Required Report - public distribution

**Date:** 9/25/2008

**GAIN Report Number:** NI8024

NI8024

**Nigeria**

**Exporter Guide**

**Exporter Guide Annual**

**2008**

**Approved by:**

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

U.S. Consulate, Lagos

**Prepared by:**

Levin Flake, Uche Nzeka

**Report Highlights:**

Nigeria\'s total food and agricultural imports continue to climb and in
2007 are valued at approximately \$3.7 billion. Wheat is the leading
U.S. agricultural export commodity to Nigeria and of approximately \$717
million indicated as total official agricultural exports in 2007, wheat
accounted for \$644 million. However, exports of other U.S. agricultural
products are rapidly increasing, including tallow, soybean meal, fish
and seafood products, tobacco, and consumer-ready products. 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)

[General and Agricultural Trade Situation
5](#general-and-agricultural-trade-situation)

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

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

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

[Import Duties & Collections: 7](#import-duties-collections)

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

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

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

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

[Retail Food Sector: 9](#retail-food-sector)

[Food Processing (FP): 12](#food-processing-fp)

[Food Service (HRI) Sector: 13](#food-service-hri-sector)

[Seafood/Frozen Fish: 14](#seafoodfrozen-fish)

[Aquaculture: 14](#aquaculture)

[Dairy Sector 14](#dairy-sector)

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

[SECTION V: BEST PROSPECTS 15](#section-v-best-prospects)

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

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

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

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

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

[Appendix II: REFERENCE MATERIALS 19](#appendix-ii-reference-materials)

# SECTION I. MARKET OVERVIEW

Nigeria is the largest market in sub-Saharan Africa with a population of
more than 144 million people, and a population growth rate estimated at
three percent annually. Petroleum continues to power the country's
economy and petroleum exports account for 20% of GDP, 95% of total
export earnings and close to 85% of federal government revenue. The
inflation rate in 2007 fell to 7.2% (year on year), down from 7.5% a
year earlier. Despite economic growth, the domestic manufacturing is
actually contracting in Nigeria, with capacity utilization in that
sector reportedly dropping from 46.7% in 2006 to 42.4% as of November
2007. This fall is mainly due to the high-cost and unreliability of
energy supplies (especially electricity) and weak infrastructure. This
is creating an opportunity where there is greater reliance on imports.
Policy implementation has been poor due to the wide range of vested
political interests in the country. Of particular concern to the U.S.
agricultural sector, is the wide range of import bans for many food
items.

Nigeria's agriculture sector is primarily subsistence-based, employs
about 70 percent of the population and contributes about 40 percent to
the GDP. Crop production accounts for about 85 percent of agricultural
activities, with livestock and poultry accounting for 10 percent, and
fisheries and forestry, 5 percent. 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, largely bulk commodities such as wheat from
the United States, rice and sugar from Asia and Brazil, fruit juice
concentrate/pre-mixes and dairy products. The market for frozen fish
(especially, mackerel, herring and croaker) is also large and is mostly
sourced from the EU, South America, and some African countries. The EU,
Asia and South Africa are leading suppliers of processed and
intermediate products to Nigeria and Nigeria is expected to continue to
import these foods for the foreseeable future due to inadequate local
food production. Also, imports of consumer-ready products should
continue to grow as inadequate domestic food processing is unable to
meet rising demand in Nigeria. The low level of domestic agricultural
production and food-processing currently provides consumers with only a
limited selection of products. U.S. exporters are advised to explore
entering Nigeria's huge and 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.

Market access improved somewhat in 2005 when the GON began the phased-in
adoption of the ECOWAS Common External Tariff (CET) and announced full
implementation of the CET, which would remove the remaining import bans
by January 2008. However, Nigeria failed to abide to its CET agreement
for total liberalization by 1 January, 2008 and import bans on many
products remain in place. Some countries in the sub-region have recently
signed an interim EU-ECOWAS Economic Partnership Agreement (EPA) with
the EU which offers duty-free access for exports of these countries to
the EU. Because of its restrictive trade policies, Nigeria is unable to
sign this agreement and this is pressuring Nigeria to embrace trade
liberalizations.

