Required Report - public distribution

**Date:** 10/9/2007

**GAIN Report Number:** NI7027

NI7027

**Nigeria**

**Exporter Guide**

**Exporter Guide Annual**

**2007**

**Approved by:**

![](media/image1.wmf)Ali A. Abdi, Agricultural Attache

U.S. Consulate, Lagos

**Prepared by:**

Levin Flake, Uche Nzeka

**Report Highlights:**

Nigeria remains a major market for food and agricultural products, with
imports worth more than \$3.0 billion annually (U.S. wheat typically
accounts for about 20 percent of this total). Nigeria\'s recent import
and port reforms (including regional tariff changes and export
incentives) are encouraging more formal trade. This, along with economic
growth and changing consumer demands, are expanding market opportunities
for U.S. exporters.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Lagos \[NI1\]

\[NI\]

TABLE OF CONTENT

[SECTION I. MARKET OVERVIEW 3](#section-i.-market-overview)

[Advantages & Disadvantages 4](#advantages-disadvantages)

[SECTION II. EXPORTER BUSINESS TIPS
5](#section-ii.-exporter-business-tips)

[U.S. Agricultural Product Exports to Nigeria
5](#u.s.-agricultural-product-exports-to-nigeria)

[Buyers' Preferences for Agricultural Products
5](#buyers-preferences-for-agricultural-products)

[Product Registration and Regulations:
6](#product-registration-and-regulations)

[Import Duties & Collections: 6](#import-duties-collections)

[Port Concessions & Destination Inspections:
6](#port-concessions-destination-inspections)

[Redesigned Export Expansion Grant Fund (REEGF):
6](#redesigned-export-expansion-grant-fund-reegf)

[Documentations, Export & Customs Clearing:
7](#documentations-export-customs-clearing)

[SECTION III. MARKET SECTOR STRUCTURE AND TRENDS
8](#section-iii.-market-sector-structure-and-trends)

[Retail Food Sector: 8](#retail-food-sector)

[Food Processing (FP) 9](#food-processing-fp)

[Food Service (HRI) Sector 11](#food-service-hri-sector)

[Seafood/Frozen Fish 11](#seafoodfrozen-fish)

[Cocoa Processing 12](#cocoa-processing)

[Dairy Processing 12](#dairy-processing)

[SECTION IV: MARKET ENTRY STRATEGIES
13](#section-iv-market-entry-strategies)

[SECTION V: BEST PROSPECTS 13](#section-v-best-prospects)

[Consumer-oriented products which are allowed for export to Nigeria:
13](#consumer-oriented-products-which-are-allowed-for-export-to-nigeria)

[Product type offering the most sales potential in Nigeria:
14](#product-type-offering-the-most-sales-potential-in-nigeria)

[Products not yet present in significant quantities but having good
sales potential:
14](#products-not-yet-present-in-significant-quantities-but-having-good-sales-potential)

[Products Currently Banned for Exports to Nigeria:
14](#products-currently-banned-for-exports-to-nigeria)

[SECTION VI. POST CONTACT AND FURTHER INFORMATION
15](#section-vi.-post-contact-and-further-information)

[Appendix I: Nigeria's Economic Structure (Annual Indicators)
16](#appendix-i-nigerias-economic-structure-annual-indicators)

[APPENDIX II: REFERENCE MATERIALS 17](#appendix-ii-reference-materials)

# SECTION I. MARKET OVERVIEW

Nigeria is huge market and the most populous country in Africa, with a
population of 140 million people, which is growing at an estimated three
percent annually. It also has an expanding economy and provisional
estimates from Central Bank of Nigeria (CBN) put Nigeria's real GDP
growth at 5.6 percent in 2006, compared to 4.8 percent in 2005.
Inflation is forecast at an average of 10.8 percent for 2007 (Economist
Intelligence Unit, May 2007). This is a result of only modest rises in
food prices, as well as improved monetary policies. The economy is still
dominated by the oil sector, and crude petroleum and gas exports account
for about one third of GDP, over 95 percent of total export earnings and
about 75 percent of federal government revenue.

Nigeria's agriculture sector is primarily subsistence-based and employs
about 70 percent of the population. It accounts for about 41 percent of
the estimated \$91.3 billion GDP in 2005 (The Economist, June 2007). The
sector grew by 4.6 percent, 5.6 percent and 6.2 percent in 2002, 2003
and 2004 respectively. Domestic food products such as corn, sorghum,
tubers, and seafood (fish) are the traditional foodstuffs consumed by
the majority of the population. Despite growth in agriculture the past
few years, Nigeria remains a major importer of food and agricultural
products, with imports worth over \$3 billion per annum (largely bulk
commodities). At present, Nigeria is the second largest market in the
world for U.S. wheat and also a major importer of other bulk commodities
such as rice and sugar from Asia and Brazil. The market for frozen fish
(especially, mackerel, herring and croaker) mostly sourced from the EU,
South America, and some African countries, is also large. The EU, Asia
and South Africa are leading suppliers of processed and intermediate
products to Nigeria.

