Investing in Quality Soap Production for Export
By Godwin Uba
The Federal Government in the early part of January 2004 released a list of products that will not be imported into this country.
Amongst these products is all types of soap (cosmetics) products, both laundry and bathing soap.
Those that are already into such business were given up to ninety (90) days to conclude the transaction.
With this development, investment in quality soap (both toilet & laundry) production that would serve the local market, as well as exported to other African nations is recommended to Nigerians.
Here the writer takes time to educate prospective investors on how to set up the project, taking into consideration the technical, marketing, financial and other factors implications of going into this project. For successfulness of the project there is need to talk about the management, since so many projects have failed because of negligence of importance of effective and efficient management.
Market Survey
Despite the downturn in the economy of the country, the demand for cosmetics by Nigerians has not changed as most Nigerian still put high premium not only in what they wear, but also in what they rob in their bodies, hairs and even fingers. As the standard of living of citizenry improves, their consumption habits changes and this affects their mode of dressing and even the type of cosmetics (soaps) they use.
In determination of the type of cosmetics they use, certain factors are put into consideration such as the availability of the products, quality and prices of the products.
Our market survey revealed that most of Nigerian businessmen have capitalized on the wrong habit of Nigeria love for foreign products to travel to Asian countries, such as Singapore, Malaysia, South Korea etc to produce and import into this country different types of soap, (both standard and substandard soap) perhaps at much reduced prices. These businessmen are after making huge money from their businesses without thinking of how to transfer such technologies into our beloved country. They have rather turned Nigeria into a dumping ground for all types of assorted soaps into the country.
It is pertinent to note that all the raw materials required for the production of any type of soap is available in Nigeria.
Even our local technology has grown to accommodate production of quality soap both toilet and laundry soap.
The most important thing the prospective investors require is to make sure that the project implementation is handled by experienced project consultant. This implies that the consultant handles the project from the feasibility stage to the implementation and marketing stage.
Product Ranges
From research carried out, Nigeria can conveniently produce any type of toilet & laundry soaps required by Nigeria populace. The raw materials and Technology are readily available and experienced manpower too.
Soap production is one of the manufacturing industries that can be established on a cottage, small, medium or large scale, depending on the investors' funds.
The technology and art of making soap has been with us for a very long time. It is only the technology that has improved globally, which Nigerian investors can as well imbibe.
Location
Soap producing factory whether laundry or toilet, can be set up in any part of the country.
One can conveniently set up a virile and dependable plant using locally manufactured machinery and equipment.
The raw materials are locally abundant in almost every part of the country.
Prospective investors will be advised on the best recommended producers of these machines within the country.
Alternatively, some foreign manufacturers of complete sets of the toilet & laundry soap making machines would be recommended to prospective investors.
Soap has a wide range of uses.
There is hardly any home or industry where soap is not used on daily basis. Also Glycerin, a byproduct recovered during soap production, commands very high commercial value as it is very useful in cosmetics and pharmaceutical formulations and in laboratories as re-agents.
The market for soap is wide.
Its consumption for personal hygiene and general cleanliness per household is rising and need not be over emphasized.
Nigeria's market is a very large one considering the population that grows everyday.
With the increase in population, there is a widening demandsupply gap.
As a result there becomes the need to establish more soap production plants in both rural and urban areas at the various levels of production to cater for the cleansing needs of various classes of consumers.
Apart from the big Nigeria markets, one can cash in on, the high demand from the neighboring countries (whose indigenes travel several kilometers to Nigeria to purchase their daily essentials) to embark on export, once the quality is good and price competitive. With the type of local raw materials available, Nigeria can provide high quality products that can even be exported to developed part of the world.
Plant and Machineries
The machines required to set up this plant are oil storage tanks & vessels, steam Generators, filter press, soap reactors, recovery vessels, drying machines, cooling frames, plodder, cutting tables, stamp, wrapper etc.
Plants of various sizes exist to produce 1500, 1600, 2200 metric tones of soap per annum.
The capacity of production will depend wholly on availability of funds and plant capacity chosen.
Raw Materials
The essential raw materials for soap production are animal fats or vegetable oil, chemicals including fragrances, wrapping materials and cartons.
These raw materials are 100% locally available. The local availability of raw materials, among other things, will ensure continuous production and profitability.
Production Technology
Modern soap production technology involves pre-treatment, saponification, graining and drying.
Details of the modern production processes would be discussed in detail in the feasibility studies.
The minimum number of workers required to carryout the above production depends wholly on the capacity chosen and on whether the proposed investor is interested in producing Bar or toilet soap or both.
Packaging
For attractive products, the most important thing is the packaging system adopted. The packaging must be carefully done, make sure that it is equal to or more attractive than the imported products.
Project Take Off Cost
From preliminary investment analysis conducted, the cost of setting the project will depend on the scale and type of machines to be used (whether imported or locally made machines).
In average, using locally made machines the cost is estimated at N7.2million as shown below.
The return on investment is very encouraging. The payback period is also very short depending on the production and marketing strategies adopted which will be treated in the feasibility studies.
The projected revenue, gross profit and cash flows are all encouraging too. Details will be shown on the report.
The good thing about this project is that it is one of the listed projects that the Bank of Industries is interested in funding.
Other financial institutions are also interested in funding this project, because it is one of the consumer goods that arevery marketable and lucrative.
For details on comprehensive & bankable feasibility studies, procurement & installations of strong and durable machines, packaging methods, export markets and funding arrangements, please contact the writer
Uba Godwin, Global Trust Ventures limited 56, Ishaga Road (1 st floor), Surulere, Lagos. Tel: 01 - 4721550, 08023664368
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