## Advantages & Disadvantages

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

  Very large population (144          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 on many
  demand for healthy foods.           food and agricultural products.

  Increasing awareness of and rising  Although rising, consumer
  demand for U.S. processed foods by  purchasing power remains low.
  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  consumer-oriented foods, longer
  patterns. This shift is being       transit times, and relatively long
  driven by changing demographics     port clearance procedures all
  including greater urbanization,     sharply reduce shelf life of U.S.
  more women working outside the      products in Nigeria.
  home, and changing lifestyles of    
  the large youth population.         

  Expanding HRI sector is demanding   Negative perceptions about Nigerian
  more intermediate products and      businesses among some U.S.
  ingredients.                        exporters and a reluctance to do
                                      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 many               
  consumer-ready food products.       

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

## General and Agricultural Trade Situation

##  

Beginning in 2005, Nigeria commenced the gradual implementation of the
more liberalized ECOWAS Common External Tariffs (CET). However, this
implementation has been spotty and the GON's earlier commitment to phase
out all import bans by January 2008 has not materialized. With some West
African countries signing an interim EU-ECOWAS Economic Partnership
Agreement (EPA) and already are enjoying duty-free access to the EU,
Nigeria is under pressure to sign the EPA.

According to reports, "EPA is a free trade agreement, which seeks
drastic reduction and, eventually, total removal of duties on goods
imported and exported between the European Union countries and its
former colonies in Africa, the Caribbean and the Pacific known as the
ACP countries". Countries that subscribed to EPA were expected to have
signed the agreement by December 31, 2007. Either the CET or the EPA
would require Nigeria to liberalize trade fully. For now, Nigeria
continues to implement protectionist agricultural trade policies,
especially import bans, in contravention of its WTO commitments. At
present, Nigeria has no Free Trade Agreement and bilateral investment
treaty with the United States. However, Nigeria signed a Trade and
Investment Framework Agreement (TIFA) with the United States in 2004
where outstanding trade policy issues are raised.

Nigeria's total exports of goods and services in 2007 are estimated at
\$61.81 billion, mainly crude oil and gas, and major export destinations
are the United States and China. Total imports in 2007 are estimated at
\$30.35 billion with the major origins being China, the United States,
the EU, and Brazil.

Nigeria is a huge net importer of agricultural products, with imports of
approximately \$3.7 billion and exports of only a fraction of this
amount. Nigeria is predominantly a bulk/intermediate commodity market
and major imports are wheat, rice and sugar. The United States is a
leading exporter of agricultural products to Nigeria (\$717 million in
CY 2007 compared to approximately \$508 million in CY 2006), primarily
wheat and U.S. exports in 2008 are reaching record levels. Exports of
U.S. value-added products are rising rapidly despite the import bans on
certain products. The major competitors for the Nigerian market are
Europe and Asia. Nigeria's traditional trade links with Europe remain
strong, and EU agricultural exports to Nigeria, accounts for about 50
percent of the total. Imports from Asia, especially China, have grown
markedly in recent years and investment from China in all sectors of the
economy has experienced very rapid growth.

Nigeria's agricultural exports to the United States in CY 2007 were
about \$24.4 million, up from less than \$20 million in CY 2006,
consisting primarily of rubber and cocoa related products.

## 

## U.S. Agricultural Exports to Nigeria

Total U.S. agricultural exports to Nigeria increased from about \$508
million in 2006 to approximated \$718 million in 2007. Wheat accounted
for approximately 90 percent of this total. U.S. exports for 2008 are on
pace to reach record levels.

