NIGERIA is the leading producer of Gum Arabic in West Africa. As well, it is the second largest world producer/exporter of Gum Arabic after Sudan. Gum Arabic (acacia senegalis) is a perennial tree found growing wild in large commercial quantity in the northern parts of Nigeria. However, when cultivated it takes about 5years to mature. At maturity, the tree when struck or pierced with sharp metal object like knife, oozes out whitish sticky sparkling substances. The raw gum command high commercial value both local and international. A research carried out by the Nigerian Export Promotion Council showed that the major Gum Arabic producing areas in Nigeria are Bornu and Yobe states. It is also being produced at lesser extent in Adamawa, Sokoto, Kano, Kaduna and Bauchi states. Of the total world supply of gum Arabic, Nigeria produces less than 30 per cent as Sudan produces about 70 per cent, leaving about 30 per cent for Nigeria and other gum Arabic producing countries of Mali, Senegal, Chad and Niger Republic. It is generally believed that Nigeria’s actual production of gum Arabic does not reflect her potentiality. Now that the government and people of Nigeria have shifted attention to commercial exploitation of non-oil exportable products, the gum Arabic industry in Nigeria is at the verge of challenging the near monopoly of Sudan in the world gum Arabic trade. According to records of the Nigerian Export Promotion Council (NEPC), there has been a significant growth in non-oil exports since 2004 from about 3 per cent that year to 8 per cent in 2005 and 24 per cent in 2006, and more than 40 per cent increase in 2007. In 2009, due to global economic meltdown, a significant fall in non-oil export was recorded. As at September 2009, the earnings from non-oil export was put at $1billion, down from the $1.8billion earned in the corresponding period of 2008. NEPC records also show that in 2009, 37 companies under the African Growth Opportunities Act (AGOA) scheme exported $37.5 million and 286,24.53 pounds worth of various products to the united states of America. This was about N48million less the amount that was accrued in the corresponding period of 2008 when a record of $86.5million was realized.
The project
The project is establishing gum Arabic processing plant capable of refining raw gum Arabic into powder and granules for export as well as for local market using the right modern technology. The project is best located near the source of raw material. The major raw material is raw gum Arabic which is available in different grades in northern Nigeria.The plant will process the raw gum Arabic to the required international trade standard. It will be capable of producing 10 tons of refined gum Arabic daily working for 300 days per annum employing 25 members of staff at the outset.
The industrial uses of gum Arabic, both locally and abroad are so much that despite the fact of Nigeria being the second largest exporter of gum Arabic in the world still records its importation into the country. The gum has binding or adhesive properties and as such is used as a good emulsifying agent. It is therefore most useful to pharmaceutical, food, and beverages flavourings, dairy and ice cream, cosmetics and the confectionary industry. Besides the increasing needs of this ever growing industries in the country, gum Arabic commands appreciating value in the international market. The major importing countries of gum Arabic are India, Japan, UK, France, Germany, Spain, Pakistan, Bangladesh, Italy, and China.
Process technology
The processing technology is relatively simple and involves the following: sorting, crushing, dispersion in water, purification or straining, precipitation, separation or centrifuging with alcohol. Drying, milling or spray granulation. The application of the right machinery in this process will yield a high grade (grade1) of the refined gum Arabic powder or granules capable of meeting the international trade grading standard.
Profitability
The project operating at the estimated installed capacity is capable of producing 3000 tons of gum Arabic powder per annum. Assuming conservative export price of $10,000per ton and the local sales prices of N150,000 per ton, annual turnover of N2.8billion can be recorded with export volume of 2000 metric tons of refined
Gum Arabic powder. A Strong positive profit figure after tax can be generated. Also a high internal rate of return due to the foreign exchange rate component of the export product is achievailable. A three year estimated pay back period for the project is guaranteed
Financing
The return on this project are quite attractive and impressive that no bank or financial institution with discerning credit officers will turn down any loan request for funding this project. Promoters of this venture will also feel comfortable to release their hard earned money to finance this project. Also, micro finance Banks across the country have all the necessary funding to assist entrepreneurs in this project. The bank of industry (BOI) as well is waiting for determined investors to present this type of project to them for sponsorship.
Project implementation
The successful implementation of this project begins with the preparation of detailed and bankable feasibility study report to ascertain the actual cost/benefit status of the project. Company registration with Corporate Affairs Commission, Nigeria Export Promotion Council, Standard Organization of Nigeria, National Food, Drug Administration and Control,etc. must be obtained. Acquisition of factory site, plant and machinery,and other fixed assets ensured. Staff recruitment and training, sourcing of raw materials, local and international market for the products established, then processing takes off.
Future growth minded investors are encouraged by the writer to engage in this profitable venture.
Project Cost Estimates N
Pre-investment expenses 300,000
Factory site 2,000,000
Plant & machinery 3,000,000
Furniture/Fitting 200,000
Motor vehicle 2,500,000
Working capital 500,000
Contingency 100,000
Total 8,600,000