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| AFRICABIZ
VOL 1 - ISSUES: 52 & 53
AUGUST
15 - OCTOBER 14, 2003
Previous
Issue
Editor: Dr. Bienvenu-Magloire
Quenum
Click here for contact & support console
| | A
WORD FROM THE EDITOR
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Dear visitor and international investor,
We
warmly welcome you, if this is
your first visit to Africabiz
Online - The ultimate newsletter
on trading and investing in 49
sub-Saharan African countries.
If you are a regular and faithful
reader, welcome back.
-
THIS DELIVERY STANDS FOR TWO ISSUES
AFRICABIZ Online's Editorial Team is taking one month break from September
1 to September 30. Therefore, this delivery covers two months: August 15 to September
14; and September 15 to October 14. The next issue N° 54 will be online on
October 15, 2003.
-
AFRICAN ENTREPRENEURS NEED TO MASTER INTERNATIONAL TRADE
INTRICACIES
50 years after African countries recovered their sovereignty, Africa is still
in the backyard of economic development as shown by its meager share (1-2%) of
the international trade.
Africa is simply a marginal participant
in the global trade. Why is it so?
It is always good to ask the right
question in order to finding the adequate solution. Nowadays, we read and hear
big powers' political leaders speak about "Trade And Not Aid"
to solve the developing gap in Africa. Good.
However, before you
sell anything, you have to produce it first. At competitive price and then find
buyers. That is where the solution starts. To
produce goods and services at competitive prices.
Once you find buyers, you need to act properly drafting efficient trading
document such as Letters Of Credit - L/C. You can easily kill the deal and lose
the hard-won client if your L/C is badly "structured".
THE NEED TO KNOW HOW TO DRAFT WINNING LETTERS OF CREDIT
Terms used in the L/C are paramount.
|
- Which company is in charge of the transportation of the goods to the buyer's
location?
- At which point of the transaction the exported or imported goods
are paid for by the purchaser?
- In which currency? |
Above
listed questions are vital for the success of the import or export transaction
and a L/C that does not properly address these questions could become a major
roadblock to successfully closing a deal.
Academic courses do not provide
the answers which are only harvested by seasoned practitioners of international
trading.
A UK's computer based training and e-learning company - Mantissa
- brings the adequate solutions right to your doorstep. Mantissa, devised
a course to teach you how to draft the perfect L/C and be a winner
With Mantissa's e-learning course you can work through the programme at times
that suit you without leaving your office desk. Training can be taken in short
spells of an hour or two, and can be repeated if necessary if skills need to be
brushed up.
THE NEED TO EFFICIENTLY USE
IMPORT AND EXPORT FINANCING TOOLS
Since the 1985's - the beginning
of the enforcement of the Structural Adjustment Program (SAP) by the IMF and the
World Bank - the so-called "globalization" of the economy took hold
of the entire world and tightened its grip
around sub-Saharan African countries fragile economies.
Sub-Saharan
African countries are forced to compete,
within the biased rules and regulations of the Uruguay Round / World Trade
Organization (WTO), against the heavyweights countries of Americas, Europe and
Asia. They are obliged, under SAP, to renounce to or alleviate any subvention
granted to their vital economic sectors (Utilities, agricultural products in particular),
while America and Europe continue to granting heavy financial subventions (billion
of US$) to the actors of similar economic sectors in their countries. (See Farm
Bill in the States and Common
Agricultural Policy - CAP - in The European Union).
Furthermore,
the selling prices of mineral and agricultural commodities produced by African
countries (Iron, copper, manganese, coffee, cocoa, cotton, tea, cashew nut. Etc.)
are under pressure from the "legal" trading speculation undertaken by
international investors acting under the powerful umbrella of bourses located
at Paris, Chicago, London, Amsterdam, Singapore.