The chart below shows a breakdown of U.S. food and agricultural product
exports to Nigeria in 2007:

![](media/image2.wmf){width="5.332677165354331in"
height="3.558267716535433in"}

**Source: FAS BICO** ![](media/image3.wmf){width="3.1720472440944882in"
height="3.925196850393701in"}![](media/image4.wmf){width="3.1838582677165355in"
height="3.94251968503937in"}

**Source: FAS 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}
<!-- -->
```
-   Bulk, intermediate products and ingredients for local re-processing
    and packaging.

-   Mixed-grocery containers.

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

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

Visit <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. Visit:
<http://www.fas.usda.gov/gainfiles/200807/146295278.doc>, for details.

## Import Duties & Collections: 

The Nigerian Customs Service (NCS) is the GON agent responsible for
import duty collection. Ports clearance has been slow in Nigeria but the
GON has set September 31, 2008 for NCS to achieve a 48-hour cargo
delivery in compliance with the directive of the International Maritime
Organization (IMO). As a result, NCS has reportedly acquired the
necessary facilities to kick-start the upgraded Automated System for
Custom Data (ASYCCUDA++), a paperless Direct Trader Input (DTI) for
online submission and processing of custom documents and duty payments.
This is expected to facilitate customs clearance at ports, and address
unofficial practices resulting mostly from increased contact between GON
officials and freight agents/importers during customs clearing.

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 had stated, however, that all these bans would be phased out
by January 2008 in compliance with its CET commitments, however the bans
remain in place.

## 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. However, importers are reporting that the change has only
added minimal improvements in cargo handling and port clearance.
Reportedly, Nigeria's new authorities also think operators' selection
did not follow due process and may consider reviewing the policy.
Uncertainties about this possible review are causing operators to pursue
more investment recovery activities than improve port infrastructure to
meet desired efficiency level.

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,
classification, collection and release of consignments. The
GON-appointed private firms function as Destination Inspection service
providers and provide x-ray cargo scanning services at entry ports. They
also review importers' documents and issue a Risk Assessment Report
(RAR) to guide NCS on the risk, classification and value for customs
purposes.

## Documentations, Export & Customs Clearing:

### Procedural Steps:

Opening letters of credit in Nigeria now takes between 2-3 days for the
importer (buyer) to accomplish and follows these steps:

A.  Importers process Form 'M' with his/her pro-Forma invoice through
    any local Authorized Dealer Bank (ADB) irrespective of the value and
    whether or not payment is involved. Form M' is a quadruplicate
    document completed to apply or seek authorization to import from the
    relevant GON agent \[Central Bank of Nigeria (CBN)\]. The Form 'M'
    shall be valid for importation only after acceptance by the relevant
    scanning company and Risk Management Service Provider. 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:

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

    ii. Mark or brand name of the product where applicable

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

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

    v.  Quantity and packaging and/or packing

    vi. 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). Documents includes the
        following:

-   Final Invoice and Combined Certificate of Value and Origin (CCVO)
    duly attested

-   Packing List

-   Bill of Lading/Airway Bill as applicable

-   Carrier Certificate

-   Insurance Certificates

-   Manufacturer's Certificate of production

-   Laboratory test certificates of chemicals, foods, beverages,
    pharmaceuticals, electrical appliances and other regulated products
    where applicable.

    i.  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.  ADB makes necessary endorsements on the Form 'M', retains the
    original copy and forwards the other three copies to the relevant
    Destination Inspection Agent (DIA) for scanning and risk assessment.

C.  DIA receives Form 'M' and pro forma invoice and carry out
    preliminary review on the application using provided information.

D.  DIA accepts the Form 'M' and generates a Risk Assessment Report
    (RAR) within five (5) working days of the receipt of the import
    documents.

E.  DIA retains a copy of the Form 'M' and sends the remaining two
    copies to NCS. At this point, the Form 'M' becomes a valid document
    and the importer can request the exporter to ship the goods.

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

G.  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.

H.  Exporter's documents above are transmitted to the importer's ADB
    which the ADB in turn sends to GON's inspection and evaluation
    agents (GIA) to evaluate items and determine import duty payable.

I.  GIA prepares Risk Assessment Report (RAR) stating import duty
    payable. RAR is a document used by NCS to take decisions with
    respect to the duty payable on imports. Import payable depends on
    outcome of product valuation after physical examination. NCS returns
