In this article, we will unravel how you can start the importation business in Nigeria, and the steps needed during the customs clearance of your imported goods or products. We will also discuss the most important form in the importation Business called the Form M.
Importation business which is the opposite of exportation business.
It is a business in Nigeria that involves the process of buying goods and products from foreign countries into Nigeria for resale or distribution purposes within the Nigerian market.
It involves sourcing products from international suppliers or manufacturers, handling the necessary logistics, such as shipping and customs clearance, and then selling those imported goods to consumers or other businesses within the country.
Here is how you can start importing business in Nigeria:
Table of Contents
1. Determine Your Products for Importation:
As an Importer or a potential importer, the first step to begin this importation business is to research and understand the Nigerian market to determine which products are currently in demand.
This involves analyzing consumer preferences, market trends, and identifying gaps in the local market where imported products could be successful.
Once you have identified the types of products that are likely to sell well in Nigeria, you will have to make a conclusive decision about which specific items or categories to import.
In fact, these are the most sought-after (highly demanded) imported items or products in Nigeria:
- Clothing and Fashion Items
- Automobiles and Auto Parts
- Food and Beverages
- Furniture and Home Decor
- Building Materials
- Generators and Electrical Appliances
- Luxury Goods
- Cosmetics and Beauty Products
- Baby Products
- Machinery and Equipment: Industrial machinery, construction equipment, and agricultural machinery
- Educational Materials: Products used in the education sector.
- Electronics and Gadgets: Smartphones, laptops, televisions, and other electronic devices.
- Energy Products: Gasoline, diesel, and aviation fuel to meet domestic energy needs.
- Agricultural Products: Rice, wheat, and other grains
If you can import one of these items, you have set your importation business on a part of continuous success.
2. Research on Suppliers:
The next decision you want to take is to diligently search for a supplier that can give you the best products in the market.
These suppliers are mainly in regions like China, the United States, Europe, and various parts of Asia.
They can be major distributors or manufacturers operating their businesses within the listed countries.
There are still online platforms where you can source your suppliers especially if you are importing your products from China.
Here are the top online platforms where you can buy your Items for importation business in Nigeria:
- Global Sources
- Made in China
Ultimately choosing a supplier entails a thorough assessment across various criteria such as the quality of their products, pricing, production capacity, lead times, shipping options, and their ability to meet specific requirements such as branding or labeling.
Negotiations with the selected suppliers to establish terms and conditions of the business relationship should not be omitted and should be backed up with a contractual agreement.
Part of what must be negotiated are the prices, order quantities, payment terms, delivery schedules, and any other relevant aspects.
3. Import Regulations:
Import regulations refer to the set of rules and requirements imposed by the Nigerian government and customs authorities that importers must follow when bringing goods into the country.
These regulations are in place to control trade, ensure revenue collection, and protect consumers from harmful and unhealthy products.
Here is a detailed explanation of what the import regulations in Nigeria entail:
- Customs Regulations: Importers are required to follow the rules and procedures established by the Nigerian Customs Service. This includes providing accurate documentation, such as a bill of lading, invoice, packing list, and a certificate of origin.
- Import Duties and Taxes: Importers are responsible for paying import duties and taxes, which are levied on imported goods. The rates and types of duties and taxes can vary depending on the type of product and its value. Importers need to calculate and pay these fees to clear their goods through customs.
- Permits and Licenses: Some products may require specific permits or licenses before they can be imported. These permits are issued by relevant government agencies, such as the National Agency for Food and Drug Administration and Control (NAFDAC) for food and pharmaceutical products, or the Standards Organization of Nigeria (SON) for quality and safety standards.
- Restricted or Prohibited Items: Import regulations may restrict or prohibit certain items from being imported into Nigeria. These restrictions are in place to safeguard public health, security, the local production industry, and the environment.
- Customs Documentation: Importers must complete and submit all necessary customs documentation (importantly Form M documents) accurately and in a timely manner. This includes providing a customs declaration form and ensuring that the declared value and quantity of the goods match the actual contents of the shipment.
- Quotas and Import Restrictions: The Nigerian government has import quotas or restrictions implemented on some specific products to control the quantity or to protect domestic industries. As an Importer, you need to be aware of any such restrictions and adhere to them if they affect your intended products.