In order to be in a
better position to compete against the heavily subsidized products from Europe
and America, African entrepreneurs need to get well acquainted with financial
tools available to import or export; that way they have more chance to minimizing
the costs of the transactions. The
highlighted and featured article of this delivery titled: How To Import
With No Money Down, by Shaun Beecham, gives leads.
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AFRICA MUST EMBRACE THE GENETICS REVOLUTION - PART 2
The Industrial Revolution took place without the participation of Africa, which
is striving now to be part of the Information Technology one.
Australian born Nobel Prize winner Professor Doherty said: "Double
helix is the shape of things to come...If we are to be responsible citizens, we
must all learn more about genetics."
It is then compulsory
that Africa becomes a player in the Genetics Revolution. To emulating emerging
countries like India and China, which understood the challenge and are taking
necessary steps not to be let aside. Otherwise, Africa will be let aside for good
and remain under the political, economic and social domination of western European
countries and the United States of America.
Last
delivery gave a brief about the history of the Genetics Revolution. Part 2
summarizes the reasons why Africa should not miss the Genetics Revolution. Click
here for more
-
Contributor's Guidelines are here
to review. Your contribution on "How African countries / entrepreneurs
could bridge the developing gap" is welcome.
Many thanks for dropping by and see you here on October
15, 2003. We are taking one month break from September 1 to September 30, 2003.
Dr.
B.M. Quenum
Editor
of AFRICABIZ
| | | |
BUSINESS
OPPORTUNITIES IN AFRICA
| |
-
Several business opportunities - component parts of the Integrated Developing Scheme described in Africans, Stop Being Poor! are listed in following table.
| a-
SHEA BUTTER (Issues 5, 6,
7, 11,
12, 13)
b- BLUE GOLD (Issues 14,
15, 16,
17, 18,
19)
c- FREEZE-DRIED
PAPAIN (Issues 20, 21,
22 and here)
d- KENAF (Issues 23,
24)
e- VEGETABLE OIL
(Issues 25, 26,
27 and 28)
f- CEREALS (Issues 30,
31, 32,
33)
g- FRUITS
(34, 35,
36, 37,
38, 39,
40, 42,
43, 44,
45, 46)
h- ESSENTIAL OILS (47,
48, 49,
50, 51)
| -
TROPICAL FLOWERS AND FRAGRANCE PLANTS AGRIBUSINESS AS INCOME
BUILDING POWER FOR AN AFRICAN COMMUNITY: PART
- V - INDUSTRIAL SCALE PRODUCTION OF GERANIUM, CITRONELLA AND LEMONGRASS ESSENTIAL
OILS - INVESTMENT DATA'S BRIEFS
Essential
oils are odorous products from natural raw materials such as leaves, fruits, roots
and wood of many seasonal or perennial plants. They are of complex composition
and contain alcohol, aldehydes, ketones, phenols, esters, ethers, and turpenes
in varying proportions. An estimated 3,000 essential oils exist of which around
300 are of commercial importance. Most of them obtained from agricultural plants,
but some 28 essential oils collected in commercial quantities from wild sources
Here is a short-list of essential
oils and the plants they originated from; with the main producing countries.
- WHY AFRICAN COUNTRIES SHOULD CONSIDER ESSENTIAL OILS INDUSTRY
The
size of essential oils' market exposed in Issue 47
averages US$ 8 billion export a year and increases at the annual rate of 10.9%.
Africa' share is less than 1% of that market. Doubtless, there is room
for Africa to have a better portion of the cake and kill two birds with one stone.
Indeed, most sub-Saharan African countries suffer recurrent drought, which
results in increasing desert territories. A well planned and carried out reforestation
policy is the answer to the problem. Trees species, which are raw material to
produce aromatic oils should be planted. The most promising speculations are
essential oils from: Geranium, Citronella, Lemongrass or Sweet calamus, Eucalyptus.
(See
Issue 47 for briefs about said plants)
In sub-Saharan African countries,
Malawi is the one country that
already has plantations of Eucalyptus (15,000 ha); Lemongrass (3,200 ha) and
Citronella (2,800 ha).
