ROLE OF NIGERIA EXPORT PROMOTION COUNCIL IN INTERNATIONAL PURCHASING

1.0 Introduction

1.1 Background of the Study

Purchasing activity is a very important activity in every aspect of life. Purchasing is being carried out by individuals, co-operate bodies, manufacturing organizations, etc and as a matter of fact, needs to be studied very closely.

Purchasing in most manufacturing organizations and co-operate bodies engage in international purchasing and as a matter of fact are been guided by rules and regulations which are related to buying and selling abroad.

In this study, analysis will be on the role of Nigeria export promotion council in international purchasing. The export promotion council have its main concern in the activities of the international market as it relates to Nigeria as an entity. This body will be viewed from the points of the purchaser and how the activities affect purchasing abroad.

The council was established in 1979 by the federal military government under Decree No. 72 of 1979 is guided by some rules and regulations, which exporters must keep to and with existing rules to be adhered to by exporters. The purchasers also in their own side are influenced by these rules because what is available in the market is what they have the chances of purchasing from the international market for their organizations.

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1.2 Statement of the Problem

This study resulted as a result of the problems encountered by exporters in this nation The researcher is interested in finding out the reason for the infrastructural bottlenecks of deficient road/rail network and post services, insufficient and unreliable supply of power, water and telecommunication. Bureaucratic and policy obstacles in government administration associated with regulation control, application procedures and cooperation of public agencies. Inadequate or poor fund raising internally to be able to run the council.

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1.3 Objectives of the Study

The study is on the analysis of the role of the Nigerian export promotion council in international purchasing. The purpose of this is to:

1. To spearhead the creation of necessary export incentives and actively promote the implementation of export policies and programmes of the country.
2. To evaluate how effective international purchasing could be achieved with the assistance of the council.
3. To coordinate and monitor export promotion activities in the country.
4. To find out the extent the council has been able to influence international purchasing positively.
5. To provide the development and diversification of Nigeria export trade and how purchasing has responded to the existing council's rules and regulations.
6. To assist in promoting the development of export oriented industries in the country.

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1.4 Scope of the Study

This study was carried out in Nigeria export promotion council in Aba-Abia state.

Data and information were obtained from managers and supervisors. There is no intention in this research work to cover all aspects of NEPC and their method of operation as such will be beyond the scope of this study.

The exporting system of NEPC has made a remarkable mark in the exporting of the Nigeria export promotion council goods since its inception in Nigeria.

In this study we will focus on the effectiveness of exporting in NEPC, identifying alternative channels of exporting and emphasizing its importance in the marketability of Nigeria export promotion council.

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1.5 Research Question

1. To what extent does Nigeria export promotion council enhance international purchasing?
2. Will financial incentives granted to exporters enhance international purchasing?
3. How does seminars, workshops and other promotional activities organized for exporters by Nigerian export promotion council improve international purchasing?
4. What are the likely challenges for financial incentives granted to exporters?
5. Has the establishment of Nigerian export promotion council helped international buyers in Nigeria?

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1.6 Research Hypothesis

The hypothesis is tested so as to enable the formulation of adequate opinion and also help to draw conclusion on whether the data is accepted or rejected.

Hypothesis I

• Ho: Fully operational Nigerian export promotion council will not lead to more international purchasing.
• H1: Fully operational Nigerian export promotion council will lead to more international purchasing.

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1.7 Significance of the Study

The issue of the role of Nigeria export promotion council in international purchasing is “very” important issue because the activities of the Nigerian export promotion council influences the world market. The study of the role of the council to purchasing will help those involved in buying abroad to get more information on how to cope with this council and thereby ensuring effective and efficient buying.

Another area of the significance of this study is that, the research could also be used by other researchers in the future who would also be investigating on the role of the council in purchasing.

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1.8 Limitation of the Study

The foremost limitation that was encountered in the course of the study was the difficulty of meeting the managers, supervisors and workforce because of their tight schedule and method of operation.

Even when audience was granted, information was not released easily by the managers for fear of information getting to their competitors and work force also had the fear that they may either loose their job or be punished if they release information.

Finally, due to financial implications associated with being a student researcher, the focus of this research was limited to information from Nigeria export promotion council, the polytechnic library and internet.

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1.9 Definition of Terms

Some of the major terms used in the write up include the following:

1) Exportation:

This involves the process of selling goods abroad.

2) Export Development Fund:

As contained in the incentives package is a special fund provided by the federal government to give financial assistance to exporting firms to cover part of their initial expenses / costs.

3) Export Credit Guarantee and Insurance Scheme:

This is to guarantee for exporters against the risk of non-payment by foreign buyers or importers.