Nigeria is expected to continue to import bulk foods such as wheat,
rice, and dairy products for the foreseeable future due to inadequate
food production. Imports of consumer-ready products should also grow as
a result of the high-cost of local food processing, poor domestic
infrastructure and rising demand for more convenient foods. The low
level of domestic agricultural production and food-processing currently
provides consumers with only a limited selection of products. In
addition to strong demand, market access is improving with the recent
GON phased-in adoption of the ECOWAS Common External Tariff (CET) and
the announced full implementation of the CET, which would remove the
remaining import bans by January 2008.

U.S. exporters are advised to explore entering this expanding market.
U.S. agribusiness firms interested in doing business in Nigeria can seek
assistance of USDA/FAS office in Nigeria to develop business
relationships with local firms.

## Advantages & Disadvantages

  ----------------------------------- -----------------------------------
  **Advantages**                      **Disadvantages**

  Very large population (140          Very small presence of U.S.
  million), which is growing at three agribusinesses in Nigeria and
  percent per annum.                  limited knowledge of the Nigerian
                                      market among many in the U.S.
                                      trade.

  Growing middle-class, rising        Nigeria's restrictive trade regime
  incomes and a trend toward greater  which includes import bans and high
  demand for healthy foods.           tariffs on many food and
                                      agricultural products.

  Increasing awareness of and rising  Low consumer purchasing power.
  demand for U.S. processed foods by  
  Nigerian consumers; Also consumers' 
  perception of U.S. foods as higher  
  quality items.                      

  Nigerian consumers' shift towards   Shorter shelf life labeling of U.S.
  western food types and consumption  HVPs, longer transit times, and a
  patterns. This shift is being       relatively time consuming port
  driven by changing demographics     clearance procedures all sharply
  including greater urbanization,     reduce shelf life of U.S. products
  more women working outside the      in Nigeria.
  home, and changing lifestyles of    
  the large youth population.         

  Expanding food processing and HRI   Negative perceptions about Nigerian
  sectors are demanding more          businesses among some U.S.
  intermediate products and           exporters and a reluctance to do
  ingredients.                        business in Nigeria.

  Growing western-style retail        Weak infrastructure and increasing
  sector.                             energy and production costs.

  Adoption of 'Global Listing for     Strong competition from other
  Supermarket' items by food          suppliers, especially the EU and
  regulatory authorities. This offers Asia.
  relatively low-cost and low-risk    
  market-entry for those              
  consumer-ready food products which  
  are not banned for imports.         

  Nigerian firms generally see U.S.   U.S. freight rates are
  suppliers as reliable in terms of   significantly higher than those
  volume, standards and quality.      from the EU, Asia and South Africa.

  The GON's recent import and port    Inconsistent and poor
  reforms including: destination      implementations of GON policies.
  inspection, minimizing invoice      
  under-valuation and concealments,   
  and port concessions which are      
  reducing port clearance time and    
  invoicing costs.                    

  A recently inaugurated U.S. to      High levels of unofficial
  Nigeria direct and regular shipping transactions and procedures.
  route by Maersk Lines.              
  ----------------------------------- -----------------------------------

#  

# SECTION II. EXPORTER BUSINESS TIPS

## U.S. Agricultural Product Exports to Nigeria

U.S. agricultural exports to Nigeria amounted to approximately \$508
million in 2006 (wheat accounted for approximately 82 percent of this
total). The chart below shows a breakdown of U.S. food and agricultural
product exports to Nigeria in 2006:

![](media/image2.wmf){width="6.454166666666667in"
height="4.416666666666667in"}

**Source: USDA's BICO report**

## Buyers' Preferences for Agricultural Products

Importers prefer consumer-oriented products with the following
characteristics:

