In this post, we provide the meaning and scope of commerce in Nigeria. We also discuss trade and differentiate between home and foreign trade.
MEANING OF COMMERCE
Commerce is a branch of production which is concerned with the distribution, exchange of goods and services and all activities which assist or facilitate trade. e.g. banking, insurance, transportation, communication, toursism etc. It is also the process of buying, selling and distributing goods and services.
The process of living involves three major activities which are production, consumption and exchange. The central focus of commerce is exchange. In a commercial sense, exchange would concentrate on the transfer of goods and services from their producers to the customers.
Commerce is therefore concerned with trade and activities which assist trade. These include the distribution of raw materials to manufacturers and finished products from the factory to the consumers. Commerce creates time and place utiiities. Commerce developed as a result of specialisation.
SCOPE OF COMMERCE
The scope of commerce may be seen as embracing the totality of all activities which ensure the distribution and exchange of goods and services for the satisfaction of the people. In all ramifications, commerce embraces trade and the ancillaries to trade.
Trade is one of the two main divisions of commerce. It is the most important aspect of commerce. Trade is the act of buying ahd selling of good and services. It is usually classified into two: Home trade and Foreign trade.
Home trade is a branch of commerce which comprises wholesaling (wholesale trade) and retailing (retail trade). Home trade is the act of buying and selling of goods and services within a geographical area of a nation. It can be referred to as domestic or internal trade. Goods are sold within the country, hence the same currency is used.
Wholesaling: Wholesaling is the process of buying goods in large quantity or bulk from the producers and making them available to the retailer in small quantities. The wholesaler, therefore serves as the intermediary between the producer and retailer.
Retailing: Retailing is concerned mainly with the buying of goods in small quantities from the wholesalers and making it available in units to the consumers. Retail trade is the business activity of selling goods and services to the final consumer. The retailer is the final link in the chain of distribution.
Foreign trade is the trade between nations. lt is the process of buying and selling of goods and services between two or more countries. Foreign trade which is also referred to as international trade can be bilateral or multilateral. it involves the use of different currencies. International trade is divided into export, import and entrepot.
Export: Export is the sale of goods (raw materials and finished goods) to other countries. The goods or services are paid for in foreign currencies. Export trade can be visible or invisible. eg. in Nigeria, cocoa and palm oil represent visible trade while invisible trade include banking, aviation etc.
Import: This is the act of buying of goods and services from other countries. Goods are imported either in response to direct orders or on consignment. lmport can be visible or invisible: Examples of imported goods in Nigeria include electronics, automobiles etc.
Entrepot: Entrepot is the process of importing goods and services for reexporting to other countries. It is also referred to as re-export trade.
DIFFERENCES BETWEEN HOME TRADE AND FOREIGN TRADE
While home trade involves the use of local currency, foreign trade uses foreign currencies. Trade occurs over short distances in home trade while trade occurs over long distance for foreign trade. Factors of production can be easily moved when dealing in home trade while they cannot be easily moved when dealing with foreign trade.
Finally, home trade occurs within a country while foreign trade occurs among countries.