NEPC Mentorship - Understanding the role of Pre-Shipment Inspection Agents in the export processes and procedures (20 June 2022)

NIGERIAN EXPORT PROMOTION COUNCIL UNDERSTANDING THE ROLE OF PRE -SHIPMENT INSPECTION AGENTS IN THE EXPORT PROCESSES AND PROCEDURES NEPC MENTORSHIP MONDAY 20TH JUNE, 2022 Mr. Oluwole AKINWE , CSD | Mrs. Ayomide AKINTOYE, TI | Mr. Anderson AMEJUMA, EDI <!-- page break --> INTRODUCTION NON-OIL EXPORT IN NIGERIA Over the years, the macro-economic policies of Nigeria sought to diversify the economy from heavy reliance on crude oil export for the nation’s foreign export earnings. To achieve this, actionable steps were taken to bring this vision to fruition, which subsequently brought about the establishment of the Nigerian Export Promotion Council (NEPC). Among other functions of the council includes the development and diversification of Nigeria’s Non-oil export trade, as well as championing the creation of appropriate export incentives, which will further develop the non-oil sector while lessening the nation’s heavy reliance on crude oil. In an effort to bolster Nigerian products on the international Non-oil export Market, and ensure that Nigeria's Non-oil exports vision and mission to the world is actualized, the Federal Government appointed Pre-Shipment Inspection Agencies. <!-- page break --> PRE-SHIPMENT INSPECTION (PSI)  A Pre-Shipment Inspection (PSI) is an essential step in the quality control process of exports. It is carried out by either a Quality Control Department or an independent quality control service/agent where goods are quality tested before being dispatched. This procedure ensures that production complies with the specifications of the buyer and/or the terms of a procurement order or letter of credit.  A pre-shipment inspection is also a step carried out by traders, agencies, buyers, and other trade operators. They inspect products destined for export to ascertain the quality and quantity of the merchandise, including any defects before they’re shipped to comply with consumer laws.  The pre-shipment process includes acceptance sampling, inspection, and testing, which can be agreed upon between the supplier and the buyer. A pre-shipment inspection can be performed at various stages before shipment. Aside from quality control measures, a pre-inspection also involves checking of all document and verification of compliance with industry standards. <!-- page break --> Under Nigerian Export Supervision Scheme (NESS), The PSI has the following among its objectives; To make the Non-oil To maximize the export from Nigeria To broaden and To maximize the volume, quality, and more competitive in diversify Nigeria’s foreign exchange value of our Non-oil the international Non-oil export base. earnings. export products. market. The above objectives of pre-shipment inspection of goods and services are generally to certify the following criteria: Determining On-site Labeling and Meeting Product’s Cost the market inspection marking of client’s quantity and cataloging of Packing price for for import the imported demands and quality the products customs entitlement goods requirements needs

<!-- page break --> BENEFITS OF PRE-SHIPMENT INSPECTION TO EXPORT Pre-Shipment Inspection provides both the supplier and the customer with the security and assurance they need. Here are some reasons Pre-shipment inspection has become a pre-requisite for both importers and exporters over the years.  Validating the quality of goods before shipment is the last line of defense against defects before the product will reach the customer or client.  A non-functional out-of-spec product can not only damage your company’s reputation but even escalate to litigation if there is personal injury or property damage to the client. Pre-Shipment Inspections aim to prevent such incidents by catching the defects before they reach the customer.  It gives the exporters the peace of mind of a proper quality inspection, along with the guarantee of an entirely impartial assessment performed in the most cost-effective manner possible. <!-- page break --> WHEN IS THE PRE-SHIPMENT INSPECTION CONDUCTED? The pre-shipment inspection can be carried out in various production phases before the goods leave the exporter’s factory. However, the inspection is generally conducted on finished products when 80% of the order has been packed for shipping. The pre-inspection must be done according to Standard Acceptable Quality Limits specifications for the products or customer requirements. During the inspection, the inspectors must follow the company’s quality standards and the destination market’s standards. <!-- page break --> PRE-SHIPMENT INSPECTION AGENTS Pre-shipment Inspection Agency was introduced in 2006 under the PRE-SHIPMENT OF EXPORTS DECREE NO. 10 OF 1996 ACT CAP. P25 L.F.N. 2004, by the appointment of Cobalt International Services Limited as the only Inspection Agencies, there after, in the year 2015, two more were introduced. They were Carmine Assayer and Neroli Technologies Limited. Then by January 2021, the Federal Government (CBN) discontinued the services of Cobalt International Services Limited and Carmine Assayer, leaving only Neroli Technologies Limited and introduced two more Pre-shipment inspections Agents (PIAs) and two Monitoring and Evaluation Agents (MEAs) of all Non-oil exports from Nigeria. These Pre-Shipment Inspection Agents are; ANGLIA GOJOPAL NIGERIA NEROLI INTERNATIONAL LIMITED has the TECHNOLOGIES LIMITED with the responsibility to cover LIMITED to cover responsibility to cover the South East and North South West and South- North West and North East South Central Zones <!-- page break --> PRE-SHIPMENT MONITORING AND EVALUATION AGENTS FOOPS INTEGRATED SERVICES North East | North West | North Central, ACE GLOBAL DEPOSITORY South East | South West | South-South <!-- page break --> THE ROLES OF PRE-SHIPMENT INSPECTION AGENTS (PIAs) To implement the scheme and attain the earlier stated objectives, the following are the roles of Pre-shipment Inspection Agents (PIAs);  To constantly deliver expected results and create value for our clients in all scenarios with exceptional service delivery.  They are responsible for checking the quality, quantity, price competitiveness and security of all non-oil export prior to shipment.  Governments implement PSI programmes to ensure that imports comply with their regulations. This is because non-compliance with these regulations can result in loss of valuable duty and tax revenue, loss of foreign exchange reserves, potential importation of substandard or prohibited goods, etc.  The role of PIAs is multifaceted. This is due to the technical nature of all the stages, procedures, and documentation involved in the export inspection.