-   Relatively small-sized, prepared and packaged for affordable
    one-time use.

```{=html}
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```
-   Bulk, intermediate products and ingredients (especially beverage
    bases and flavors) for local re-processing and packaging.

-   Mixed-grocery containers of products not banned for imports.

-   Perishable food products processed dry and packaged for a long shelf
    life without the need for refrigeration (for example dry seafood and
    dairy products such as milk powder).

-   Packaged food products with longer "Best Before" dates.

See GAIN Report NI6026:
<http://www.fas.usda.gov/gainfiles/200611/146249621.pdf> for details.

## Product Registration and Regulations:

All processed foods must be registered with Nigeria's food regulatory
agency\--National Agency for Food & Drug Administration and Control
(NAFDAC)\--to be legally imported into Nigeria. The cost of product
registration is typically borne by the importer except when an exporter
agrees to assist the importer in paying these costs. It is advised that
U.S. exporters contact the FAS/Lagos office in Nigeria when importers
make similar requests from them. See GAIN Report NI6017:
<http://www.fas.usda.gov/gainfiles/200608/146208761.pdf> for details.

## Import Duties & Collections: 

The Nigerian Customs Service (NCS) is the GON agent responsible for
import duty collection. NCS recently adopted the upgraded Automated
System for Custom Data (ASYCCUDA), with the assistance of UNCTAD, in
order to facilitate more efficient operations. ASYCCUDA allows the
online submission and processing of custom documents and assists in
reducing importers' contacts with NCS officials during customs clearing.
This new systems helps to reduce unofficial practices and demands in the
duty collection process.

Nigeria commenced a partial implementation the ECOWAS CET in November
2005 which harmonized its tariffs with those of other ECOWAS member
states and reduced the tariff bands from twenty to five. Despite these
steps, GON's protectionist policies persist, including numerous import
bans. GON has stated, however, that all these bans would be phased out
by January 2008 in compliance with its CET commitments.

## Port Concessions & Destination Inspections:

As of April 2006, in order to increase efficiency the GON adopted port
concession, which transferred ports' operation to private sector
operators. As of January 2006, GON also replaced Pre-shipment Inspection
(PSI) with Destination Inspection (DI). This means that all goods
destined for Nigeria's ports are now inspected at the point of entry
rather than the point of shipment. NCS remains responsible for duty
valuation and collection while three GON-appointed private firms
function as Destination Inspection service providers and provide
scanning services at entry ports.

## Redesigned Export Expansion Grant Fund (REEGF):

In 2002, the GON introduced the Export Expansion Grant (EEG) in order to
encourage local processing and manufacturing firms to create more jobs.
This program offered a 40 percent rebate to companies exporting fully
manufactured and semi-processed products with high local value addition,
and 5 percent for products that do not fall into the first category.

Inherent loopholes in determining which products qualified for which
rates resulted in gross abuse of the program and caused the GON to scrap
it during the 1st quarter of 2005. However, organized local
manufacturers and processors \[under Nigeria's Manufacturers Association
of Nigeria (MAN)\] pressured GON to re-introduce a Redesigned Export
Expansion Grant Fund (REEGF) in November 2005, which became effective in
January 2006.

REEGF is company-based rather than product-based grant and provides
rebates ranging from 5-30 percent. Eligibility and rates are weighted by
how much of a firm\'s activities contribute to creating local jobs. For
example, cocoa grinding falls within the 30-percent maximum while export
merchandising of cocoa beans only qualifies for a 5-percent rebate.

## 

## Documentations, Export & Customs Clearing:

**Procedural Steps:**

A. Importers process Form 'M' with his/her pro-Forma invoice through any
authorized local dealer bank (LDB) irrespective of the value and whether
or not payment is involved. Form 'M' is a document completed to apply or
seek authorization to import from the relevant GON agent \[Central Bank
of Nigeria (CBN)\]. This takes about one to two days to complete.

Supporting documents shall be clearly marked 'VALID FOR Foreign Exchange
(FOREX) or NOT VALID FOR FOREX' as appropriate i.e. depending on whether
or not foreign exchange remittance would be involved. The Form 'M' and
relevant pro-forma invoice shall carry a proper description of the goods
to be imported to facilitate price verification: The description will
include:

1.  Generic product name, i.e. product type, category

2.  Mark or brand name of the product where applicable

3.  Model name and or model or reference number where\
    applicable

4.  Description of the quality, grade, specification, capacity, size
    performance, etc

5.  Quantity and packaging and/or packing

