A Feasibility Study And Viability Appraisal Pdf 1ql5p

University of Nigeria Author

Research Publications UCHE, Remigius Iheanacho

A Feasibility Study and Viability Appraisal of the Establishment of a Small Scale Soap Manufacturing Industry in Ahiazu Mbaise L. G A. Imo State

Business istration

Department

Faculty

Title

PG/MBA/93/18003

Signature

Date

Management

September, 1995

Alice Okore

Digitally signed by Alice Okore DN: CN = Alice Okore, C = NG, O = University of Nigeria, OU = Library Department Reason: I have reviewed this document Date: 2008.11.28 09:37:57 +01'00'

A F E A S I B I L I T Y S'TUDY AND V I A B I L I T Y A P P R A I S A L OF

THE E S T A B L i S H h E N T O F k S W L L SCALE S O A P

F i N U F A C T U K I N G INDUSTRY I N AHIAZU MBAISE L . G. A . I N 0 STATE.

UCHE

, REMI G I U S

IHEANACI-I0

PG/MBA/53/18003

DEPARTMENT OF MANAGEMENT SCHOOL O F P O S T GRADUATE S T U D I E S UNIVERSITY O F N I G E R I A ENUGU CAMPUS.

SEPTEMBER, 1Y95.

A F E A S I B I L I T Y STUDY AND V I A B I L I T Y A P P M I S A L O F THE ESTABLISHMENT O F A SMALL SCALE SOAP MANUFACTURING INDUSTRY I N AHIAZU MBAISE L . G.A. IMO S T A T E .

A P O S T GRADUATE P R O J E C T WORK CONDUCTED I N P A R T I A L FULFILMENT FOR THE AWARD O F MASTERS DEGREE I N B U S I N E S S A D M I N I S T R A T I O N (MBN

UCHE

,

R E M I G I U S IHEANACHO

PG/MBA/93/18003

DEPARTMENT O F MANAGEMENT SCHOOL O F P O S T GRADUATE S T U D I E S UNIVERSITY O F NIGERIA ENUGU CAMPUS. SEPTEMBER, 1 9 9 5 .

CERTIFICATION

UCHE REMIGIUS IHEANACHO, a p o s t g r a d u a t e s t u d e n t i n t h e I

Department of Management w i t h r e g i s t r a t i o n number, PG/MBA/93/18003 h a s s a t i s f a c t o r i l y completed t h e r e q u i r e m e n t s f o r c o u r s e and r e s e a r c h work f o r d e g r e e of

asters

I n B u s i n e s s A d m i n i s t r a t i o n (MBA)

i n Management. The work embodGd i n t h i s p r o j e c t r e p o r t i s o r i g i n a l and h a s n o t been s'ubmitted i n p a r t ' o f f u l l f o r any o t h e r diploma o r d e g r e e of t h i s o r any o t h e r U n i v e r s i t y .

PROF. EJU. 5 1

SUPERVISOR.

L . IMAGA

DEDICATION

T h i s work i s d e d i c a t e d t o God Almighty t o Whom what 1 am and

what 1 hope t o be 1 owe.

ACKNOWLEDGEMENT

The r e a l i s a t i o n o f e v e r y a m b i t i o n i s a f u n c t i o n o f s e v e r a l i n d i s p e n s a b l e f a c t o r s , b o t h human and m a t e r i a l . A s i t h a s become a t r a d i t i o n t o show a p p r e c i a t i o n when-

e v e r one r e c e i v e s any goodwill o r b l e s s i n g i n t h e c o u r s e o f a c h i e v i n g ones a m b i t i o n , 1 wish t o acknowledge t h e e f f o r t s and c o n t r i b u t i o n s o f s e v e r a l i n d i v i d u a l s who made p o s s i b l e , t h e s u c c e s s f u l c o m p l e t i o n o f t h i s work. I w i l l s t a r t by g i v i n g s p e c i a l t h a n k s and p r a i s e s

t o God Almighty f o r H i s goodness and m e r c i e s u n t o me i n the realisation of t h i s singular objectiveI wish a l s o t o e x p r e s s my p r o f o u n d g r a t i t u d e t o my

S u p e r v i s o r and Dean F a c u l t y o f B u s i n e s s A d m i n i s t r a t i o n , D r E.U.L.

Imaga who i n s p i t e of h i s numerous a d m i n i s t r a t i v e ,

academic and p r i v a t e engagements made t h e s u c c e s s f u l completion of t h i s p r o j e c t p o s s i b l e through h i s constant u s e f u l a d v i c e , s u p e r v i s i o n and c o r r e c t i o n s .

H i s contribu-

t i o n s h e l p e d immensely i n a c h i e v i n g t h e d e s i r e d q u a l i t y and s t a n d a r d . I a l s o e x p r e s s my s i n c e r e t h a n k s t o my p a r e n t s , M r and Mrs H.I.Uche,

my b r o t h e r s , C h a r l e s , Obinna, Tony,

A u s t i n , my S i s t e r s S t e l l a and Chinwe f o r b e i n g s o n i c e t o me always.

L e t me a t t h i s j u n c t u r e pay s p e c i a l t r i b u t e t o my j e w e l o f i n e s t i m a b l e v a l u e , Onyinyechi Marian f o r r e m a i n i n g s t e a d f a s t , c a r i n g and l o v i n g t h r o u g h o u t t h e trying periods.

I commend h e r f o r h e r c o n s i s t e n c y and

p e r s e v e r a n c e d e s p i t e a l l odds and p r a y t h a t God w i l l grant h e r t h e opportunity t o reap t h e f r u i t of her labour. I w i s h a l s o t o i n a s p e c i a l way some one ,

who h a s - been s o n i c e t o me, a f r i e n d i n d e e d , a m o t i v a t o r , i n s p i r a t o r and mover o f men, C h i e f D.I.C. Amadi who t h r o u g h h i s numerous f i n a n c i a l c o n t r i b u t i o n s made v e r y p o s s i b l e t h e s u c c e s s f u l completion o f t h e p r o j e c t i n p a r t i c u l a r and t h e programme a s a whole.

Words a r e n o t

enough t o e x p r e s s my s i n c e r e t h a n k s and a p p r e c i a t i o n t o him b u t p r a y t h e Almighty God t o c o n t i n u e t o b l e s s him abundantly.

I am a l s o i n d e b t e d t o t h e f a m i l i e s o f Nze and Lolo M.O.Anyanwu and M r and Mrs C h r i s Okechukwu f o r b e i n g s u c h wonderful f a m i l i e s .

God w i l l c o n t i n u e t o b l e s s you a l l .

My s i n c e r e t h a n k s a n d a p p r e c i a t i o n a l s o go t o my c o l l e a g u e s i n t h e F i n a n c e Department, M r P h i l i p ugwfi and Chukwuma N n a j i f o r t h e i r c o n t r i b u t i o n s i n t h e f i n a n c i a l analysis aspect of t h i s project.

I rem&er a l s o i n a s p e c i a l way t h e f o l l o w i n g p e o p l e , \

P e t e r Eke, Law Onuoha, Alex Brown, Eddy H i l l y Okoro,

Dickson Oyovwi, Joseph Akpaka (Big J o e ) , C h i d i Onyemelukwe, Ken Opara, J . C . Anene, W i l l y

Njoku ( E v e r g r e e n ) ,

Uwazie Anyanwu, P a s c h a l Nj oku,Ben Obasi , Udensi Orj i and a h o s t o f o t h e r s f o r b e i n g so n i c e t o me. To a l l t h e s e people and o t h e r s n o t mentioned h e r e who c o n t r i b u t e d i n one way o r t h e o t h e r towards t h e r e a l i s a t i o n of t h i s o b j e c t i v e , 1 s a y t h a n k s a m i l l i o n t i m e s and God b l e s s .

REMIGIUS I . UCHE SEPTEMBER, 1995.

ABSTRACT The need f o r , p r o j e c t o r investment a p p r a i s a l a r i s e s from t h e s c a r c i t y o f r m f Q s w h i c h i s a t t h e r o o t of most o r g a n i s a t i o n a l d e c i s i o n s .

The a t t a i n m e n t o f

.

organisational objectives is a process involving t h e a l l o c a t i o n o f r e s o u r c e s between money s p e n t i n one way t o b e t t e r a c h i e v e one o b j e c t i v e and t h a t s p e n t i n a n o t h e r t o achieve another objective.

Once t h i s b a s i c concept

of resource a l l o c a t i o n i s understood t h e essence of p r o j e c t e v a l u a t i o n can t h e n be a p p r e c i a t e d . S i n c e r e s o u r c e s a r e s c a r c e and l i m i t e d , t h e y must be p u t t o t h e most e f f e c t i v e u s e .

The purpose of

p r o j e c t a n a l y s i s i s t o a c h i e v e t h i s end by making a s s u r e as t h e c i r s u m s t a n c e s p e r m i t t h a t t h e p r o j e c t i s t e c h n i c a l l y sound, t h a t i t w i l l p r o v i d e a r e a s o n a b l e economic and where a p p r o p r i a t e , f i n a n c i a l r e t u r n , t h a t i t s o b j e c t i v e can be achieved i n some l e s s c o s t l y way. A

T h i s ~ o r k ~ t h e ~ e f oaimed r e , a t e s t a b l i s h i n g t.he t e c h n i c a l f e a s i b i l i t y , economic v i a b i l i t y and s o c i a l p r o f i t a b i l i t y of e s t a b l i s h i n g a s m a l l s c a l e soap m a n u f a c t u r i n g i n d u s t r y i n Ahiazu Mbaise Local Government Area, Imo S t a t e .

In

pursuance o f t h i s o b j e c t i v e , b o t h secondary and primary d a t a were used.

The primary d a t a i n v b l v e d t h e u s e o f

r e s e a r c h q u e s t i o n a i r e s mainly t o determine t h e m a r k e t a b i l i t y

and a c c e p t a b i l i t y o f t h e p r o p o s e d p r o d u c t i n t h e a r e a . Also f i e l d surveyswere c a r r i e d out t o determine t h e s u i t a b i l i t y of t h e l o c a t i o n a l s i t e i n of a c c e s s i b i l i t y and a v a i l a b i l i t y o f t h e n e e d e d raw m a t e r i a l s and u t i l i t i e s .

Secondary d a t a covered t h e review o f

r e l a t e d l i t e r a t u r e on t h e i s s u e . I t is p e r t i n e n t t o note t h a t t h e United Nations I l n d u s l r i a l ~ ~ D e v e l o p m e notr g a n i s a t i o n (UNIDO) f o r m a t o f p r e s e n t i n g f e a s i b i l i t y r e p o r t s was a d o p t e d i n t h i s t e x t . T h i s e n t a i l e d t h e market s t u d y and a n a l y s i s , m a t e r i a l s i n p u t , l o c a t i o n and s i t e , p r o j e c t e n g i n e e r i n g i n v o l v i n g t h e machinery and equipment and t h e t e c h n o l o g y and

-.

p r o d u c t i o n p r o c e s s , manpower r e q u i r e m e n t s , f i n a n c i a l and economic a n a l y s i s i n v o l v i n g t h e d e t e r m i n a t i o n o f t h e t o t a l p r o j e c t c o s t , p r o j e c t e d income s t a t e m e n t , p r o j e c t e d c a s h f l o w , b a l a n c e s h e e t , r e t u r n on i n v e s t m e n t , payback p e r i o d e t c . F i n a l l y , f a r r e a c h i n g recommendations were made on t h e r e a l i s a t i o n o f t h e s t u d y o b j e c t i v e b a s e d on t h e r e s e a r c h problems and f i n d i n g s i n t h e a r e a o f implementation.

-

T A B L E OF CONTENTS

PAGE

.-

Certification

i

ljedicat ion

ii

Acknowledgement

iii

Abstract

iv

T a b l e o f Conten*

v

L i s t Of T a b l e s

vi

L i s t . Of F i g u r e s

vii

..

CHAPTER ONE Introduction S t a t e m e n t Of Problems S t a t e m e n t Of O b j e c t i v e s / P u r p o s e Of S t u d y S i g n i f i c a n c e O f Study Methodology Scope Of S t u d y Background I n f o r m a t i o n On S t u d y Area D e f i n i t i o n Of Key CHAPTER TWO

REVIEW OF RELATED - LITERATURE Concept Of F e a s i b i l i t y And V i a b i l i t y A p p r a i s a l

12-14

Feasibility Indicators

14-19

The Need For F e a s i b i l i t y And V i a b i l i t y A p p r a i s a l

20-21

F e a s i b i l i t y j v i a b i l i t y Appraisal Process

21-23

S t a g e s Of P r o j e c t F e a s i b i l i t y A n a l y s i s

23-28

I

1

1

!

2.6

A s s e s s i n g The D e s i r a b i l i t y Of An I n v e s t m e n t

2.7

B r i e f H i s t o r y O f E a r l y Soap Making

2.8

Soap I n d u s t r y I n N i g e r i a

2.9

Problems F a c i n g Local Manufacture Of Soap I n ' Nigeria

2.10

N i g e r i a ' s Raw M a t e r i a l s P o t e n t i a l For Soap Production

2 . il

I m p o r t a n c e Of Small S c a l e E n t e r p r i s e

2.12

Problems O f Small B u s i n e s s E n t e r p r i s e s I n N i eria References CHAPTER THREE

3.0

RESEARCH -

METHODOLOGY

3 . 1 . 1 Freambie 3.12

R e s e a r c h Design

3 . 1 . 3 D a ' t i i S e l e c t i o n / S o u r c e s Of Date 5.1.4 Sample S i z e And P r o c e d u r e s 3.1.4.1 Piiot Sample 3 . 1 . 5 Sampl.ing Method 3 . 1 . 6 N a t u r e Of Data Anajkysis 3.17

R e l i a b i l i t y Of Data

References CHAPTER FOUR -4.0

DATA PRESENTATION AND ANALYSIS

4.1

Data P r e s e n t a t i o n

4.2

Data A n a l y s i s

-CHAPTEK

FIVE

THE FEASIBILITY STUDY A N D APPRAISAL %PORT

P r o j e c t Summary And Recommendations Preamble P r o j e c t Background/History Market And P l a n t C a p a c i t y M a t e r i a l s And I n p u t s L o c a t i o n And S i t e P r o j e c t Engineering P l a n t O r g a n i s a t i o n And Overhead Cost Manpower Requirement Implementat i o n Schedula i n g 5.10

F i n a n c i a l And Economic E v a l u a t i o n

5.11

Social Benefit Effect

6.0

CHAPTER SIX

6.1

Summary Of F i n d i n g s And C o n c l u s i o n Appendix Bibliography

PAGE

LIST OF TABLES

.

,

.4.1-4.7

A n a l y s i s Of R e s e a r c h Q u e s t i o n a i r e s

51-62

5.1

E s t i m a t e d C o s t Of Annual ... Raw M a t e r i a i s

81

5.2

M a c h i n e r y And Equipment

88

5.5

P r o p o s e d S c h e d u l e Of P r o d u c t i o n

97

5.4

R e q u i r e d . I n d u s t r i a l Land A r e a

100

5.5

Overhead C o s t R e q u i r e m e n t (Annual)

103

5.6

Manpower R e q u i r e m e n t , C o s t F o r e c a s t

107

5.7

F o r e c a s t O f P r o j e c t lmplement&ion Schedule

109

5.8

Working C a p i t a l E s t i m a t e

110

5.9

E s t i m a t e O f T o t a l I n i t i a l P r o j e c t Cost

112

5.10

E s t i m a t e d I n t e r e s t s And Bank C h a r g e s

115

5.11

F o r e c a s t Annual D e p r e c i a t i o n

116

5.12

F o r e c a s t P r o f i t And L o s s

5.13

F o r e c a s t O f Cash Flow P r o j e c t i o n s

5.14

Balance Sheet P r o j e c t i o n s

5.15

Rayback P e r i o d

Cost Requirement

,

LIST OF FIGURES

'

2.1

P r o j e c t F e a s i b i l i t y A n a l y s i s Flow C h a r t

5.1

D i s t r i b u t i o n Channel

5.2

Recommended i n v e n t o r y C o n t r o l Card

5.3

K e t t l e For Soap Making

5.4

b a t c h R e a c t o r For Soap -Making

5.5

P r o d u c t i o n Flow C h a r t

5.6

P l a n t Layout

b.

7

Organisational Structure

24A

CHAPTER ONE 1.1

INTRODUCTION

One o f t h e problems o f a s u c c e s s f u l i n d u s t r i a l i s a t i o n i n developing c o u n t r i e s i s undoubtedly, t h e l a c k o f knowledge o f how t o f o r m u l a t e a p r o j e c t i n s u c h a way t h a t f t s p o t e n t i a l p r o f i t a b i l i t y e i t h e r from t h e p u b l i c o r p r i v a t e view p o i n t can be e s t i m a t e d on a f i r m b a s i s . A p r o j e c t p a s s e s t h r o u g h many p h a s e s from t h e t i m e

it is f i r s t identified as potentially attractive u n t i l

i t goes i n t o o p e r a t i o n .

Thus, p r o j e c t s which a r e t h e

p r o p o s e d s o l u t i o n s t o problems go from one p h a s e t o a n o t h e r a s t h e y e v o l v e from i d e a t o f r u i t i o n .

A t any o f t h e

v a r i o u s p h a s e s , t h e t e c h n i q u e s o f p r o j e c t a p p r a i s a l s can be a p p l i e d

t o s e e w h e t h e r some a s p e c t s have been o v e r -

l o o k e d , w h e t h e r some more a t t r a c t i v e a l t e r n a t i v e h a s been d e v e l o p e d , o r w h e t h e r more d e t a i l e d c a l c u l a t i o n o f t h e c o s t s and b e n e f i t s t h a n were p o s s i b l e e a r l i e r have made t h e p r o j e c t l e s s d e s i r a b l e t h a n ' i t a p p e a r e d i n t h e f i r s t place. P r o j e c t a n a l y s i s c o n s t i t u t e s an i m p o r t a n t a s p e c t o f investment d e c i s i o n process. two t y p e s o f q u e s t i o n s .

I t s scope i s l i m i t e d t o

F i r s t l y , it should h e l p decide

if

i t i s p r a c t i c a b l e and worth w h i l e committing r e s o u r c e s

t o a p r o j e c t . S e c o n d l y i t s h o u l d a s s i s t i n d e t e r m i n i n g which among. a group o f p r o j e c t s t o s e l e c t .

project analysis

2

has;, two b a s i c dimensions.

F i r s t l y , t h e assessment of

t h e chances o f i t s . s u c c e s s f u l i m p l e m e n t a t i o n and second1.y a p p r a i s a l . o f t h e c o n t r i b u t i o n of t h e p r o j e c t t o g i v e n goals.

These two a s p e c t s a r e r e f e r e d t o a s f e a s i b i l i t y

and v i a b i l i t y a p p r a i s a l . F e a s i b i l i t y a p p r a i s a l i s concerned w i t h p r a c t i c ' a b i l i t y , whereas v i a b i l i t y r e f e r s t o t h e w o r t h w h i l e n e s s of t h e p r o j e c t

.

The need f o r p r o j e c t o r i n v e s t m e n t a n a l y s i s a r i s e s from t h e s c a r c i t y o f r e s o u r c e s which i s a t t h e r o o t o f most o r g a n i s a t i o n a l d e c i s i o n s .

The a t t a i n m e n t o f

organisational objectives is a process involving the a l l o c a t i o n o f r e s o u r c e s between money s p e n t i n 'we way t o b e t t e r a c h i e v e one o b j e c t i v e and t h a t s p e n t i n a n o t h e r way t o a c h i e v e a n o t h e r o b j e c t i v e .

Once t h i s

b a s i c c o n c e p t of r e s o u r c e a l l o c a t i o n i s u n d e r s t o o d , t h e e s s e n c e o f p r o j e c t e v a l u a t i o n c a n t h e n be a p p r e c i a t e d . Since

r e s o u r c e s a r e l i m i t e d , t h e y must be p u t

t o t h e most e f f e c t i v e u s e s .

The pupose o f p r o j e c t

a n a l y s i s i s t o a c h i e v e t h i s end by making a s s u r e a s t h e circumstances permit t h a t t h e p r o j e c t i s t e c h n i c a l l y sound, t h a t i t w i l l p r o v i d e a r e a s o n a b l e economic a n d , where a p p r o p r i a t e f i n a n c i a l r e t u r n , t h a t i t s o b j e c t i v e c a n n o t be a c h i e v e d i n some l e s s c o s t l y way, and t h a t i t f i r s i n with t h e o v e r a l l o b j e c t i v e s of t h e organisation.

Having c o n s i d e r e d t h e v e r y i m p o r t a n c e o f s o a p t o v i r t u a l l y every household i n t h e i r d a i l y washing, l a u n d r i n g and b a t h i n g and t h e economic and f i n a n c i a l b e n e f i t s o f s e t t i n g up s m a l l s c a l e i n d u s t r i e s i n o u r r u r a l a r e a s , t h i s s t u d y h a s beon c h o s e n t o d e t e r m i n e and a s c e r t a i n t h e t e c h n i c a l f e a s i b i l i t y , economic v i a b i l i t y and s o c i a l p r o f i t a b i l i t y o f e s t a b l i s h i n g a small s c a l e s o a p m a n u f a c t u r i n g i n d u s t r y i n Ahiazu Mbaise L o c a l Government Area o f Imo S t a t e . 1.2

-STATEMENT OF PROBLEMS

Many l a r g e and s m a l l s c a l e i n d u s t r i a l ' i n v e s t o r s and o p e r a t o r s f a i l t o r e a l i s e t h e i r o b j e c t i v e s b e c a u s e no p r o p e r f e a s i b i l i t y and v i a b i l i t y s t u d i e s were c a r r i e d out.

Some o f t h e s e p r o j e c t s e s p e c i a l l y s m a l l s c a l e

i n d u s t r i e s were j u s t embarked upon b e c a u s e o p e r a t o r s f e e l t h e r e i s market' demand f o r t h e p r o d u c t s and t h e y c o u l d g e t enough f u n d t o e x e c u t e - ? t h e p r o j e c t .

Eventually,

many o f t h e s e v e n t u r e s a r e a b a n d o n e d l a f t e r p l u n g i n g i n huge amount o f money. A p a r t from t h e p r o b l e m s i n h e r e n t i n t h e f o r e c a s t s o f f u t u r e c o s t s and b e n e f i t s ,

t h e major source

o f wrong d e c i s i o n s i n p r o j e c t management and e x e c u t i o n a r e t r a c e a b l e back t o t h e f a i l u r e t o a t t a c h r e c o g n i t i o n t o t h e i m p o r t a n c e o f b o t h f e a s i b i l i t y and v i a b i l i t y

appraisals.

Some d e v e l o p e r s Q r p r o m o t e r s , o u t o f

s h e e r i g n o r a n c e o r o v e r optiinism assume f e a s i b i l i t y o f a p r o j e c t and p r o c e e d t o s e e k t o e s t a b l i s h v i a b i l i t y o n l y t o f i n d o u t , a f t e r l a b o u r o u s , t i m e consuming o r c o s t l y e x e r c i s e s t h a t tIje9- h a v e n o t g i v e n any o r

'

s u f f i c i e n t t h o u g h t t o f e a s i b i l i t y and a s a r e s u l t f i n d themselves plunged i n t o s i g n i f i c a n t l o s s e s o r c a t a s t r o phic results,

some e s p e c i a l l y t h o s e who h a v e t h e money

may assume c o m p l e t e f e a s i b i l i t y and p r o c e e d w i t h t h e rosy expectation of v i a b i l i t y .

They e i t h e r make

incompetent and d i s t o r t e d v i a b i l i t y a p p r a i s a l t h e r e b y

.

missing t h e opportunity of doing b e t t e r w i t h t h e funds a v a i l a b l e , o r r u n up a g a i n s t l e g a l o r t e c h n o l o b l ~ a l o b s t a c l e s orexceed t h e time permitted t o execute t h e project.

Some may have b l u r r e d view o f b o t h f e a s i b i l i t y

and v i a b i l i t y a p p r a i s a l b u t a r e i n f a c t n o t c o m p e t e n t t o c a r r y o u t p r o p e r f e a s i b i l i t y and v i a b i l i t y a p p r a i s a l s . They n o n e t h e l e s s , p r o c e e d w i t h o u t making u s e o f compet e n t p r o f e s s i o n a l s e r v i c e s and i n s o d o i n g t h e y p a y a v e r y heavy p e n a l t y i n c u r r i n g d e v a s t a t i n g l o s s e s o r i n a dequate r e t u r n s . 1.3

STATEMENT OF OBJECTIVES/PURPOSE OF STUDY -. The f u n d a m e n t a l o b j e c t i v e o f t h i s f e a s i b i l i t y s t u d y

i s t o a s c e r t a i n t h e t e c h n i c a l f e a s i b i l i t y , . economic v i a b i l i t y and s o c i a l p r o f i t a b i l i t y of e s t a b l i s h i n g a

t

I,

s m a l l s c a l e s o a p m a n u f a c t u r i n g i n d u s t r y i n Ahiazu Mbaise L.G.A.

of Pmo S t a t e . a d d i t i o n t o t h i s , o t h e r o b j e c t i v e s include: To d e m o n s t r a t e t h e r o l e o f f e a s i b i l i t y s t u d y and

v i a b i l i t y a p p r a i s a l i n d e c i s i o n making i n i n d u s t r i a l projects. To c r e a t e a w a r e n e s s on t h e n e e d f o r f e a s i b i l i t y and v i a b i l i t y a p p r a i s a l on t h e e s t a b l i s h m e n t o f s m a l l s c a l e i n d u s t r i a l p r o j e c t s which h a s been g i v e n l i t t l e o r n o attention in the past. To i l l u s t r a t e t h e p r i n c i p l e and a p p l i c a t i o n ? o f f e a s i b i l i t y and v i a b i l i t y s t u d y i n s m a l l s c a l e i n d u s t r i a l projects. F i n a l l y , t o make recommendations b a s e d *on f i n d i n g s from t h e s t u d y on f u t u r e i n d u s t r i a l p r o j e c t i n v e s t m e n t , devel.oment o r e s t a b l i s m e n t . 1.4

SIGNIFICANCE OFSTUDY This study has f a r reaching s i g n i f i c a n c e t o both

i n v e s t o r s and d e v e l o p e r s o f i n d u s t r i a l p r o j e c t s e s p e c i a l l y small s c a l e i n d u s t r i a l p r o j e c t promoters. I t w i l l b r i n g t o f o r e t h e d e s i r e d need f o r p r o p e r

f e a s i b i l i t y and v i a b i l i t y a p p r a i s a l b e f o r e t a k i n g i n v e s t m e n t d e c i s i o n s i n f u t u r e t o a v o i d embarking on w a s t e f u l v e n t u r e s e s p e c i a l l y i n a r e c e s s i v e economy l i k e ours.

