Trade is seen as the act of buying and selling goods and services in business. Trade can be divided into home trade and foreign trade. Home trade is the type of trade that occurs within the country, while foreign trade is the type of trade that occurs among countries. All trading activities involve a buyer and a seller.
Importance of Trade
It facilitates the exchange of goods and services using the medium of money.
Trade employs people.
Trade makes goods and services available to customers.
Trade enhances the economy of a nation.
Trade activities improve the standard of living
Home Trade
It is otherwise known as either domestic trade or internal trade. This is the type of trade that occurs within the country. This is the buying and selling of goods and services between two or more people within a particular country. The buying and selling or exchange of goods and services at New Benin Market in Benin City, Nigeria, is an example of home trade.
A trader of pepper fruits and palm oil from the southern states to the western states in Nigeria is involved in the Home trade. Home trade can be categorised into wholesale trade and retail trade. Home trade is divided into two. These two divisions are:
i. Wholesale trade.
ii. Retail trade.
Wholesale Trade
This is the buying of goods in large quantities from the manufacturers and reselling them in small quantities to the retailers. Those involved in buying in large quantities are called wholesalers. The wholesalers play a very important role in trade in society.
Retail Trade
This means buying goods in small quantities from the wholesaler and reselling them in smaller quantities or units to the consumers. Those involved in buying goods from the wholesalers in small quantities and reselling them in units to the consumers are called retailers. The woman who sells Biro in bits is a retailer. Retailers are everywhere in the country because the trade is easy to set up. Wholesaler and resells them in smaller quantities or units to the consumers. Those involved in buying goods from the wholesalers in small quantities and selling them in units to the consumers are called retailers. The woman who sells biros in bits is a retailer. Retailers are everywhere in the country because trade is easy to set up.
Foreign Trade
Foreign trade is otherwise known as international trade. Foreign trade is the buying ànd selling of goods and services between two or more countries or between people from two or more different countries. Foreign trade is a result of interdependence among countries. A trade between organisations or persons from Nigeria, Ghana, or the United States of America is called foreign trade. Foreign trade has three main divisions. These are:
i. Export trade.
i. Import trade.
ii. Entre-port.
Import Trade: This is the type of foreign trade that deals with goods and services that are bought into the country. That is, buying goods and services from another country to one’s own country. For example, when. Nigeria buys or imports goods from Japan. Nigeria buys goods from other countries to supplement its local production and also to improve the standard of living of its citizens. When it involves goods that it cannot produce. Import trade can be visible or invisible. Visible imports consist of goods that can be seen and touched, such as machines, etc. Invisible imports are services rendered, and these cannot be touched.
Export Trade: This is the selling of goods and services to other countries. Some of the products Nigeria exports) to other countries include cocoa, rubber latex, palm oil, and agricultural products. Export trade also consists of visible goods, which are goods that can be seen and touched, such as cocoa, coffee, palm oil, etc, and invisible trade, which consists of services that cannot be seen or touched, such as the service of an expert.
Entre-Port: This means re-exporting of imported goods to another country. In this case, three countries are involved in the trading activity. An example is when a Nigerian imports goods from the USA and exports the same goods to Ghana.
Aids to Trade
These are factors that make buying and selling possible on a large scale. Services that make trade easy are services that help trade to succeed. Everyone in society is involved in trade activity. These activities include, among others, the following:
1. Banking.
2. Transportation.
3. Advertising.
4. Warehousing.
5. Communication.
6. Insurance.
7. Tourism.
Banking: Banking is one of the aids to trade that provides financial services for individuals and organisations carrying on a legitimate business. These financial services include keeping money in the bank,
payment of customers through cheque, internet, and automated teller machine (ATM), and granting of loans and overdrafts to solvent customers. Banks play an important role in commerce by giving financial assistance.
Transportation: This is an aid to trade that assists businessmen in conveying goods, services, and people from their various origins to their respective destinations. Goods are distributed via transportation. This ensures effective and efficient distribution of goods and services. It encourages both local and international trade. It makes the carriage of bulky goods easier.
Advertising: Advertising is another facilitator that enables customers to be aware of an organisation and the products produced or services rendered. It gives the customer information about products, their uses, and where they can be obtained. It is a guide to the customer.
Warehousing: This is a factor that bridges the gap between the time that goods are produced and the time they are needed by the members of society. The storing of raw materials and finished goods in a room or place until there is a need for them is called warehousing.
Communication: This provides a platform for stakeholders in business to pass across vital information between or among one another. That is the passing of information from one person to another or from one place to another. Business deals are agreed on and settled between two traders at long distances apart, through the telephone, for instance.
Insurance: This is another aid to trade that reduces the risk associated with the business. It is a contractual agreement between the insured and the insurer in which the insured agrees to pay a premium so that the insured is indemnified should any negative thing happen to the insured asset. It helps businessmen and women to take risks.
Tourism: This has to do with movement from one part of the world for sightseeing and relaxation. The historical event is what tourism promotes in every nation, and this strengthens the economy of a nation as foreigners are attracted to the country.
Roles of customs and excise in foreign trade customs duties: These are duties levied on both imported and exported goods and services by customs and excise. Read further on this page.
Editors
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