters until you can have enough to start your own exporting company.
It helps for easy diversification
Another very important reason why export business is very profitable is the fact that it makes for diversification. There are many processes involved in doing export business. It requires a mine, the use of machinery to mine the minerals, trucks to transport the minerals, a warehouse to house the minerals, freight forwarders to prepare the required shipping documents, and a shipping line to actually ship the product.
If you look at the top commodity trading companies in the world, you will find out that they are involved in almost every stage of the processes above. The raison d’etre for the above is to cut costs and maximize profit.
As you grow this business, you could come up with the ability to get involved with the processes too; giving you diverse means to make more money.
It builds the nation
This is the altruistic purpose for the business. It can be an agent for change and nation-building. It can help reduce the employment deficit because, at every stage of the operation, you will need hands to handle things for you. Resultantly, you must employ at a part-time rate or full-time rate.
Secondly, it will help in increasing the country’s gross domestic product (GDP). You see, it has widespread and far-reaching implications for the Nigerian economy.