I n t h e academic f i e l d , i t i s i n t e n d e d t o s e r v e a s a r e f e r e n c e work t o s t u d e n t s i n t e n d i n g t o embark on r e s e a r c h s t u d y i n t h i s a r e a i n f u t u r e . 1.5

METHODOLOGY The methodology f o r t h i s s t u d y w i l l b e d e s i g n e d

and e l a b o r a t e d u s i n g q u e s t i o n a i r e , o b s e r v a t i o n , o r a l i n t e r v i e w , r e v i e w o f r e l a t e d works i n t h e p a s t . Also t h e s t u d y o f m a r k e t a n a l y s i s and a p p l i c a t i o n o f various techniques t o quantify t h e v i a b i l i t y w i l l help i n making t h e r e s e a r c h more s u c c e s s f u l .

The a n a l y s i s

d e r i v e d from d a t a c o l l e c t e d w i l l b e u s e d i n d e t e r m i n i n g how f e a s i b l e and v i a b l e t h e p r o j e c t w i l l b e . Data c o l l e c t i o n w i l l b e t h r o u g h b o t h p r i m a r y and secondary sources.

Primary d a t a w i l l include use of

q u e s t i o n a i r e s on p o t e n t i a l c o n s u m e r s , o r a l i n t e r v i e w and f i e l d s u r v e y o f t h e l o c a t i o n a l s i t e .

While s e c o n d a r y

d a t a w i l l b e c o l l e c t e d from r e l a t e d l i t e r a t u r e s , b o o k s , magazines newspapers and p a s t r e s e a r c h works on t h e area of study. 1.6

SCOPE OF STUDY This study i s concerned s t r i c t l y with t h e f e a s i b i -

l i t y and v i a b i l i t y a p p r a i s a l o f e s t a b l i s h i n g a s m a l l s c a l e s o a p m a n u f a c t u r i n g i n d u s t r y i n Ahiazu Mbaise L . G. A , Imo S t a t e .

The s t u d y i s i n t e n d e d t o r e v o l v e a r o u n d t h e

7

t e c h n i c a l f e a s i b i l i t y economic v i a b i l i t y and s o c i a 3 p r c f i t a b i l i t y of e s t a b l i s h i n g t h e small s c a l e industry. For t h e purpose of t h i s s t u d y t h e r e s e a r c h w i l l c o v e r mainly consumers i n t h e Local Governemnt Area w h i l e t h e p r o d u c t proposed f o r t h e i n d u s t r y w i l l e x t e n d beyond t h e study area.

I t w i l l a l s o make recommendations

based on i t s f i n d i n g s on s m a l l s c a l e i n d u s t r i a l p r o j e c t establishment i n future. 1.7

BACKGROUND INFORMATION OF STUDY AREA

BACKGROUND

The Ahiazu Mbaise Local Government Area was c r e a t e d i n 1 9 7 6 by t h e f u s i o n o f Ahiara and Ekwerazu c l a n s o f t h e former Mbaise Local Government Area. There a r e f o u r t e e n autonomous communities i n t h e a r e a , e i g h t i n Ahiara and s i x i n EKwerazu. LOCATION Ahiazu Mbaise Local Government Area i s bounded on t h e n o r t h by t.he I s i a l a Mbhno and Ehime Mbano Local Government A r e a s ; on t h e e a s t by I h i t t e Uboma and Obowo Local Government Areas.

The a d m i n i s t r a t i v e h e a d q u a r t e r s

i s l o c a t e d a t Afor Oru. POPULATION AND SIZE The Local government a r e a c o v e r s an a r e a o f a p p r o x i mately one hundred and seven (107) s q u a r e lcil.ometers,

8 and a c c o r d i n g t o t h e 1991 c e n s u s h a s a p o p u l a t i o n o f one hundred and f o r t y s e v e n t h o u s a n d (147,000) i n h a b i tants.

'l'his f i g u r e i s however n o t a r e f l e c t i o n o f t h e

t o t a l number o f p e o p l e i n Ahaizu Mbaise L . G . A ,

since a

l a r g e p r o p o r t i o n o f t h e i n d i g e n e s were r e s i d i n g o u t s i d e t h e l o c a l governma$. a r e a a t t h e t i m e o f t h e c e n s u s . The t r u e p o p u l a t i o n i s i n r h e neighbournood o f two hundred and f o r t y t h o u s a n d (240,000) b a s e d on a 2 . 5 % annual growth r a t e o f t h e 1963 c e n s u s of 118,080. ECONOMY

AGKI CULTURE : A m a j o r i t y o f t h e p e o p l e o f t h i s l o c a l government

a r e a a r e s u b s i s t e n t farmers.

Their products include

palm o i i , palm k e r n e l , c a s s a v a and a l l i e d p r o d u c t s e t c . The l o c a l government a d m i n i s t r a t i o n h a s an a g r o - b a s e d s e r v i . g s c e n t r e a t t h e h e a d q u a r t e r s which servtis a s a d e p o t f o r d i s t r i b u t i o n o f proved s e e d s , s e e d l i n g s , f e r t i l i zers etc.

The a d m i n i s t r a t i o n m a i n t a i n s a f i f t e e n h e c t a r e

d e m o n s t r a t i o n farm a t I h i t t e Ubi.

Ahiazu i s b l e s s e d w i t h

l a r g e number o f . p r i v a t e f a r m e r s who a r e s p e c i a l i z e d i n

.

p a h p i a n t a t i o n , p o u l t r y farmers e t c . INDUSTRIES : Ahiazu i s a r u r a l cum i n d u s t r i a l c e n t r e .

A number

o f i n d u s t r i e s o p e r a t e a t d i f f e r e n t communities i n t h e a r e a .

9

Prominent among them a r e D a n a i l s I n d u s t r i e s , and C a s s a P a p e r M i l l s a t ogb'e A h i a r a , Dona Motors a t (.:Eke A h i a r a , Barnax E n g i n e e r i n g Company Ltd a t I h i t t e a f o r u k w u and S e p t a Shoe I n d u s t r y a t O k i r i k a Nweke.

There i s a l s o a

'-.

s o a p and c a n d l e i n d u s t r y i n t h e 2 o c a l . government and t h e e x p l o r a t i o n o f t h e p o s s i b i l i t y o f s e t t i n g up a s p r i n g w a t e r b o t t l i n g i n d u s t r y - - b a s e d on t h e w a t e r from t h e famous Lake Nwaegbeneru at.Umununo I h i t t e a f o r u k w u . P r o p o s a l s have a l s o been completed f o r t h e e s t a b l i s h m e n t o f more a g r o - b a s e d i n d u s t r i e s i n t h e a r e a . COMMERCE :

/

Many i n d i g e n e s o f Ahiazu L . G . A

a r e migrant business-

men and workers and r e s i d e o u t s i d e t h e l o c a l government I

area.

They l i v e and do t h e i r b u s i n e s s i n b i g c i t i e s

o u t s i d e t h e s t a t e and even o u t s i d e t h e c o u n t r y s u c h p e o p l e r e t u r n t h e i r e a r n i n g s t o Ahiazu and have been i n s t r u m e n t a l i n o p e n i n g up c o t t a g e i n d u s t r i e s , s u p e r ,

m a r k e t s and o t h e r b u s i n e s s v e n t u r e s which a r e now transfbrming Ahiazu L.G.A.

i n t o an i n d u s t r i a l n e r v e

centre of the s t a t e . The l o c a l government a d d i n i s t r a t i o n h a s embarked on t h e development o f t h r e e r e g i o n a l m a r k e t s namely:Afor-Oru, Afor-Ogbe and Nkwoala Umuokirika.

The f i r s t

two have been d e v e l o p e d a t a c o s t o f 4yer N 2 . 3 m i l l i - o n .

10 The t h i r d . i s y e t t o be b r o u g h t t o t h e s t a t e o f t h e o t h e r two.

There a r e a l s o o t h e r b i g markets i n

d i f f e r e n t p a r t s 6 f t h e l o c a l government a r e a . The c o - o p e r a t i v e and Commerce Bank and t h e P r o g r e s s Bank PLC a r e , t h e two Commercial Banks t h a t o p e r a t e there presently.

There a r e a l s o f o u r community banks

l o c a t e d a t Afor-Oru, Afor-Ogbe) Umuokirika and Mpam which r e n d e r f i n a n c i a l h e l p t o s m a l l s c a l e i n d u s t r i a l i s t s and t r a d e r s i n t h e a r e a .

1.8

DEFINITION OF KEY

FEASIBILITY T h i s answers t h e q u e s t i o n ; c a n i t b e done?,

I t is

concerned w i t h t h e p r a c t i c a b i l i t y o r p o s s i b i l i t y o f t h e v i s u a l i s e d o r c o n t e m p l a t e d d e c i s i o n w h e t h e r on d e v e l o p m e n t a l pro3 e c t , p l a n n i n g scheme, r e s o u r c e investment proposal e t c . VIABILITY While

f e a s i b i l i t y answers t h e q u e s t i o n , can i t

done? , v i a b i l i t y a p p r a i s a l answers t h e complementary q u e s t i o n ; s h o u l d i t b e done?

.Viability

thus establishes

whether o r n o t i t i s worthwhile t o t a k e t h e d e c i s i o n which h a s a l r e a d y been e s t a b l i s h e d as c a p a b l e o f b e i n g taken.

INVESTMENT The Oxford E n g l i s h D i c t i o n a r y d e f i n e s i n v e s t m e n t a s t h e c o n v e r s i o n o f money o r c i r c u l a t i n g c a p i t a l i n t o some s p e c i e s of p r o p e r t y from which an income o r p r o f i t i s e x p e c t e d t o be d e s i r e d i n t h e o r d i n a r y t r a d e o r

business.

'

T h i s means t h a t i n v e s t m e n t i n v l o v e s p a r t i n g

w i t h some c a p i t a l i n e x p e c t a t i o n o f p r o f i t s o r r e t u r n i n future. VALUATION A w r i t t e n s t a t e m e n t o r e s t i m a t e o f v a l u e which i s

b a s e d on a l o g i c a l a n a l y s i s o f r e l e v a n t i n f o r m a t i o n r e g . a r d i n g a p a r t i c u l a r p r o j e c t o r p r o p e r t y and which i s

?

a l s o made a s a t a d a t e o f i n s p e c t i o n . APPRAISAL An e s t i m a t e o r o p i n i o n o f v a l u e . t h e a c t o r process of estimating value.

I t i s regarded a s

The r e s u l t i n g

o p i n i o n o f v a l u e d e s i r e d from t h e a p p r a i s a l may be t r a n s m i t t e d o r a l l y o r i t may be f o r m a l , p r e s e n t e d on w r i t t e n form. RELIABILITY

C o n s i s t e n c y o f r e s u l t when an i n s t r u m e n t o f measurement i s r e p e a t e d l y u s e d .

12 CHAPTER TWO 2.0

REVIEW OF RELATED LITERATURE -This chapter considers v i t a l i s s u e s r e l a t e d t o t h e

study. 2.1

THE CONCEPT OF FEASIBILITY AND VIABILITY -APPRAISAL Broadly speaking, f e a s i b i l i t y a p p r a i s a l i s concerned

w i t h t h e fundamental q u e s t i o n o f t h e p r a c t i c a b i l i t y o r p o s s i b i l i t y o f t h e subJect m a t t e r o f a proposed d e c i s i o n be i t development sheme, i n v e s t m e n t p r o j e c t , g r a n t of l o a n and s o on.

I t i s regarded as various

p r o c e d u r e s which c o u l d b e u s e d g e n e r a l l y by d i f f e r e n t professionals i n carrying out t h e i r project task.

A

s u c c e s s f u l . f e a s i b i l i t y a p p r a i s a l can be a c h i e v e d i f t h e i n t e n d i n g u s e r o f t h e t e c h n i q u e h a s an i d e a o f what f e a s i b i l i t y i s a l l about. To.:::some p r o f e s s i o n a l s i n t h e p a s t , f e a s i b i l i t y means p r o j e c t e v a l u a t i o n , m a r k e t s t u d y o r m a r k e t a b i l i t y

-

.

analysis.

O t h e r s c a l l f e a s i b i l i t y t o mean c o s t b e n e f i t

a n a l y s i s o r economic s t u d y o f a p r o j e c f ,

These v a r i e t i e s

o f i d e a s b r o u g h t c o n f u s i o n on what t h i s s y s t e m o f i d e n t i t y l a b e l l e d on f e a s i b i l i t y c o u l d actuaU$mean. Young (1970) P.337 i n t r y i n g t o c l e a r t h e c o n f u s i o n described f e a s i b i l i t y study as:-

"That which i s r e g a r d e d a s p r o v i d i n g i n v e s t o r s w i t h t h e l i k e l y economic r e s u l t s of s e l f sustaining r e a l e s t a t e

The economic r e s u l t s c o u l d b e aimed a t b y s i m p l e comparison o f c o s t w i t h v a l u e .

A w e l l conducted

m a r k e t s t u d y w i l l g i v e an o v e r a l l i m p r e s s i o n t o a r e a s where i n v e s t m e n t s w i l l g a i n o r l o s e t h e r e b y c r e a t i n g an o p p o r t u n i t y f o r i n v e s t o r t o a v o i d p o s s i b l e f a i l u r e i n t h e i r ventures.

O r whenever t h e f e a s i b i l i t y a p p r a i s a l

g i v e s p o s i t i v e s i g n , t h e r e i s an i n d i c a t i o n t h a t s u c c e s s i n encountering r e t u r n c a p i t a l w i l l . be p o s s i b l e .

P r o f e s s o r Ume (1977) P.42 c l e a r e d d o u b t s on t h e a c t u a l c o n c e p t o f f e a s i b i l i t y and w r o t e , " P T o j e c t f e a s i b i l i t y h a s t o do w i t h p r a c t i c a b i l i t y and v i a b i l i t y w i t h . t h e -:worthwhileness:'2

This involves

t h . e a c t o f c a r r y i n g o u t t e s t t o khow w h e t h e r a known , p r o j e c t c a n p h y s i c a l l y b e implemented t h e r e b y s e c u r i n g adequate r e s u l t . P r o f e s s o r Ume i n c o n c l u s i o n f u r t h e r s a i d t h a t , f e a s i b i l i t y a p p r a i s a l answers t h e q u e s t i o n : Can i t b e done

'

, I

i 1

:

A f e a s i b i l i t y r e p o r t which i s e s s e n t i a l l y a n '

e x p r e s s i o n o f e x p e r t o p i n i o n on w h e t h e r o r n o t t h e a c t i o n i.s c a p a b l e o f b e i n g p u r s u e d may t a k e t h e form of a w r i t t e n report submitted s e p a r a t e l y t o t h e decision maker o r i n c o r p o r a t e d a s an i n t e g r a l p a r t o f a w r i t t e n document embracing b o t h f e a s i b i l i t y and v i a b i l i t y o r i n of t h e form,oral a d v i c e . Tn p r a c t i c e , a f e a s i b i l i t y r e p o r t i s o f t e n an amalgam o f a number o f s u b - r e p o r t s d e a l i n g

w i t h t h e v a r o u s f e a s i b i l i t y i n d i c a t o r s and which a r e f i n a l l y assembled by a c o - o r d i n a t i n g p r i n c i p a l a p p r a i s e r o r a c o n s o r t i u m o f a p p r a i s e r s who have c o n s u l t e d and i n c o r p o r a . t e d t h e i r f i n d i n g s and o t h e r c o n s u l t a n t s i n t o an i n t e g r a l whole f o r m i n g t h e f e a s i b i l i t y r e p o r t . 2.2

FEASIBILITY INDICATORS As a l r e a d y i n d i c a t e d , f e a s i b i l i t y i s concerned

w i t h t h e fundamental q u e s t i o n o f p r a c t i c a b i l i t y o r p o s s i b i l i t y of t h e v i s u a l i s e d o r contempaated d e c i s i o n be i t on a development p r o j e c t , p l a n n i n g scheme, r e s o u r c e

u s e and i n v e s t m e n t p r o p o s a l e t c . Thus, i n p r o j e c t d e c i s i o n v a l u a t i o n , f e a s i b i l i t y

I

1

I

a p p r a i s a l answers t h e q u e s t i o n ; c a n i t be d o n e ? . I n o r d e r t o answer t h e q u e s t i o n as t o w h e t h e r something c o u l d be done, a number o f r e l e v a n t o r a s s o c i a t e d q u e s t i o n s 1vhj.c.h we may c a l l f e a s i b i l i t y i n d i c a t o r s .and whose a n s w e r s would add up t o t h e o v e r a l l f e a s i b i l i t y o r

I

non f e a s i b i l i t y o f t h e p a r t i c u l a r a c t i o n c o n t e m p l a t e d , s h o u l d be asked.

The q u e s t i o n s t o be a s k e d and

answered depend upon t h e n a t u r e o f t h e d e c i s i o n t o be made.

S i m i l a r l y t h e number and p r o f e s s i o n a l background

o f t h o s e who would frame o r answer t h e q u e s t i o n s a l s o depend on what i s b e i n g d e c i d e d . Most f e a s i b i l i t y a p p r a i s a l s answer t h e q u e s t i o n s which come w i t h i n t h e s i x p r i n c i p a l c o n s i d e r a t i o n s on the following f e a s i b i l i t y i n d i c a t o r s m d TECHNOLOGICAL FEASIBILITY The f i r s t q u e s t i o n o r i s s u e which i p r o j e c t d e c i s i o n maker and h i s p r o f e s s i o n a l a d v i s e r s h o u l d concern themselves with i s whether t h e p r o p o s a l , p r o j e c t o r sheme i s c a p a b l e o f r e a l i s a t i o n w i t h i n t h e l i m i t s o f e x i s t i n g t e c h n o l o g i c a l knowledge and a v a i l a b l e l a b o u r f o r c e and s k i l l . T e c h n o l o g i c a l f e a s i b i l i t y i s n o t concerned s o much w i t h s o much i s s u e s a s t h e a d v a n t a g e s o f a l t e r n a t i v e technological

methods o f e x e c u t i n g t h e proposed

p r o j e c t o r scheme a s w i t h t h e r a d i c a l q u e s t i o n o f whether o r n o t i t i s p o s s i b l e o f r e a l i s a t i o n w i t h i n t h e f o r e s e e a b l e f u t u r e w i t h t h e e x i s t i n g and o b t a i n a b l e s t o c k o f t e c h n o l . o g i c a 1 knowledge and s k i l l .

PHYSICAL FEASIBILITY P h y s i c a l f e a $ b i l i t y c o n s i d e r s such importa.nt i s s u e s a s s u i t a b i ) l i t y o f t h e s i t e and t h e c l i m a t e . " s i b e s u i t a b i l i t y i s a wide s u b j e c t and may b e examined i n t e r m s o f s o i l strength, character, topographical considerations. P h y s i c a l f e a s i b i l i t y embraces l o c a t i o n a l f e a s i b i l i t y . A c c e s s i b i l i t y a l s o comes i n t o i t .

P h y s i c a l f a c t o r s do n o t

o n l y a f f e c t f e a s i b i l i t y o f p r o j e c t s and d e c i s i . o n s d i r e c t l y but also indirectly.

For example, p h y s i c a l c i r c u m s t a n c e

may c o n d i t i o n economic f e a s i b i l i t y : . f f t h e y f o r example, i n h i b i t t h e p r o d u c t i o n o r i m p o r t a t i o n o f any o r o f a n

.

.'

a d e q u a t e s u p p l y o f n e c e s s a r y raw m a t e r i a l s . ECONOMIC FEASIBILITY

Economic f e a s i b i l i t y a p p r a i s a l i s l a r g e l y c o n ~ e r l ~ e d w i t h t h e fundamental i s s u e of whether t h e p r o j e c t d e c i s i o n can be t a k e n under t h e broad p r e v a i l i n g o r f o r e s e e a b l e economic e n v i r o n m e n t .

I t i s f o r instance, necessary a t

t h i s j u n c t u r e t o c o n s i d e r - :whether t h e known economic resources available within t h e country o r obtainable from s o u r c e s o u t s i d e t h e c o u n t r y c a n s u p p o r t t h e contempl a t e d p r o j e c t o r scheme.

There i s a l s o t h e need t o

c o n s i d e r a t t h i s s t a g e , t h e b r o a d i s s u e o f demand f o r t h e p r o d u c t o f t h e p r o d u c t t h e p r o p o s e d development i n c l u d i n g a q u a n t i t a t i v e a n a l y s i s o f t h e s c a l e and p a t t e r n i n o r d e r t o estab1ish:the

demand t r e n d .

LEGAL FEASIBILITY

L e g a l f e a s i b i 1 i . t ~c o n s i d e r s t h e b r o a d l e g a l i t y o f t h e p r o p o s a l , p r o j e c t o r scheme.

F o r i n s t a n c e , one

s h o u l d f i n d o u t , i n r e l e v a n t c a s e s , w h e t h e r t h e town p l a n n i n g and o t h e r r e g u l a t i o n c o n t r o l l i n g l a n d u s e and b u i l d i n g development i n t h e a r e a i n q u e s t i o n w i l l p e r m i t t h e a c t i o n p r o p o s e d f o r t h e s i t e and v i c i n i t y chosen. I n m a n u f a c t u r i n g and o t h e r b u s i n e s s e s , one s h o u l d n o t o n l y e n s u r e t h a t t h e p r o p o s a l w i l l n o t contYauege t h e laws of t h e land b u t w i l l a l s o o b t a i n t h e o f t h e law where r e l e v a n t . I n t h e s e d a y s o f awakening, g e n e r a l e n v i r o n m e n t a l r e s p o n s i b i l i t i e s , l e g a l considerations should not stop a t w h e t h e r t h e main o b j e c t i v e can b e a c h i e v e d w i t h i n t h e law b u t s h o u l d e x t e n d t o w h e t h e r t h e law w i l l p e r m i t t h e proposals f o r treatment o r d i s p o s a l of wastes i n appropriate cases. L e g a l f e a s i b i l i t y i s n o t s o much c o n c e r n e d w i t h t h e l e g a l i t y of such i s s u e s a s t h e d e t a i l s o f t h e v a r i o u s d e s i g n s , m a t e r i a l s and c o n s t r u c t i o n b u t e s s e n t i a l l y 'with b r o a d l e g a l i t y o f t h e c o n t e m p l a t e d a c t i o n . FINANCIAL -

FEASIBILITY

F i n a n c i a l c o n s i d e r a t i o n i s n o d o u b t 'a p a r t o f t h e

1.8

wider economic. i s s u e .

I t h a s , however, been i s o l a t e d

and t r e a t e d s e p a r a t e l y h e r e i n o r d e r t o emphasize its . . importance i n d e c i s i o n v a l u a t i o n of p r o j e c t s o r schemes. P a r t of i t s g r e a t importance d e r i v e s from t h e f a c t t h a t most development p r o j e c t s o r i n v e s t m e n t schemes a r e c a r r i e d o u t w i t h p a r t l y borrowed c a p i t a l . Financing w i l l a l s o d e t e r m i n e t h e t i m i n g , , p h a s i n g and s c a l e of o p e r a t i o n s .

It w i l l also influence the

marketing p o l i c y f o r t h e f i n i s h e d p r o d u c t s . The f i n a n c i a l c o n s i d e ~ a t i o ni n v o l v e d a t t h e f e a s i b i . l i t y s t a g e i s n o t s o much concerned w i t h such m a t t e r s a s t h e a p p r a i s a l of t h e c o s t of funds o r t h e r e t u r n s e x p e c t e d from c a p i t a l o u t l a y a s i t i s w i t h t h e fundamental i s s u e of a v a i l a b i l i t y o f funds i n t h e f i r s t p l a c e : A t the f e a s i b i l i t y stage therefore, the financial

q u e s t i o n s s h o u l d be c o n f i n e d ' t o t h e b a s i c and major i s s u e s of t h e broad e s t i m a t e s of t h e t o t a l f i n a n c i a l r e q u i r e m e n t s and t h e s o u r c e of f u n d s .

I t s h o u l d be

concerned w i t h whether o r n o t enough funds can be m o b i l i s e d from any s o u r c e

-

i n t e r n a l , external, personal

borrowed, p r i v a t e , p u b l i c o r i n s t i t u t i o n a l t o e x e c u t e the decision.

I n hhe c a s e o f borrowed f u n d , t h e r e i s

a l s o t h e need t o a p p r i a s e t h e adequacy o r o t h e r w i s e of t h e s e c u r i t y which t h e borrower can o f f e r i n o r d e r t o secure loans.

SOCIO-POLITICAL FEASIBILITY The s o c i a l and p o l i t i c a l c o n s i d e r a t i o n s i n v o l v e d i n c e r t a i n i n v e s t m e n t o r development p r o j e c t s o r p r o p o s a a s c a n n o t b e d i s r e g a r d e d i n feasibility a p p r a i s a l .

The

( :

e f f e c t s o f s o c i a l and p o l i t i c a l e n v i r o n m e n t and o f t r e n d s t h e r e o f , and t h e i r r e l e v a n t t o p r u d e n t d e c i s i o n making c a n n o t be o v e r emphasised.

S o c i a l and p o l i t i c a l e l e m e n t s

may n o t o n l y a f f e c t t h e f e a s i b i l i t y o f a p r o j e c t d i r e c t l y b u t a l s o i n d i r e c t l y t h r o u g h t h e changes t h e y may impose on o t h e r f e a s i b i l i t y i n d i c a t o r s .

On t h i s l a t t e r p o i n t ,

war i n a c o u n t r y s u p p l y i n g r a w m a t e r i a l s f o r a p r o p o s e d m a n u f a c t u r i n g i n d u s t r y i n a n o t h e r c o u n t r y may s e r i o u s l y affect the feasiblity of the industrial project. Foreign ownership o r p a r t i c i p a t i o n a a n d such i s s u e s a s i n d e g e n i s a t i o n p o l i c y a r e some o f t h e r e l e v a n t m a t t e r s t o consider under s o c i o - p o l i t i c a l f e a s i b i l i t y .

Political

manoeuvres can undermine t h e economic, l e g a l and financial feasiblit3es of a project. I t c a n be b r i e f l y s t a t e d t h a t c e r t a i n p r o j e c t s which may be f e a s i b l e on f o u r c o u n t s s t a t e d above may n o t be a t t e m p t e d b e c a u s e o f t h e s o c i a l and p o l i t i c a l i m p l i c a t i o n s which may make them t o t a l l y u n a c c e p t a B l e t o the political authority o r society a t large.

