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Country Commercial Guides for FY 2000: Nigeria Report prepared by U.S. Embassy Abuja, released July 1999 Note*

CHAPTER IV: MARKETING U.S. PRODUCTS AND SERVICES

As in most developing countries, personal ties and patience are key to successful business activity in Nigeria. The best way for U.S. manufacturers and suppliers to penetrate the Nigerian market is through the Department of Commerce's Agent/Distributor Service, or its Customized Market Analysis (CMA) program. Both aim to identify reputable and capable agents/distributors. Asian and European firms, effectively using locally-based marketing strategies, present strong competition. Additionally, U.S. exporters interested in visiting Nigeria to explore potential opportunities and meet with trade/industry contacts are urged to use the Gold Key Service offered by the Commercial Service at the American Embassy in Lagos. Embassy Lagos keeps a data base of potential agents/distributors but cautions that U.S. firms wishing to export to the Nigerian market should fully investigate the financial, technical, and marketing reputation of all candidates under consideration. The Commercial Service's U.S. Export Assistance Centers can provide assistance in this regard.

Some U.S. firms prefer an exclusive agent/distributor relationship. Many foreign manufacturers and suppliers, however, appoint more than one agent/distributor to accommodate Nigeria's geographical size and ethnic complexities. In Nigeria's complicated environment, all relevant terms and conditions of such arrangements must be carefully delineated. U.S. firms interested in the Nigerian market are strongly advised to seek the assistance of experienced commercial lawyers. Enforcement of international property rights remains a problem in Nigeria despite official pronouncements and existing copyright laws.

Principles governing agency and distribution are largely based on Nigerian case law established over many years. Key issues include: geographical area of representation, duration of the agreement and the conditions under which it can be canceled or revised, specific assignments, right to refuse orders, terms of payment, restraints after termination to solicit sales from previous customers, and restraints on the use of registered logos, company product or brand names and trademarks.

Apart from Nigerian government-owned enterprises, there are three forms of business recognized under the Allied Matters Act of 1990: companies, partnerships, and sole proprietorships. As foreign firms cannot operate through a branch office, potential U.S. manufacturers and suppliers must establish a place of business and incorporate within Nigeria in order to conduct business. According to the 1990 Act, establishment of a joint venture by itself is not sufficient to constitute a legal entity. A foreign firm can only participate as a shareholder in a local company incorporated for the purpose of the joint venture.

The government of Nigeria buys products and services through a "tenders board" composed of senior government officials and may include local consultants or foreign firms with representatives in Nigeria. The Central Bank of Nigeria (CBN) does not buy products and services for the Nigerian government or its agencies. Inquiries and business proposals emanating purportedly from the CBN on behalf of the Nigerian government or any of its agencies should be disregarded.

Port reforms announced by the Nigerian Government in its 1999 budget include replacement of preshipment inspection (PSI)of imports with destination inspection (DI) effective April 1, 1999.

Introduction of destination inspection is an attempt to check official corruption at the ports, reduce continued diversion of Nigerian imports to Cotonou in Republic of Benin and shorten the time spent clearing imports through customs.

Two inspection agents, Bureau Veritas and Cotecna have been appointed by GON to work with the officers of the Nigerian Customs Service (NCS). The inspection agents are required to verify the following:

- tallying of imported goods to ensure that the correct container and volume of goods march and are accounted for especially for import duty assessment.
- reconciliation of details on import manifest, bills of lading, tallying records, etc.
- ensuring that accurate payment of duties and other relevant charges for all goods released have been made.

Other significant aspects of the port reform involve the reduction of the number of security operatives at the ports. Over the past one year, there has been a growing complaint about the activities of securities agents at Nigerian ports resulting in long delays and official corruption. Currently, only the following agencies are permitted to operate under the supervision of the Nigerian Ports Authority.

- Nigerian Customs Service (NCS)
- The Port Police
- Nigerian Immigration Service
- Authorized licenced Customs Agents

The GON has directed that only the Federal Aviation Authority of Nigeria (FAAN), Customs, Immigration and Authorized licenced Customs Agent are authorized to inspect imports at the Nigerian airports.

Reportedly, there are indications that the GON may review the destination inspection effective September 1999. Those who advocate a return to reshipment inspection argue that over 90 percent of imports cleared through the Nigerian Customs from April 1, 1999 were undervalued. Additionally, there are allegations of falsification of import documents by Custom Agents and some security operatives at the ports. Over the past twenty years, the reshipment inspection had been a major source of revenue for the Nigerian government. This is probably one of the reasons why opinion is high about the re-introduction of the reshipment inspection especially now that the GON has declared war against official corruption and its oil revenue is sliding.

