Do you know that you can make a lot of money in Nigeria without owning a product, shop or office? If you want to learn how, then here’s a detailed guide on how to make money in Nigeria as a product sourcing agent.
As a product sourcing agent you can conveniently plug into the export value chain. What a good way to build up a successful exportation business from nothing and have fun doing it? Not only does it require little financial investment to start, but it offers the prestige of working with Nigerian exporters spread all over the Country.
What you need to start: In all honesty, you don’t need previous experience in the field to get started, but you should have a good head for organizing and paying constant attention to little details.
Making contacts with exporters: As a product sourcing agent, you will need to make contact with the Nigeria exporters. You can register with some trade portals where you will have access to their chosen commodities, specifications and contacts details. You can also send a mail to them and inform them that you can meet their requirement. However, you will need to submit a product sample to your potential clients; then you can go ahead to discuss the price and the terms of payment.
Your clients: As a product sourcing agent, you will deal majorly with farmers. You will need to go to their farms and deal with them directly and you might need to transport the commodity to the city. You can also deal with the local buying agents and the commodity merchant. Although, this can be an expensive route to take but they make product sourcing very easy.
THE VALUE CHAIN: How Product Sourcing Agents Make Money in Nigeria
1. Farmers cultivate and harvest the commodities
Nigeria, one of Africa’s most populous countries, has a highly diversified agro-ecological condition, which makes the production of a wide range of agricultural products possible. Agriculture is one of the most potentially viable sectors of the Nigerian economy, particularly in terms of its employment generation potentials; as well as its contribution to Nation’s Gross Domestic Product (GDP) and export revenue earnings.
The Agricultural sector is being totally transformed by the federal government to enable the country move from traditional farming to modern agriculture as a business both for small and large-scale farmers. The objective is to ensure food security whilst also promoting exports in agriculture value chains where we have a comparative advantage.
A lot of Nigerian exporters are investing in large scale plantation of different agricultural product and making over 900% returns on their investment. This makes agricultural exporting one of the fastest growing business opportunities in Nigeria. As a small investor, you can get involved in the export value chain by getting a land lease for a year at N5,000 per hectare or buying the land completely and start a large scale agricultural plantation.
2. Local buying agent (LBA)
Local buying agents purchase commodities from different farmers, and pre–process them for export. They make sure they have enough commodities in stock before the market day. The local buying agents (LBA) are divided into two parts:
- The Local commodity merchants
- The City-based or large scale merchants
The local commodity merchants operate at the local level. For instance, a local buying agent that operates in Jujunku in Taraba state will buy from the farmer and stock his shop with agricultural commodities before the set market day. On the other hand, the city commodity merchants are based in Kano, Lafia, Kaduna, etc.
They are big players and before you can buy from them, you must have a big order. Some Asians that come to Nigeria do buy from them because the city commodity merchant can arrange for five to ten containers within few days.
As a product sourcing agent, you can buy from them if you have big orders, especially when you have the financial muscle to buy in large quantities. Dealing with them ultimately saves the time of the sourcing agent because you will get your commodities at one point
3. Commodity Merchants
The commodity merchants purchase products from different local buying agents and farmers to process and sell to the sales agent and exporters. They are based in Lagos and you will need to give them advance payment before they can supply you your chosen commodity. I will advice any new entrants into commodity sourcing to deal with the farmers or the local buying agents, because commodity merchant are very expensive to deal with.
4. Commodity sales agent
These set of individuals purchase the commodity from merchants and local buying agents to deliver to exporters’ warehouse. Some of them are based in Lagos. As a product sourcing agent, you will need a point man especially when you are sourcing for agro products. A point man will make product sourcing very easy for you as they know the terrain and they know how to deal with the agents. They help in quick and effective co-ordination of your chosen agricultural commodity.
Exporters are the receiver of the products and they deal with the international markets. In the export value chain, an exporter can decide to deal with any of the agents or commodity merchants. He or she can also decide to pay in advance for the products or pay when the commodity is delivered to the warehouse.
A lot of Nigerians are operating a highly lucrative export company and they are making a steady income of between N500,000 and N10,000,000 per month regularly; and at their spare time. The profit from the first transaction can be ploughed back and an investor will be able to build up his capital base. The cheapest exportable product is charcoal and the startup capital required is N650,000; while the profit return on investment is N150,000 per trailer.
However, the sad truth is that Nigerians cannot even meet the demand coming from the Europeans Countries now. If you have the ability to sell, and an air of diplomacy; the export business might be right for you. All you need is the desire and determination to make it work.
How to Make Money Sourcing Products for Local Manufacturing Companies
Do you know that some local manufacturers are looking for ways to increase their market share for the goods they produce? You can help them achieve their goal by helping them source their raw materials. A lot of Nigerian companies are looking for cassava tuners, cassava flour, Shea butter, Cocoa, maize, Groundnut. You can get their LPO. In fact, I discovered that some of them pay on delivery and being their regular supply can raise your income level.
Export Business Can Still Accommodate More Nigerians
The non-oil export business is still at its very primitive stage in Nigeria with a very high potential for growth. The market is, thus, inexhaustible (especially for agricultural commodities and other consumables). Therefore, there is space for everyone that will like to earn foreign exchange via the export business. If you are interested in the export business, you can start as a product sourcing agent and increase your skill in the export value chain.
The biggest advantage is the money you will make. Once you get the business underway, the commission for setting up sales is very profitable. And after you establish and maintain a number of exclusive accounts, you will find out that the time you spend is highly rewarded with money.
Author’s Bio: Tunji Afuwape is a small business finance consultant and expert. He is the CEO of 21st Strategies. He provides “how-to” advice on small business and home-based work issues. His organization helps small businesses reach their fullest potential. You can read his full bio here and contact him also for business advice.