2.3

THE NEED FOR FEASIBILITY AND VIABILITY APPRAISAL I n many d e v e l o p i n g c o u n t r i e s o f t h e w o r l d , w a s t e -

f u l .arid u n v i a b l e p r o j e c t s h a v e b e e n p l u n g e d t n t o by i n d i v i d u a l s , g r o u p s o r government m e r e l y b e c a u s e t h e money c o u l d b e f o u n d e i t h e r from i n t e r n a l o f e x t e r n a l sources.

T r a g i c s i t u a t i o n s l i k e t h e s e would b e a v e r t e d

by a c l e a r r e c o g n i t i o n o f t h e i m p o r t a n c e and n e e d f o r and t h e d i f f e r e n c e b e t w e e n f e a s i b i l i t y and v i a b i l i t y a p p r a i s a l s o f p r o j e c t s and e n s u r i n g t h a t b o t h c o u l d b e a t t a i n e d before decisions are taken t o venture i n t o i n d u s t r i a l and o t h e r d e v e l o p m e n t a l p r o j e c t s . F e a s i b i l i t y and v i a b i l i t y s t u d y and a p p r a i s a l a r e s o f v i t a l : i m p o r t a n c e i n t h e economic u t i l i z a t i o n o f resources.

W i t h o u t t h o r o u h g f e a s i b i l i t y and v i a b i l i t y

a p p r a i s a l p r e c e d i n g t h e u n d e r t a k i n g o f any l a r g e o r s m a l l s c a l e i n d u s t r i a l p r o j e c t , t h e r e s u l t would unquestionably be t h e misuse o f valuable resources i n one way o r t h e o t h e r . F e a s i b i l i t y and v i a b i l i t y a p p r a i s a l a l s o p r o v i d e a r e l i a b l e - pxe-development

and p r e - i n v e s t m e n t p l a n n i n g

t o o l for, v i r t u a l l y a l l types of projects.

Its use i n

c o n n e c t i o n w i t h a l l p r o j e c t s and s c h e m e s , e s p e c i a l l y i n d u s t r i a l p r o j e c t s w i l l ensure t h a t only viable p r o j e c t s w i l l be f m d e r t a k e n .

I t a l s o saves investors

t h e t r o u b l e o f s p e n d i n g e n e r g y , t i m e , and c a p i t a l on p r o j e c t s t h a t w i l l n o t pay o f f .

I t makes f o r c l e a r ,

c o h e r e n t and comprehensive t h i n k i n g and l u c i d e x p o s i tion

o f t h e e s s e n c e o f d e c i s i o n v a l u a t i o n i f t h e two

b a s i c mmponents a r e r e a l i s e d and k e p t i n p r o p e r p e r s p e c t i v e a l l t h e time.

Above a l l , i t l e a d s t o a

more competent e x e c u t i o n and p r e s e n t a t i o n o f p r o j e c t decision. I t i s i m p o r t a n t t h a t f e a s i b i l i t y and v i a b i l i t y

-

a p p r a i s a l s s h o u l d be r e c o g n i s e d and k e p t i n p e r s p e c t i v e a l l t h e time.

For one t h i n g , i t emphasizes t h e g r e a t

r a n g e and c o m p l e x i t i e s of e x p e r t knowledge o r e x p e r t c o n s u l t a % f o n s which s h o u l d be brought i n t o many d e c i s i o n v a l u a t i o n s i f a worthwhile r e p o r t i s t o emerge. Secondly i t h e l p s t o emphasize and map o u t and p r e s e n t t h e f a c t s and f i g u r e s i n a c o h e r e n t and l o g i c a l sequence and i n s o doing h e l p s remove o r minimise t h e muddle i n t h e t h i n k i n g and p r a c t i c e o f many p r o j e c t appraisa3srs.

Above a l l , i t h e l p s t o a v o i d i n c u r i n g

expense and c o l l o s a l l o s s e s i n v o l v e d i n v e n t u r i n g i n t o an a b o r t i v e p r o j e c t . 2.4

FEASIBILITY AND VIABILITY APPRAISAL PROCESS The f e a s i b i l i t y and v i a b i l i t y a p p r a i s a l p r o c e s s i s

an

o r d e r l y p r e c e d u r e i n t h e development o f an e s t i m a t e

of t h e worthwhileness o r otherwise of a p r o j e c t . To make an a p p r a i s a l i s t o s o l v e a problem.

The

s o l u t i o n r e q u i r e s i n t e r p r e t a t i o n . ; i n t e r m s o f money, o f t h e i n f l u e n c e s o f econofiic, s o c i o l o g i c a l , p h y s i c a l and p o l i t i c a l f o r c e s on a s p e c i f l c p r o j e c t .

Character-

i s t i c s o f i n d u s t r i a l p r o j e c t s d i f f e r t o some e x t e n t . T h i s however d o e s n o t mean t h a t t h e r e i s a wide v a r i a t i o n i n t h e o r d e r l y procedure f o r solving a p p r a i s a l problems.

The a p p r a i s a l p r o c e s s i s an o r d e r l y programme

by which t h e p r o j e c t i s i d e n t i f i e d , t h e work n e c e s s a r y t o s o l v e t h e problem i s p l a n n e d and t h e d a t a i n v o l v e d i s a c q u i r e d , c l a s s i f i e d , a n a l y s k d and i n t e r p r e t e d i n o r d e r t o take a decisibn" 5 The a p p r a i s a l p r o c e s s begi-ns w i t h t h e i d e n t i f i c a t i o n of the project.

I n o t h e r words, i t begifis w i t h t h e

',

:

i d e n t i f i c a t i o n o f t h e i n d u s t r i a l p r o j e c t ? . t h a t h a s been e a r l i e r conceptualised.

This

involves the i d e n t i f i c a -

t i o n o f t h e t y p e o f p r o d u c t t o b e m a n u f a c t u r e d by t h e i n d u s t r y , t h e raw m a t e r i a l i n p u t s , t h e t y p e o f p l a n t s and m a c h i n e r y , t h e t y p e s o f s t r u c t u r e t h a t w i l l be a d e q u a t e f o r p r o d u c t i o n a n d a l s o t h e s i t e t h a t w i l l be most: s h i t s b l e f o r t h e i n d u s t r i a l p r o j e c t .

The s i t e

s e l e c t i o n i s v e r y i m p o r t a n t b e c a u s e most. i n d u s t r i a l : p r o j e c t s r e q u i r e p l a n t s and equipment and i f t h e s i t e i s n o t s t a b l e enough, i t w i l l p o s e a s e r i o u s problem:.

23

.

I n o r d e r t o a c q u i r e r e l i a b l e i n f o r m a t i o n on t h e above i s s u e s , t h e a p p r a k s e r may n e e d t o c o n s u l t o t h e r professionals.

T h i s w i l l h e l p him t o e s t a b l i s h t h e

f e a s i b i l i t y of t h e p r o j e c t and t h e r e l i a b i l i t y o f t h e information collected

w i Z i go a l o n g way t o h e l p i n g t h e

a p p r a i s e r come o u t w i t h a more a c c u r a t e r e s u l t . A f t e r t h e i d e n t i f i c a t i o n o f t h e p r o j e c t and a l l i t s a t t r i b u t e s , the next s t e p i t t o carry out a p r e l i -

minary survey.

The p u r p o s e o f t h i s p r e l i m i n a r y s u r v e y

i s t o d e t e r m i n e t h e c h a r a c t e r , t h e s c o p e and t h e amount

of work i t w i l l t a k e t o c a r r y o u t t h e f e a s i b i l i t y and viability studies.

This w i l l involve collecti.on of

d a t a and l a t e r t h e a n a 3 y s i s o f t h e s e d a t a .

Early i n the

p r e l i m i n a r y s u r v e y , t h e c h a r a c t e r and amount o f d a t a which may b e r e q u i r e d i n t h e a s s i g n m e n t s h o u l d be estimated.

T h i s w i l l depend on t h e t y p e of p r j e c t b e i n g

appraised. STAGES OF PROJECT FEASIBILITY ANALYSIS

2.5

The a n a l y s i s o f a p r o j e c t i n v o l v e s a c e r t a i n number o f s t a g e s d u r i n g which i t s v a r i o u s e l e m e n t s a r e p r e p a r e d and examined i n o r d e r t o r e a c h d e c i s i o n s .

The p r e p a r a -

t i o n o f . a p r o j e c t t h e r e f o r e can be s e e n a s a s e r i e s of a c t i v i t i e s c u l m i n a t i n g i n t h e e s t a b l i s h m e n t o f a c e r t a i n number of s t u d i e s and documents which p e r m i t d e c i s i o n making.

24

.

P r o j e c t f e a s i b i l i t y a n a l y s i s i s conducted i n a given i n s t i t u t i o n a l frame which determines:. t S s n a t u r e and t h e number of economic a g e n c i e s l i k e l y t o be i n t e r e s t e d i n i t .

Thus t h e n a t u r e and sequence o f

d e c i s i o n s c o n c e r n i n g v i a b i l i t y o f t h e p r o j e c t and i t s f i n a n c i n g a r e determined by v a r i o u s i n s t i t u t i o n a l p o l i c i e s a s w e l l a s company o b j e c t i v e s .

A l s o , t h e range and accu?:

-

I.

:

r a c y of i n f o r m a t i o n n e c e s s a r y f o r d e c i s i o n making d u r i n g d i f f e r e n t s t a g e s o f a p r o j e c t depend on i t s i n h e r e n t c h a r a c t e r i s t i c s such a s s i z e , d e g r e e o f complexity and r i s k .

T h e r e f o r e any a t t e m p t t o d e s c r i b e

a t y p i c a l p r o c e d u r e f o r feasibility a n a l y s i s must b e g e n e r a l because t h e d e c i s i o n s t o be made and t h e informat i o n r e q u i r e d v a r y among companies, i n s t i t u t i o n s and t y p e s of p r o j e c t s . The p r o c e s s o f p r o j e c t f e a s i b i l i t y a n a l y s i s f o l l o w i n g t h e d e t e r m i n a t i o n of t h e o b j e c t i v e t o b e a t t a i n e d cah be d i v i d e d i n t o s t a g e s and s t e p s .

T h i s i s shown i n t h e

f i g u r e below which i l l u s t r a t e s t h e main s t a g e s and c o r r e s p o n d i n g flow o f t y p e s of s t u d i e s needed t o e v a l u a t e the project. For t h e purpose o f c l a r i t y i n - p r e s e n t a t i o n , no l o o p s a r e shown on t h e f e a s i b i l i t y a n a l y s i s flow c h a r t .

For example, i f t h e market a n a l y s i s i s

i .'

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IS INFORh!AL ANALYSIS FAVOl?f\BLE'

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PREFEAS!BILITY

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YES

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NO

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C O N D U C T T E C t i N I C r l . 4rJALYSIS

J1

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FAVORP.ELE?

FAVORABLE?

-

AYALYSIS N E C E S S l r R Y ?

CONDUCT SOCIAL. P R O F I T A B I L I T Y ANALYSIS

-1

A N A L Y S I S FAVORABLE?

1

unfavourab1.e t h e d a t a may i n d i c a t e t h a t t h e o b j e c t i v e s o f t h e s t u d y s h o i ~ l dbe r e - d e f i n e d ( t h a t is,pcle'fine t h e product) r a t h e r than terminate t h e project. Also t h e f e a s i b i l i t y a n a l y s i s flow c h a r t i n d i c a t e s t h a t t h e m a r k e t , t e c h n i c a l and O t h e r s t u d i e s s h o u l d b e c o n d u c t e d i n a c e r t a i n o r d e r which i s n o t always a p p l i c a b l e . B e f o r e e x a m i n i n g t h e st.@geso f a p r o j e c t f e a s i b i l i t y analysis,it

s h o u l d b e emphasized t h a t t h e method and t h e

accompanying s t u d i e s d i s c u s s e d below a r e s u g g e s t e d f o r m a t s , s i n c e no s t a n d a r d s e x i s t . A c c o r d i n g t o F y f f e and C l i f t o n (

1977 )

P.4, every

f e a s i b i l i t y analysis i s d i f f e r e n t , taiilored t o t h e subject a r e a a s w e l l a s t o t h e p o t e n t i a l audience.

However, t h e

b a s i c documents u s u a l l y n e c e s s a r y f o r p r o j e c t a n a l y s i s have been i d e n t i f i e d .

The ' n a t u r e o f t h e s e p r o j e c t s m a y

d i c t a t e t h a t o n e o r more o f t h e s e documents b e g i v m m o r e emphasis o r b e o m i t t e d . IDENTIFICATION -

STATE

The s t a r t i n g p o i n t o f a p r o j e c t a n a l y s i s i s t h e e s t a b l i s h m e n t o f t h e o b j e c t i v e t o he a t t a i n e d .

This

o b j e c t i v e may b e t o p r o v e t h a t i t i s p o s s i b l e and d e s i r a b l e t o add a p i e c e o f equipment t o t h e e x i s t i n g p l a n t ; t o manufacture a c e r t a i n a product o r group o f p r o d u c t s o r t o u t i l i z e certain resources.

According t o F y f f e and C l i f t o n ( 1 9 7 7 ) p . 4 , i d e a s f o r new p r o d u c t s o r d i v e r s i f i c a t i o n TOT a company c a n be g e n e r a t e d i n an i n f o r m a l and s p o n t a n e o u s manner from c u s t o m e r s , d i s t r i b u t o r s c o m p e t i t o r s , s a l e s p e o p l e and o t h e r s o r t h e entrepreneurl:.,can r e l y on a s y s t e m a t i c p r o c e s s of ideas generation. For t h e p l a n n e r , t h e p r o d u c t i d e a i s - more l i k e l y t o stem

from a s u r v e y o f e x i s t i n g i n d u s t r y s e c t o r a l o r

i n t e r - i n d u s t r i a l a n a l y s ' i s , a r e a r e s o u r c e s u r v e y o r market studies.

The prop,osed p r o j e c t may d e v e l o p a s a r e s p o n s e

t o a n e e d t h a t a p p e a r e d w i t h i n t h e framework o f i n d u s t r i a l development p l a n n i n g . PRE-SELECTION

-.--

'STAGE . .-

I n t n e p r e - s e l e c t i o n s t a g e , a d e c i s i o n must b e made a s t o w h e t h e r i t i s a d v i s a b l e t o examine i n d e t a i l t h e -

f e a s i b i . l i t y o f t h e p r o j e c t and i f s o t h e y d e f i n e t h e s c o p e C'

and e s t i m a t e t h e c o s t o f s u b s e q u e n t s t u d i e s .

Both t h e

e n t r e p r e n e u r and p l a n n e r want t o e n s u r e t h a t t h e p r o j e c t i s o f s u f f i c i e n t i n t e r e s t i n t h e t e c h n i c a l economic p l a n e

t o j u s t i f y an i n d e p t h s t u d y ,

that is, that a feasible

s o l u t i o n can be a n t i c i p a t e d .

The r e s u l t s g a t h e r e d o r

o b t a i n e d d u r i n g t h e p r e - s e l e c t i o n s t a t e a r e o f t e n compiled i n t o a p r e - f e a s i b i l i t y study.

To p e r m i t d e c i s i o q o n t h e

;

27

merit of the project, the pre-feasibility study s h o u l d i n c l u d e following: A 1

d e s c r i p t i o n o f t h e market ( e s t i m a t e o f consumption

trends, present supply, price) An o u t l i n e o f m a n u f a c t u r i n g p r o c e s s and i n f o r m a t i o n c o n c e r n i n g a v a i l a b i l i t y o f main p r o d u c t i o n f a c t o r s ( m a i n l y raw m a t e r i a l s ) . An e s t i m a t e o f n e c e s s a r y i n v e s t m e n t and c o s t o f operation. An a p p r o x i m a t e e s t i m a t e o f profidti.

S t a t e m e n t o f a n t i c i p a t e d m a j o r p r o b l e m s and r i s k s . ANAY LSIS STATE

A t the analysis stage, the various alternatives

i n m a r k e t i n g , t e c h n o l o g y and o t h e r c o n s i d e r a t i o n s must b e s t u d i e d and t h e f i n d i n g s w i t h s u p p o r t i n g d a t a p r e s e n t e d i n a s y s t e m a t i c form.

For a p a r t i c u l a r p r o j e c t ,

t h e r e may b e more t h a n one p o s s i b l e t e c h n o l o g y t o e v a l u a t e and s u c h f a c t o r s a s p l a n t s i z e , c a p i t a l a v a i l a b i l i t y , raw m a t e r i a l s a v a i l a b i l i t y and l a b o u r s k t l l s and a v a i l a b i l i t y need t o be considered.

The a n a l y s i s o f ; t h e

f e a s i b i l i t y o f a p r o j e c t can be conducted a t d i f f e r e n t l e v e l s o f e f f o r t w i t h r e s p e c t t o t i m e , b u d g e t and p e r s o n n e l , d e p e n d i n g on t h e c i r c u m s t a n c e s .

A complete s t u d y c o n t a i n s

a m a r k e t , t e c h n i c a l and f i n a n c i a l a n a l y s i s and i s r e f e r r e d t o a s an economic' f e a s i b i l i t y s t u d y .

I n some c a s e s ,

such a d e t a i l e d study i s n o t necessary.

For example,

if t h e p r o j e c t o u t p u t h a s a confirmed b u y e r , t h e n an

i n d e p t h market a n a l y s i s i s n o t r e q u i r e d .

I n some

i n s t a n c e s , a p a r t i a l s t u d y o f t h e market o r o f t h e technologies s a t i s f i e s the data'requirements f o r d e c i s i o n making. To p e r m i t a d e c i s i o n on t h e m e r i t o f t h e p r o j e c t t h e r e f o r e , t h e p r o j e c t f e a s i b i l i t y a n a l y s i s should i n c l u d e m a r k e t , t e c h n i c a l , f i n a n c i a l and s o c i a l profitability analysis. 2.6

ASSESSING THE DESIRABILITY OF AN INVESTMENT I t i s i m p o r t a n t , a f t e r a p r o j e c t h a s been

adjudged f e a s i b l e and v i a b l e , t o c a r r y o u t a v i a b i l i t y t e s t i n order:.to a s s e s s t h e c o s t s and b e n e f i t s t h a t a r e l i k e l y t o accrue t o t h e individual investor,.and t h e s o c i e t y a s a whole.

This task requires'an expert

s k i l l , knowledge and e x p e r i e n c e on t h e p a r t o f t h e a p p r a i s e r b e c a u s e a s l i g h t m i s t a k e e i t h e r by omission o r commission, may r e s u l t i n a p r o j e c t which i s v i a b l e appearing non-viable a t a f i r s t look.

I t s h o u l d however

be n o t e d t h a t t h i s p r e l i m i n a r y t e s t i s n o t an end i n

itself.

I t i s r a t h e r a means t o an end.

There a r e

o t h e r more s o p h i s t i c a t e d methods o r t e c h n i q u e s o f a r r i v i n g 'at t h e v i a b i l i t y o r o t h e r w i s e o f a p r o j e c t . I n a s s e s s i n g t h e d e s i r a b i l i t y of an i n v e s t m e n t o r i n carrying out t h e preliminary v i a b i l i t y t e s t , t h e computation o f t h e e x p e c t e d c o s t s and b e n e f i t s is required.

I t i s a l s o important t h a t t h e s e c o s t s

and b e n e f i t s be e s t i m a t e d a s a c c u r a t e l y a s p o s s i b l e , T h i s may c a l l f o r t h e a s s i s t a n c e o f some o t h e r p r o f e s s i o n a l s such a s economists and market a n a l y s i s . I n a d e v e l o p i n g c o u n t r y l i k e o u r s , i t i s a l i t t l e more d i f f i c u l t t o a c c u r a t e l y compute t h e e x p e c t e d c o s t s and b e n e f i t s o f an i n d u s t r y p a r t l y due t o l a c k of a d e q u a t e d a t a and a l s o due t o t h e n o n - e x i s t e n c e o f comparablestif6 I n s i t u a t i o n s where few comparables e x i s t s , t h e y a r e u s u a l l y l o c a t e d i n t h e same a r e a . With t h e i n f o r m a t i o n a v a i l a b l e t o him, t h e a p p r a i s e r goes on t o c o n d u c t a profitability t e s t . The p r o f i t a b i l i t y t e s t i s a measure o f r a t i o between p r e s e n t v a l u e o f e x p e c t e d income flow and t h e i n v e s t ment o u t l a y . 2.7

BRIEF HISTORY OF EARLY SOAP MANUFACTURING Soap had been known f o r many y e a r s now.

According

t o P l i n y t h e E l d e r , t h e p h o e n i c i a n s p r e p a r e d soap from goats

t a l l o w and wood a s h e s i n 600 B . C and sometime

30 u s e i t a s an a r t i c l e o f b a r t e r w i t h t h e Gauls.

The c e l t s ,

who produced t h e i r s o a p from animal f a t s and p l a n t s a s h e s named t h e p r o d u c t t t ~ a i p o " 8 from which t h e word s o a p was d e r i v e d . The importance o f soap f o r c l e a n i n g and washing was t h e n n o t r e c o g n i s e d u n t i l t h e second c e n t u r y a f t e r C h r i s t , t h e Greek p h y s i c i a n , Galen, mentioned i t a s a m e d i c a t i o n and a means o f c l e a n i n g t h e body. E a r l y s o a p makers p r o b a b l y used a s h e s and animal fats.

Simple wood o r p l a n t a s h e s c o n t a i n i n g p o t a s s i u m

c a r b o n a t e were d i s p e r s e d i n w a t e r and f a t was added t o the solution.

The m i x t u r e was t h e n b o i l e d , a s h e s b e i n g

added a g a i n and a g a i n a s t h e w a t e r e v a p o r a t e d .

During

t h i s p r o c e s s , t h e f a t t y a c i d s could then r e a c t with t h e a l k a l i c a r b o n a t e s o f t h e p l a n t a s h t o form s o a p .

This

method p r e v a i l e d u A t i l t h e end o f t h e middle a g e s when s l a k e d lime came t o be u s e d t o c a m s t i c i s e t h e a l k a l i carbonate.

Through t h i s p r o c e s s , c h e m i c a l l y n e u t r a l

f a t s c o u l d be s a p o n i f i e d e a s i l y w i t h t h e c a u s t i c s o l u t i o n . P e o p l e i n N i g e r i a had p r e p a r e d t h e i r s o a p from t h e a v a i l a b l e t e c h n o l o g y found i n t h e i r l o c a l i t i e s

.

There was no g e n e r a l way of making soap i n t h o s e days Black Soap was t h e most form of s o a p s made i n t h o s e d a y s , even a s a t p r e s e n t .

They a r e made mainly from wood a s h e s

31 e s p e c i a l l y from t h e bunches which c o n t a i n t h e palm o i l fruits.

When t h e palm o i l f r u i t s have been removed,

t h e remai.ning bunches a r e b u r n t i n an open f i r e u n t i l t h e y a r e reduced t o a s h e s .

These a s h e s w i l l t h e n

serve a s potassium carbonate. The p o t a s s i u m c a r b o n a t e ( a s h e s ) w i l l t h e n b e p l a c e d i n a l a r g e pan and mixed w i t h w a t e r s o a s t o o b t a i n pasty substance.

The c o n t e n t i s t h e n b o i l e d a f t e r palm

o i l h a s been added.

The palm o i l s e r v e s a s form o f o i l .

S a p o n i f i c a t i o n t a k e s p l a c e a s t h e c o n t e n t s o f t h e pan continue t o b o i l f o r s e v e r a l hours.

After saponification,

t h e c o n t e n t s form a p a s t y b l a c k s u b s t a n c e which i s t h e soap. 2.8

SOAP INDUSTRY I N NIGERIA Soap p r o d u c t i o n i s an a r e a where import s u b s t i t u t i o n

h a s r e a c h e d an advanced s t a g e i n N i g e r i a .

However,

c o n s i d e r i n g t h e s i z e o f t h e N i g e r i a n p o p u l a t i o n and t h e n a t u r e o f s o a p a s a n e c e s s i t y , t h e r e l a t i v e l y l a r g e and i n c r e a s i n g o u t p u t o f l o c a l soap p r o d u c u e r s have n o t been adequate t o remove t h e need f o r soap i m p o r t a t i o n .

Official

s t a t i s t i c s h a s shown t h a t t h e r e a r e w e l l o v e r one hundred s o a p p r o d u c e r s i n t h e c o u n t r y w 9 , t h e s e however d i d n o t i n c l u d e o t h e r unknown i n d i v i d u a l p r o d u c e r s found i n many p a r t s o f t h e c o u n t r y .

Among t h e s e s o a p p r o d u c e r s , L e v e r B r o t h e r s , P . Z . Industries, A.J. are

Seward and A s s o c i a t e d I n d u s t r i e s L t d .

t h e o n l y m a j o r s o a p p r o d u c e r s w i d e l y knownin

t h e country. production.

They a c c o u n t f o r a b o u t 7 5 % o f t o t a l l o c a l The o t h e r s o a p p r o d u c e r s a r e r e l a t i v e l y

s m a l l e n t e r p r i s e s e m p l o y i n g l e s s t h a n f i f t y (50) p e o p l e .

A s a m a t t e r o f f a c t , most o f them a r e no more t h a n a c o t t a g e o r backyard i n d u s t r i e s using labour i n t e n s i v e o r e n t i r e l y manual p r o d u c t i o n t e c h n i q u e s .

Except f o r

v e r y few, t h e i r p r o d u c t s a r e h a r d l y known beyond t h e i r i m m e d i a t e m a r k e t zone and c e r t a i n l y n o t beyond t h e i r s t a t e of location. 2.9

PROBLEMS FACING LOCAL MANUFACTURE OF SOAP I N NIGERIA. Soap i n i t s v a r i o u s forms i s one o f t h e b e s t b a s i c

n e c e s s i t i e s o f normal h e a l t h y l i f e .

Thus e i t h e r f o r

body w a s h i n g , l a u n d e r i n g o r t h e g e n e r a l c l e a n i n g o f t h e human e n v i r o n m e n t , no s i n g l e i n d i v i d u a l c a n do f o r long w i t h o u t soap. B e f o r e t h e a p p e a r a n c e o f whitemen on o u r s h o r e s , o u r people have developed t h e a r t ( o r s c i e n c e ) o f soap making.

However, 2 i k e o t h e r a s p e c t s o f o u r c u l t w e ,

t r a d i t i o n and t e c h n o l o g y , n a t i v e s o a p making i s a d y i n g occupation.