    RAR to the importer through his ADB. This process now takes about
    two weeks to accomplish.

J.  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 the Form "M". The
    importer will begin Customs Clearing with the import and duty
    documents.

K.  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.

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.

## 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 the 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.

# SECTION III: MARKET SECTOR STRUCTURE AND TRENDS

## Retail Food Sector:

#### 

Nigeria's retail food sector is dominated by traditional open-air
markets (accounting for 74 percent of total retail food sales in 2007),
then convenience stores/small groceries (25 percent), and finally
supermarkets (1 percent).

![](media/image5.wmf){width="4.832677165354331in"
height="3.2251968503937007in"}

The distribution players for merchandising imported consumer-oriented
foods in Nigeria are: 1) Importer-distributors 2) Wholesalers 3)
Retailers.

#### In 2007, consumer-oriented food imports are estimated at \$550 million and industry sources forecast imports to increase to \$600 million by the end of 2008. The partial adoption of the more liberalized ECOWAS CET is encouraging imports, despite GON's import bans placed on some food products. Applied duties under the CET range from five to 20 percent. Some importers, however, 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
2007 are shown below:

![](media/image6.wmf){width="4.711023622047244in"
height="3.1429133858267715in"}

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.

#### 

#### Industry sources indicated more than \$50 million worth of U.S. consumer-oriented foods was exported to Nigeria in 2007, however, about half of the products reportedly enter the market through cross border smuggling or other informal means.

#### 

#### According to USDA's BICO report, the value of U.S. consumer oriented food exports to Nigeria increased 30 percent in 2007 from about \$20 million in 2006 to approximately \$26 million in 2007. For 2008, these products have increased another 22 percent year to date. Dairy products, breakfast cereals, processed fruits, and mixed grocery items make up most of these imports. U.S. food product 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. GON's import and port reforms are also assisting 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. Visit <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.

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 (especially power), multiple
taxation and GON's inconsistent policies---allegedly, often initiated on
political basis. Reportedly, manufacturing sector's average capacity
utilization generally dropped from 46.7 percent at the beginning of 2007
to about 42.4 percent as at the end of the year. For the food processing
sector, average capacity utilization reportedly dropped from 65 percent
in 2006, to 56 percent in 2007.

Nigerian food processors report that the sector will become extinct if
the country is pressured to sign and/or fully implement such regional
trade agreements as the ECOWAS CET and EPA. They argue that Nigeria does
not have the comparative advantage and the necessary infrastructure that
abound in other regions which makes local food processing a high-cost
activity. According to the estimation of key government agencies, the
IMF and the World Bank, Nigeria's infrastructural gap will need over
\$510 billion to bridge investment for the next 15 years (Source:
Nigeria's AFBTE Annual Report, 2007).

Table below shows the capacity utilization trends in Nigeria's food
processing sector, 2003 to 2007:

  ------------------------ ------------- ---------- ---------- ---------- ----------
                           **CAPACITY                                     
                           UTILIZATION                                    
                           (%)**                                          

  **Sub-sector**           **2003**      **2004**   **2005**   **2006**   **2007**

  Beer                     54            60         57         50         58

  Soft Drinks              56            55         48         59         56

  Flour Mills              62            44         50         49         64

  Tobacco                  \-            65         34         45         50

  Vegetable Oil            45            55         55         65         53

  Beverage                 53            55         64         90         44

  Dairy                    67            80         78         65         75

  Spirit/Distillers        \-            40         64         \-         66

  Biscuits/Confectionery   55            59         69         75         55

  Flour Based              \-            \-         \-         \-         44

  Others                   \-            \-         \-         \-         56

  **Average Capacity       **59**        **54**     **56**     **64**     **56**
  Utilization (%)**                                                       
  ------------------------ ------------- ---------- ---------- ---------- ----------

**Source: AFBTE Annual report, 2007**

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 \$2.4 billion worth of inputs used
in Nigeria's food processing industry are imported (Industry estimate).

Potential for increased export sales is present for the following
inputs:

+----------------------+---------------------+-------------------------+