<!-- page break --> THE FOLLOWING DOCUMENTS ARE SUBMMITED TO THE PIAs FOR INSPECTION RFI Form(Request for Information) Packing List Final/Commercial Invoice If fully satisfied with the competence and accuracy of above the documents, the PIAs are expected to: • Conduct price analysis and •Conduct quality •Conduct physical inspection of confirmation. analysis and the cargo. confirmation <!-- page break --> PIA INSPECTION  The inspection which is being conducted at the factory, warehouse, transitory terminals sea/airport as well as other points of dispatch, is to ensure compliance with the consignee’s specification and conformity with the international standard organization.  The Clean Certificate of Inspection (CCI) is a document certifying that merchandise (such as perishable goods) was in good condition at the time of inspection, usually immediately prior to shipment.  Within 72 hours, a clean certificate of inspection (CCI) will be issued. however, in the event of any discrepancies in the cargo, quality, quantity and price verifications, a NON-NEGOTIABLE REPORT OF INSPECTION will be issued. the CCI is what qualifies an exporter to be recognized by the federal government and accepted internationally.  The data (statistical returns on all export transactions) collected for all export inspections are then collated and submitted to the appropriate Government Quarters which include the Federal Ministry of Finance, NEPC, The Central Bank, Bureau of Statistics and The Nigeria Customs Services on a monthly, quarterly and yearly basis. <!-- page break --> PIA INSPECTION CONT’D • The two vital documents with regards to documentation are the NXP form and the CCI. Both are distributed accordingly as follows: CCI DISTRIBUTION COPIES DESTINATIONS First Copy Exporter Second Copy Exporter's bank Third Copy Exporter's Agent Fourth Copy Presshipment Inspection Agent (PIA) Fifth Copy Nigerian Customs Service (NCS) Sixth Copy Ministry of Finance (MOF) Seventh Copy Central Bank of Nigeria (CBN) Eighth Copy Nigeria Port Authority (NPA) Two Certified True Copy Nigerian Customs Service (NCS) One Certified True Copy National Bureau of Statistics (NBS) One Certified True Copy Nigerian Export Promotion Council (NEPC) <!-- page break --> PIA INSPECTION CONT’D NXP DISTRIBUTION COPIES DESTINATIONS Duplicate Copy attached to Seventh Copy of CCI Central Bank of Nigeria (CBN) Triplicate Copy Pre-shipment Inspection Agent (PIA) Third Copy Exporter's Agent Fourth Copy Pre-shipment Inspection Agent (PIA) Quadruplicate Copy Attached to Fifth copy of CCI Nigerian Customs Service (NCS) Quintuplicate Copy Attached to Fifth copy of CCI Nigerian Customs Service (NCS) Sextuplicate Copy Attached to Fifth copy of CCI Nigerian Customs Service (NCS) <!-- page break --> INSPECTION PROCEDURES This requires that an exporter among Click on the other things registers with: Applicant/Exporter Portal Corporate Affairs Commission (CAC) Fill in the required info on the portal Nigeria Export Promotion Council (NEPC) Upload required documents Federal Inland Revenue Service • Tax Identification Number Summit and It goes to the Open Export Domiciliary Bank Account Log into the TRMS Portal Bank Generates NXP • https://www.tradesystem.gov.ng number

<!-- page break --> CAC CERTIFICATE NEPC CERTIFICATE <!-- page break --> SAMPLE OF REQUEST FOR NXP FORM INFORMATION FORM (RFI) <!-- page break --> CONCLUSION Pre-shipment inspections may seem like an unnecessary and costly additional step. However, it could mean the difference between a satisfied customer and a disappointed one. The former is even more likely to become a return customer. Ensuring product quality, proper packaging, and regulatory labeling minimizes the risk of defects and boosts the company’s trust. Location is a determining factor that affects the cost involved because different governments have varying compliance measures. However, if you opt for a pre-inspection service in Nigeria, you can expect cost-effective services with technical expertise, quality control efficiency, and minimized procurement risks. <!-- page break --> THANK YOU AND HAVE AN IMPACTFUL WEEK <!-- page break -->