Today t h e b u l k o f o u r demand f o r s o a p i s

met from t h e p r o d u c t s o f f a c t o r i e s o r e s t a b l i s h m e n t s u s i n g modern p r o d u c t i o n f a c i l i t i e s and t e c h n i q u e s . A t f i r s t , t h i s demand was met by i m p o r t s , b u t o v e r t h e

f i v e d e c a d e s o r s o , modern s o a p making was i n t r o d u c e d i n N i g e r i a and ha3 been g a i n i n g ground e v e r s i n c e The s h o r t a g e o f f o r e i g n exchange and t h e r e s u l t i n g r e s t r i c t i o n on i m p o r t a t i o n o f c e r t a i n raw m a t e r i a l s required f o r production w i l l impair t h e a b i l i t y of e x i s t i n g l o c a l p r o d u c t i o n t o expand o u t p u t s i g n i c a n t l y and a l s o d x s ~ ~ u r a gt hee e n t r y o f p r o s p e c t i v e p r o d u c e r s . The p r e s e n t economic d i f f i c u l t i e s have i m p a i r e d t h e a b i l i t y o f 4 o c a l p r o d u c e r s t o expand p r o d u c t i o n a t t h e r a t e r e q u i r e d due t o i n f l a t i o n and h i g h c o s t o f e q u i p ments and m a t e r i a l s f o r p r o d u c t i o n . 2.10

NI GERIA' S RAW MATERIALS POTENTIAL FOR SOAP PRODUCTION The m a j o r raw m a t e r i a l s r e q u i r e d f o r t h e p r o d u c t i o n

o f s o a p a r e t a l l o w , p a l m k e r n e l o i l , palm o i l , c u a s t i c s o d a , sodium s i l i c a t e , magnessium s u l p h a t e p e r f u m e , c o l o u r i n g a g e n t s , p a c k a g i n g m a t e r i a l s and c h e m i c a l

additives l i k e t i t a n i u m e t c .

As can be o b s e r v e d ,

upwards o f 80% o f t h e raw m a t e r i a l s i n c l u d i n g palm o i l , palm k e r n e l o i l and p a c k a g i n g m a t e . r i a l s a r e c a p a b l e of

b e i n g produced l o c a l l y .

Several years a f t e r , Nigeria has r e c e n t l y ed o t h e r a i l producing c o u n t r i e s i n e s t a b l i s h i n g petrochemical p l a n t s .

P e t r o l e u m c o n s t i t u t e s t h e major s o u r c e

( 9 0 % ) of o r g a n i c compounds i n t h e w o r l d t o d a y .

The e s t a b l i s h m e n t o f a f u n c t i o n a l p e t r o k h e m i c a l i n d u s t r y o f a r o m a t i c and o l e f i n b a s e d complexes w i l l r e v o l u t i o n a l i s e t h e soap i n d u s t r y . i n N i g e r i a . With t h e p r o v i s i o n o f l o c a l raw m a t e r i a l s f o r o u r soap i n d u s t r i e s complemented w i t h a d e q u a t e e n g i n e e r i n g s e r v i c e s , t r a i n e d p e r s o n n e l and r e g u l a r s u p p l y of b a s i c u t i l i t i e s , t h e soap i n d u s t r y can q u i c k l y f i l l t h e yawning gap between t h e s u p p l y c a p a c i t y o f t h e f a c t o r i e s and t h e p o p u l a t i o n demand. When t h e i r o n and s t e e l i n d u s t r y commences o p e r a t i o n s f u l l y , and t h e p e t r o c h e m i c a l i n d u s t r y a c h i e v e s e s t a b l i s h ment, t h e n t h e machinery m a n u f a c t u r e r s may become more i n t e r e s t e d i n f a s h i o n i n g more s i m p l e m a c h i n e r i e s l o c a l l y , and f u r t h e r enhance t h e p r o s p e c t s of t h e s u r v i v a l and r e v i t a l i s a t i o n of soap i n d u s t r y i n Nigeria. 2.11

IMPORTANCE OF SMALL SCALE ENTERPRISE

The importance o f s m a l l s c a l e e n t e r p r i s e t o t h e growth o f economy c a n n o t be over-emphas i z e d . Commenting on t h e s p e c i f i c importance t o t h e economic development o f t h e c o u n t r y , 0 k o r i e l 0 s t a t e d t h a t t h e s m a l l s c a l e e n t e r p r i s e s p r o v i d e employment on

a l a r g e s c a l e and t h e r e f o r e make t h e p o s s i b i l i t y o f

e q u i t a b l e d i s t r i b u t . i o n o f n a t i o n a l income more r e a l i s tic.

He added t h a t by c r e a t i n g more employment o p p o r t -

u n i t y t h e y h e l p i n m o b i l i s i n g c a p i t a l and human r e s o u r c e s t h a t would o t h e r w i s e b e l e f t i d l e . Another importance s t a t e d was t h a t o f removal o f

I

r e g i o n a l im.ba.2ance by r e d u c i n g t h e r u s h t o t h e few developed c e n t r e s o f t h e c o u n t r y , t h u s h e l p i n g i n c h e c k i n g r u r a l urban m i g r a t i o n and t h e a s s o c i a t e d problem of unplanned u r b a n i s a t i o n . I n a n o t h e r p u b l i c a t i o n , Ogaga 11 s t r e s s e d t h a t the existence of small s c a l e business provides c o n s i d e r a b l e s o l u t i o n t o t h e imbalance o f payment problem becuase of t h e i r l e s s dependence on i m p o r t e d i n p u t s t h e r e . by r e d u c i n g t h e demand p r e s s u r e on f o r e i g n exchange earnings. Another importance o f s m a l l s c a l e e n t e r p r i s e s l i e s i n t h e f a c t t h a t some f u n c t i o n s a r e more e x p e r t l y performed by s m a l l b u s i n e s s .

T h i s e n a b l e s them t o

contribute t o t h e success of l a r g e business.

all"'^

s t r e s s e d a n o t h e r importance o f s m a l l

s c a l e b u s i n e s s concern a s s o u r c e o f i n n o v a t i o n .

Me

I I

m a i n t a i n e d t h a t new s e r v i c e s a r e o f t e n i n a u g u r a t e d by I

s m a l l b u s i n e s s owners who p e r c e i v e t h e n e e d f o r s u c h services.

Many e c o n o m i s t s have compounded t h e v a l u e s i n h e r e n t i n economic c o m p e t i t i o n .

When monopoly r e p l a c e s c o m p e t i -

t i o n , t h e c u s t o m e r i s a t t h e mercy o f t h e m o n o p o l i s t b e c a u s e t h e m o n o p o l i s t can s e t an e x h o r b i t a n t p r i c e , w i t h h o l d a t e c h n o l o g i c a l d e v e l o p m e n t , e x c l u d e new c o m p e t i t o r s o r o t h e r w i s e a b u s e h i s p o s i t i o n o f power. Small business e n t e r p r i s e s encourage competition i n t h e economy. To t h i s , A l b e r t " l 3 o p i n e d t h a t t h e e x i s t e n c e o f many h e a l t h y b u s i n e s s f i r m s i n an i n d u s t r y c o n s t i t u t e s b a r r i e s a g a i n s t monopoly. A11spp"14

saw s m a l l b u s i n e s s o p e r a t i o n a s a means o f

s e l f employment f o r o l d e r p e r s o n s , p h y s i c a l l y h a n d i c a pped p e r s o n s and m i n o r i t y g r o u p s who f i n d i t d i f f i c u l t t o obB.ainzgainfu1 employment e l s e w h e r e . F i n a l l y , t h e importance of small s c a l e e n t e r p r i s e i n t h e promotion o f economic development c a n n o t b e o v e r emphasized. A~co.rdiag.@ ~ k w a e z e ~ s~ml a~l l, s c a l e e n p t e r p r i s e s a r e a l e g i t i m a t e and v i a b l e compon.ent i n any s t r a t e g y for 2.13

reconstruct^^^

.

.;

.

t h e economy.

PROBLEMS OF SMALL SCALE ENTERPRISES I N N I G E R I A T h e r e a r e s e v e r a l problems m i l i t a t i n g a g a i n s t s m a l l

s c a l e enterprises i n Nigeria.

Far t h e purpose of t h i s

s t u d y , a r e a s v i t a l t o t h e t e x t w i l l be c-o n s i d e r e d h e r e .

37

In h i s p u b l i s h & d . . - a r t i c l e ,O j iako" l 4 s t a t e d t h a t one problem o f s m a l l s c a l e b u s i n e s s i s t h e l a c k o f s t r a t e g i c planning.

T h i s problem i s b e t t e r c o n c e i v e d

a s l a c k of management a b i l i t y .

I n most s m a l l s c a l e

b u s i n e s s , t h e e n t r e p r e n e u r i s a one man management team. Top l e v e l d e c i s i o n t o g e t h e r w i t h a l l t h e l e s s e r t a s k s o f management.

That t h e a s s i s t a n t cannot accomplish

d e v o l v e on t h e e n t r e p r e n e u r .

Unfortunately t h i s requires

a d i v e r s i t y o f t a l e n t s and no i n d i v i d u a l h a s s u p e r i o r a b i l i t y i n a l l a r e a s o f management.

Sound p l a n n i n g

p r e c e d e s s o u n d d e c i s i o n ' m a k i n g most s m a l l b u s i n e s s s e e p l a n n i n g a s a l u x u r y which c o u l d b e a f f o r d e d o n l y by a large corporation. "Even when t h e y p l a n t h e t e n d e n c y i s t h a t t h e y c o n c e r n themseves o n l y w i t h s h o r t term p l a n w h i l e t h e y s h y away from l o n g t e r m p l a n s 11 1T According t o George

ice"'^,

the lack of the use

o f modern method o f g a t h e r i n g and a n a l y s i n g d a t a const i t u t e s a weak p o i n t i n t h e s m a l l b u s i n e s s s t r a t e g i c planning e f f o r t . Another problem i s t h a t o f p o o r f i n a n c i n g a s viewed by K a r l ~ e s ~ e r " ' ~T' h i s problem i s i n t h r e e dimensions

-

t h e n e e d f o r s t a r t - u p c a p i t a l , working c a p i t a l and

expansion c a p i t a l .

Long t e r m c a p i t a l i s a p a r t i c u l a r

need of s m a l l c o n c e r n s .

T h i s c a p i t a l i s o b t a i n e d by

p e r s o n a l i n v e s t m e n t 'or by l o n g t e r m borrowing. ing

Borrow-

l a r g e sum o f money t o be p a i d back o v e r a p e r i o d

o f y e a r s i ~ sd i f f e r e n t f o r s m a l l f i r m s b e c a u s e o f t h e l i m i t e d a c c e s s t o c a p i t a l market. 0 s h u n b i y i 2 0 a l s o saw t h e key problem f a c i n g most s m a l l b u s i n e s s i n N i g e r i a a s t h a t o f l a c k of f i n a n c e ;

" Whether f o r t h e e s t a b l i s h m e n t of new i n d u s t r i a l o r t o c a r r y o u t expansion p l a n s the inability t o attract financial credit h a s , s t i f f l e d t h e growth o f t h i s s u b s e c t o r " 21 I n h i s v i e w , commercial banks which were e x p e c t e d t o be t h e launch-pad' f o r t h e development o f s m a l l s c a l e i n d u s t r i e s t h r o u g h t h e p r o v i s i o n s o f l o a n s have f a i l e d t o g i v e a d e q u a t e s u p p o r t t o them.

Stiff colateral

s e c u r i t y demanded by banks o f t e n means t h a t s m a l l s c a l e i n d u s t r i a l i s t s around t o meet t h e s e p r o v i s i o n s consequ e n t l y l o s i n g t h e chance t o o b t a i n l o a n s . Banks on t h e i r own p a r t have argued t h a t t h e y a r e d i s c o u r a g e d t o l e n d t o t h i s s u b s e c t o r s i n c e many p o t e n t i a l and e x i s t i n g s m a l l and medium s c a l e e n t e r p r e n e u r s draw up f e a s i b i l i t y r e p o r t s t h a t a r e n o t v i a b l e , l a c k m a n a g e r i a l s k i l l s and do n o t mainta,in a d e q u a t e f i n a n c i a l o r ing records about t h e i r business.

The n e x t s e r i o u s problem f a c i n g s m a l l s c a l e i n d u s t r i a l i s t s i s t h e d i f f i c u l t y i n undertaking product, p r o c e s s and market r e s e a r c h .

This d i f f i c u l t y a r i s e s

p r i n c i p a l l y from t h e demands f o r money and s p e c i a l i s e d t a l e n t s n e c e s s a r y t o conduct r e s e a r c h .

The e n t e r p r e n e u r

i s most o f t i m e handicapped i n t h e s e a r e a s o f demands i t a l s o t a k e s t h e t i m e and a b i l i t y o f someone t o keep

a b r e a s t of developments i n methods, p r o c e s s and p r o d u c t s . T h i s d i f f i c u l t y i n u n d e r t a k i n g market r e s e a r c h may make t h e advent and t h e u s e f u l n e s s o f v i a b l e market i n f o r m a t i o n remain l o n g unknown t o t h e s m a l l i n d u s t r i a l i s t s .

The

problem o f r e s e a r c h i s l e s s t r u e o f b i g b u s i n e s s b e c a u s e i t i s h a s t h e n e c e s s a r y c a p i t a l and t r a i n e d e x p e r t s t o

u n d e r t a k e p r o d u c t and market r e s e a r c h on a l a r g e s c a l e . The l a s t probSem o f c o n s i d e r a t i o n i s t h e e f f e c t o f government p o l i c i e s and r e g u l a t i o n some o f which b r i n g d i s t o r t i o n s i n t h e s t r u c t u r e and management o f these business.

According t o K e i t h ~ a r s d e n " ? ' , s m a l l

e n t e r p r i s e s w i l l t h r i v e i f they a r e economically e f f e c i e n t w i t h o u t t h e p l e t h o r a o f government i n t e r v e n t i o n s .

REFERENCES 1.

G.

I . M. Young:

" F e a s i b i l i t y S t u d i e s v v : The A p p r a i s a l J o u r n a l Vol. 38 Chicago: American R e a l E s t a t e I n s t i t u t e , 1970

2.

John A. Ume;

F e a s i b i l i t y And V i a b i l i t y A p p r a i s a l Onibinoje P u b l i s h e r s , 1 9 7 7 p.42.

3.

Ibid

4.

Ibid

5.

George L. S c h u t i : . The A p p r a i s a l P r o c e s s :

6.

M.O. Kayode

New York, 1953.

The A r t o f P r o j e c t E v a l u a t i o n ; I b a d a n U n i v e r s i t y P r e s s , 1979.

7.

E n c y c l o p a e d i a B r i a n i c a , Vol. 1 6 , 1 5 t h E d i t i o n 1973p.915.

8.

Ibid

9.

F e d e r a l O f f i c e o f S t a t i s t i c s , Lagos 1993.

10.

N.N.

Okorie;

S m a l l S c a l e B u s i n e s s ; I t ' s Impact on N i g e r i a Economy.

Ododuma B

J o u r n a l No. 8 , 1982. p . 9 . 11.

H . P . Ogaga: .

12.

.

P. H a l l y

Encouraging Small S c a l e E n t e r p r i s e s ; B u s i n e s s Time. A p r i l 1 7 , 1986. p . 1 3 Small B u s i n e s s V e n t u r e s , 2nd E d i t i o n ( C a r l i f o r n i a ; Wedsworth P u b l i s h i n g Company, 1 9 8 3 ) .

13.

K.J.Albert

S t r a i g h t T a l k About S m a l l B u s i n e s s 2nd E d i t i o n Englewood C l i f f ; N . J . H a l l I n c . 1980. p.61.

Prentice

14.

M.Allsopp

Survival In Business E n t e r p r i s e s ; London, Mercury House I n c . 1975.p.17

15

Akkwaeze

G.C.

Small S c a l e I n d u s t r i e s And NAtional Development ; Development ---Outlo& Vol. 1 -.

NO. 16.

O.F. O j i a k o

1 0 Lagos, A p r i l 1987. p . 1 0

Problem o f Small S c a l e E n t e r p r i s e s I n Nigeria.The Business ;

---

Vo1.15 (UNN Enugu), 1987. p . 4 0

17.

G,

Roger

A p r a c t i c a l P l a n n i n g For S m a l l B s i n e s s ;

Harward B u s i n e s s Review Vo1 .42 No. 5 , 1964. -------~....

18.

G.H.

Rice

S t r a t e g i c D e c i s i o n Making I n S m a l l B u s i n e s s ; J o u r n a l o f G e n- e-r a l Management ; -

V01.9. 19.

K.H.

Vesper

Y

..

P

1980. p . 6 3 . 3rd Edition

New V e n t u r e s t r a t----' egies -Englewood C l i f f s N . J .

-

Prentice Hall

I n c . 1981 p.58. 20

0. O s h

" E n s u r i n g S u r v i v a l Of Small S c a l e Industries",

B u s i n e s s Times A p r i l 1 0 ,

-~--

---

1989. p . 1 0 21.

K e i t h Marsden

Problems Of S m a l l B u s i n e s s : Ododuma B u s i n e s s J o u r n a l No. 1 7 1983 p . 4 1

-.-.

----.

CHAPTER THEE 3.0 3.1.1

- METHODOLOGY, DATA PRESENTATION ANALYSIS RESEARCH PREAMBLE Every r e s e a r c h work must have an o b j e c t i v e o t h e r w i s e

t h e r e s e a r c h i s a w a s t e o f money and e f f o r t .

The

o b j e c t i v e i n t u r n must have way(s) o f a r r i v i n g a t i t and t h i s i s i n f a c t what t h i s c h a p t e r s e e k s t o a c h i e v e . The methodology f o r t h i s was d e s i g n e d and e l a b o r a t e d u s i n g q u e s t i o n a i r e on p o t e n t i a l consumers,oral i n t e r v i e w , f i e l d s u r v e y o f t h e l o c a t i o n a l s i t e and review o f r e l a t e d works i n t h e p a s t .

Also t h e s t u d y o f market a n a l y s i s

and a p p l i c a t i o n o f v a r i o u s t e c h n i q u e s t o q u a n t i f y t h e v i a b i l i t y w i i l h e l p i n making r e s e a r c h more s u c c e s s f u l . About 80% o f t h e d a t a was based on s e c o n d a r y s o u r c e . 3.12

RESEARCH DESIGN According t o Osuala 1, s c i e n t i f i c problems can be

s o l v e d o n l y on t h e b a s i s o f d a t a and a major r e s p o n s i a b i l i t y of t h e i n v e s t i g a t o r i s t o s e t up a r e s e a r c h design capable of providing t h e data necessary t o t h e s o l u t i o n o f t h i s problem.

Research d e s i g n i n v o l v e s

t h e t e c h n i q u e and p r o c e d u r e f o r c o l l e c t i o n , c o l i a t i o n and a n a l y s i s o f d a t a .

This include developing research

i n s t r u m e n t and sampling p l a n .

According t o ~ o t l e r ' (1980)

, research

design

a l s o i n c l u d e s a s a m p l i n g p l a n which c a l l s f o r f o u r decisions Sampling Q n i t

-

That answers t h e q u e s t i o n , who

i s t o be surveyed.

Sampling S i z e

-

How many p e o p l e s h o u l d b e s u r v e y e d .

Sampling P r o c e d u r e

-

How s h o u l d t h e r e s p o n d e n t s

be chosen. Means o f C o n t a c t

-

How s h o u l d t h e s u b j e c t be

ed. A l l t h e s e were t a k e n c a r e o f i n t h e body o f t h i s

chapter.

I t s h o u l d be n o t e d t h a t t h e sampling u n i t f o r

t h i s s t u d y i s t h e u s e r s o f t h e p r o d u c t t o be produced. 3.1.3

DATA SELECTION/SOURCES OF DATA The d a t a f o r t h e research:?were c o l l e c t e d t h r o u g h

two s o u r c e s ; (a)

Primary Source

(b)

Secondary Source.

PRIMARY SOURCES

Primary d a t a c o n s i s t s o f o r i g i n a r i l y c o l l e c t e d d a t a f o r t h e s p e c i f i c p u r p o s e a t hand.

The n a t u r e o f

t h i s s t u d y demands t h a t t h e p r i m a r y d a t a n s e d s h o u l d be

-

g e n e r a t e d t h r o u g h t h e f o l l o w i n g ways : (a)

Q u e s t i o n a i r e on p o t e n t i a l consumers

(b)

Oral Interview

(c)

F i e l d s u r v e y of l o c a t i o n a l s i t e and e x i s t i n g f a c t o r i e s and machine f a b r i c a t o r s .

QUESTIONAIRE Since q u e s t i o n a i r e allows t h e respondent t o express h i s / h e r o p i n i o n i n w r i t i n g and b e c a u s e o f t h e number o f consumers and t h e t y p e o f d a t a n e e d e d , t h e r e s e a r c h made u s e o f t h e q u e s t i o n a i r e .

The r e s e a r c h employed

b o t h open ended and c l o s e d q u e s t i o n s .

'

Open ended

q u e s t i o n s r e q u i r e t h e r e s p o n d e n t t o t h i n k o u t t h e answers himself.

In closed questions, choice of a l t e r n a t i v e s

were p r o v i d e d t o r e s p o n d e n t from which he chos=

?-

the

o p t i o n h e gmsPde.nd. . a p p r o p r i a t e . INTERVIEW

Having known t h a t n o t a l l i n f o r m a t i o n a r e r e c o r d e d * t h e r e s e a r c h e r made u s e o f i n t e r v i e w t o supplement t h e d a t a gathered through q u e s t i o n a i r e .

Staff of the local

government concerned were i n t e r v i e w e d on t h e a r e a s r e l a t e d t o t h e study,,

These i n c l u d e t h e i n d u s t r i a l

p o l i c y o f t h e l o c a l g o v e r n e m e n t ' t h e i r e f f o r t towards and s u p p o r t i n g i n d u s t r i a l developments i n t h e a r e a , g e n e r a l

45

background i n f o r m a t i o n on t h e s t u d y a r e a . FIELD SURVEY S i n c e t h i s s t u d y i s on t h e f e a s i b i l i t y a p p r a i s a l on e s t a b l i s h m e n t o f an i n d u s t r i a l p r o j e c t , f i e l d s u r v e y t o d e t e r m i n e t h e topography and u t i l i t i e s o f t h e l o c a t i o n a l s i t e becomes n e c e s s a r y . r e s e a r c h e r t h e on-the-spot

Thisprovided t h e

assessment of t h e s i t e t o

determine i t s t e c h n i c a l f e a s i b i l i t y . SECONDARY DATA According t o ~ o t l e r( 1~9 8 0 ) , s e c o n d a r y d a t a a r e t h o s e t h a t a l r e a d y e x i s t somewhere, h a v i n g been c o l l e c t e d f o r another purpose.

With r e g a r d t o t h i s , t h e research'lzr

c o l l e c t e d t h e s e c o n d a r y d a t a f o r t h i s work from p a s t works and p u b l i c a t i o n s on f e a s i b i l i t y a n d v i a b i l i t y a p p r a i s a l , books on s m a l l s c a l e m a n u f a c t u r i n g , soap p r o d u c t i o n , j o u r n a l s , magazines, newspapers e t c .

The

c o l l e c t i o n o f most socondary d a t a were made p o s s i b l e by r e p e a t e d v i s i t t o t h e v a r i o u s l i b r a r i e s i n c l u d i n g t h a t o f t h e U n i v e r s i t y o f N i g e r i a Enugu Campus, t h e N a t i o n a l l i b r a r y of N i g e r i a i n Enugu and O w e r r i , N a t i o n a l A r c h i v e s Enugu, M i n i s t r i e s o f Finance And Economic P l a n n i n g and Commerce and I n d u s t r i e s , Enugu.

SAMPLE SIZE AND PROCEDURES

3.14

I n s e l e c t i n g t h o s e e l e m e n t s from which t h e i n f o r m a t i o n were t o be c o l l e c t e d , t h e r e s e a r c h e r d i d n o t aim a t u s i n g t h e w h o l e p o p u l a t i o n , r a t h e r t h e r e s e a r c h e r u s e d a p r o p o r t i o n o f t h e p o p u l a t i o n by t a k i n g a sample o f t h e s t u d y a r e a and b a s e d t h e c o n c l u s i o n a b o u t t h e whole p o p u l a t i o n on t h e i n f o r m a t i o n c o l l e c t e d from t h e s a m p l e . N a t u r a l l y , i f t h e r e s e a r c h e r were t o u s e t h e t o t a l p o p u l a t i o n o f A h i a z u M b a i s e , i t would invo1,ve a huge amount o f moeny, e n e r g y , t i m e and w i t h o u t any s p e c i a l r e s u l t t h a n t h e one p r o v i d e d by a w e l l d e s i g n e d s a m p l e of t h i s population. Thus, t h e r e s e a r c h e r t o o k a p r o p o r t i o n o f p o p u l a t i o n o f Ahiazu Mbaise which h a s t h e c h a r a c t e r i s t i c s o f t h e population.

The r e s e a r c h e r i s 9 5 % c o n f i d e n t t h a t h i s

f i n d i n g s w i l l be a c c u r a t e and t h e t o l e r a b l e e r r o r i s w i t h i n t h e range o f 5%.

Hence t h e r e s e a r c h e r d e t e r m i n e d

t h e s a m p l e s i z e u s i n g Freund and W i l l i a m s model 4

where n = :Sample S i z e p= P o s i t i v e response q= Negative response 9

z'= C o n f i d e n c e l e v e l -e2 = Limit.::of t o l e r a b l e e r r o r .

,

47

3.1.4.1

P I LOT SAMPLE

To determine t h e sample s i z e , a p i l o t s u r v e y was conducted. zones

-

The whole a r e a was d i v i d e d i n t o f o u r ( 4 )

A h i a r a E a s t , Ahiara West, Ekwerwu E a s t ,

Ekwerazu West and a p i l o t sample of t w e l v e ( l 2 ) , t h r e e (3) e a c h , were d i s t r i b u t e d t o t h e p o t e n t i a l consumers i n t h e zones.

T h i s was given t o them i n form of

questionaires t o fill.,

Based on t h i s , t h e r e s e a r c h e r

d i s c o v e r e d t h a t t e n (10) o u t of t h e twelve (12) consumers responded p o s i t i v e l y w h i l e t h e o t h e r two ( 2 ) responded negatively.

