Vectoring off the Nigerian thread- how are you going to get ahead or do any kind of international sales if the international business world assumes that every Nigerian PO or invoice is a con or scam of some kind?
You don’t. You base your company somewhere else, or don’t operate. Unless you already have an existing business relationship, of course.
I’m pretty sure that legitimate Nigerian businesses exist, such as oil and gas companies, and I don’t think anyone would confuse them with the scammers.
For one, they probably don’t introduce themselves via spam mail starting with “Dear sir/madam…”
Become scammers?
For one, I don’t think they will email random strangers offering riches for minimal effort.
I hate to mention it, but Nigeria is not some freakish faraway place in many communities, but the equivalent of what recent European immigrants call “the old country”. Black communities have built strong ties to Nigeria, buy much of their artwork exports, try to build family trees through their annals.
I’ve worked with Nigerians before. I required payment in advance but I require that of any smaller customer, especially international ones. The two relationships I had never really lasted long enough to get to a point where I might have otherwise offered credit, if not for being in Nigerian.
Isn’t this like asking why anyone does business with the UK? I get plenty of scam letters saying they’re from the Bank of Scotland, and I’ve won the Scottish lottery at least a dozen times this year alone. I’ve also had the same scam letters from most of the countries in Africa, as well as Russia, former Russian states, Iran, Iraq and Mexico. (This is what I get for having the same e-mail address continuously for 14 years). It’s the form of the letter, not the country, that indicates the scam.
In addition, most serious business relationships are more easily verified. You can look up business licenses. You have an address, a phone number, etc. not just an e-mail address. Most business, whether buying or selling, want references they can check. None of this can defeat a sophisticated con, but Nigerian scam e-mails are not sophisticated cons.
You confirm the legitimacy of the business you are dealing with through both the US State Dept (or the equivalent in your country) and with the Nigerian State dept.
Then you only release goods or services after the completion of an Irrevokable Letter of Credit. This is like a wire transfer but is between banks and is guaranteed by the issuing bank. Your own bank will confirm that the conditions have been met and that the money is good. ILC is the best way to insure that you are going to get paid, and should be done for any transaction involving money between countries. Not just with Nigeria.
I was export/import manager for a company that did business with another company in Taiwan. After a pattern of regular shipments and payments had been established our company, at the urging of the sales dept., began shipping without the ILC. And of course the Taiwanese company quit paying and we were stuck for several shipping containers sent and thousands of dollars unpaid.
After that NOTHING shipped to anyone overseas without the completion of an Irrevokable Letter of Credit. An no more problems occurred.
http://www.expertlaw.com/library/finance/letter_of_credit.html
To expand on this, with an ILC the banks, for all intents and purposes, take possession of the merchandise. The seller’s bank have the documents proving ownership of said merchandise (B/L, invoices, permits, etc.) and releases it to the buyer’s bank upon receipt of payment. Other conditions may apply or be negotiated between the parties, but generally speaking this is how it works.
Buying and selling with an ILC can make things more expensive and complicated for both parties, but it is the best assurance that you’ll get something for your money, or money for your goods.
It is complicated. All the I’s have to be crossed and the T’s dotted. You cannot have mistakes on the paperwork or your payment is open to dispute. Don’t know what it would cost now, but as I recall, it added a couple hundred dollars per container load. Not counting the employee’s time to do the paper/phone work. We were only doing a couple containers per month.
I can see where a company might have many persons working just on the ILC’s. Or maybe a whole department. But, hey, you have to get paid. So it gets done and added to the transaction costs.
If it’s much like equally-corrupt Cameroon, I’d imagine that most of Nigeria’s larger industries have affiliations with trans-national companies (oil goes to Shell, pineapples to Dole, etc). And that most smaller businesses focus on their neighbors in Africa. Running a legit business in most of Africa is a complicated balancing act involving paying off a lot of people. Anyone making too much money is going to attract attention and find themselves no longer owning their business. So there isn’t much space between “massive multinational” and “cottage industry.”
Foreign corporations are still deeply tied to Africa’s economies, on old fashioned “pay off the government, mine the resources, and get the hell out of there” basis. In Cameroon, even basic things like road systems, electricity, etc. were run by foreign companies. And they were just as in to the skimming-off-the-top as anyone else. Most of the good stuff goes to them.
Nigeria is marginally better, because they’ve partially resisted the urge to “nationalize” (funnel profits into president’s pockets) every industry. But they are still subject to the same forces. I doubt there are really that many Nigerian businesses trying to make it the same way we think of businesses making it. In order to survive, they are already entrenched in their own networks, paying off the right people, etc. and aren’t doing a ton of business with complete strangers.