6.  Documents in respect of each import transaction shall carry the name
    of the product, country of origin, specifications, date of
    manufacture, batch or lot number, standards to which the goods have
    been produced (e.g. Nigeria Standards-NIS, British Standards PD,
    ISO, IES, DIN, (etc)

7.  Where import items such as food, drinks, cosmetics, drugs, medical
    devices, chemicals, etc. are regulated for health or environmental
    reasons, they shall carry EXPIRY dates or the shelf life and specify
    the active ingredients, where applicable.

B. CBN accepts importer's application (Form 'M') and Letter of Credit is
opened.

C. Exporter prepares and submits, 1) Final Export Invoices 2) Packing
List, and 3) Certificate of Value and Origin (prepared for the U.S. firm
by a Notary Public) for attestation. Exporter also negotiates Letter of
Credit and ships.

D. Exporter's documents above are transmitted to the importer's LDB
which the LDB in turn sends to GON's inspection and evaluation agents
(GIA) to evaluate items and determine import duty payable. GIA prepares
Risk Assessment Report (RAR) stating import duty payable. This process
now takes about two weeks to accomplish.

E. Importer pays the reported import duty if the assessed value is not
more than 10 percent of value declared on the invoice. Otherwise, the
importer would be required to re-process Form "M". The importer will
begin Customs Clearing with the import and duty documents. The consignee
(importer) can clear with NCS or appoint a Customs Clearing agent. This
stage can take one to two weeks to process and then the consignment can
be delivered to the importer's warehouse.

Opening letters of credit in Nigeria now takes between 2-3 days for the
buyer to accomplish. Some Nigerian importers still make payments for
their imports through Inter-bank wire transfers. The exporter then ships
the items to the importer upon receipt of these bank transfer payments.
This method is often employed for informal imports---either in importing
banned goods or in order to negotiate duty payments with GON officials
during port clearances. Importers utilizing this payment method usually
pay lower and unofficial 'duties'. Often such importers rely on their
privileged access to port officials to clear their goods. Many customs
clearing agents also have this access to port officials and employ it
while clearing for their clients (importers). This import procedure has
become unofficial (and at the importer's risk) since GON abolished
duplicate inspections during the first quarter of 2006.

# SECTION III. MARKET SECTOR STRUCTURE AND TRENDS

## Retail Food Sector:

#### 

Nigeria's retail food sector is dominated by traditional open-air
markets (accounting for 60 percent of total retail food sales in 2005),
then convenience stores/small groceries (39 percent), and finally
supermarkets (1 percent). The major players for merchandising imported
consumer-oriented foods in Nigeria are: 1) Importer-distributors 2)
Wholesalers, 3) Retailers.

#### In 2006, consumer-oriented food imports are estimated at \$400 million and industry sources forecast imports to increase to \$600 million by the end of 2007. Although imports of some products are restricted by GON bans and high tariffs, the recent adoption of the more liberalized ECOWAS CET is encouraging imports. Applied duties under the CET range from five to 20 percent. Many importers circumvent restriction by shipping banned and higher-duty goods to ports in neighboring countries from where they enter the market by road through cross-border smuggling.

#### 

Industry estimates of the origin of imported processed food products in
2006 are shown below:

> ![](media/image3.wmf)

U.S. market share is low mostly due to:

-   Higher freight rates for shipments from the United States.

-   Unfavorable perception of Nigerian firms by some in U.S. trade.

-   Some U.S. exporters' reluctance to meet Nigerian importer demands,
    especially on documentation and product specifications.

-   Lack of sufficient contacts between Nigerian importers and U.S.
    consumer-oriented food exporters.

#### 

#### According to USDA's BICO report, exports of U.S. consumer oriented food products to Nigeria increased to \$20.3 million in 2006, from \$10.7 million in 2005, with the growth primarily focused in dairy products, red and poultry meat, processed fruits, and mixed grocery items. U.S. exports are projected to continue to increase following the recent commencement of a direct shipping route from the United States to Nigeria. This will reduce ordering and shipping time. A further increase in exports is expected if GON abides by its CET agreement to remove all import bans by January of 2008. GON's import and port reforms have also assisted in minimizing informal imports and documentations, which were major advantages for third-country suppliers. Most Nigerian importers of mixed container loads require the services of freight consolidators. See GAIN Report NI6026: <http://www.fas.usda.gov/gainfiles/200611/146249621.pdf> for details.

## Food Processing (FP)

About 65 percent of Nigeria's manufacturing sector is food processing,