- Compliance with Quality Standards: Products imported into Nigeria must meet certain quality and safety standards. As an Importer, you will be required to provide evidence of compliance, such as product certifications (excluding the food industry) or laboratory tests (only within the food industry).
Non-compliance with import regulations will lead to delays, fines, confiscation of goods, or other legal consequences.
Therefore, it is crucial as an importer in Nigeria to be well-informed about the specific regulations that apply to your imported products and to work closely with customs brokers or experts to ensure compliance.
4. Shipping and Logistics:
This aspect is about transporting your purchased goods from the country of origin (where the products are produced or purchased) to Nigeria.
This step is crucial in the importation process, as it encompasses various aspects, including the choice of transportation mode (Sea Freight, or Air Freight), managing the movement of goods, and ensuring compliance with customs procedures.
In terms of managing the movement of goods as an importer, you will have to work with freight forwarders or shipping agents who specialize in coordinating and managing the logistics of transportation.
These professionals handle tasks such as booking cargo space, arranging transport, and ensuring that the goods are properly packaged and documented for shipping.
Depending on your chosen mode of transportation, your goods will arrive at a Nigerian port (e.g., Lagos Port, Onne Port, Apapa Port, or even Air Port).
When your imported goods successfully land in the Nigeria port, you must coordinate the arrival of your goods both directly and through your shipping agent with the port authorities and customs agents to ensure a smooth and efficient customs clearance process.
5. Customs Clearance Process:
The customs clearance process of imported goods or products in Nigeria is all about the formal procedures and documentation required to allow imported goods to enter the country legally.
Here is the step-by-step customer clearance process that takes place in the Nigeria Port:
- Arrival at Nigerian Ports: Imported goods arrive at a Nigerian port, such as Lagos Port, Onne Port, or Apapa Port. These ports are entry points where customs authorities inspect and process incoming shipments.
- Customs Inspection: Customs officials conduct inspections to verify the contents of the shipment and ensure that they match the documentation provided by the importer. They also check for compliance with import regulations and the accuracy of declared values.
- Required Documentation: Importers must provide a range of documents to facilitate customs clearance, including but not limited to:
- Bill of Lading: A document issued by the shipping carrier that provides details about the goods being transported.
- Commercial Invoice: An itemized list of the goods, including descriptions, quantities, prices, and the total value.
- Packing List: A detailed list of the contents of each package or container.
- Certificate of Origin: A document that specifies the country of origin of the goods.
- Import License or Permit: Some products require specific licenses or permits for importation.
- Payment Proof: Receipts or evidence of payment for import duties and taxes.
- Import Duties and Taxes: Importers are required to pay import duties and taxes, which are determined based on the type of goods, their value, and other relevant factors. Failure to pay these fees can result in delays, fines, or the seizure of goods.
- Customs Declaration: Importers must submit a customs declaration form that includes information about the imported goods, their value, and other relevant details. This declaration should be accurate and complete to avoid potential issues.
- Examination and Inspection: Customs authorities may physically inspect the goods to confirm that they meet safety, quality, and regulatory standards. This may involve product sampling and testing in some cases.
- Release of Goods: Once customs officials are satisfied that all requirements have been met, they will release the goods for entry into the Nigerian market. The goods can then be moved to their intended destination, such as a warehouse or distribution center.
- Customs Brokerage: Importers often work with customs brokers or agents who are knowledgeable about customs procedures and can assist with the clearance process, ensuring that all necessary documents are in order and that duties and taxes are paid correctly.
Customs clearance is a complex and highly regulated process that importers must navigate to bring their goods into Nigeria legally and efficiently.
6. Distribution and Sales:
After your goods or products have been successfully cleared by the customs officials, the next activity to carry out is the distribution and sales of your products.
Distribution and sales of your products or goods after importation can be carried out by various channels such as:
- Wholesale: Selling goods in bulk quantities to other businesses, such as retailers or distributors who then resell the products.
- Retail: Operating physical stores or online retail platforms where consumers can purchase the imported goods directly.
- E-commerce: Selling products through online marketplaces or the importer’s own e-commerce website.
- Local Partners: Collaborating with local distributors, agents, or partners who have an established presence in the Nigerian market.