T h e i r r e a s o n s b e i n g t h a t t h e y do n o t t a k e

a c t i v e p a r t i n buying d e c i s i o n of t h e proposed p r o d u c t Hence, P o s i t i v e response i s

10

Negative r e s p o n s e i s

2

Percentage of p o s i t i v e response i s 10

= .83 E.'

P e r c e n t a g e of n e g a t i v e r e s p o n s e i s 2 . That i s

Therefore

n

=

z2

(pq)

.

.. ,

= .17

o r 83% or 17%

3.15

SAMPLING METHOD The r e s e a r c h e r u s e d t h e s t r a t i f i e d sample and random Here, s t r a t i f i c a t i o n involved. d i v i d i n g

s a m p l i n g methods.

t h e e n t i r e p o p u l a t i o n o f Ahiazu M b a b i n t o homogeneous part called strata.

The p o p u l a t i o n o f t h e a r e a was g o t

from t h e l o c a l government s e c r e t a r i a t and t h e 1 9 9 1 c e n s u s f i g u r e was u s e d .

Based on t h i s , t h e a r e a was d i v i d e d

i n t o f o u r zones a s i n d i c a t e d e a r l i e r f o r e a s y and b e t t e r c o v e r a g e and t h e two h u n d r e d and s e v e n t e e n (217) q u e s t i o n a i r e s were a d m i n i s t e r e d randomly t h r o u g h o u t t h e f o u r z o n e s . 3.16

NATURE OF DATA ANALYSIS

The n a t u r e o f d a t a a n a l y s i s employed i n t h i s s t u d y

is purely descriptive.

P r i m a r y and s i m p l e s t a t i s t i c a l

meth'ods were u s e d f o r example p e r c e n t a g e s o f t o t a l r e s p o n s e s . D e d u c t i v e r e a s o n i n g r e l e v a n t t o t h e s t u d y , o b j e c t i v e were a l s o used.

Note s h o u l d be made t h e r e f o r e t h a t t h i s

a n a l y s i s i s a t t a c h e d t o and b a s e d on t h e framework w r i t t e n i n t h e previous chapters.

3.17

RELIABILITY OF DATA I n t h e a n a l y s i s of t h e d a t a c o l l e c t e d f o r t h e

research, the researcher believes t h a t the data are r e l i a b l e , c o n s i s t e n t and e x p e r i m e n t a b l e s u b j e c t t o e x t e r n a l i n f l u e n c e and t o t h e l i m i t a t i o n s o f t h e s t u d y .

NOTES ON CHAPTER THREE (1)

Osuala E.C

-.

I n t r o d u c t i o n t o R e s e a r c h Methodology; 2nd E d i t i o n , Awka. A f r i c a n a F. F.B.

P u b l i s h i n g , 1987. (2)

P h i l @ K o t l e r : P r i n c i p l e s o f MArketing; Englewood C l i f f s , New J e r s e y . P r e n t i c e H a l l I n c . 1 9 8 0 . p.145.

(3)

Ibid

p. 146.

(4)

J . E . F r e u n d And F. J . W i l l i a m s ; Modern B u s i n e s s s t a t i s t i c s *2nd E d i t i o n , M a r s h a l f i e l d M a s s a c h u s t t e s ; Pitman P u b l i s h i n g I n c . 1970, p.170.

CHAPTER FOUR 4.0 4.1

DATA PRESENTATION AND ANALYSIS PREAMBLE:

In t h i s c h a p t e r , t h e primary d a t a f o r

t h i s s t u d y a r e p r e s e n t e d and a n a l y s e d . The s t u d y examined t h e consumer o v e r a l l a t t f t u d e towards t h e product of t h e proposed p r o j e c t .

As e a r l i e r

i n d i c a t e d i n t h e previous chapter, t h e simple percentage o f r e s p o n s e method

'has

.

adopted i n t h e p r e s e n t a t i o n

and a n a l y s i s . The a n a l y s i s c o v e r e d r e s p o n s e and r e s u l t s o b t a i n e d t h r o u g h t h e u s e o f q u e s t i o n a i r e s and t h e f i e l d s t u d y

.

c o n d u c t e d on t h e s i t e o f t h e p r o p o s e d p r o j e c t . A t o t a l o f two hundred and s e v e n t e e n (217) q u e s t i o n a k i a r e s were d i s t r i b u t e d t o s o a p consumers i n t h e a r e a a s d e t e r m i n e d from t h e sample s i z e .

Out

0.i

t h i s number o n l y

two hundred (200) were r e t u r n e d showing 92.2% r e s p o n s e . Of t h e two hundred t e t u r n e d s i x c o u l d n o t p a s s t h e r e s e a r c h e r s v a r i o u s r e l k a l b i l i t y and v a l i d i t y t e s t s and were t h e r e f o r e r e j e c t e d f o r improper c o n p l e t i o n l e a v i n g t h e number o f v a 1 i d : ' a n d a c c e p t e d q u e s t i o n a i r e s t o one h u n d r e d and n i n e t y f o u r ( 1 9 4 ) . 4.2 4.2.1

PRESENTATION AND ANALYSIS Q u e s t i o n a i r e s : : The two hundred (200) q u e s t i o n a i r e s

r e t u r n e d from t h e 217 a d m i n i s t e r e d r e s p o n d e n t s were

f u r t h e r c l a s s i f i e d on t h e b a s i s o f s e x , Age, M a r i t a l s t a t u s , E d u c a t i o n a l q u a l i t f i c a t i o n , o c c u p a t i o n , Income g r o u f i u s e of p r o d u c t s , r e a c t i o n s t o ' p r i c e , q u a l i t y o f t h e proposed p r o d u c t , a d v e r t i s e m e n t r e s p o n s e r a t e , a d v e r t i s e m e n t media i n f l u e n c e , p l a c e o f p u r c h a s e and s u g g e s t e d improvement.

We s h a l l p i c k on e a c h o f t h e

above c l a s s i f i c a t i o n s , t a b u l a t e each and analyst3 t h e i g responses. CLASSIFICATION OF RESPONDENTS ACCORDING TO SEX TABLE 4 . 1

(

SEX

NO.

OF RESPONSES

I

PERCENTAGE RESPONSE %

Ma1e Female

Total

4

194

= = = = = = = = = = ......................

i

100%

........................

From t h e ahoue t a b l e , 7 4 o r 38.1% of t h e responde n t s were male w h i l e 120 o r 61.9% were female.

This

shows t h e p r e s e n c e o f more women t h a n men p r e s e n t l y a t home and t h e t a r g e t o f t h e r e s e a r c h e r a t t h e r e a l p e o p l e involved i n t h e purchase o f t h e product.

CLASSIFICATION OF RESPONDENTS ACCORDING TO AGE TABLE 4.2

b OF E b f W E TarM FEMALE % OF MALE ESPONDENTS RESPONDENTS RESPCNDENT: RESPONDENTS RESPCNSE

AGE; ,GROUP:I IN Y F m

4U.E

Under 20

14

21:

-

29

10

30

-

39

20

10.3

40 and 'above 30

15.5

18.9 ..

13.5

74 ---------- .--------. --------.

TOTAL

The d a t a above i n d i c a t e t h a t o u t of:th,e,7!kmale r e s p o n d e n t s : 1 4 were below 20 y e a r s , 1 0 w i t h i n t h e age r a n g e o f 2 1 and 29, 20 w i t h i n t h e age r a n g e o f 30 and 39 and 3 0 , 40 y e a r s and above.

Out o f t h e 1 2 0 f e m a l e r e s p o n d e n t s , 20 were below

20 y e a r s , 25 w i t h i n t h e age r a n g e o f 2 1 and 29 y e a r s . 30 w i t h i n t h e a g e r a n g e 30 and 39 y e a r s and 40

yeare:,and

ahdve. We can deduce from t h e d a t a t h a t a g r e a t e r p e r c e n t a g e

above. o f r e s p o n d e n t s were from t h e age bragk8ts 3@'-ye'ars'-and . -. - .,. ~

1 _.4

_...I L_

T h i s e x p l a i n s t h a t t h e g r e a t e r p o p u l a t i o n a t home a r e m i d d l e aged and e l d e r l y p e o p l e as t h e y o u t h s have d e s e r t e d t h e v i l l a g e s i n s e a r c h o f means of l i v e l i h o o d .

Secondly, people

w i t h i n t h e s e a g e s a r e w i l l i n g t o g i v e i n f o r m a t i o n on t h e product.

6

53 CLASSIFICATION OF RESPONDENTS ACCORDING MARITAL STATUS TAR LE MAR I TAL

STATUS

RESPONDENT MALE

%

ESPONDENT

%

12.9

Single

TOTAL RESPONSE

%' TOTAL

49

Married

The a a b l e above i n d i c a t e t h a t 24 males and 25 f e m a l e s r e s p o n d e n t a r e s i n g l e a d d i n g up t o 49 s i n g l e r e s p o n d e n t s , w h i l e 50 male and 95 f e m a l e r e s p o n d e n t s a r e r e q u i r e d a d d i n g up t o 1 4 5 m a r r i e d r e s p o n d e n t s . . married

Thus we had more o f t h e

respondents t h a n unmarried ones.

25.3

A t o t a l r e s p o n s e o f 165 was r e c o r d e d which shows

t h e d e g r e e t o which many N i g e r i a n s c o n c e a l t h e i r income. StudiLes have shown t h a t most men h a r d l y make t h e i - r incomes known t o t h e i r i n v e s .

However t h e h i g h e s t number

o f r e s p o n d e n t s income group i s i n between W4000 and W7000 and above w i t h a b o u t 1 2 . 1 % i n d i c a t i n g no knoweldge o f any f i x e d income t o them.

This highest

number from t h e h i g h income g r o u p i n d i c a t e t h e a v a i l a b i l i t y nf p u r c h a s i n g power f o r t h e p r o d u c t . CLASSIFICATION OF RESPONDENTS ACCORDING T O OCCUPATION TABLE 4 . 6

OCCUPATION

(

Employed S e l f Employed Pensioner

NO OF RESPONDENTS

PERCENTAGE

140

75.7

40

21.6

5

2.7

185 100% .................................... ------.................... .................................................................

TOTAL

Employees o t h e r w i s e r e f e r e d t o a s w h i t e c o l l a r j o b b e r s ( P u b l i c S e r v a n t s , t e a c h e r s and employees o f p r i v a t e companies) fa'rm t h e h i g h e s t s h a r e o f o c c u p a t i o n g r o u p i n g s with 75.7%.

They a r e f o l l o w e d by t h e s e l f employed g r o u p ,

mostljr t r a d e r s and t e c h n i c i a n s and t h e n p e n s i o n e r s .

Since the

q u e s t i o n a i r e were randomly a d m i n i s t e r e d on e n l i g h t e n e d c l a s s , i t i s n o t s u r p r i s e t o f i n d t h e l a r g e s t number a f r e s p o n d e n t s

i n t h e employee group.

RESPONSE ON THE BRAND OF BAR SOAP USED TABLE -

4.9 I!

BRAND OF SOAP

N.O. OF RESPONDENTS

. . . .

Truck

PERCENTAGE

40

Duck Key O t h e r s (Any A v a i l a b l e ) I

The r e s p o n s e s f r o m t h e t a b l e above show t h a t 40 respondents s a i d t h a t they use t r u c k soap,30,

Duck s o a p , 20 "

Key s o a p w h i l e t h e r e m a i n i n g 1 0 0 do n o t have any p a r t i c u 1 . a ~ b r a n d , i n d i c a t i n g t h a t t h e y a r e p r e p a r e d t o p a t r o n i s e any b r a n d o f ba.r s o a p a v a i l a b l e a t t h e i r d i s p o s a l .

The r e s p o n s e

o f t h i s h i g h e s t number shows t h a t t h e r e i s m a r k e t f o r t h e p r o p o s e d p r o d u c t as t h e y a r e e x p e c t e d t o p a t r o n i s e i t t o o i f brought t o t h e i r reach.

ON HOW OFTEN THE RESPONDENT USE BAR SOAP TABLE 4 . 1 0 RESPONSE

NO OF RESPONDENTS

1

PERCENTATE

Very o f t e n Occassionally Not a t a l l TOTAL

192 ------------------ ....................... .......................

100%

......................

The d a t a from t h e t a b l e above show t h a t a b o u t 88.5% o f t h e r e s p o n d e n t s u s e b a r s o a p v e r y o f f e n , 1 0 . 4 % o c c a s i o n a l l y and meagre 1.1%c l a i m t h e y do n o t u s e b a r soap a t a l l .

The h i g h r e s p o n s e of p c o p l e t h a t t h e y u s e

b a r s o a p r e g u l a r y i s a n o t h e r i n d i c a t i o n t h a t t h e demand and t h e m a r k e t f o r t h e p r o p o s e d p r o d u c t i s t h e r e .

On

t h e whole a t o t a l 0.f 192 r e s p o n s e s were g o t . ON ESTIMATE OF MONTHLY EXPENDITURE ON BAR SOAP CONCUMTION

TARLE 4 . 1 1

N O OF RESPONDENTS

ESTIMATE

Do:-.not know

PERCENTAGE

46

-

The above shows t h a t a t o t a l o f 192 r e s p o n s e s were r e c o r d e d on t h e e s t i m a t e o f monthly e x p e n d i t u r e on s o a p consumption. 46

52 r e s p o n d e n t s c l a i m t h e y s p e n d a b o u t W600,

N500, and 46 c l a i m t h e y do n o t know t h e e x a c t amount

t h e y spend on s o a p consumption.

The above r e s p o n s e s

i n d i c a t e s an a v e r a g e monthly e x p e n d i t u r e o f a b o u t W500

"5

by r e s p o n d e n t s i n d i c a t i n g t h e l e v e l A emand and consumption of t h e p r o d u c t .

ON WHO MAKES THE BUYING DECISION IN THE HOUSEI-{OLD

TABLE 4 . 1 2

RESPONSE

NO OF RESPONDENTS

PERCENTAGE

The w i f e The husband

The d a t a above show t h a t 190 r e s p o n s e s were c o l l e c t e d . 100 s a i d t h a t t h e w i f e makes t h e buying d e c i s i o n w h i l e 40 claimed i t i s t h e husband, t h e r e m a i n i n g p e o p l e c h i m anybody.. can d e c i d e e s p e c i a l l y on consumer i t e m l i k e soap.

The

d a t a i n d i c a t e s t h a t soap can be bought by anybody a v a i l a b l e i n t h e h o u s e h o l d when needed.

TABLE 4.13 - . ON WHAT INFLUENCES THE BUYERS DECISION BASIS

NO OF RESPONDENTS

PERCENTAGE

Brand l o y a l t y Prevailing Price Q u a l i t y Uf Product Nothing

7

3.7

TOTAL

192

100%

................................................................. .................................................................

60 The above t a b l e show t h a t a t o t a l 1 9 2 r e s p o n s e s were c o l l e c t e d on what i n f l u e n c e s t h e b u y i n g d e c i s i o n o f respondents.

30 r e s p o n d e n t s show t h a t

t h e y a r e brand

l o y a l , 1 L O c l a i m t h a t t h e p r e v a i l i n g p r i c e d e t e r m i n e s , 35 s a y they consider q u a l i t y while 7 s a i d nothing influences the d e c i s i o n t o buy a p a r t i c u l a r p r o d u c t .

The h i g h e s t number

on t h e p r e v a i l i n g p r i c e i s a n i n d i c a t i o n o f t h e h a r d economic condition of the country

.

I t a l s o show how s e n s i t i v e

buyers a r e t o t h e p r i c e of products. ON WHERE RESPONDENTS BW-;THEIR SOAP

r

TABLE 4 . 1 4 BUYING OUTLET

NO OF RESPONDENT

PERCENTAGE

Supermarkets L o c a l Markets Provision Stores

A t o t a l o f 194 r e s p o n s e s were c o l l e c t e d .

The d a t a

above show t h a t 17.58 o f t h e r e s p o n d e n t s buy t h e i r s o a p from t h e s u p e r m a r k e t s , 33.5% from t h e l o c a l market w h i l e 4 9 % buy from t h e p r o v i s i o n S t o r e s n e a r t o them.

ON HOW RESPONDENTS 'CONSIDER P R E S E N T P R I C E O F S O A P TABLE 4 . 1 5 RESPONSE

II

Very h i g h

I

I NO O F RESPONDENTS 65

1

PERCENTAGE

I

33.5

Moderately high

The d a t a a b o v e i n d i c a t e t h a t 6 5 % o f t h e r e s p o n d e n t s

i:?.?.

c l a i m t h a t t h e p r e s e n t p r i c e i s v e r y h i g h , 95 s a i d t h a t i t i s m o d e r a t e l y h i g h w h i l e 34 r e s p o n d e n t s d i d n o t q u a r r e l w i t h t h e p r i c e w h i c h t h e y c l a i m i s a f f o r d a b l e t o them. The h i g h number o f r e s p o n d e n t s i n d i c a t i n g t h a t t h e p r e s e n t .-_ .- - - p r i c e i s h i g h i s a l s o a n i n d i c a t i o n o f t h e h a r s h e c o n o m i c c o n d i t i o n i n t h e c o u n t r y a n d i t s e f f e c t on t h e a v e r a g e

consumer.

Price of t h e proposed product should t h e r e f o r e

be f i x e d s l i g h t l y bedow t h e p r e v a i l i n g p r i c e i n t h e market

.

ON WHETHER P R I C E I N C R E A S E A F F E C T THE BUYERS D E C I S I O N TABLE 4.16 RESPONSE

Yes

TOTAL

NO O F RESPONDENTS

PERCENTAGE

A t o t a l o f 190 r e s p o n s e s were r e c o r d e d on w h e t h e r

t h e i n c r e a s e i n p r i c e a f f e c t s t h e buyers decision. 6 8 . 4 % o f t h e r e s p o n d e n t s answered p o s i t i v e l y w h i l e 31.6% o f t h e respondents s a i d t h a t i n c r e a s e i n p r i c e do n o t a f f e c t t h e i r d e c i s i o n t o buy a p a r t i c u l a r p r o d u c t . ON WHETHER ADVERT1 SEMENT OF A PRODUCT INFLUENCES BUYERS DECESION. .. ,

TABLE 4.17

I

RESPONSE

NO OF RESPONDENTS

I

PERCENTAGE

Yes

80

41.7

Do n o t l i s t e n t o a d v e r t

27

14.0

The t a b l e above show t h a t a t o t a l o f 192 r e s p o n s e s were r e c o r d e d on t h e i n f l u e n c e o f a d v e r t i s e m e n t on t h e buyers decision.

80 r e s p o n d e n t s i n d i c a t e d t h a t t h e y a r e

i n f l u e n c e d by a d v e r t i s e m e n t w h i l e 85 r e s p o n d e n t s s a i d t h e y a r e n o t i n f l u e n c e d by a d v e r t i s e m e n t .

27 indicated

t h a t t h e y do n o t l i s t e n t o a d v e r t i s e m e n t . On t h e improvement consumers w i l l e x p e c t on t h e new b r a n d s o f s o a p t o be i n t r o d u c e d i n t h e m a r k e t i n f u t u r e s e r i e s o f s u g g e s t i o n s were made.

While some r e s p o n d e n t s

s u g g e s t e d an improvement on t h e q u a l i t y o f t h e p r o d u c t t o meet an a c c e p t a b l e s t a n d a r d and compete

:

favourably

63

w i t h imported ones, o t h e r s suggested a reduction i n t h e p r e v a i l i n g market p r i c e of t h e product. SUMMARY OF QUESTIONAIRE ANALYSIS

4.3

From t h e d a t a c o l l e c t e d t h r o u g h t h e q u e s t i o n i t c o u l d be d e d u c e d t h a t t h e p r o p o s e d p r o d u c t i s an i m p o r t a n t h o u s e h o l d n e e d w i t h a v e r y h i g h p r e s e n t and f u t u r e demand.

The d a t a i n d i c a t e d t h a t v i r t u a l l y e v e r y h o u s e -

h o l d u s e Soap d a i l y e i t h e r f o r body c l e a n i n g o r f o r washing. The d a t a a l s o r e v e a l e d t h a t consumer a c c e p t a n c e of t h e proposed product w i l l be favourable s i n c e t h e q u a l i t y i s e x p e c t e d t o be h i g h and t h e p r i c e v e r y

. .

m o d e r a t e and a f f o r d a b l e by m a j o r i t y o f t h e consumers i n t h e area.

The s e n s i t i v e n a t u r e o f p r i c e and q u a l i t y t o

consumers were n o t e d d u r i n g t h e d a t a c o l l e c t i o n . T h e r e were a l s o s u g g e s t i o n s on t h e improvement e x p e c t e d i n t h e proposed p r o d u c t which i n c l u d e h i g h q u a l i t y and m o d e r a t e p r i c e .

A l l these w i l l help i n deg

-.

a n ' a c c e p t a b l e f e a s i b i l i t y r e p o r t on t h e p r o j e c t .

4.4 SUMMARY OF FINDINGS ON FIELD SURVEY The f i e l d s u r v e y c o n d u c t e d which was a n o t h e r s o u r c e of primary d a t a revealed t h e following:(1)

The s i t e f o r t h e p r o j e c t h a s enough l a n d f o r p o s s i b l e expansion i n t h e f u t u r e .

The s i t e h a s s u i t a b l e a c c e s s t o a m a j o r highway Ehime

-

Mbaise-Okpala

Road.

I t has a l o c a t i o n s t r a t e g i c a l l y placed f o r t h e

d i s t r i b u t i o n o f p r o d u c t s b o t h t o t h e l o c a l consumer and p o s s i b l e e x p o r t m a r k e t s The s i t e l e n d s i t s e l f t o s u i t a b l e g r a d i n g and

..a.r?il;la g ~. F i n a l l y , t h e s i t e h a s t h e needed u t i l i t i e s l i k e power, a s t h e s i t e i s hooked t o t h e n a t i o n a l g r i d and water t o t h e factory.

CHAPTER FIVE PROJECT SUMMARY AND RE COMEENDAT1ONS

THE PROJECT T h i s s t u d y was c a r r i e d o u t t o d e t e r m i n e : t h e m a r k e t i n g , t e c h n i c a l f e a s i b i l i t y , f i n a n c i a l and c o m m e r c i a l v i a b i l i t y o f e s t a b l i s h i n g a s m a l l s c a l e soap manufacturing i n d u s t r y i n A h i a z u Mbaise L o c a l . Government A r e a , Imo S t a t e . SPONSOR -The s p o n s o r o f t h e p r o j e c t i s t h e L o c a l Governement istration. INVESTMENT COST The t o t a l investment c o s t f o r t h e p r o j e c t i s e s t i m a t e d a t W2,417,100 made up a s f o l l o w s : F i x e d A s s e t s C a p i t a l Investmemt

=

W1,950,000

I n i t i a l Working C a p i t a l ( Y r . 1 )

=

302,000

-

115,100

Pre-investment 5 % C 0 n t i n g e n . c ~P r o v i s i o n TOTAL FINANCING PLAN The e n v i s a g e d f i n a n c i n g a r r a n g e m e n t i s a s f o & l o w s:Owners E q u i t y Term L,oan

1,000,000

11.37%

Overdraft

417,100

17.26%

TOTAL

PROFITABILITY

The pro-ject p r o m i s e s t h e f o l l o w i n g n e t p r o f i t a f t e r tax f o r projected f i v e years period:-

RETURN -

ON EQUITY

YEAR

% RETURN

RETURN ON TOTAL INVESTMENT YEAR

1

% RETURN

PAYBACK PERIOD

The payback p e r i o d f o r t h e p r o j e c t i s two y e a r s and t h r e e months ( 2 y r s and 3 m o n t h s ) .

T h i s s t u d y shows t h a t t h e p r o j e c t i s t e c h n i c a l l y f e a s i b l e and c o m m e r c i a l l y v i a b l e .

On t h i s b a s i s t h e

f o l l o w i n g recommendations t o w a r d s t h e r e a l i s a t i o n o f t h e p r o j e c t a r e ,made. (1.)

The i m p l e m e n t a t i o n o f t h e p r o j e c t s h o u l d be p u r s u e d w i t h o u t much w a s t e o f t i m e .

This w i l l help t o

e l i m i n a t e c o s t i n c r e a s e s which may a f f e c t i n p u t f i g u r e s used i n t h e study.

I t w i l l a l s o reduce t h e

c h a n c e s o f o c c u r e n c e o f any c h a n g e s i n t h e economy t h a t might a f f e c t t h e r e a l i s a t i o n o f t h e p r o j e c t . (2)

Adequate s t o c k o f raw m a t e r i a l s s h o u l d be c a r r i e d a t a l l times s o a s t o avoid problems-that might arise

as a r e s u l t of irregular supplies.

Five

( 5 ) p e r c e n t p r o v i s i o n i n p r i c e h a s been recommended

a n n u a l l y t o t a k e c a r e ' o f i n f l a t i o n a r y changes. (3)

Q u a l i f i e d p e r s o n n e l s h o u l d b e employed t o work f o r the project.

A t e n (10%) p e r c e n t i n c r e a s e i n wages

h a s been recommended a s from t h e t h i r d y e a r o f c o m ~ n e r c i a lo p e r a t i o n .

High q u a l i t y p r o d u c t s h o u l d be aimed a t by t h e p r o j e c t t o e n a b l e i t compete f a v o u r a b l y w i t h e x i s t i n g ones i n t h e market: A p p l i c a t i o n s h o u l d be made t o i n s t i t u t i o n a l i n v e s t o r s and i n v e s t m e n t banks f o r f i n a n c i a l assistance t o enable t h e project take off. THE FEASIBILITY REPORT

PREAMBLE I n t h e b r o a d e s t s e n s e , e v e r y r a t i o n a l d e c i s i o n t o make a new i n v e s t m e n t i s p r e c e d e d by an i n v e s t i g a t i o n o f t h e f e a s i b i l i t y of t h e p r o j e c t , whether o r n o t t h i s i s c a r r i e 2 o u t i n a f o r m a l manDer. The l a r g e r t h e p r o j e c t and the g r e a t e r t h e investment, t h e m r c formalized t h e investment.

Assurance i s needed t h a t t h e market

e x i s t s o r can be d e v e l o p e d , t h a t raw m a t e r i a l s can be obtained, t h a t s u f f i c i e n t labour supply i s a v a i l a b l e , t h a t l o c a l s e r v i c e s v i t a l t o t h e p r o j e c t a r e a t hand and t h a t t h e o v e r a l l c o s t s f o r p l a n t e q u i p m e n t , l a b o u r and raw m a t e r i a l s i n p u t s w i l l b e a c e r t a i n o r d e r . Most i m p o r t a n t l y , i t must be d e t e r m i n e d t h a t introme w i l l exceed c o s t s by a margin s u f f i c i e n t t o make t h e p r o j e c t financia

9a t t r a c t i v e .