and according to the Economist Intelligence Country Report, May 2007,
manufacturing had an estimated 3.8 percent share of Nigeria's GDP
(\$116.6 billion) in 2006. The chart below illustrates the components of
Nigeria's food processing sector in 2006:

![](media/image4.wmf) **Source: Industry Estimates**

Nigeria is dominated by mass market consumers with low purchasing power,
and a diet high in carbohydrates. In order to boost sales and increase
market share, manufacturers focus on packaging and selling products in
affordable small units for one-time use. However, an expanding
middle-class and rising incomes are prompting increased demand for
low-carb, low-fat, and even sugar-free food and beverages. Also growing
concerns regarding food safety and dietary quality are also increasing
demand for higher quality products. As a result, local processors are
developing and improving products in order to meet the needs of this
niche market.

The combination of import restrictive measures (implemented by GON to
protect domestic industries, primarily food processors) as well as the
initiation of REEGF (export rebate) had helped domestic food processing
to grow at an average of 10 percent per annum during past years.
However, key sector players including the Manufacturers Association of
Nigeria, report more recently, Nigeria's food processing sector has been
declining due mainly to poor infrastructure, multiple taxation and GON's
inconsistent policies---allegedly, often initiated on political basis.

Chart below shows the capacity utilization trends in Nigeria's food
processing sector, 2001-2005:

![](media/image5.wmf){width="6.454166666666667in"
height="4.067361111111111in"}

> **Note: Capacity Utilization rates not provided for Tobacco (2003),
> Sugar (2003 & 2005) and Spirit/Distillers (2002).**

**Source: AFBTE Annual report, 2005**

The current GON reform programs, especially the new CET structure and
REEGF, are expected to increase market access for imported food
ingredients. At the moment, more than \$2 billion worth of inputs used
in Nigeria's food processing industry are imported (Industry estimate).
Potential for increased export sales is present for following inputs:

+----------------------+---------------------+-------------------------+
| **Bulk**             | **Intermediate**    | **Processed**           |
+----------------------+---------------------+-------------------------+
| Barley and Malt      | Corn Starch         | 1\) Baking mixes, Yeast |
|                      |                     | & Baking Powder         |
| Edible Fat           | Ethanol             |                         |
|                      |                     | 2\) Jam & Jellies       |
| Raw Sugar            | Fruit Juice         |                         |
|                      | Concentrate Fruit   | 3\) Mayonnaise          |
| Refined Sugar        | pre-mixes & syrup   |                         |
|                      |                     | 4\) Salad Dressing      |
| Wheat                | Ice Cream Pre-mixes |                         |
|                      |                     | 5\) Table Salt          |
| Paddy Rice           | Other Beverage      |                         |
|                      | Bases               | 6\) Sauces, Spices      |
|                      |                     |                         |
|                      | Dairy Products      | 7\) Tomato Ketchup      |
|                      |                     |                         |
|                      | Flavors, Sweeteners |                         |
|                      |                     |                         |
|                      | Industrial Salt,    |                         |
|                      | other               |                         |
|                      | Micronutrients      |                         |
+----------------------+---------------------+-------------------------+

Third-country suppliers from the EU, Far-East Asia, South America as
well as South Africa show increased interest in the Nigerian food
ingredients/intermediate products market and are quick to adapt to the
requirements of this growing sector. Nigerian food processors perceive
U.S. ingredient suppliers as reliable in terms of volume, standards, and
quality but U.S. exporters are constrained by:

-   Limited knowledge of the Nigerian ingredient market among the U.S.
    trade.

-   Strong competition from South Africa, the EU and Asian suppliers.

-   Limited local infrastructure, limited operational capital, high
    local production costs, and unstable GON import policies.

-   A lack of knowledge of food ingredients available from the United
    States.

-   Limited contact with and negative perceptions of Nigerian businesses
    among some U.S. exporters.

## Food Service (HRI) Sector

The rapid expansion of the food service sector in Nigeria presents
opportunities for U.S. exporters. The sector was valued at US\$3 billion
(industry estimate) in 2006, with imports accounting for less than 10
percent. Nigeria's foodservice sector consists of hotels and resorts,
restaurants, and institutional contracts (HRI). The largest and fastest