Successful distribution and sales involve understanding the needs and preferences of your target market and implementing effective strategies to make the products readily available and appealing to consumers.
These effective strategies also include marketing such as advertising, branding, and promotional activities to attract customers.
Before you can start the importation business in Nigeria, you must be aware of an important document called the Form M
What is needed in the preparation of the Form M?
Here’s a list of what is typically needed for the preparation of a Form M:
- Importer’s Details:
- Importer’s name and address
- Importer’s Tax Identification Number (TIN)
- Contact information for the importer
- Supplier’s Information:
- Supplier’s name and address (overseas supplier)
- Supplier’s contact details
- Supplier’s bank details (especially if payments will be made)
- Description of Goods:
- Detailed description of the goods being imported, including product name, specifications, and quantity.
- Harmonized System (HS) code or product classification code for customs classification.
- Country of Origin:
- The country where the goods were produced or manufactured.
- Shipping Terms:
- Details of the shipping terms, including the incoterm (e.g., EXW, FOB, CIF), which specifies the responsibilities and costs of the buyer and seller during transportation.
- Mode of Payment:
- Information about how the payment for the imported goods will be made (e.g., Letter of Credit, Bank Transfer).
- The currency in which transactions will be conducted, typically the Nigerian Naira (NGN) or a foreign currency.
- Value of the Goods:
- The total value of the goods being imported, as per the commercial invoice.
- Expected Port of Entry:
- The specific port in Nigeria where the goods are expected to enter.
- Import License or Permit (if applicable):
- Some types of goods may require a specific import license or permit. If so, include this documentation.
- Any other relevant documents or information required by the Central Bank of Nigeria (CBN) or Nigeria Customs Service.
It’s essential to ensure that the information provided on the Form M is accurate and complete. Any errors or omissions could lead to delays or complications in the importation and customs clearance process.
And just so you know, the Form M has a validity period of 6 months (180 days) from the date of issuance.
This means that once the Form M is issued and approved, the importer has six months to complete the importation of the goods covered by that Form M.
If the goods are not imported within the six-month validity period, the Form M expires, and a new Form M would need to be obtained for the importation of those specific goods.
It’s essential for importers to be aware of this expiration date and to plan their importation activities accordingly to avoid issues with expired Form Ms.
Because the Form M is not free it comes with 3 categories of fees:
Form M Application Fee (fee charged by the Bank)
Central Bank of Nigeria (CBN) Fee
Nigeria Customs Service Fees
The specific fees can vary depending on various factors, including the value and type of goods being imported, the bank used for the Form M application, and any changes in government regulations.
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Conclusion on Starting an Importation Business in Nigeria
It’s important for all importers in Nigeria to be aware of the legal and regulatory requirements surrounding imports, including documentation, import licenses, and taxes.
Additionally, they should be knowledgeable about the specific product categories they deal with and stay updated on market trends to make informed business decisions.
Importation business is lucrative, but it also involves risks and challenges that require careful planning and execution.
What does form M means?
Form M is an essential and mandatory import permit that facilitates the importation of goods into Nigeria. It contains information about the importer, the supplier, the description of goods, and other relevant details.
Who prepares the form M?
In Nigeria, the Form M is prepared and submitted by the importer or their authorized agent, typically a licensed customs clearing agent or a freight forwarder. Importers can also work with their banks to facilitate the preparation and submission of the Form M, as the form needs to be processed and approved by the Central Bank of Nigeria (CBN) and the Nigeria Customs Service.
Is Form M the same as Customs Declaration Form?
No, Form M is very distinct from the customs declaration form. The Form M is required for the importation process (i.e. pre-importation phase), while the customs declaration form is used at the customs clearance stage to provide specific details about the imported goods to the customs authorities. Both forms are essential for the successful importation of goods into Nigeria, and they serve different purposes in the importation process.
How can I check my Form M status?
To check the status of your Form M in Nigeria, you can follow these steps:
Contact your Bank.
Provide relevant information such as the Form M reference number and any other information the bank may request.
Or you can make use of the online portals or platforms provided by the bank or government agencies where you can check the status of your Form M. If your bank provides such a service, they will guide you on how to access it.