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Small scale entrepreneurs: The foodstuff export market and Vision 20:2020

By Tunji Afuwape

The demand for African foodstuff in Europe and America is rising due to the increasing number of Africans, particularly Nigerians who sojourn in these countries.

There are many small exporters of foodstuff in the sub-region who depend on middlemen to export foodstuff in small quantities and sell them directly to consumers or retailers running ethnic shops in the United States (US) and Europe.

The volume of Nigerian export of foodstuff to these countries is still on a very small scale considering the estimated 20 million people of Nigerian descent residing outside the country, with the majority living in the United Kingdom (UK) and the US.

President Goodluck Jonathan

This is a great opportunity to sell to this category of people. The few exporters of African foodstuff cannot meet with the demand of Nigerians which populations are increasing everyday in the US and UK.

The exportable foodstuff to the foreign countries are smoked fish, gari, beans flour, melon seed (egusi ground), ogbono, cassava flour, bitterleaf, dried ugu leaf, palmwine, butter production, coconut processing, pepper, tomato paste, hibiscus flower, yoghurt, pap (ogi), ukazi leaf.

Others are, hot chilli pepper – ground, kolanut, potato, semolina, ginger beer, kilishi, soybean, groundnut, okro, cassava, yam, honey, snail, bitter kola, ofada rice, catfish, shrimps, pounded yam flour, poultry, fruit juice, cashew, plantain flour and palm oil.

Product sourcing: Every exporter can select foodstuff for export based on accessibility and availability.

Starting foodstuff business on a small scale:  Company registration is optional since you are doing it on a small scale, which means you are sending the foodstuff through an individual.

The requirements include start up capital of between N150,000 and N200,000, an e-mail, a mobile phone and an account with a reputable bank here in Nigeria.

However, having a domiciliary account is better. You don’t need previous experience in the field but you should have a “Good Head” for organizing. You can get support from an organization called Association of Micro-Entrepreneurs of Nigeria (AMEN), to allow you to get NAFDAC number.

You can also make use of their factory site which will enable you operate the business successfully. You can package any of these products into bottles or small nylon bags of 1kg and 2kg. You can penetrate the local market and sell to busy office executives, professionals, high-net worth individuals, and supermarkets.

The NAFDAC number on your product will give the product more credibility in the African foodstuff market in the US and UK when you are finally set for the international market.

Opportunity for small investors: As a small investor, you can send your product through NIPOST, or by air. NIPOST has ready-made cartons that can take up to 30kg and costing N40,593. Perishable products are not allowed through NIPOST because it takes up to five to seven days before the products get to the UK and US respectively.

But you can send perishable items by air because it takes only eight hours to get there. It is important that you send the foodstuff to an individual because if you use a company address, you may need to answer a lot of questions.

Prepare a massive mail campaign to every prospective buyer; write a letter introducing your company’s goods and quality specifications, and that you will package according to their requirements. Don’t fail to quote the selling price and payment terms.

How new entrants can get buyers: You can get buyers by advertising your product online. To do this, you need a website where to display your product. Make use of social sites like Facebook or Twitter.

You can also register with some trade sites like Alibaba, Tradekey, etc. You can advertise your product as a free member. It will also give you a privilege to chat with foodstuff buyers abroad.

How to identify genuine buyers: You will receive mails from intending buyers but you will need to ask them relevant questions like their company registration details, phone numbers, and office address.

Ask them if they have an office or a relative here in Nigeria that you can deal with. You will also need to ask them to give you the list of their customers here in Nigeria to allow you to know how genuine and reputable they are in the foodstuff importation industry.However, you need to agree on a particular payment pattern.

How to deal with responses: A lot of response will come from Nigerians and Africans operating African shops in foreign countries, because some of them are looking for  foodstuff distributors. You may need to send free samples to them, while you make them choose the right packaging pattern for the product you are sending.

Opportunity for Nigerians who have friends and relatives in the US and UK:  You can send the foodstuff to friends and relatives in the US and UK who will help you sell the foodstuff and pay the money into your account in Nigeria.

You don’t need to go through the rigors of cross checking who is genuine or not, they know the terrain and they will help you sell directly to African foodstuff importers and African food stores abroad.

Nigeria has remained a mono-culture economy because it failed to tap into the African Growth and Opportunity Act (AGOA) launched by the US since 2000. AGOA introduced by the Clinton administration was to encourage African countries to increase their exports in non-traditional products to the US, thus adding value to raw materials from developing economies.

Nigeria ranks only high in the energy-related products sector. The country has failed woefully in the foodstuff exportation category while a company like Ghana has support from their government, and that is why you will see many branded foodstuff in African restaurants in UK and US , “Made in Ghana”, and it will surprise you to discover that some of the raw materials are exported by Nigerian manufacturers to Ghana.

Nigerian small scale entrepreneurs who do not have enough funds to set up such businesses in Ghana have decided to remain in the country and send such foods through individuals, thus making 100% returns on investment whereas they can make up to 400% were they to be in Ghana.

AGOA is a window of export opportunities which can also serve as a catalyst for achieving Nigeria’s Vision 20:2020 in terms of foreign earnings, boosting production and capacity utilization, and generating hundreds of thousands of gainful employments through foodstuff exportation.

Foodstuff exportation business can generate employment if the Federal Government can establish cold storage facilities and agricultural trade support infrastructure at designated points.

Challenges faced by Nigeria in foodstuff exportation sector include: Stringent sanitary and phyto-sanitary (SPS) requirements, high transportation cost and poor trade facilitation system, difficulty in accessing finance and credit facilities by manufacturers and exporters, especially the SMEs, lack of adequate training and modern equipment in processing value -added agricultural products, unwillingness of our business people to take risks associated with foodstuff export business, lack of basic information about doing business in the US market and, most importantly, packaging and labeling.

Nigerians who are ready to start this business should keep themselves informed. The few Nigerians currently in the foodstuff exportation  sector cannot meet the demands of the millions of Africans in the US and UK. This is a special invitation to the Nigeria multi-billion naira foodstuff exportation industry.

• * Afuwape, CEO, 21st Strategies, is a small business and SME finance expert

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