growing segment is fast food restaurants. The return to civilian rule,
more women working outside the home, urbanization and modest economic
growth are some of the factors that have increased demand in the HRI
sector. Growth is expected to continue, as convenience fast food chain
restaurants become more and more important in the Nigerian way of life.
Growth in the sector offers excellent opportunities for U.S. exporters
of potato chips, sauces, seasonings, pastry mixes, seafood, tomato
ketchup, mayonnaise, canned food, wine and ice cream. Except for wines
and poultry meat, the import duties on these products range from five
percent to 20 percent.

Major food service operators are looking for franchises to represent
major U.S. companies in Nigeria, especially in the quick restaurant
sector.

## Seafood/Frozen Fish

Nigeria remains a rapidly expanding market for mass consumer frozen
pelagic fish imports,

Frozen mackerel, herring and croaker from the EU, South America, and
some African countries are the major species exported to Nigeria.
Industry estimates show that Nigeria's frozen fish imports are expected
to exceed one million tons (worth more than \$1.1 billion) by the end of
2007, up from 800,000 tons (\$900 million) in 2006. This is driven by
decline in domestic fishing, Nigeria's rising income and high price of
other sources of protein. Brokers in the EU consolidate frozen seafood
from suppliers across the world (including the United States) and are
able to sell larger volumes shipped in reefer vessels of 3,500-5,000 MT,
thereby reducing ocean freight costs. The scarcity and high price of
Atlantic species has resulted in a noticeable shift in the Nigerian
market towards more imports from South America, especially Chile.

Nigeria offers U.S. frozen fish exporters market opportunities,
especially if the U.S. producers could increase the production of
low-price pelagic fish and ship larger volumes in reefer vessels to
reduce the high freight cost. U.S. fish exports to Nigeria could also
increase if Nigerian buyers could easily locate efficient and willing
brokers consolidating these seafood products in the United Sates. There
is also a huge market for stockfish (dried fish) and Nigeria imports
about 160,000 tons of worth more than \$400 million per annum.
Scandinavian exporters are the major suppliers, and Nigerian importers
have been unable to find suppliers of this product from the United
States. See GAIN Report NI7026 for details.

**Aquaculture**

Growth in Nigerian aquaculture is driven by GON efforts to promote local
production and has been the most prevalent in shrimp. Nigeria's shrimp
exports (about 80 percent of shrimp caught in Nigeria's waters) is
valued at about \$65 million per annum (Nigeria's Federal Fisheries
Department Report, 2007) and Nigeria's shrimp regained access to U.S.
market after complying with Turtle Excluder Devices (TED) regulations on
January 10, 2007. Exports of shrimp from Nigeria to the United States
are thus expected to increase. Because of this, there is now a
significant investment window for Nigeria's shrimp farming and
opportunities for exports of U.S. shrimp feedstuffs and ingredients.
Also, resulting shipping frequencies between Nigeria and U.S. will
likely reduce freight cost on reefer containers and make U.S. frozen
fish exports to Nigeria competitive.

Nigeria is a potential market for approximately 2.5 million MT of fish.
Nigeria's current fish demand is approximately 1.5 million MT whereas
aquaculture (especially, catfish farming) contributed only 16,000 MT in
2005. With the increasing local demand for fish and the global dwindling
fish stock, GON is collaborating with local and external stakeholders
(including local farmers, World Bank, WHO, FAO, NEPAD, etc), to increase
local aquaculture and fish supply.

There will likely be increased output from the aquaculture sector in the
upcoming years. This has created a niche market for U.S. exporters of
aquaculture feed ingredients and additives.

## Cocoa Processing

Cocoa processing is currently expanding in Nigeria. Nigeria produced an
estimated 385,000 tons of cocoa beans worth more than \$570 million in
2005 (industry sources). This accounts for about 11 percent of world
total cocoa production (3.5 million tons). About 80-85 percent of
Nigeria's cocoa is exported as beans mostly to the EU, where they are
then processed into butter, paste, and liquor (75 percent) and powder
(25 percent). Belgium, UK, Germany, the Netherlands, are the primary
destinations. The United States imported cocoa beans worth nearly \$50
million from Nigeria in 2005 (USDA's BICO report). However, GON approval
of a 30 percent REEGF on exported processed cocoa products (compared to
an only five percent rebate on exported cocoa beans), is resulting in
increasing cocoa production and especially local processing. This
presents opportunities for U.S. exporters to sell cocoa processing
ingredients into Nigeria's growing market.

See GAIN Report NI7001:
<http://www.fas.usda.gov/gainfiles/200701/146279896.pdf> for details.

## Dairy Processing

Nigeria is a potential market for 1.3 million tons of milk valued at