However, i f t h e p r o j e c t i s s m a l l , t h e . s t u d y f o r m a t may be q u i t e i n f o r m a l .

P e r h a p s t h e r e will. be no f o r m a l

s t u d y a t a l l and l i t t l e a c c u m u l a t i o n o f a c t u a l d a t a . N o n e t h e l e s s , t h e f e a s i b i l i t y c a l c u l a t i o n s w i l l . have t o b e computed and e v a l . u a t e d even i f i n an i n f o r m a l manner, before t h e u l t i m a t e s t e p of a c t u a l investment i s taken. T h e r e a r e d i f f e r e n t ways of p r e s e n t i n g f e a s i b i l i t y report.

However, f o r t h e p u r p o s e o f t h i s p r o j e c t t h e

U n i t e d N a t i o n s I n d u s t r i a l Development O r g a n i s a t i o n (UNIDO) formag f o r p r e s e n t i n g f e a s i b i l i t y r e p o r t i s adopted here. 5.2

PROJECT BACKGROUND AND HISTORY The government o f Ahiazu Mbais h a s been a n x i o u s

t o e x p l o i t a m e a n i n g f u l development o f t h e s m a l l s c a l e industries in the area.

I t recognises t h a t a serious

e f f o r t i s needed t o upgrade t h e s t a n d a r d o f l i v i n g i n t h e a r e a t h r o u g h t h e encouragement o f m a n u f a c t u r i n g i n a d d i t i o n t o t r a d i n g which

..' , i

s

t h e source of livelihood

of g r e a t e r percentage of' t h e population. The v a r i o u s and p r e v i o u s a d m i n i s t r a t i o n s i n t h e l o c a l . government have i n t h e p a s t made s e v e r a l e f f o r t s t o s e t up small. s c a l e i n d u s t r i e s i n t h e a r e a i n l i n e w i t h t h e F e d e r a l Government p o l i c y on rural i n d u s t r i a l i sation.

The e s t a b l i s h m e n t o f a s m a l l s c a l e s o a p

i n d u s t r y i n t h e a r e a h a s been on t h e l i s t o f p r o j e c t s

earmarked f o r

e x e c u t i o n by t h e l o c a l government

istration.

The technol.ogica1 e f f e c t o f a s o a p

i n d u s t r y on t h e socio-economic s i t u a t i o n o f t h e l o c a l government i n g e n e r a l i s immense and i n c l u d e s t h e i n c r e a s e i n t h e number o f s k i l l e d w o r k e r s i n t h e l a b o u r f o r c e t h r o u g h employment and t m i n i n g i n t h e i n d u s t r y . I t i s a l s o e c o n o m i c a l l y and p o l i t i c a l l y d e s i r a b l e f o r

N i g e r i a t o p r o d u c e s o a p s i n c e s h e h a s t h e l o c a l raw m a t e r i a l s a t home. The economy i s no l o n g e r e n j o y i n g t h e bonanza c r e a t e d by t h e o i l boom. i n o i l revenue.

I t h a s slumped w i t h t h e d r o p

S i n c e one o f t h e economic t r a n s f o r m a -

t i o n b r o u g h t a b o u t by t h e o i l boom was t h e u r b a n b a s e d c o n c e n t r a t i o n o f s e r v i c e s and c o n s t r u c t i o n e n t e r p r i s e s , . of labour. t h e r u r a l a r e a s were &rained. +

Consequently,

t h e r e was d e p r e c i a t i o n o f development o f s e l f s u s t a i n i n g potentials.

The r e s u l t was an i n c r e a s i n g d r a i n on t h e

e x t e r n a l r e s e r v e s t o f i n d even b a s i c food r e q u i r e m e n t s of the increasing population.

T h e r e was t h e r e f o r e

d r a i n s i n t h e r e s e r v e t o meet t h e i n c r e a s i n g h i g h import p r o p e n s i t y f o r t h e c a p i t a l goods, raw m a t e r i a l s and consumer i t e m s .

To stem t h i s , t h e government

i n t r o d u c e d v a r i o u s c r i s i s management and economic p o l i c i e s r a n g i n g from t h e s t r u c t u r a l Adj.ustment Progamme t o t h e F o r e i g n Exchange M a r k e t s .

,

71 The b a s i c . j d i i l o s o p h y o f t h e s e schemes i.s t o r e v e r t t o c o n s i d e r a b l e s e l f r e l i a n c e by k n c r e a s i n g l o c a l p r o d u c t ion.. This approach i s i n t e n d e d t o reduce t h e l e v e l o f unemployment which had h i t even t h e g r a d u a t e and p o s t graduate l e v e l s .

The i n d u s t r i a l i m p l i c a t i o n o f t h e s e

features i n thepnomy- i s therefore t o redirect the production resources of those s e c t o r s t h a t a r e cost e f f e c t i v e i n t h e c o n v e r s i o n o f l o c a l raw m a t e r i a l s i n t o immediate o r f i n a l p r o d u c t s . P r a c t i c a l l y , a l l firms i n t h e manufacturing s e c t o r have u n d e r t a k e n programmes d i r e c t e d a t l o c a l s o u r c i n g of t h e i r m a t e r i a l s input.

A soap i n d u s t r y has 95% l o c a l

raw m a t e r i a l i n p u t . The j u s t i f i c a t i o n o f t h i s p r o j e c t i s b a s e d on t h e following f a c t o r s : -

-

The i n c r e a s i n g n e e d and demand f o r s o a p a s an i m p o r t a n t h o u s e h o l d n e e d b o t h f o r cleaning t h e body and f o r washing.

-

The n e e d t o d i v e r s i f y t h e r e v e n u e b a s e o f t h e l o c a l government.

-

The n e e d t o c r e a t e employment o p p o r t u n i t t e s f o r t h e indige.nes o f t h e a r e a .

-

The a v a i l a b i l i t y o f a b r i g h t i n v e s t m e n t c l i m a t e i n t h e a r e a of s o a p m a n u f a c t u r i n g .

-

The a v a i l a b i l i t y o f u t i l i t i e s l i k e power a s t h e l o c a l

government i s a h e a d y hooked t o t h e n a t i o n a l g r i d and w a t e r ' f o r i n d u s t r i a l and d o m e s t i c p u r p o s e s .

-

There i s a l s o a v a i l a b i l i t y i n l a r g e q u a n t i t y o f t h e major raw m a t e r i a l s i n t h e a r e a . The e x e c u t i o n o f t h e p r o j e c t i s i n t e n d e d t o l a s t

f o r one y e a r . 5.3

MARKET AND PLANT CAPACITY THE PRODUCT: SOAP

T h i s i s a cleansing a g e n t d i s c r i b e d c h e m i c a l l y a s an a l k a l i m e t a l s a l t o f a l o n g carbon c h a i n monocarboxylic a c i d r e p r e s e n t e d by sedium myristate(NaCODO13 H 2 9 ) .

CH2

CH2

CH2

CH2

CH2

CH2

Carboxylate

The hydrocarbon p o r t i o n i s hydrophobic and t h e Carboxylate p o r t i o n i s hydrophilic. The p r o d u c t can b e u s e d i n many ways.

I t can b e

u s e d f o r c l e a d n g human body, washing p l a t e s , p o t s and o t h e r househoad equipment, f a b r i c s and f l o o r s .

Hence

i t can be used i n h o u s e h o l d s , r e s t a u r a n t s . , h o s p i t a l s ,

laundry firms e t c . 5.3.2

MARKET According t o Imaga ( 1 9 9 4 ) p.603, t h e environment

i n which b u s i n e s s o p e r a t e s i s known a s market.'

It is

h i g h l y i n f l u e n c e d by t h e b u y e r s and s e l l e r s b a h a v i o u r s , produ c t o f f e r e d by t h e s u p p l i e r s , t h e i r p r i c e s and q u a n t i t y , p o l i t i c a S l e g a 1 and a d m i n i s t r a t i v e r e s t r i c t i o n s . The e n t i r e l o c a l government a r e a and s t a t e w i l l b e t a k e n a s t h e p r i m a r y m a r k e t zone f o r t h e p r o d u c t .

The

p r o d u c t w i l l n a t u r a l l y f i n d p r e - e m p t i v e o p t i o n among the locals.

T h e r e f o r e , t h e market f o r t h e p r o d u c t w i l l

comprise t h e i n d i v i d u a l h o u s e h o l d s and s e r v i c e o r g a n i s a t i o n w i t h i n t h e l o c a l government and i t s e n v i r o n s .

In other

words, t h e p r o d u c t w i l l o f f e r p r i m a r i l y t o r e s i d e n t s o f Ahiazu Mbaise and s e c o n d l y o t h e r p a r t s o f t h e s t a t e . Thus, a l l u s e r s o f s o a p i n t h e s e a r e a s c o n s t i t u t e t h e market f o r t h e p r o d u c t . 5.3.3

MARKET DEMAND STUDY

The e s t i m a t e o f demand c a n n o t be e a s i l y e v a l u a t e d b o t h f o r l o c a l and i n d u s t r i a l u s e s .

However, w i t h t h e

p r o l i f e r a t i o n o f l a u n d r y and d r y c l e a n i n g f i r m s , i n c r e a s e i n b i r t h s w i t h r e d u c e d i n f a n t m o r t a l i t y , s o a p w i l l always be i n demand.

I t need a l s o b e s a i d t h a t t h e p r o d u c t can

be used b o t h a s a t o i l e t s o a p and l a u n d r y s o a p going by r e s u l t s from t h e r e s e a r c h conducted, andsohas auniquemarketniche.

i t i s t o b e perfumed

A l l consumers o f t h e

product c o n s t i t u t e t h e t o o l f o r t h e product.

74

Obviously, t h e product has competitors l i k e T r u c k - s o a p , Duck. s o a p , Key s o a p b o t h i n b a r and t a b l e t forms a s i n d i c a t e d i n t h e r e s u l t o f t h e m a r k e t r e s e a r c h conducted.

However, t h e o n l y d i f f e r e n c e i s i n t h e

f a c t t h a t t h e p r o j e c t p r o d u c t c a n n o t o n l y be u s e d on c l o t h e s b u t can a l s o be used a s t o i l e t soap because i t i s perfumed.

The m a r k e t s i t u a t i o n i s s u c h t h a t t h e p r o j e c t w i l l b e more t h a n a d e q u a t e l y accomodated w i t h i n t h e a v a i l a b l e domestic market.

The m a r k e t i s more t h a n enough t o

a b s o r b t h e p r o d u c t s w i t h i n a downstream i n d u s t r i a l i s e d Ahiazu Mbaise L o c a l Government Area.

I t can a l s o f i n d

m a r k e t i n n e i g h b o u r i n g s t a t e s , b u t on a n a t i o n a l s c a l e , t h e p r o d u c t w i l l n o t make any s i g n i f i c a n t impact on t h e supply market. The p l a n t w i l l i n i t s f i r s t y e a r o f o p e r a t i o n p r o d u c e one s i z e o f p r o d u c t t y p e s .

I n consequence of

t h i s d i s t i n - c t f e a t u r e , a segment o f t h e m a r k e t i s expected t o be covered.

This d i f f e r e n t i a t i o n i n

products i s advantageous becuase i t allows f o r deeper p e n e t r a t i o n i n t o t h e market. 5.3.4.

CURRENT DEMAND The c u r r e n t demand f o r t h e p r o d u c t ( s o a p ) i s v e r y

h i g h a s v i r t u a l l y e v e r y h o u s e h o l d and o r g a n i s a t i o n i n t h e a r e a i n d i c a t e d t h e y u s e s o a p d a i l y i n body c l e a n i n g

I

i

and w a s h i n g .

As e a r l i e r indicated, the proliferation

o f l a u n d r y a n d d r y c l e a n i n g f i r m s h a s made t h e demand f o r soap c u r r e n t l y very high.

The m a r k e t s i z e e s t i m a t e i s

f o r o v e r twenty thousand (20,000) household p r e s e n t l y .

,

The a n n u a l e s t i m a t e d e x p e n d i t u r e on t h e a v e r a g e p e r h o u s e h o l d on t h e p r o d u c t i s c u r r e n t l y p u t a t o v e r f i v e h u n d r e d n a i r a (W500) a s i n d i c a t e d i n t h e r e s u l t o f t h e r e s e a r c h The m a r k e t s i z e i t t h e n aimed a t by m u l t i p l y -

conducted. ing

t h e e x p e n d i t u r e by number o f h o u s e h o l d s .

m a r k e t s i z e i s 2 0 , 0 0 0 x 500 5.3.5

=

Hence

W10,000,000 c u r r e n t l y .

MARKET SHARE ESTIMATE Market s h a r e i s t h e p r o p o r t i o n o f t h e t o t a l m a r k e t

which t h e p r o m o t e r s hope t o c o n t r o l when t h e b u s i n e s s i s established. forecast.

The s h a r e o f t h e m a r k e t becomes t h e s a l e s

E s t i m a t i o n of market s h a r e w i l l a s s i s t i n

product planning.

The d e t e r m i n a t i o n o f t h e f o l l o w i n g

-

Estimated market f o r productTin t h e i n d u s t r y

-

The number o f c o m p e t i t o r s ( t h r e e i n number p l u s the product,

making f o u r 4 ) .

The m a r k e t s h a r e i s e s t i m a t e d by d i v i d i n g t h e m a r k e t f o r t h e p r o d u c t by t o t a l number o f c o m p e t i t o r s

5.3.6

MARKET GROWTH POTENTIALS/FUTURE DEMAND

F u t u r e demand i s e x p e c t e d t o b e h i g h a s t h e p o p u l a t i o n i s e x p e c t e d t o grow w i t h an i n c r e a s e i n t h e demand f o r s o a p .

With t h e e x p e c t e d i n c r e a s e i n t h e

p r o l i f e r a t i o n o f l a u n d r y and d r y c l e a n i n g f i r m s . i n c r e a s e i n b i r t h s w i t h reduced i n f a n t m o r t a l i t y s o a p w i l l always be i n demand.

There a r e v a l i d reasons

t o e x p e c t improvement i n t h e growth o f t h e i n d u s t r y . T h i s w i l l l e a d t o growth o f t h e n a t i o n a l economy and t h e r e b y i n c r e a s e t h e Gross Domestic P r o d u c t . 5.3.7

SALESPLAN AND MARKETING P r o j e c t e d s a l e s i s p u t a t 2 5 % o f t h e market s h a r e .

S i n c e t h e p r o d u c t s w i l l b e new t o t h e m a r k e t i t i s considered s t r a t e g i c t o s t a f t a t t h a t r a t e . 5.3.8

PRICING POLICY The p r i c i n g p l o i c y w i l l b e m a r k e t d e t e r m i n e d .

The o p e r a t i o n c o s t w i l l b e i n e f f i c i e n t s i n c e i t may end up w i t h a low p r i c e o r p r i c e t h e p r o j e c t e d p r o d u c t out of t h e market.

I n o t h e r words i n f i x i n g t h e p r i c e ,

it w i l l be i n accordance w i t h t h e competitors p r i c e .

T h i s i m p l i e s t h a t t h e p r i c e o f t h e p r o d u c t w i l l compete favourably with t h a t o f o t h e r competitors t o avoid p r i c e war and l e s s s a k s ,

The a d v a n t a g e s o f t h e f o l l o w - t h e - m a r k e t

pricing

method i s f a v o u r e d f o r 5hese r e a s o n s

-

S i n c e t h e p r o d u c t i s new t o t h e m a r k e t , t h e p r i c e i s n o t e x p e c t e d t o d e v i a t e much from p r i c e s

p r o s p e c t i v e consumers a r e u s e d t o ;

-

H i g h e r t h a n t h e p r e v a i l i n g market p r i c e may e n c o u r a g e

! I

unwanted c o m p e t i t i o n .

Hence p r i c e s s e t s h o u l d p u t

o f f c o m p e t i t o r s from e n t e r i n g t h e f i e l d a s much a s possible. The p r o d u c t p r i c e w i l l f i r s t a d o p t . . t h i s method and t h e n i n c r e a s e t h e p r i c e a s demand i n c r e a s e s .

The

p r o d u c t s t r u c t u r e , q u a l i t y s p e c i f i c a t i o n s and c o m p e t i t i v e p r i c e s s h o u l d p r o v i d e t h e means o f a c h i e v i n g t h e d e s i r e d m a r k e t p e n e t r a t i o n s i n c e t h e immediate c o m p e t i t o r s a r e n o t e x t r a l o r d i n a r i l y formidable.

The p r i c e p e r b a r o f

t h e s o a p t o be p r o d u c e d i s p u t a t N=40. MARKETING STRATEGY

5.3.9

The m a r k e t i n g s t r a t e g y f o r t h e p r o d u c t o f t h e proposed p r o j e c t i s t o s e l l t h e products through d i s t r i b u t o r s t o b e a p p o i n t e d and p a r t l y d i r e c t t o r e t a i l e r s e s p e c i a l l y on m a j o r m a r k e t d a y s i n t h e a r e a t h r o u g h salesmen.

S u b s e q u e n t l y , a t t e n t i o n w i l l b e f o c u s s e d on

e x p a n s i o n o f t h e m a r k e t a r e a t o encom n e a r b y towns.

D i s t r i b u t i o n i s by way o f a d i r e c t s u p p l y t o f u l f i l l o r d e r s on l o n g . d u r a t i o n c o n t r a c t o f s a l e s b a s i s . P r o m o t i o n a l p r a c t i c e s w i l l a l s o be by d i r e c t d e a l i n g s w i t h i n which r e q u i r e d p r o d u c t s p e c i f i c a t i o n s a r e r e c o n c i l e d and matched w i t h , p r o d u c t i o n s c h e d u l l i n g programmes. 5.3.10

DISTRIBUTION SYSTEM

The d i s t r i b u t i o n system f o r t h e proposed i n d u s t r y ' s p r o d u c t s w i l l be t h r o u g h t h e f o l l owing c h a n n e l s ;

-

Driver/Salesman t o l o c a t i o n d e p o t s s i t u a t e d i n d . i s t r i c t s i n p r i m a r y t a r g e t s t o u l t i m a t e consumers.

-

Driver/Salesman t o r e t a i l e r s . i n major m a r k e t .

-

D i r e c t t o d i s t r i b u t o r s a p p o i n t e d by t h e company.

-u r i v e r i S a l e s m a n t o major p r o v i s i o n s t o r e s . These d i s t r i b u t i o n c h a n n e l i s i n l i n e w i t h r e s p o n s e s

from p o t e n t i a l consumers d u r i n g t h e r e s e a r c h conducted. This i s i l l u s t r a t e d thus:-

Lot

J/

Con sumers

Consumers

J.

Provision st o r

4

Consumers To f a c i l i t a t e d i s t r i b u t i o n , fairly u s e d pick-up van w i l l be r e q u i r e d .

79 5.3.11

MENT AND PROMOTION

Though r e s p o n s e s from p o t e n t i a l consumers

indica-

t e d t h a t a d v e r t i s e m e n t do n o t i n f l u e n c e t h e i r buying d e c i s i o n , t h e r e s e a r c h e r used deductive reasoning t o e s t a b l i s h t h e importance o f a d v e r t i s e m e n t and promotion e s p e c i a l l y f o r new p r o d u c t s .

S i n c e t h e volume w i l l

i n i t i a l l y be s m a l l and b e c u a s e o f t h e n a t u r e o f t h e t a r g e t market, i t i s considered t h a t handbills be used.

Also p u b l i c a d d r e s s system i s t o be i n s t a l l e d

on t h e p i c k - u p van f o r a d t e r t i s e m e n t and p r o m o t i o n a l purposes. For hand b i l l s , 1 , 2 0 0 hand b i l l s w i l l be p r i n t e d and d i s t r i b u t e d t o r e t a i l e r s and consumers.

The c o s t

o f t h e hand b i l l . w i l l b e p u t a t @000 5.3.12

PLANT CAPACITY

The p r o d u c t i o n p l a n c o n s i d e r s e s t i m a t e s t o a c h i e v e desired sales capacity.

The p r o d u c t i o n p l a n t f o r t h i s

p r o j e c t h a s t h e p r o j e c t e d c a p a c i t y o f p r o d u c i n g 200 b a r s o f s o a p d a i l y g i v e n a p r o j e c t e d t o t a l of 60,000 b a r s t o be produced i n 300 working days i n t h e f i r s t y e a r o f operation a t 70% i n i t i a l capacity u t i l i z a t i o n .

is

p l a n n e d t o o p e r a t e a one s h i f t working s y s t e m o f e i g h t h o u r s d a i l y e x c e p t on S a t u r d a y s and Sundays.

The l e v e l

80

o f a c t i v i t y i n t h e p l a n t w i l l be graduated i n o r d e r t o promote g r a d u a l e n t r y i n t o t h e m a r k e t , a l l o w t i m e f o r t h e development o f n e c e s s a y s k i l l and a l s o t i m e t o h a n d l e problems a s s o c i a t e d w i t h p r o d u c t i o n p l a n t s . 5.4

MATERIALS INPUT ----

-.

I n t h e m a n u f a c t u r i n g o f s o a p , t h e p n y s i c a i and c h e m i c a l c h a r a c t e r i s t i c s o f t h e f i n i s h e d p r o d u c t s depend d i r e c t l y on t h e raw m a t e r i a l s employed i n t h e , p r o d u c t i o n s . D T f f e r e n t k i n d s o f r a w m a t e r i l a s a r e employed i n t h e production.

However, t h e p r i n c i p a l raw m a t e r i a l s t h a t a r e

recommended f o r O S e i n t h e p r o p o s e d i n d u s t r y a r e palm o i l ( b i e a c h e d ) , palm k e r n e l o i i and t h e c h e m i c a l components and a d d i t i v e s i n c l u d e c a u s t i c s o d a (sodium h y d o x i d e ) , c a u s t i c p o t a s h , p h o s p h o r i c a c i d , sodium c a r b ~ n a t e , sodium c h l o r i d e ( s a l t l , p e r f u m e s and c o l o u r i n g m a t t e - r . Most o f t h e s e raw m a t e r i a l s a r e s o u r c e d l o c a l l y . Palm o i l and palm k e r n e l o i l a r e p r o d u c e d i n v e r y l a r g e quantity i n t h e area.

While palm o i l w i l l b e p r o v i d e d

e t h r o u g h t h e ADA PALM N I L L a t Umuogu, ~ b o k ~ b a i sand n e a r b y l o c a l m a r k e t s , t h e palm k e r n e l o i l w i l l b e o b t a i n e d b o t h from t h e palm k e r n e l o i i M i i l i n Nguru Mbaise and o t h e r l o c a l p a l n k e r n e l e x t r a c t i o n Mills w i t h i n t h e l o c a l government. The c h e m i c a l a d d i t i v e s c a n b e o b t a i n e d i n m a j o r s u r r o u n d i n g towns l i k e Aba, Owerri o r even Enugu from

importers of t h e s e products..

On t h e whole a b o u t 9 5 %

o f t h e raw m a t e r i a l s f o r s o a p p r o d u c t i o n a r e s o u r c e d locally.

The sum o f W540,OOO h a v e b e e n p r o j e c t e d f o r

t h e p r o v i s i o n o f raw m a t e r i a l s f o r t h e f i r s t y e a r o f operation. A b u f f e r p r o v i s i o n i s made t o a b s o r b t h e s h o c k o f

f l u c t u a t i n g demand o f p r o d u c t and s u p p l y o f raw m a t e r i a l s . I t i s e n v i s a g e d t h a t two ( 2 ) months raw m a t e r i a l n e e d s

w i l l be a d e q u a t e . in

Table'S.1.

S e e s c h e d u l e f o r raw m a t e r i a l s c o s t

The u n i t c o s t o f raw m a t e r i a l s p e r b a r i s

p u t a t W9.00. TABLE 5 . 1 ESTIMATED COST OF RAW MATERIALS ANNUALLY Y e a r o f Commercial operations

E s t i m a t e d C o s t o f "Raw M a t e r i a l s (W) 540,000 647,986 680,386 758,910 937,753

NOTE:

5 % a n n u a l i n c r e a s e i n c o s t i s recommended t o t a k e c a r e of i n f l a t i o n a r y r a t e .

INVENTORY CONTROL SYSTEM

5.4.1

An i n v e f l t o r y system f o r raw m a t e r i a l s used i n p r o d u c t i o n i s recommended f o r p r o p e r c o n t r o l o f raw m a t e r i a l needs.

T h i s w i l l i n v o l v e ( t h e use o f b i n c a r d s .

This c a r r i e s such i n f o r m a t i o n a s t h e name o f t h e i t e m , s t o c k number and re'order

point.

A d d i t i o n s and s u b s t r a c -

t i o n s t o t h e inventory a r e recorded.

This w i l l e n a b l e

management t o e a s i l y a s s e s s t h e a v a i l a b l e and needed. I n f o r m a t i o n such a s p r i c e , amount a r d e r e d b u t n o t r e c e i v e d , s p e c i f i c a t i o n s , l o c a t i o n s i n s t o c k room e t c a r e a l s o recorded f o r e a s y - m a t e r i a l handling istration. The recommended i n v e n t o r y c a r d w i l l l o o k t h u s : Fig. 5.2

I

ITEM REORDER POINT

ORDE R AMOUNT

IN DATE

STOCK CONTROL

OUT AMOUNT

DATE

AMOUNT

BALANCE

LOCATION ANDSITE

5.5

The p r o p o s e d soap m a n u f a c t u r i n g i n d u s t r y i s t o be l o c a t e d n e a r t h e l o c a l governmeht h e a d q u a r t e r s a t Afor-Oru on a 3 a c r e l a n d p r o v i d e d by t h e l o c a l government a d m i n i s t r a t i o n f o r such p u r p o s e ,

-

The

s i t e commands good; a c c e s s r o a d t o t h e a s p h a l t e d Ehime- Mbaise

-

Okpala r o a d l i n k i n g t h e s i t e t o t h e

commercial town of Aba, P o r t - H a r c o u r t , Owerri t h e s t a t e c a p i t a l and Umuahia t h e c a p i t a l o f Abia S t a t e . The s i t e t h u s p r o v i d e s easx - a c c e s s t o major commerc i a l areas.