| **Bulk**             | **Intermediate**    | **Processed**           |
+----------------------+---------------------+-------------------------+
| Barley and Malt      | Corn Starch         | Baking mixes, Yeast &   |
|                      |                     | Baking Powder           |
| Edible and inedible  | Ethanol             |                         |
| Fat                  |                     | Jam & Jellies           |
|                      | Fruit Juice         |                         |
| Raw Sugar            | Concentrate Fruit   | Mayonnaise              |
|                      | pre-mixes & syrup   |                         |
| Refined Sugar        |                     | Salad Dressing          |
|                      | Ice Cream Pre-mixes |                         |
| Wheat                |                     | Sauces, Spices          |
|                      | Other Beverage      |                         |
| Paddy Rice           | Bases               | Tomato Ketchup          |
|                      |                     |                         |
|                      | Dairy Products      | Seasonings, etc         |
|                      |                     |                         |
|                      | Flavors, Sweeteners |                         |
|                      |                     |                         |
|                      | Industrial Salt,    |                         |
|                      | other               |                         |
|                      | micro-nutrients,    |                         |
|                      | other ingredients   |                         |
|                      | for food and        |                         |
|                      | feedstuff           |                         |
|                      | processing, edible  |                         |
|                      | tallow, etc.        |                         |
+----------------------+---------------------+-------------------------+

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 by Nigerian importers.

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

## Food Service (HRI) Sector:

Nigeria\'s food service sector; consisting of hotels, restaurants and
institutional contracts (HRI) was valued at US\$3 billion in 2007. The
largest and fastest growing segment is the quick service restaurants
(QSR).

Growth in the HRI sector is driven by modest economic growth,
urbanization, more women working outside the home and changing
demographics in favor of the youths who have a preference for western
style convenience foods. The sector is expected to continue to grow as
convenience QSRs become more and more important in the Nigerian way of
life. In the same vein, import demand for food ingredients by the
operators is trending upwards.

U.S. products with best market prospects include potato chips, sauces,
seasonings, pastry mixes, seafood, 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:

  ------------------------------ ------------ ----------- ---------------
                                 2006         2007        2008
                                                          (Estimated)

  Total Market Size              1430         1660        1700

  Total Local Production         430          500         400

  Total Exports                  \--          N/A         N/A

  Total Imports                  1000         1160        1300

  Imports from the U.S.          8.0          0.001       5.0
  ------------------------------ ------------ ----------- ---------------

**Note: Figures in millions of dollars; Estimates from industry
contacts; Exchange rate: 120 naira to 1 USD**

Nigeria imports the majority of seafood, and imports are projected to
increase to 1.3 million tons in 2008, up from approximately one million
tons in 2007. Export sales of U.S. seafood (especially frozen mackerel,
herring and croaker) to Nigeria significantly dropped in 2007 and the
scarcity and high price of Atlantic species resulted in a noticeable
shift in the Nigerian market towards more imports from South America,
especially Chile. High energy cost translating to higher U.S. freight
charges as well as the hitherto one-way seafood trade contributed to
this. In 2007, however, the U.S. recertified Nigeria for shrimp exports
to the United States. Reefer containers returning to Nigeria only for
shrimp can be available for shipping seafood and other perishable foods
from the U.S. at reduced freight costs. This is expected to promote a
two-way trade between the countries in seafood and other perishable food
products. See, <http://intranetapps/GainFiles/200710/146292622.pdf> 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
export (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). The country's shrimp regained access to U.S. market after
complying with Turtle Excluder Devices (TED) regulations on January 10,
2007. Imports of shrimp from Nigeria to the United States jumped from
only \$3,000 in 2006 to more than \$1.03 million in 2007 (USDA's BICO
Report). Huge export market for Nigeria's shrimp has caused increased
investments in local shrimp production activities.

Nigeria is a potential market for approximately 2.5 million MT of fish.
Of the country's fish 1.5 million MT fish demand in 2005, aquaculture
(especially, catfish farming) contributed only 16,000 MT. Following GON
collaboration with local and external stakeholders (including local
farmers, World Bank, WHO, FAO, NEPAD, etc), local production stepped up.