about \$3 billion (Industry source). Total domestic production was an
estimated 1.3 billion liters in 2006, but according to a GON provisional
report, only 600,000 liters (valued \$1.5 million) entered formal
marketing channels in 2006. The rest was either consumed within families
or traded informally among the producing communities. Milk powder and
other processed dairy products valued approximately \$275 million were
imported into the country in 2006.

Growing population, increasing urbanization, and rising per capita
income are expected to stimulate rising demand for dairy based products.
Meanwhile, domestic production remains insufficient due to increasing
production/processing costs, non-competitiveness of the industry, and
the failure to incorporate more advanced technologies. More efficient
dairy processing in the United States should provide U.S. suppliers an
advantage over third-country suppliers in exporting processed dairy
products to this market. Additionally, there is export potential for
livestock genetics, fodders and dairy-based food processing inputs which
will likely increase if local infrastructure is improved and
production/processing costs lowered. See GAIN Report NI7019:
<http://www.fas.usda.gov/gainfiles/200709/146292296.pdf> for details.

# 

# SECTION IV: MARKET ENTRY STRATEGIES

New-to-market U.S. food and agricultural products exporters should
consider the following market entry strategies and tactics:

-   Contact the Agricultural Attaché at the USDA/FAS office located in
    the American Consulate, Lagos-Nigeria for assistance in selecting a
    local distributor/ agent or representative.

-   With the assistance of the USDA/FAS office in Lagos-Nigeria, appoint
    a local distributor/agent or representative in Nigeria to register
    the products with the appropriate GON regulatory bodies, to
    introduce these products to the local market and develop consumer
    demand.

-   Identify and sell through consolidators based in the U.S. who are
    already serving the West African region.

-   Exhibit at trade shows in the United States, which are attended by
    Nigerian importers. This will make follow-up contacts easier.

-   Offer product shipment in mixed-lot containers, and offer flexible
    shipping volumes.

-   Adopt a pricing strategy, which encourages importers to initiate
    buying activities with U.S. suppliers.

-   Send sample products and sales catalogs to Post to facilitate
    locating local buyers.

# 

# SECTION V: BEST PROSPECTS

## Consumer-oriented products which are allowed for export to Nigeria:

-   Breakfast Cereals

-   Wine, including sparkling wine

-   Alcoholic beverages & Spirit & Liqueurs

-   Canned vegetables

-   Nuts

-   Milk, Cream, Honey products (liquid or powdered)

-   Spices, Sauces including, Soy Sauce, Mixed Seasoning

-   Coffee, Tea & Herbal products

-   Yeast & Baking Powder

-   Tomato Ketchup, Mayonnaise & Salad Dressing

-   Canned Soups

-   Baby Foods & Health Food products

-   Sweeteners & Non-Dairy Coffee Whiteners

-   Powdered beverages

-   Packaged rice

-   Chocolate, etc

## Product type offering the most sales potential in Nigeria:

-   Frozen seafood

-   Fast food, other HRI food ingredients and dairy products including,
    ice cream and yoghurt

-   Agricultural-based food ingredients

-   Industrial processed foods & beverages especially, fruit juice
    concentrate, and bulk products for local re-processing and packaging

-   Bakery, confectionery, and food preparation ingredients

-   Specialized food ingredients such as additives, preservatives, and
    flavorings

-   Ingredients and additives for feedstuffs

-   Relatively small-sized imported or domestic-processed HVPs, prepared
    and packed for one-time use

## Products not yet present in significant quantities but having good sales potential: 

-   Crushed dry fish or Powdered fish

-   Nutrition food products

## Products Currently Banned for Exports to Nigeria:

1.  Wheat flour - HS Code 1101,0000

2.  Sorghum - HS Code 1007,0000

3.  Vegetable oil in bulk - HS Codes 1507.1100-1516,2000

4.  Frozen poultry and poultry products - HS Codes 0207.0000-0207.3600

5.  Cassava and cassava products -- HS Codes 0714.1000, 1106.2000,
    1108,1400 and 1903.0000.

> Note: the importation of all cassava and cassava products through land
> borders is prohibited

6.  Toothpicks

7.  Bottled water (sparkling and non-sparkling)-- HS Codes
    2201.0000-2202.0000

8.  Biscuits - HS Code 1905.3000

9.  Noodles (including spaghetti) - HS Codes 1902.1100 -- 1902.4000

10. Fruit juice in retail packs - HS Codes 2009.1100 -- 2009.9000

> Note: fruit juice may be imported in concentrates or drums only.

11. Sugar confectioneries (sweets and chocolate) - HS Codes 1704.1000 --
    1704.9000 and 1806.1000 -- 1806.9000

12. Beer (bottled and canned) - HS Code 2203

13. Millet -- HS Code 1007.0000

14. Pork and pork products, beef and beef products, mutton, lamb, and
    goat meat -

HS Codes 0210.1900, 1602.4900, 0202.2000, 1602.5000, 0204.4200,
0204.4300, 1602.9000, 0204.1000, 0204.2200, 0304.3000, 0204.4200,
0204,4300, 0210.7900, 0204,5000, 0208.9000, 0210.9900 and 1602.9000