The l o c a t i o n i s w e l l a p p r o p r i a t e i n

o f good a c c e s s r o a d s f o r s u p p l y o f needed raw m a t e r i a l s and f o r e v a c u a t i o n o f f i n i s h e d p r o d u c t s . No problem o f t r a n s p o r t a t i o n o f goods and p e r s o n a l a r e t h e r e f o r e envisaged. During

t h e f i e l d s u r v e y conducted on t h e s i t e

by t h e r e s e a r c h e r , t h e f o l l o w i n g o b s e r v a t i o n s were

-

made :

-

The s i t e have enough l a n d f o r p o s s i b l e e x p a n s i o n o f a c t i v i t i e s and s e r v i c e s .

-

The s i t e have s u i t a b l e a c c e s s t o major highway.

-

I t has a l o c a t i o n s t r a t e g i c a l l y p l a c e d f o r t h e

d i s t r i b u t i o n of products both t o t h e l o c a l consumer and p r o b a b l e e x p o r t m a r k e t s .

-

I t l e n d s i t s e l f t o s u i t a b l e g r a d i n g and d r a i n a g e .

-

F i n a l l y , i t h a s p r o v i s i o n f o r power and w a t e r supply t o ' t h e factory.

5.5.1

UTILITIES The u t i l i t i e s r e q u i r e d f o r t h e f a c t o r y o p e r a t i o n

i n c l u d e e l e c t r i c i t y and w a t e r s u p p l y .

Water i s o b t a i n a -

b l e l o c a l l y through t h e bore hole s i t u a t e d n e a r t h e l o c a l government h e a d q u a r t e r a t A f o r

-

Oru -0gbe r o a d .

There

a r e e x i s t i n g t a p s b e i n g s u p p l i e d w a t e r from t h e b o r e h o l e

in the site.

A p r o v i s i o n i s t h e r e f o r e made f o r t h e

c o n s t r u c t i o n o f a 10,000 l i t r e over head tank f o r water storage

a t the factory site.

The c o s t i s p u t a t W35,OOO.

Though t h e p r o p o s e d s i t e i s a l r e a d y hooked t o t h e n a t i o n a l g r i d which w i l l s e r v e a s a m a j o r s o u r c e o f power t h e r e i s a l s o a 50 KVA g e n e r a t i n g s e t a t t h e l o c a l g o v e r n m e n t l i e a d q u a r t e r s which i s e x p e c t e d t o b e l i n k e d t o t h e f a c t o r y s i t e t o meet t h e power n e e d s o f t h e f a c t o r y i n c a s e s o f o c c a s s i o n a l power c u t s from t h e p u b l i c power s u p p l y s y s t e m a s p r e s e n t l y e x p e r i e n c e d . 5.6

PROJECT E N G I N E E R I N G

5 . 6 . 1 MACHINERY AND EQUIPbENTS When t e c h n o l o g y s e l e c t i o n and P l a n t c a p a c i t y d e c i s i o n h a s been c o m p l e t e d , i t i s e s s e n t i a l t o make d e c i s i o n a b o u t t h e r i g h t machinery and equipment t o b e s e l e c t e d .

The e q u i p m e n t s and m a c h i n e r y r e c t ' d u c t i o n w i l l work f o r a p e r i o d o

,?nded f o r t h e

pro-

ve y e a r s w i t h o u t

any a n t i c i p a t e d breakdown a n d i n t e r u p t i o n i n t h e production process. 0

A p r o c e s s a n a l y s i s h a s been c o m p l e t e d a n d t h e f o l l w i n g A

p r o d u c t i o n equipment s e l e c t e d

and recommended f o r t h e

proposed p l a n t ; (a)

Soap M i x e r :

Here two t y p e s , t h e k e t t l e a n d t h e

b a t c h r e a c t o r f o r s o a p making a r e recommended.

These

equipments a r e s e l e c t e d because o f t h e f u l l b o i l e d p r o c e s s of the batch process of production adopted f o r t h e f a c t o r y . A b r i e f d e s c r i p t i o n o f t h e two e q u i p m e n t s a r e g i v e n below. ( i1

T h i s i s c y l i n d e r i c a l w i t h cone b o t t o m

Kettle:

-

equiped w i t h d e l i v e r y pipes f o r f a t , water, l y e , b r i n e and n i g r e .

A

swinging s u c t i o n o r 'skimmer1 p i p e

o p e r a t e d from t o p i s i n s t a l l l e d t o p e r m i t d r a i n i n g o f f t h e c o n t e n t s t o any d e s i r e d l e v e l a n d i n t h e b o t t o m , another

l i n e i s provided f o r withdrawing t h e r e s i d u e

l e f t f o r skim ming. t o conserve h e a t .

The k e t t l e i s u s u a l l y l a g g e d ' Open s t e a m c o i l s i n t h e c o n e s e c t i o n

supply h e a t a g i t a t e t o t h e c o n t e n t s . The k e t t l e i s shown b e l o w : -

K e t t l e f o r soap makinq by t h e f u l l boiled. process.

KEY : -

-

1

2

Steam. i n l e t f o r t h e p e r f o r a t e d steam c o i l . Steam f o r a g i t a t i o n .

3

-

Swing p i p e f o r pumping o u t t h e s o a p

4

-

Run o f f f o r l y e l i q u o r and g l y c e r i n e l i q u o r

(ii)

The second t y p e i s t h e Batch R e a c t o r .

It is

c y l i n d e r i c a l tank with a base f o r d i r e c t heating.

From

t h e b a s e o f c y l i n d e r t h r o u g h t h e f i r e box i s c o n n e c t e d a p i p e f o r removal o f t h e l y e .

The equipment h a s a mech-

a n i c a l a g i t a t i o n system f o r mixing t h e c o n t e n t s o f t h e soap d u r i n g t h e p r o c e s s .

In t h e case, t h e source of

h e a t aan be c o a l , f i r e w o o d o r t h e l i k e .

I f coal o r

firewood i s t o be u s e d , an e x h a u s t p i p e i s p r o v i d e d a t t h e o t h e r s i d e o f t h e h e a t i n g b a s e t o remove t h e e x h a u s t gases.

The equipment i s shown below;

KEY : Bgtch R e a c t o r f o r Soap Making

.

1

2 3

4 5 6

F i g . 5.4'

-

Mechanical A g i t a t o r Soap t a n k Heat b a s e Opening f o r h e a t

'-

SUPP~Y P i p e f o r removing l y Tap.

-

;8:7

Any of t h e m i x e r s d e s c r i b e d above can be used i n t h i s project. O t h e r equipments recommended f o r p r o d u c t i o n a r e :-

-

The 38cm by 5.5cm s t e e l s o a p mould t h e dimension o f t h e s o a p mould was d e t e r m i n e d u s i n g t h e s t a n d a r d s p e c i f i c a t i o n s o f b a r and l a u n d r y s a o p s .

-

C u t t e r f o r c u t t i n g t h e s o a p mould i n t o a p p r o p r i a t e sizes.

-

The s t a m p i n g machine f o r i n s c r i b i n g t h e b r a n d name. A l l t h e equipments a r e d e s i g n e d and f a b r i c a t e d

l o c a l l y and does n o t i n v o l v e any i m p o r t a t i o n . l o c a l l y a v a i l a b l e and e a s y t o o p e r a t e .

They a r e

They can a l s o

be s e r v i c e d and r e p a i r e d l o c a l l y by l o c a l f a b r i c a t i n g experts.

I n f o r m a t i o n on t h e a v a i l a b i l i t y o f t h e s e

equipments can be g o t from t h e chamber o f Commerce, M i n i s t r y o f I n d u s t r i e s and Technology and P r o j e c t Development I n s t i t u t e . In a d d i t i o n t o t h e production equipments, t h e f o l l o w i n g o f f i c e equipments a r e n e e d e d : -

-

E i g h t C e i l i n g Fans

-

One a i r c o n d i t i o n e r

-

One p i c k - u p van

Furnitures

A breakdown o f f u r n i t u r e s i s a s f o l l o w s : -

3

Executive t a b l e s

3

Executive Chairs

2

Ordinary c h a i r s

2

Padded l o n g c h a k r s .

TABLE

MACHINERY AND EQUIPMENT COST REQUIREMENT

PRODUCTION EOUIPMENT

COST ESTIMATE

Soap Mixer Soap Mould C u t t i n g Machine Stamping Machine

5,000

Motor V e h i c l e

250,000

O f f i c e Equipments E i g h t C e i l i n g Fans One A i r c o n d i t i o n e r One F i l l i n g C a b i n e t

20,000

Furnitures, Installation 4

T o t a l Equipment and I n s t a l l a t i o n cost. 5.6.2

------,W45Q*QQQ----------

TECHNOLOGY AND PRODUCTION PROCESS: The t e c h n o l o g y t o be a d o p t e d i n t h e p r o d u c t i o n p r o c e s s

i s s i m p l e and does n o t i n v o l v e s o p h i s t i c a t i o n c o n s i d e r i n g t h e t y p e of equipments s e 2 e c t e d e a r l i e r .

.

The p r o d u c t i . o n p r o c e s s i t s e l f i s t h e s e q u e n c e o f o p e r a t i o n s , moves and i n s p e c t i o n s by which raw m a t e r i a l s input a r e converted i n t o f i n i s h e d products r e a d y f o r t h e consumer.

For t h i s p r o j e c t , t h e b a t c h

p r o c e s s o f s o a p making i s s e l e c t e d .

The main r e a s o n s

f o r s e l e c t i n g t h i s p r o c e s s a r e a s foll.ows: -

-

I t o f f e r s f l e x i b i l i t y of o p e r a t i o n

-

I t does n o t involve s o p h i s t i c a t i o n both i n e q u i p m e n t s and t e c h n o l o g y . The b a t c h p r o c e s s a s p e c t o f s o a p m a n u f a c t u r i n g

i s of four kinds:(a)

Full k e t t l e boiled process

(b)

Semi k e t t l e b o i l e d p r o c e s s

(c)

Cold p r o c e s s s a p o n i f i c a t i o n

(d)

J e t process saponification Out o f t h e s e f o u r k i n d s , t h e f u l l k e t t l e b o i l e d

p r o c e s s i s s e l e c t e d and recommended f o r t h i s p r o j e c t . This p r o c e s s i s p r e f e r r e d t o t h e o t h e r t h r e e because it produces high grade soap u n l i k e o t h e r s t h a t produce

l e w grade soap. t h e next page.

The p r o c e s s i s b r i e f l y d e s c r i b e d i n

FULL KETTLE R O O I L E D PROCESS I n t h i s method, s a p o n i f i c a t i o n i s c a r r i e d o u t s i m p l y by c h a r g i n g t h e p r o c e s s e d o i l o r f a t t o t h e r e a c t o r , h e a t i n g t o 90

-

9 5 ' ~ , adding

of refined caustic I

s o d a s o l u t i o n u s u a l l y 35% c o n c e n t r a t i o n o r o t h e r s u b s t i t u t e (potash) i n t e r m i t t e n t l y ' during t h e cause o f r e a c t i o n and s t i r r i n g u n t i l t h e r e a c t i o n i s o v e r . S a t u r a t e d sodium c h l o r i d e s o l u t i o n ( b r i n e ) 35% (W/V) N a c l i s u s u a l l y u s e d i n t h e s a l t i n g o u t operation. This process s u p p l i e s completely s a p o n i f i t a d n e u t r a l s o a p c o n t a i n i n g a p p r o x i m a t e l y 30% w a t e r , a c o m p o s i t i o n which when h o t c a n b e pumped t o v a r i o u s f i n i s h i n g operations such as:-

-

Removal o f l y e

-

Washing change

-

S t r o n g change

-

F i t t i n g change.

The a d v a n t a g e s f o r u s i n g t h i s method a r e : (1)

I t p r o d u c e s h i g h g r a d e s o a p and i s u s e d i n l a r g e s c a l e production.

(2)

I t provides f l e x i b i l i t y of operation.

(3)

I t i s n o t h i g h l y mechanised, r e q u i r i n g low s k i l l e d

labour (5)

Can b e changed from one f o r m u l a t o a n o t h e r w i t h o u t t h e reworking o f s u b s t a n t i a l q u a n t i t i e s o f soap. The u n i t o p e r a t i o n s ( p h y s i c a l changes) and u n i t

p r o c e s s e s ( c h e m i c a l changes) a r e a s f o l l o w s : -

-

'Separation

-

Washing

-

Re-Saponif i c a t i o n

-

Fitting

-

Moulding and p a c k a g i n g

Saponification

These o p e r a t i o n s and p r o c e s s a r e d e s c r i b e d below: SAPONIFICATION:

-

In t h i s operations, saponifica&ion

i s - . c a r r i e d o u t by c h a r g i n g t h e r e f i n e d palm k e r n e l

o i l t o t h e r e a c t o r ( S a p o n i f i e r ) h e a t i n g t o 90-9.S0c, a d d i n g of r e f i n e d c a u s t i c s o d a s o l u t i o n u s u a l l y 35% o r o t h e r s u b s t i t u t e (Potash) i n t e r m i t t e n t l y during t h e c o u r s e o f r e a c t i o n and a g i t a t i n g u n t i l t h e r e a c t i o n is

over.

The m i x t u r e i s b o i l e d t o g e t h e r e a t a t e m p e r a t u r e

o f a b o u t 1050C

9%' A v i g o r o u s c h e m i c a l r e a c t i o n t a k e s p l a c e and a

great deal of heat i s generated.

The r e s u l t i n g t u r b u l e n c e

c a u s e s t h e mass o f l i q u i d t o s w e l l and h e a v e .

The mass

g r a d u a l l y t h i c k e n s o r e m u l s i f i e s a s t h e c a u s t i c soda r e a c t s w i t h o i l t o produce s o a p and g l y c e r o l .

Water

and b r i n e a r e u s u a l l y added t o k e e p t h e m i x t u r e manageable Towards t h e end o f t h e p r o c e s s , t h e c o n t e n t s a r e b o i l e d up t o e n s u r e t h a t no p o c k e t s o f o i l o r a l k a l i remain isolated.

A t t h e conclusion o f t h e process a l l t h e o i l

and a l k a l i have been c o n v e r t e d i n t o s o a p mixed.r.with a p r o p o r t i o n o f b r i n e and g l y c e r o l . SEPARATION PROCESS:

I n S e p a r a t i o n o f g l y c e r o l from

s o a p ( s a l t c h a n g e ) , t h e p a s t y b o i l i n g mass i s t r e a t e d with hot strong brine.

Cbntents of t h e k e t t l e s a l t out

o r s e p a r a t e i n t o an u p p e r l a r g e t h a t i s a c u r d y mass o f impure s o a p and a l o w e r l a y e r t h a t c o n s i s t s o f an aqueous Thus,

s a l t solution with the glycerol dissolved i n i t .

t h e b a s i s o f g l y c e r o l removal i s t h e s o l u b i l i t y o f g l y c e r o l and i n s o l u b i l i t y o f s o a p i n s a l t s o l u t i o n . After the introduction of t h i s s a l t solution the c o n t e n t s of t h e k e t t l e i s allowed t o s t a n d f o r 3

-

4

h o u r s t o a l l o w c o m p l e t e s e p a r a t i o n o f t h e two p h a s e s ; t h e s l i g h t l y a l k a l i n e s a l t s o l u t i o n termed s p e n t s o a p l y e ,

i s d r a i n e d o f f through t h e t a p .

A t t h e bottom o f t h e

k e t t l e l e a v i n g impure soap i n molten form.

WASHING OPERATION:

Here, t h e washing o p e r a t i o n s a r e

c a r r i e d o u t f o r t h e purpose o f f u r t h e r removing g l y c e r o l from t h e soap mass.

A f t e r t h e removal of t h e l y e from

t h e s a l t change, t h e g r a i n e d soap i s b o i l e d w i t h open steam and w a t e r i s added u n t i l t h e mass i s i n a smooth homogeneous c o n d i t i o n .

B o i l i n g i s c o n t i n u e d and s a l t

i s added showly t o g r a i n o u t t h e soap. The b o i l i n g mass i s expanded s e v e r a l t i m e s t o t h e top

of t h e k e t t l e w i t h open system.

This ensures

t h o r o u g h l y mixing and maximum washing f o r g l y c e r o l recovery.

The steam i s s h u t o f f and t h e k e t t l e allowed

t o s e t t l e f o r s e v e r a l hours.

A f t e r removing t h e f i r s t

wash l y e from t h e bottom o f t h e k e t t l e , t h e g r a i n e d soap i s g i v e n a second wash f o r t h e purpose o f r e c o v e r i n g more g l y c e r o l .

T h i s i s handled i n t h e same manner a s

t h e f i r s t wash d e s c r i b e d e a r l i e r . RE-SAPONIFICATION:

In t h i s stage of operation, t h e

soap i s s u b j e c t e d t o a strongchange i n o r d e r t o c o n v e r t t o soap any o i l o r f a t which was n o t s a p o n i f i e d d u r i n g t h e s a p o n i f i c a t i o n o r k i l l i n g change.

In t h e treatment,

s t r o n g c a u s t i c soda i s used and i s u s u a l l y r u n i n t o k e t t l e and b o i l e d w i t h t h e soap f o r a l o n g t i m e , about an h o u r .

94 The soap which i s n o t s o l u b l e i n t h e a l k a l i n e l i q u o r , acquires a grainy structure,

No r e c o v e r y o f g l y c e r o l

i s aceqmplifked i n t h i s s t a g e .

The a l k a l i r i c h l y e i s

r u n o f f a f t e r s e t t l i n g and u s e d i n t h e s a p o n i f i c a t i o n s t R g e o f a new

boil.

A f t e r t h i s o p e r a t i o n , t h e s o a p i s g i v e n one o r more s a l t w a t e r washes t o reduce t h e f r e e a l k a l i c o n t e n t o f t h e s o a p mass p r e p a r a t o r y f o r t h e f i n i s h i n g o p e r a t i o n . T h i s o p e r a t i o n i s o p t i o n a l depending on t h e e f f i c i e n c y o f t h e r e a c t o r and t h e raw m a t e r i a l s used.

After t h i s

o p e r a t i o n , ' t h e two p r o d u c t s o f s a p o n i f i c a t i o n , s o a p and g l y c e r o l a r e f u l l y s e p a r a t e d .

Further treatments

@ndperformed t o b r i n g them t o t h e i r b e s t u s e f u l e n d s . FITTING OPERATION (PURIFICATION STAGE) : f i n a l s t a g e of n e a t s o a p m a n u f a c t u r e .

This i s the It serves the

d u a l purpose o f r e n o k i n g . , i m p u r i t i e s from t h e soap mass and p e r m i t t i n g t h e p r o d u c t i o n o f a f i n a l p r o d u c t " h a v i n g t h e composition r e q u i r e d o r d e s i r e d . T h i s s t a g e r e q u i r e d o o n s i d e r a b l e s k i l l and s h o u l d be h a n d l e d i n s u c h a manner a s t o produce a h i g h y i e l d o f n e a t soap and r e l a t i v e l y s m a l l amount o f n i g r e . The i m p u r i t k e s go i n t o t h e n i g r e upon t h e s e t t i n g o f t h e f i n i s h e d soap.

A f t e r t h e l a s t wash l y e i s removed, t h e f i n a l ' f i t 1 t o t h e n e a t - s o a p i s begun.

The c u r d c o n t a i n s

t o o much s a l t and o r c a u s t i c , so. i t i s b o i l e d up and s m a l l q u a n t i t y o f w a t e r i s g r a d u a l l y a d d e d and b o i l e d into the desired f i t .

The c o n t e n t s o f t h e r e a c t i o n

a r e allowed t o s e t t l e f o r 2

-

4 days by which t i m e

t h e y w i l l have r e s o l v e d i n t o t h r e e l a y e r s

-

a thin

d a r k n i g r e l a y e r i s formed between t h e u p p e r l a y e r n e a t s o a p and l o w e r l a y e r ( n i g r e l y e ) . A f t e r s e t t i n g , t h e upper n e a t l a y e r a l s o c a l l e d k e t t l e s o a p which i s of most c o n s t a n t c o m p o s i t i o n about (70% s o a p and 30% w a t e r ) i s withdrawn w h i l e s t i l l h o t t h r o u g h t h e swing p i p e o r kimmer and pumped t o s t o r a g e o r r e l a y tanks f o r f u r t h e r processing i n t o bars o r tablets.

Pumping i s s t o p p e d when t h e swing p i p e r e a c h e s

t h e n i g r e l a y e r a t t h e b o t t o m of t h e k e t t l e . LAUNDRY SOAP:

In production of household b a r soap o r

laundry soap, t h e n e a t soap i s d r i e d f u r t h e r .

In t h i s

p r o c e s s i n g , t h e p u r e n e a t s o a p i s pumped from s t o r a g e t a n k i n t o c o u t c h e r where a d d i t i o n s o f perfuiiies.', c o l o u r i n g ( a g e n t s ) m a t t e r and s m a l l q u a n t i t y o f i n o r g a n i c b u l d e r s a r e made.

I t then runs i n t o frames, t h a t i s ,

r e c t a n g u l a r s t e e l mould w i t h removable ends and s i d e s i n which i t c o o l s and s e t i n t o s o l i d .

When t h e s o a p

h a s been s o l i d i f i e d , t h e frames a r e removed by means o f s t e e l w i r e s , t h e s l a b o r mould i s now c u t i n t o b a r s and t a b l e t s which i s f i n 3 l l y stamped and packed. PRODUCTION FLOW CHART t

RAW MATERIALS

9

-4' S O A P MOULD

SOAP MIXING

i

&

t

-

CUTTING I N T O BARS

r+l STAMPING

? PACKAGING

1

.

d

FINAL FINISHED PRODUCT

F i g u r e 5.5

6

I

5.6.3

PRODUCTION SCHEDULE The p r o d u c t i o n s c h e d u l e i s a s p e c i f i c m a n u f a c t u r -

i n g programme which i n v o l v e s p r o d u c t i o n f o r s a f e t y s t o c k o p e r a t e a t planned constant and r e f l e c t s e f f o r t s - :..to, production r a t e . and,c o s t estimating.

I t forms t h e b a s i s f o r a n a l y s i s

A s e a r l i e r i n d i c a t e d , t h e proposed

p l a n t w i l l r u n a one s h i f t , e i g h t h o u r s s c h e d u l e p r o d u c i n g a n a v e r a g e o f two hundred (200) b a r s o f h i g h g r a d e perfumed

s o a p p e r day f o r t h e p r o j e c t e d 300

working days r e s u l t i n g t o t h e p r o d u c t i o n o f 60,000 b a r s of soap i n t h e f i r s t y e a r of operation.

The p l a n t

i s e x p e c t e d i n i t i a l l y t o o p e r a t e a t a b o u t 70 p e r c e n t

o f i n s t a l l e d c a p a c i t y and a t % a i n s i t s maximum p r o d u c t i o n l e v e l i n the f i f t h year. The proposed s c h e d u l e o f p r o d u c t i o n a l l o w s f o r a gradual but progressive absorption of the estimated p r o d u c t a n n u a l a v e r a g e s u p p l y gap

-

a p r o c e s s which i s

e x p e c t e d t o e n s u r e a g r a d u a l b u t s y s t e m a t i c improvement on t h e p r o d u c t q u a l i t y and s a l e s network. TABLE 5 . z

I

I

YEAR OF PRODUCTION CAPACITY USAGE

1 2 3 4 5

1

THE PROPOSED SCHEDULE OF PRODUCTION

70% 80% 80% 85% 100%

NO. OF SHIFT

P I O ~ J $ C ~!LJTPVT ~~s

5.6.4

BUILDING NEEDS AND CIVIL WORKS Consideration i s given t o s t r u c t u r a l needs o f

the industry.

I t i s recommended t h a t t h e b u i l d i n g s

f o r t h e p r o j e c t w i l l be b u i l t with reinforced concrete and cement b l o c k .

The p r o d u c t i o n and s t o r a g e s e c t i o n s

w i l l have h i g h b a y s and a d e q u a t e columns f o r s u p p o r t .

The p r o d u c t i o n f l o o r w i l l b e g i v e n s p e c i a l f l o o r i n g t o s u p p o r t t h e p r o d u c t i o n equipment p l a n t .

The r e s t

p a r t o f t h e p l a n t w i l l u s e n o r m a l l i v i n g and o f f i c e specifications.

The sum o f W1.5m h a s been s e t a s i d e

f o r t h e b u i l d i n g needs.

T h i s amount w i l l a l s o c o v e r

laAd development and c o n s u l t a n c y f e e s . 5.6.5

SPACE REQUIREMENTS T h i s h v o l v e s t h e p r o d u c t i o n , o f f i c e and o t h e r

s e r v i c e requirements. PRODUCTION SPACE REQUIREMENTS I n t h e p r o v i s i o n o f s p a c e , c o n s i d e r a t i o n h a s been given t o expansion p o s s i b i l i t i e s .

The p r o d u c t i o n s p a c e

requirements include a l l space d i r e c t l y used i n t h e production.

-

I t i n c l u d e s :-

Work S t a t i o n A r e a s S t o r a g e Areas.

99

(i)

Work s t a t i o n Areas;

T h i s w i l l cover t h e a c t u a l

space occupied by machines and o t h e r p r o d u c t i o n equipments i n t h e f a c t o r y .

The a r e a requirement

p r o j e c t e d i s p u t a t s i x t y f i v e (65) s q u a r e m e t r e s . (ii)

The s t o r a g e a r e a i s d i v i d e d i n t o

S t o r a g e Areas: two s e c t i o n s .

Warehouse f o r raw m a t e r i a l s and

s t o r e s f o r finished products.

Estimate of space

requirements f o r s t o r a g e i s put a t f o u r t y - f i v e (45) square metres.

5.6.5.2 (i)

OFFICE AND SERVICE SPACE REOUIREMENTS

istration: office.

The p l a n t w i l l have a d m i n i s t r a t T v e

T h i s w i l l accomodate t h e General Manager,

A d m i n i s t r a t i v e Manager, two s u p e r v i s o r s f o r p r o d u c t i o n and m a r k e t i n g , A c c o u n t s - o f f i c e r . E s t i m a t e d space r e q u i r e d f o r t h x s i s p u t a t t h i r t y (30) s q u a r e m e t r e s . (ii)

P r o v i s i o n w i l l be made f o r a customer s e r v i c e f a c t o r y depot.

E s t i m a t e d s p a c e i s twenty (20)

square metres. ( i i i ) Plant Services:

This w i l l i n c l u d e s p a c e p r o v i s i o n

f o r shower, l a v a t o r y , t o i l e t .

Space e s t i m a t e i s

p u t a t f i f t e e n (15) s q u a r e m e t r e s .

U t i l i t y s p a c e And P r o t e c t i o n :

This includes

Space f o r c a r p a r k , f r o n t l o a d i n g , w a t e r t a n k and open c o u r t y a r d .