4) Export Expansion Grant Fund:

The fund is to provide cash inducements for exporters who have exported a minimum of N1, 500,000 worth of semi-manufactured or manufactured goods / materials to encourage the exporter to increase his volume or quantity of export to overseas market or to diversify his product types or his market coverage.

5) Duty Draw Back / Supervision Scheme:

This is a method by which an exporter receives a refund of the import duties on raw materials used in the manufacturing of goods that is meant for exporting.

6) Export Adjustment Scheme Fund:

This serves as a supplementary export subsidy to compensate exporters for high costs of production arising from infrastructure deficiencies. Pioneer status: Any manufacturer who exports at least 50 percent of annual turnover qualities for pioneer status.

7) Tax Relief On Interest Income:

Interest accruing from loans granted by banks for export activities is exempted from tax.

8) Capital Assets Depreciation Allowances:

This is an additional annual capital allowance of 5 percent on plant and machinery for manufacturing exporters who export at least 50 percent of their annual turnover.

9) Rediscounting of Short-Term Bills:

This scheme makes provision for exporters of any product to discount their bills of exchange and promissory notes with their banks in order to increase their liquidity.

10) Export House:

This is a house in any firm or organization but not a manufacturer whose main activity is to handle or finance a given local export and or international trade on behalf of the principal manufacturer.

11) Bill of Lading:

This document is a key document in the movement of goods. It is an acknowledgment for the receipt of goods for shipment. The bill has been standardized and carriers are responsible for issuing proper bill, though, in practice it is normally prepared by the shipper, signed by both shippers and carrier's agents respectively.

12) Pro-Forma Invoice:

This is a form of quotation by the exporter to a potential buyer (importer) which will assist the importer secure the import license, where applicable to bring in the goods and for foreign exchange permit by the importer's country. The documents contains such information as to the date, the name of the consignee, quantity and description of the goods, marks and measurements of packages, cost of the goods, packaging, carriage freights, insurance premium terms of sale and terms of payment.

13) Supplier's Original Invoice:

This is a document usually issued by the supplier or the exporter to the buyer or the importer. It shows the list of goods bought by the importer and shipped by the exporter or the seller with their prices against which payment must be made. Other information which could be found on this invoice include, the name and address of the seller, the weight of goods, the insurance charges, packaging and handling charges and other terms of the relationship.

14) Custom Bill of Entry:

This document is compulsory for all imports into the country and it is used to clear goods at the ports after all exchange control regulations requirements have been met including certification by NAFDAC, SON etc. This particular document is issued by Board of customs and exercise indicating that such goods or materials as shown on the face of the documents actually entered into the country and that the good met all acceptable standard having been duly certified by relevant agencies.

15) Certificate of Origin:

This is a document which states the country of origin of the goods imported by the buyer or exporter by the supplier. It is usually completed by the supplier or seller and may have to be authenticated by a chamber of commerce or any other authorized body in the exporter or seller's country.

16) Import Licenses:

These licenses are usually granted by the federal government of Nigeria or any other federation for the goods being imported into the federation.

17) Form “M”:

This is one of the important documents from the importer. It is usually called the importers document. It is required when the importer wants to apply for the purchase of foreign exchange and it acts as a control system. This document is guided by the Federal Republic of Nigeria Foreign Exchange Control Act 1962.

18) Export Quotation:

It is essential that the exporter (seller) appreciates that international purchasing involves a great deal of distance and time. Thus, the exporter must ensure that he is quoting exactly what the importer (foreign customer) is asking for.

19) Export License:

Before the exporter would have sent out quotation to a potential foreign importer, the exporter must first and foremost ascertain whether what he is to quote for is exportable or otherwise. It must be noted that the export of certain strategic goods may be prohibited in certain countries and it is important too that the exporters understands whether such goods will require export license or not.

20) Counter Purchase:

This is a reciprocal buying agreement. It occurs when a firm agrees to purchase a certain amount of materials back from a country to which a sale is made.

21) Quotas:

These are devices employed by government directly or through its agencies to restrict the amount or quantity of goods and services that international buyers and sellers can bring in and out of the country for economic or political reasons.

22) Licensing:

A license is a document officially given to an individual or organization to do something or carryout an assignment within a system and within a given period of time. As far as international purchasing is concern, it is an official permission issued to an organization to engage in the export or import of goods or services by the government or its agencies.

23) Bill of Exchange:

This is widely used in international purchasing to establish a legal undertaking to pay a sum of money and provides a convenient mechanism for the giving or receiving of a period of credit.

24) Promissory Note:

This is a promise to pay issued and drawn up by a buyer (i.e the author of the document) in favour of the seller, that is the payee or beneficiary.

25) Incoterms:

Incoterms is defined as the method of delivery of the goods by exporters/supplier and shows what charges are included in the price; and also define the responsibilities of the parties to the contract of sale for the arrangement of insurance, shipping and packaging.