15\. Live or dead birds - HS Codes 0106.3100-0106.9000, 0208.9000 and
0210.9900

16\. Fresh fruit - HS Codes 0801.1100 -- 0814.000

# SECTION VI. POST CONTACT AND FURTHER INFORMATION

> Agricultural Affairs Office
>
> American Consulate
>
> 2, Walter Carrington Crescent
>
> Victoria Island, Lagos-Nigeria
>
> Telephone: (234) 1 261-3926, 775-0830
>
> Fax: (234) 1 262-9835
>
> e-mail: aglagos@usda.gov
>
> National Agency for Food & Drug Administration & Control (NAFDAC)
>
> Plot 204, Olusegun Obasanjo Way
>
> Wuse Zone 7
>
> Abuja-Nigeria
>
> Telephone: (234) 9 234-6383, 234-6405-6
>
> Fax: (234) 9 269-5163, 234-8382
>
> e-mail: <nafdac.lagos@alpha.linkserve.com>
>
> Website: [www.NAFDAC.org](http://www.NAFDAC.org/)

Nigeria Customs Service

> Customs Headquarters
>
> 3-7, Abidjan Street
>
> off Sultan Abubakar Way, Wuse Zone 3
>
> Garki-Abuja, Nigeria
>
> Tel: (234) 9 523-6394, 253-4680
>
> Fax: (234) 9 523-6394, 523-4690

Federal Ministry of Agriculture & Water Resources

Federal Secretariat, FCDA

> PMB 135, Area 11
>
> Garki-Abuja, FCT
>
> Nigeria
>
> Tel: (234) 9-314-1931, 314-2405
>
> Fax: (234) 9-314-2532

## Appendix I: Nigeria's Economic Structure (Annual Indicators)

  ------------------- ----------- ----------- ----------- ---------- ----------
                      2002\*      2003\*      2004\*\*    2005\*\*   2006\*\*

  GDP (US\$ bn)       46.7        58.4        74.0        95.3       116.6

  Real GDP growth (%) 3.7         10.2        6.1\*\*\*   4.8        5.6\*\*

  Consumer price      13.0        14.1        15.0        17.9       7.5
  inflation (av; %)                                                  

  Population (m)      129.9\*\*   133.2\*\*   136.5       139.8      144.0

  Exports of goods    17,672      27,250      37,326      51,897     58,872
  fob (US \$ m)                                                      

  Imports of goods    -13,631     -17,193     -19,133     -25,995    -27,402
  fob (US\$ m)                                                       

  Current account     -5,400      -1,569      3,606       7,112      15,810
  balance (US\$ m)                                                   

  Foreign exchange    7,331       7,128       16,956      28,280     42,277
  reserves excluding                                                 
  gold (US\$ m)                                                      

  Total external debt 30.5        35.0        37.9        22.2       6.5
  (US\$ bn)                                                          

  Debt-service ratio, 7.4         5.5         4.2         16.1       1.8
  paid (%)                                                           

  Exchange rate (av.) 120.58      129.22      132.89      131.20     127.38
  N: US\$                                                            
  ------------------- ----------- ----------- ----------- ---------- ----------

**Notes:** Actual. \*\* Economic Intelligence Unit estimates. \*\*\*
Official Estimates.

'N', represents Naira (Nigeria's currency).

**Source:** Economist Intelligence Unit, Country Report (Nigeria)---May
2007.

## APPENDIX II: REFERENCE MATERIALS

1\. The GON has finally released the Nigeria Customs and Excise Tariff
Book for 2005- 2006. For further information regarding specific tariff
lines, contact FAS/Lagos at:

> Agricultural Affairs Office, U.S. Consulate General
>
> #2, Walter Carrington Crescent, Victoria Island, Lagos, Nigeria

Tel: 234‑1‑261-3926 Fax: 234-1- 2629835 E‑mail: <aglagos@usda.gov>

2\. The Central Bank of Nigeria (CBN) circular (TED/AD/150/2005) dated
December 28, 2005 stated that "in pursuance of the GON's decision to
abolish pre-shipment inspection scheme and the introduction of
Destination Inspection Scheme for imports to Nigeria with effect from
January 1, 2006, the Government had entered into agreements with three
scanning companies that will act as service providers for the effective
take-off and operation of the scheme". The details of each service
provider together with the designated zones are outlined below:

COTECNA INSPECTION LIMITED

10, Engineering Close

Off Idowu Taylor Street

Victoria Island, Lagos-Nigeria

Tel: 234-1-4617121/3

Fax: 234-1-4617124

E-mail: <info@cotecna.com>

Contact: Contract Manager

**ZONE**: Apapa and Tin Can Seaports, Kano and Abuja Airports, Jibiya
and Banki Posts.

SOCIETY GENERALE DU SURVEILLANCE (SGS)

Plot 999C, Danmole Street

Intercontinental Plaza, 4th Floor

Victoria Island, Lagos-Nigeria

Tel: 234-1-2623042

Fax: 234-1-2622976

E-mail: <Philip-bank@sgs.com>

Contact: Contract Manager

**ZONE:** Onne and Port-Harcourt Seaports: Port-Harcourt Airport and
Idiroko border post.

GLOBALSCAN SYSTEM LIMITED

5B, Oko-Awo Close

Off Adetokumbo Ademola Street

Victoria Island, Lagos-Nigeria

Tel: 234-1-2625392

Fax: 234-1-2624542

E-mail: <globalscansystem@yahoo.com>

Contact: Managing Director

ZONE: Warri and Calabar Seaports; Ikeja Airport and Seme Border Post

3\. The circular further stated, "Under the new arrangement, Form 'M'
submission and processing shall be based on the Port of Destination as
outline above. For avoidance of doubt, importation shall remain
restricted to on the ports listed above".