- PRODUCTION ESTIMATES OF MALAWI'S PLANTATIONS
In
Table below are reported the production's estimates of various essential oils
generated from plants available in Malawi.
| Plantations | Existing
ha | To
be used
ha | Raw
material
Metric Tons |
% Oil |
In MT | In
Liters | | Eucalyptus | 15,000
ha | 300 | 9,600 | 1% | 96 | 109,464 |
| Lemongrass | 3,200
ha | 300 | 7,000 | 0.4% | 28 | 32,000 |
| Citronella | 2,800
ha | 300 | 7,000 | 1% | 70 | 78,000 |
For more on facts, data and assumptions, which
are background to the figures listed in above table, click here
- INVESTMENT DATA BRIEFS ON AN INDUSTRIAL SCALE OPERATION TO PRODUCING ESSENTIAL
OILS
Let us consider an operation in Malawi to produce essential oils of Eucalyptus,
Lemongrass and Citronella as per the production's yelds above listed. Table below
summarizes the investment and operational costs and data:
| | Amount
(US$ x 1,000) | |
INVESTMENT
| | 1-
Land and buildings: Land acquisition - Plant (300 sq.
meter) - Offices (150 sq. meter) - Housing for management (3 x 100 sq. meter)
| 120
| |
2- Processing Equipment: Know How acquisition - Equipment
purchase and setup - Blank Startup Assistance (for three months) - Spare Parts
- Storage tanks - Cold room. Etc. |
220
| | 3-
Other Equipment: Offices equipment - Four 10 metric
tons trucks - Three four wheelers - Housing furniture. Etc.
| 50 |
| 4-
Starting expenses: Feasibility study / Business Plan
for the processing plant - startup technical assistance (for six months) Etc.
Click
here for tentative terms of references covering
production and investment planning by Dr. Quenum & Associates.
| 40
| |
Total
investment | 430 |
| FULL
CAPACITY YEARLY PRODUCTION LEVEL |
| Eucalyptus
= 109,464 liters |
| Lemongrass
= 32,000 liters |
| Citronella
= 78,000 liters |
| OPERATING
COSTS | |
Operational
Expenses: Raw material
purchasing - plantations managing - production costs: insurance - utilities -
staff and hands - management salaries - packaging - external management assistance
- amortization - interests on loan. Etc.
| 350 |
| PRODUCTION
COST PER LITER EX-WORKS |
| Global
production of 219,464 liters of essential oils: 350,000/ 219,464 | 1,595 |
| GENERATED
GROSS REVENUES* | | Eucalyptus:
109,464 x 3,9875 US $ | 436,488
| | Lemongrass:
32,000 x 4,785 US $ | 153,120 |
|
Citronella: 78,000 x 4,785 US $ | 373,320 |
| TOTAL
GROSS REVENUES | 962,928 |
| GROSS
PROFIT: Total Gross Revenues minus Operating Costs | 612,928 |
This
site gives an idea of the pricing of most used essential oils on the world's marketplace.
One can see that the selling prices listed in the Generated Gross Revenues' section
are far below the international prices - and the production shall remain highly
competitive after transport costs to port and harbor's taxes are added for Free
On Board (FOB) purposes.
The production of essential oils on an industrial
scale basis - in Africa and particularly in Malawi - is a high profit making operation.
Loans to establishing the business will be paid back easily in a short span of
time. Annual Gross Profit is twice Operating Costs. No doubt a more detailed Business
Plan will reveal positive Cash Flow allowing for a lucrative expansion drive.
Once an essential oil
industry set up in a sub-Saharan African country, it will open the way to develop
a large spectrum of economic activities in following sectors: foods, cosmetics,
detergent, pesticides, pharmaceuticals; etc.; and contribute to the Self-Inducing
And Accelerating Impact Factor or Synergetic
Impact Factor to speeding up the economic development of said country.
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