Reportedly, catfish production increased to 80,000 tons and 110,000 tons
in 2006 and 2007, respectively. This has also created about 25,000 jobs.

However, growth in the sector is being threatened by increasing costs of
aquaculture feedstuffs which now constitute more than 70 percent of
total cost of production. This opens export market for U.S.
shrimp/aquaculture feedstuffs, feed ingredients and technology.

## Dairy Sector

Nigeria is a potential market for 1.3 million tons of milk valued about
\$3 billion (Industry source). Of Nigeria's estimated 1.3 billion liters
of total domestic fluid milk production in 2006, only a very small
amount enters formal marketing channels. Dairy imports are large and
were valued at more than \$300 million in 2007. Nigeria's dairy
processors (including ice cream, chocolate milk, yoghurt, and long-life
milk producers) rely on combining and reconstituting milk powder
imported mostly from the European Union (Netherlands, Denmark).
Processed infant formula, cheese, butter, as well as high-end ice cream,
are also imported. U.S. dairy products exports to Nigeria grew from
\$1million in 2005, to \$6million in 2006 and \$8million in 2007. U.S.
market share (though growing), remains small despite the higher quality
perception of U.S. processed dairy products among Nigerian consumers.
Freight costs from the U.S. are well above those from the European
Union.

+--------------------------+----------+----------+--------------------+
|                          | 2006     | 2007     | 2008               |
|                          |          |          |                    |
|                          |          |          | (estimated)        |
+--------------------------+----------+----------+--------------------+
| Total Market Size        | 276.3    | 301.5    | 362.5              |
+--------------------------+----------+----------+--------------------+
| Total Local Production   | 1.3      | 1.5      | 2.5                |
+--------------------------+----------+----------+--------------------+
| Total Exports            | 0        | 0        | 0                  |
+--------------------------+----------+----------+--------------------+
| Total Imports            | 275      | 300      | 360                |
+--------------------------+----------+----------+--------------------+
| Imports from the U.S.    | 6.2      | 8.5      | 12.0               |
+--------------------------+----------+----------+--------------------+

**Note: Figures in millions of dollars and only include formally
marketed products and estimates from industry contacts. Exchange rate:
120 naira to 1 USD**

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
<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:

-   Select 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. For assistance contact the Office of Agricultural Affairs,
    U.S. Consulate General, Lagos-Nigeria.

-   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 (excluding beer)

-   Canned vegetables

-   Nuts, Milk, Cream (powdered), Honey products

-   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:

-   Agricultural-based food ingredients

-   Frozen seafood

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

-   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

-   Processed fruits and vegetables

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

-   Nutrition/health 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 - 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.

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**

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

  ------------------- ----------- ----------- ---------- ---------- -----------
                      2003\*      2004\*\*    2005\*\*   2006\*\*   2007

  GDP (US\$ bn)       58.4        74.0        95.3       116.6      142.4

  Real GDP growth (%) 10.2        6.1\*\*\*   4.8        5.6\*\*    5.0\^

  Consumer price      14.1        15.0        17.9       7.5        9.1\^
  inflation (av; %)                                                 

  Population (m)      133.2\*\*   136.5       139.8      144.0      146.2\*

  Exports of goods    27,250      37,326      51,897     58,872     61,810\^
  fob (US \$ m)                                                     

  Imports of goods    -17,193     -19,133     -25,995    -27,402    -38,350\^
  fob (US\$ m)                                                      

  Current account     -1,569      3,606       7,112      15,810     3,538\^
  balance (US\$ m)                                                  

  Foreign exchange    7,128       16,956      28,280     42,277     59,700\^
  reserves excluding                                                
  gold (US\$ m)                                                     

  Total external debt 35.0        37.9        22.2       6.5        8\^
  (US\$ bn)                                                         

  Debt-service ratio, 5.5         4.2         16.1       1.8        3.4
  paid (%)                                                          

  Exchange rate (av.) 129.22      132.89      131.20     127.38     125.00
  N: US\$                                                           
  ------------------- ----------- ----------- ---------- ---------- -----------

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

'N', represents Naira (Nigeria's currency). \^ Industry estimates.

**Source:** Economist Intelligence Unit, Country Report (Nigeria)---Nov.
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".