(a) What five benefits does Nigeria derive from engaging in international trade? (b) State and explain five problem likely to be faced by a businessman who ...

Answer Details

(a) Five benefits Nigeria derives from international trade

1. Earning of foreign exchange: Exports of goods such as crude oil and cocoa earn foreign currency used to pay for imports and settle foreign debts.
2. Obtaining goods not produced locally: Nigeria imports machinery, drugs and other goods that it cannot produce, or cannot produce in sufficient quantity, at home.
3. Wider market for local producers: International trade provides a large overseas market that enables local firms to sell surplus output and expand production.
4. Employment and income generation: The production, handling and shipping of exports and imports create jobs and raise incomes for many Nigerians.
5. Promotion of specialisation and international relations: It allows the country to specialise in what it produces best and fosters friendly economic and political ties with other nations.

(Other valid benefits: source of government revenue through customs duties; transfer of technology and skills.)

(b) Five problems likely to be faced by a businessman selling goods overseas

1. Trade restrictions: Foreign governments may impose tariffs, quotas, embargoes or import bans that limit or prevent the sale of his goods.
2. Foreign exchange and currency problems: Differences in currencies, exchange-rate fluctuations and difficulty in obtaining foreign exchange make pricing and payment risky.
3. Language and cultural barriers: Differences in language, taste, custom and religion make it hard to communicate with and satisfy foreign customers.
4. Problems of distance and transportation: Long distances raise the cost of transport, cause delays, and increase the risk of loss or damage to goods in transit.
5. Risk of non-payment and credit difficulties: It is hard to assess the creditworthiness of distant buyers, so there is a greater risk of bad debts and delayed payment.

(Other valid problems: complex documentation and customs procedures; differences in weights, measures and standards; political instability in the buyer's country.)