In an attempt to check official corruption and long delays during clearing process at the ports, the Nigerian government appointed private auditing/accounting firms in 1998 to collect import and excise duties through seven so-called "first generation" banks, listed below:

First Bank of Nigeria PLC
Afribank
Union Bank of Nigeria PLC
Universal Trust Bank
United Bank for Africa PLC
FSB International Bank
Diamond Bank Limited

The use of letter of credit for all imports valued more than $1,000 was made compulsory by the Nigerian government in 1994. Therefore, U.S. suppliers are advised to ship through an irrevocable letter of credit confirmed by a U.S. or a major international bank (see Chapter VIII, Banking Section.)

Advertising plays a significant role in marketing products and services in the Nigerian market. However, due to limited communications links, especially in heavily populated rural areas, advertising strategies by U.S. firms should put emphasis on "below-the-line advertisements" (sales promotions including gifts and discounts.) Agents and distributors of foreign suppliers and manufacturers usually expect promotional support such as subsidies and brochures to participate in trade shows.

The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) publishes an annual directory of trade shows in Nigeria. However, Nigeria's international trade fairs are not recommended for the promotion of highly specialized, technical products due to their emphasis on "general" products. Although a visit by a non-exhibiting U.S. exporter to an international Nigerian trade fair can help identify a potential agent or distributor, it is not required to penetrate the Nigerian market.

The Manufacturers Association of Nigeria (MAN) publishes a journal entitled "WHO MAKES WHAT," which reports on developments and opportunities in various sectors and provides commentary on the Nigerian economy. Additionally, it is an important source of information on the Nigerian market, and a useful medium in which to advertise products and services to the trade. Inquiries regarding the journal may be directed to:

The Manufacturers Association of Nigeria
72 Obafemi Awolowo Way, Ikeja
Lagos, Nigeria
Tel: (234-1) 266-0756, 266-8992, 266-8985

Business magazines published in Nigeria that may be of use to U.S. manufacturers and suppliers include:

The Nigerian Economist
c/o Sahel Publishing and Printing Co. Ltd.
71 Oregun Road
P.M.B. 21268, Ikeja
Lagos, Nigeria
Tel: (234-1) 496-5411, 496-5979
Fax: (234-1) 269-3532

The Businessman Journal
White House
23 Falomo Close, Ikeja
P.O. Box 72269, Victoria Island
Lagos, Nigeria. Tel/Fax: (234-1) 523-299

Marketing
10 Awofeso Street
Honesty House, Palmgrove
P.O. Box 256, Oshodi
Lagos, Nigeria
Tel: (234-1) 821-008

African Technical Review of Business and Technology is another publication to consult or to consider as an advertising medium. This monthly magazine, with a circulation of 25,000, is an excellent source of information regarding technological development in African markets, and has a representative in the U.S. to help with inquiries from American businesses.

African Technical Review of Business and Technology
Through Mercury Airfreight Anthill Ltd.
323 Randolph Avenue
Avenel, NJ 07001
Tel: (908) 396-9555
Fax: (908) 396-1492

MEDIA

Federal Government Press:

News Agency of Nigeria (NAN) is the government's voice for news and opinion media in Nigeria.

NEW NIGERIAN
DAILY TIMES
ABUJA TIMES
WEST AFRICA MAGAZINE

State Government Press:

SKETCH (Ibadan)
TRIUMPH (Kano)
NIGERIAN STANDARD (Jos)
CHRONICLE (Calabar)
OBSERVER (Benin City)
TIDE (Port Harcourt)
AMBASSADOR (Umuahia)

Independent Publications:

VANGUARD (Lagos Daily)
CHAMPION (Daily, pro-Eastern Nigeria)
SUNRAY (Daily, Eastern, partly American-owned)
THE DEMOCRAT (Daily, Northern Islamic, pro-government)
THE WEEKLY BUSINESS TIMES (Weekly, pro-business)
THISDAY (Daily, pro-business)
TEMPO (Weekly magazine)
TELL (Weekly magazine)
NEWSWATCH (Weekly magazine)
THE GUARDIAN (Daily, pro-business)
THE DIET (Daily, pro-business)
THE POST EXPRESS (Daily, pro-business)
BUSINESS CONCORD (Weekly, pro-business)
TRIBUNE (Ibadan Daily)
THE WEEK (Weekly magazine)
THE NEWS (Weekly magazine)
THE SOURCE (Weekly magazine)