Estimated space requiredent

i s p u t a t one hundred (100) s q u a r e m e t r e s .

REQUIRED INDUSTRIAL LAND AR

TABLE 5 . 3

CAP I TAL ITEMS

-

Factory S i t e comprising Production/ W o r k s t a t i o n Area, Warehouse f o r raw m a t e r i a l s , Water S t o r a g e t a n k , Area f o r f u t u r e e x p a n s i o n and o f f l o a d i n g

-

area.

-

O t h e r b u i l d i n g s Comprising main istration block, plant services c a r p a r k s , s t o r e f o r f i n i s h e d goods and l o a d i n g a r e a .

NOTE: -

The above l a n d a r e a i n c l u d e t h e a r e a f o r f u t uI r e e x p a n s i o n o f i n d u s t r i a l a c t i v i t i e s on t h e 3Lacre l a n d p r o v i d e d f o r i n d u s t r i a l p u r p o s e s by t h e l o c a l istration.

5.7

PLANT ORGANISATION AND OVERHEAD COST

5.7.1

PLANT ORGANISATION

T h i s i n v o l v e s t h e g e n e r a l arrangement o f t h e p r o d u c t i o n and s t o r a g e and f r e e flow o f p r o d u c t i o n m a t e r i a l s . an'd p e r s o n n e l .

The p l a n t w i l l be l a i d

o u t i n s u c h a manner t h a t i t w i l l be i n l i n e w i t h t h e p r o d u c t i o n p r o c e s s e s s and t e c h n o l o g y a d o p t e d f o r t h i s project. A s e a r l i e r i n d i c a t e d , t h e p l a n t w i l l be d i v i d e d

i n t o p r o d u c t i o n a r e a which w i l l comp?i%e t h e w o r k s t a t i o n a r e a and t h e s t o r a g e a r e a , r e q u i r e d s p e c i f i c a t i o n f o r t h e s e have e a r l i e r been g i v e n i n t h e s p a c e r e q u i r e ments t a b l e . The s t o r a g e a r e a w i l l be d i v i d e d i n t o two made up of raw m a t e r i a l s and f i n s i h e d goods s t o r e s .

The

s t o r a g e a r e a w i l l be c a p a b l e of h o l d i n g a h i g h p e r c e n t a g e o f a l l t h e needed n e c e s s a r y raw m a t e r i a l s

the f i n i s h e d products.

t h e o t h e r hand, t h e

p r o d u c t i o n a r e a w i l l - ~ o n v e n i e n t l y ' . : accommodate t h e machinery and equipments f o r p r o d u c t i o n and a l s o a l l o w enough s p a c e f o r f r e e movement o f p e r s o n n e l , goods and maintenance. P e r s o n n e l w i l l be a s s i g n e d i n r e l e v a n t a r e a s . PLANT LAYOUT I

b

i

Raw M a t e r i a l s Store

1

d

/n

L.

I

4

4

Off l o a d i n g Area b

*

P r o d u c t i o n Area Machinery & Equipments And Peronnel

I

4

w I

F i n i s h e d Goods Store i

P a r k i n g And Loading Area. 4

Figure: 5.6

K

i

10'3 5.7.2

OVEFWEAD COST This involves t h e c o s t of running t h e p l a n t .

It

w i l l cover t h e c o s t of providing c e r t a i n f a c i l i t i e s

p r o v i d e d f o r r u n n i n g t h e pZant l i k e t e l e p h o n e , e l e c t r i c i t y , water e t c . The t o t a l o v e r h e a d c o s t r e q u i r e m e n t i s shown below:TABLE 5 . 5

OVERHEAD -

COST REQUIREMENT (ANNUAL) ITEM

I

I

COST (W)

V e h i c l e Maintenace And F u e l i n g V e h i c l e I n s u r a n c e And R e g i s t r a t i o n Electricity Water Supply Factory Supplies (Cartons) S a n i t a t i o n Fee Business Premises Contingency Miscelaneous

NOTE:

T h i s f i g u r e i s r e l e v a n t f o r t h e f i r s t one y e a r o f

operation.

A 5% a n n u a l i n c r e a s e i s assumed t o p r o v i d e

f o r r i s i n g c o s t of l i v i n g .

5.8

MANPOWER REQUIREMENTS This e v a l u a t e s t h e manpower needs of t h e p r o j e c t .

The s t a f f s t r e n g t h , S ~ X V and wage p l a n and t h e i r i n d u s t r i a l f u n c t i o n s were a l s o t a k e n c a r e o f h e r e .

This

w i l l be a n a l y s 6 d i n two p a r t s o f t h e management team

and p e r s o n n e l requivements.

I t a l s o d e c r i b e d s an

o r g a n i s a t i o n a l s t r u c t u r e t h a t i n d i c a t e s ., t h e command h i e r a r c h y t h a t s h o u l d be most e f f i c i e n t i n running t h e organisation effectively. I

5.8.1

MANAGEMENT TEAM:

To e n s u r e t h e s u c c e s s o f an

i n d u s t r i a l p r o j e c t , p r o p e r a t t e n t i o n must be given t o t h e importance of management.

Management can be d e f i n e d

a s t h e sum t o t a l of t h e p o l i c y d e c i s i o n s t h a t a f f e c t t h e f u n c t i o n s of an o r g a n i s a t i o n .

I f the decisions

a r e c o r r e c t and t a k e n a t t h e r i g h t t i m e , management i s s a i d t o be e f f i c i e n t .

But where d e c i s i o n s a r e wrong

o r t a k e n a t t h e wrong t i m e , management may become inefficient. The management team f o r t h i s p r o j e c t w i l l c o m p r i s e t h e General Manager, t h e A d m i n i s t r a t i v e and P e r s o n n e l Manager, t h e two S u p e r v i s i o r s a n d . t h e T e c h n i c a l s t a f f and t h e c o u n c i l l o r i n c h a r g e of f i n a n c e and economic planning.

-

Their duties . w i l l include:

-

Advise t h e General Manager on new t e c h i q u e s f o r maximum f a c i l i t i e s u t i l i z a t i o n .

i05

-

Provide u s e f u l i n f o r m a t i o n on imLproved p r o d u c t i o n methods

-

.

Formulate a p p r o p r i a t e p o l i c y g u i d e l i n e s i n l i n e w i t h t h e l o c a l istrat ions requirements.

-

P r o j e c t t h e company i n t h e f o r e f r o n t of s i m i l a r i n d u s t r i e s i n t h e c o u r s e o f t h e i r r o u t i n e engagements. They should meet q u a r t e r l y and be p a i d remuneration

based on an a s r e e d p e r c e n t a g e of p r o f i t a f t e r t a x . PERSONNEL REQUIREMENTS:

5.8.2

The p l a n t w i l l i n t h e

f i r s t y e a r of commercial o p e r a t i o n employ t h e s e r v i c e s o f t h e fo,llowing p e r s o n n e l s .

-

istrative/Personnel Manager

-

Supervisors

-

Technical S t a f f

-

s O f f i c e r

-

Depot S a l e s l a d y

-

F a c t o r y workers.

General Manager

D r i v e r Salesmad?

J O B DESCRIPTION AND QUALIFICATION

5.8.3

(i)

General Manager:-

industr?:.

He i s t h e c h i e f e x e c u t i v e o f t h e

He s h o u l d p o s s e s s a B.Sc.

i n production Engineering

w i t h a t l e a s t f o u r y e a r s co:gnate manager.ia1 e x p e r i e n c e . He w i l l be r e s p o n s i b l e f o r t h e day t o day running of t h e plant.

He w i l l d i r e c t and c o n t r o l t h e f u n c t i o n s of o t h e r

o f t h e management who w i l l r e p o r t d i r e c t l y t o him.

He i s r e s p o n s i b l e t o t h e management team wh6 makes

recommendation t o t h e chairman.

ISTRATIVE/PERSONNEL MANAGER:

He s h o u l d be r e s p o n s i b l e

f o r t h e g e n e r a l a d m i n i s t r a t i v e and p e r s o n n e l r e q u i r e m e n t s of t h e i n d u s t r y .

He s h o u l d p o s s e s a H N D / B . S C

i n Business

A d m i n i s t r a t i o n w i t h t w ~y e a r s cognate e x p e r i e n c e .

He

s h o u l d r e p o r t t o t h e General Manager. SUPERVISORS:

They w i l l be two i n number and w i l l s u p e r v i s e

t h e p r o d u c t i o n and s a l e s r e s p e c t i v e l y .

The S u p e r v i s o r

f o r s a l e s w i l l co-ordinate s a l e s of the f i n i s h e d products while t h e product i n supervisor w i l l oversee t h e functions o f t h e f a c t o r y workers and o v e r a l l p r o d u c t i o n p r o c e s s . They s h o u l d p o s s e s s a HND/B.Sc i n r e l e v a n t a r e a s w i t h two y e a r s c o g n a t e e x p e r i e n c e .

They r e p o r t t o t h e General

Manager. T E C H N I C A L STAFF:-

W i l l s e e t o t h e t e c h n i c a l and mainte-

nance o f t h e p r o d u c t i o n equipments.

He s h o u l d p o s s e s s

a B.Sc/HND i n Mechanical E n g i n e e r i n g and w i l l l i a s e w i t h p r o d u c t i o n s u p e r v i s o r and r e p o r t t o t h e General Manager. S DFFICER:

W i l l be r e s p o n s i b l e f o r t h e g e n e r a l

s of t h e industr*.

He w i l l r e c e i v e and make

payments on b e h a l f of t h e o r g a n i z a t i o n and r e p o r t d i r e c t l y t o t h e General Manager. i n s.

He s h o u l d p o s s e s s a B.Sc/HND

DRIVER/SALESMAN:

W i l l be r e s p o n s i b l e t o t h e d e l i v e r y o f

t h e f i n i s h e d goods t o p o t e n t i a l c u s t o m e r s and consumers. He i s e x p e c t e d t o c a r r y t h e p r o d u c t s t o t h e m a j o r markets i n t h e a r e a f o r d i r e c t s a l e s t o t h e f i n a l consumers. an.

'El

He s h o u l d p o s s e s s a minimum o f WASC and a l s o

grade d r i v i n g licence with f o u r years driving

experience.

He w i l l r e p o r t t o t h e s a l e s s u p e r v i s o r .

DEPOT SALES LADY: f a c t o r y depot.

Should be r e s p o n s i b l e f o r s a l e s a t t h e

She s h o u l d b e c h a r i s m a t i c and p o s s e s s a

minimum o f WASC o r GCE.

She s h o u l d r e p o r t d i r e c t l y t o

t h e Sales Supervisor. FACTORY WORKERS:

These a r e t h e a c t u a l p e o p l e i n v o l v e d

t h e d i r e c t production.

They s h o u l d p o s s e s s t h e WASC o r

P r i m a r y S i x C e r t i f i c a t e and w i l l r e p o r t d i r e c t l y t o t h e production Supervisor. TABLE 5.6 MANPOWER REQUIREMENT COST FORECAST NO ( W ) MONTHLY SALARY (W) ANNUALSALARY DESIGNATION G e n e r a l Manager /Personnel Manager

1

5,000 3 , 500

3

2,800 1,000

1

60,000 42,000

Supervisors s O f f i c e r ,

.

Technical S t a f f DriverlSalesman Depot S a l e s l a d y F a c t o r y Workers TOTAL

1 .

. ."lo

,

.

,

.

'

Pi18,700

."

.. ..

.

'

.

.

33,600 12,000 108',000 Pi357,600

NOTE: -

T h i s f i g u r e i s r e l e v a n t f o r t h e f i r s t $ w o - y e i r of

commercial o p e r a t i o n .

Ten (10) p e r c e n t i n c r e a s e i n

s a l a r y i s recommended'in t h e t h i r d y e a r o f o p e r a t i o n .

5.8.4

ORGANISATIONAL STRUCTURE:

. . --

The o r g a n i s a t i o n a l

s t r u c t u r e i n d i c a t e s t h e h i e r a r c h y t h a t s h o u l d be a d o p t e d f o r t h e most e f f i c i e n t way of r u n n i n g t h e o r g a n i s a t i o n

A s e a r l i e r i n d i c a t e d t h e General Manager i s

effectively.

t h e c h i e f e x e c u t i v e and d i r e c t s . ':and of t h e o r g a n i s a t i o n .

controls the a f f a i r s

Below t h e General Manager a r e , t h e

;

'

/Personnel Manager, t h e S u p e r v i s o r s , s o f f i c e r . D r i v e r / S & l e s m a n , S a l e s l a d y , t e c h n i c a l s t a f f and f a c t o r y workers. Fig.5.7 THE ORGANISATIONAL STRUCTURE

General Manager

LC Technical S t a f f

4

I

i

t

r

s Officer z

/Personnel Manager

v

1

*

supervisor Sales

I

( Supervisor

I

I ( production 1 1 I I 1 1

Driver/Sales Man

Depot L

IMPLEMENTATION SCHEDULE

5.9.

The i m p l e m e n t a t i o n s c h e d u l e i n c l u d e s a l l t h e a c t i v i t i e s i n v o l v e d i n t h e p r o j e c t work and t h e worked o u t I t i s a work p l a n f o r a c h i e v i n g

p e r i o d f o r a c h i e v i n g them.

t h e c o m p l e t i o n o f t h e p r o j e c t w i t h i n t h e s e t t i m e frame. The i m p l e m e n t a t i o n s c h e d u l e i s a s o r t o f g u i d e i n p r o j e c t implementation. Forecast of p r o j e c t implementation schedule f o r t h e p r o p o s e d p r o j e c t i s shown below. TABLE 5 . 7 FORECAST OF PROJECT IMPLEMEYTATION SCHEDULE PROGRAMME OF SOURCE OF PROJECT IMPLEMENTATION FUND 1. B u i l d i n g C o n s t r u c t i o n l

2.

1

Long t e r m

C i v i l E n g i n e e r i n g Works

Loan

P u r c h a s e o f Machinery And Equipment And t h e i r

Long t e r m , Loan

, ESTIMATED DURATION

I

1 2 months

Inst a l l a t ion 3 . S t a f f Recuitment

Equity Capital

4 . P u r c h a s e o f Raw

E q u i t y And

I

2 months

r ,

Materials 5. T e s t P r o d u c t i o n

2 months

S h o r t t e r m Loan

I

1 month 1

* S t a r t up o f Commercial O p e r a t i o n * F i r s t month o f t h e f o l l o w i n g y e a r . NOTE: -

The p r o j e c t i m p l e m e n t a t i o n i s e s t i m a t e d t o l a s t f o r o w yea,x.

-

5.10

iio

WORKJNC CAPITAL

The working c a p i t a l e s t i m a t e i s b a s e d on t h e m a n u f a c t u r i n g programme and on t h e e x p e r i e n c e o f an i n d u s t r y o f similar operations i n the s t a t e .

Owkn-g..to r i s i n g c o s t

o f l i v i n g we have p r o v i d e d f o r a n e s t i m a t e d 5 % a v e r a g e a n n u a l i n c r e a s e i n working c a p i t a l a s from t h e s e c o n d The r e a s o n

y e a r o f commercial o p e r a t i o n and p r o d u c t i o n .

f o r using s h o r t periods stock is t o avoid saddling t h e p r o j e c t w i t h heavy working c a p i t a l i n i t i a l l y s i n c e t h e ;,.Fh. -7- , , . ,

- 7 , -:

p r o j e c t from my p r o j e c t i o n s , s t a r t s t o g e n e r a t e : i t s own&v&nue. r i g h t from t h e f i r s t y e a r o f commercial o p e r a t i o n s . S e c o n d l y , most o f t h e raw m a t e r i a l s r e q u i r e m e n t s o f t h e proposed f a c t o r y could b e sourced l o c a l l y . TABLE 5 . 8 WORKING CAPITAL ESTIMATE ( W '000)

YEAR i

YEAR YEAR ii 130

YEAR iii 136

YEAR iv 152

:ess 2 d a y s v a l u e o f tnnual s a l e s

16

19

20

22

27

of finished p o d s 1 week o f t o t a l mnual s a l e s

56

69

70

78

96

112

134

140

156

L__I

YEAR 0

taw m a t e r i a l s 2 months

-3mJ-

YEAR

76-

;t o c k

;tack

o f Work i n P r o -

;tack

Debtors: 1 4 days value of t o t a l annual s a l e s

192

S a l a r y And wages f o r two months

1

I

I

I

Less C r e d i t o r s : 1 5 days s t o c k of raw m a t e r i a l s

27

32

Net T o t a l

302

355

I n c r e a s e I n working capital

-

53

5.11

FINANCIAL ANALYSIS

F i n a n c i a l a n a l y s i s p l a y s an i m p o r t a n t r o l e i,n t h e p r o c e s s not of t h e p r o j e c t a p p r a i s a l which shows whether or,,the project i s f i n a n c i a l l y v i a b l e and p r o f i t a b l e economic environment.

in

t h e given s o c i o -

The f i n a n c i a l i n f o r m a t i o n i s u s u a l l y

enough t o i n t e r e s t p o t e n t i a l i n v e s t o r s who, once t h e y have been i d e n t i f i e d can be p r o v i d e d w i t h more d e t a i l e d d a t a t a i l o r e d t o t h e i r needs.

The i n f o r m a t i o n c o n t a i n e d i n

t h e f i n a n c i a l a n a y l s i s can be used t o determine i f t h e p r o j e c t shows an a c c e p t a b l e l e v e l o f commercial p r o f i t a b i l i t y . For t h e purpose of t h i s p r o j e c t , t h e f i n a n c i a l a n a y l s i s w i l l cover t h e f o l l o w i n g a r e a s : -

(i)

Estimate of t o t a l p r o j e c t cost.

( i i ) P r o j e c t e d Income S t a t e m e n t . ( i i i ) P r o j e c t e d Cash Flows S t a t e m e n t . ( i v ) P r o j e c t e d Balance S h e e t .

(v)

Return On I n v e s t m e n t

(vi)

Payback P e r i o d .

TABLE 5 . 9

5.11.1

ESTIMATE OF TOTAL PROJECT COST (INITIAL)

The p r o j e c t e d i n i t i a l t o t a l p r o j e c t c o s t c o v e r s t h e f o l l o w i n g i t e m s :ITEMS OF EXPENDITURE

ESTIMATED COST (W)

B u i l d i n g and C i v i l works

1,500,000

Machinery And Equipments

450,000

Pre-investment Costs Working C a p i t a l ( 1 y e a r ) Part Total

50,000 302,000 W2,302,000

P l u s 5% contingency p r o v i s i o n Grand T o t a l

115,100 W2,417,100

The t o t a l e s t i m a t e d c o s t o f i n i t i a l i n v e s t m e n t s t a n d s a t W2,417,100.

Considering t h e reasonable contingency

p r o v i s i o n made a v a i l a b l e , i n t h e i n v e s t m e n t f o r e c a s t , we b e l i e v e t h e r e w i l l be no s p i l l o v e r i n t h e a c t u a l c o s t o f the project. 5.11.2

FINANCING PLANS FOR INITIAL INVESTMENT COST

I n working o u t t h e f i n a n c i n g p l a n f o r t h e proposed project.

.

We a r e guided by t h e r e q u i r e m e n t s o f many

1

i n s t i t u t i o n s i n t t h e c o u n t r y which p r o v i d e medium and I

The p r o m o t e r s ' o f t h e prefect c o u l d

long term loans.

r a i s e a s u b s t a n t . 5 ~ 1p a r t o f t h e i r l o a n r e q u i r e m e n t s ' f o r t h e v e n t u r e from t h e N i g e r i a n Bank f o r Commercedi and I n d u s t r y (NBCI).

'

The NBCI d o e s n o t i n s i s t on any h i g h

c a p i t a l g e a r i n g r a t i o and r e c o g n i s e s t h e f a c t t h a t i t

i s t h e e f f e c t t h a t t h e g e a r i n g has an t h e p r o j e c t s p r o f i t a b i l i t y and l i q u i d i t y t h a t i s i m p o r t a n t and n o t t h e gearing p e r se.

The NBCI i s t h e r e f o r e p r e p a r e d t o

c o n s i d e r any c a p i t a l g e a r i n g p r o p o s i t i o n s u b m i t t e d t o i t on i t s m e r i t . The p r o j e c t i n i t i a l c o s t o f W2,417;100

w i l l be

financed- as follows:Equity

-

Wl,OOO,OOO

Long t e r m l o a n = W 1 , 0 0 0 ~ 0 0 0 . S h o r t t e r m loan'=W417,100 EQUITY SHARE:

The t o t a l p r o p o s e d e q u i t y s h a r e o f t h e

p r o j e c t s t a n d a t W1,000,000.

T h i s w i l l be u s e d t o

f i n a n c e P r e - i n v e s t m e n t c o s t , s t a f f r e c r u i t m e n t and p a r t l y t h e f i x e d a s s e t s investment. SHORT TERM LOAN:

The s h o r t t e r m l o a n i s p u t a t W417,000,

c o u l d be s e c u r e d from t h e N i g e r i a n Bank f o r Commerce and I n d u s t r y .

T h i s w i l l f i a n c e t h e working c a p i t a l and

contingency provision.

The l o n g t e r m l o a n e s t i m a t e d a t W1,000,000

LONG TERM LOAN:

J

i s t o be p r o v i d e d a l s o by t h e N i g e r i a n BtZriIc f o r Commerce

The l o n g t e r m l o a n i s e x p e c t e d t o f i n a n c e

and I n d u s t r y .

p a r t l y t h e machinery and equipment, b u i l d i - n g needs and o t h e r r e q u i r e m e n t s f o r t h e proposed f a c t o r y . In view o f t h e c o m p a r a t i v e l y low i n v e s t m e n t , r i s k s a s s o c i a t e d w i t h t h e p r o j e c t , we c o n s i d e r t h i s f i n a n c i a l s t r u c t u r e s a t i s f a c t o r y and we hope i t w i l l be a c c e p t a b l e t o i n s t i t u t i o n a l investors p a r t i c u l a r l y t h e NBCI t h a t w i l l be approached by p r o j e c t s p o n s o r s f o r l a o n c a p i t a l .

The l o n g t e r m l o a n i s proposed t o be s e c u r e d w i t h e x i s t i n g a s s e t s o f t h e c l i e n t and a d d i t i o n a l f i x e d a s s e t s t o be

I

a c q u i r e d by same.

-

5.11,3 within a 5

LOAN REPAYMENT:

-

Repayment o f l o n g t e r m l o a n

y e a r p e r i o d on e q u a l a n n u a l i n s t a l m e n t s w i t h

one y e a r moratorium and a y e a r l y i n t e r e s t c h a r g e o f 2 1 % i s recommended.

T h i s c o u l d be an a c c e p t a b l e l e n d i n g

i n t e r e s t r a t e by development banks l i k e N B C I i n t h e preferred s e c t o r s o f t h e c o n t r y ' s economy.

The o b j e c t i v e u n d e r l y i n g

t h e proposed f i v e - y e a r repayment p e r i o d i s t o e n a b l e t h e proj e c t acquire\'adequate f i a n c i a l resources necessary f o r growth.

The one y e a r moratorium p r o p o s e d c o v e r e d

t h e estimated building constfxction period.

,

TABLE 5.10

ESTIMATED INTERESTS AND BANK CHARGES YEAR

INTEREST W ' 000

5.11.4

PRINCIPAL W '000

CAPITAL OUTSTANDING W'OOO

DEPRECIATION

The d e p r e c i a t i o n method u s e d i s l i n e a r d e p r e c i a t i o n o v e r a p e r i o d e q u a l t o t h e e s t i m a t e d l i f e o f a s s e t : Twenty (20) y e a r s f o r b u i l d i n g and C i v i l works, f i v e (5) y e a r s f o r machinery and equipments f o u r (4) y e a r s f o r motor v e h i c l e ( f a i r l y used)' and f i v e ( 5 ) y e a r s f o r p r e - i n v e s t m e n t cost

. T o t a l d e p r e c i a t i o n i s p u t a t W187,500.

Assets w r i t t e n

o f f and c o n s i d e r e d no l o n g e r s e r v i c e a b l e c o u l d b e renewed f o r f u r t h e r operations.

But p r e - i n v e s t m e n t c o s t s which do n o t

genraally c o n s t i t u t e a r e c u r r e n t item

of expenditure i n

i n v e s t m e n t p r o j e c t s s u c h a s t h i s p a r t i c u l a r p r o j e c t may r e q u i r e no f u r t h e r p r o v i s i o n a f t e r t h e w r i t t n g - o f f . . p e r i o d .

1

Table 5 . 1 1 FORECAST ANNUAL DEPRECIATION

I

ANNUAL DEPRECIATION(W)

CAPITAL ITEM B u i l d i n g s And C i v i l Works Machinery And Equipments Motor V e h i c l e Pre-investment Cost

10,000

I

Total

5.11.5

W187,500

PROJECTED INCOME STATEMENT (PROFIT AND LOSS )

The f o r e c a s t o p e r a t i n g s t a t e m e n t o f t h e p r o j e c t f o r t h e f i r s t f i v e y e a r s o f o p e r a t i o n i s shown below. The f o r e c a s t t r a d i n g a c c o u n t was b a s e d on t h e p r o p o s e d schedule

of production of t h e relevant products a t

t h e a v e r a g e e s t i m a t e d p r i c e o f W40.

An a v e r a g e a n n u a l

i n c r e a s e o f 5 % i n t h e s e l l i n g p r i c e i s f o r e c a s t a s from t h e s e c o n d y e a r o f o p e r a t i o n t o match w i t h a p o s s i b l e estimated corresponding r i s e i n t h e c o s t s of t h e necessary input.

FORECAST PROFIT AND LOSS LOSS BASED ON THE PROPOSED

TABLE 5.12

PRODUCTION SCHEDULE

, (W

I

' 000)

,

I I I ESTIMATED INCOME YEAR 1 YEAR 11. YEAR 111 YEAR:.rv Y s FROM OPERATIONS I

1

I

S a l e s o f soap a t a v e r a g e p r i c e o f W40 I

1

I

1

1 2,879 1 3,023 1 3,366

T o t a l Gross S a l e s 1ncorne12,400

1

14,

Operating Costs Raw m a t e r i a l s S a l a r i e s And Wages Overhead Expenses F i n a n c e Bank Charges (21%

540 357 163

647 557 171

680 393 180

758 432 189

I n t e r e s t on t e r m l a a n

507

269

326

198

187

187

187

1,756

1,634

1,678

1,764

1,l

P r o f i t B e f o r e Tax

643

1,244

1,345

1,601

2,

L e s s Company Income Tax a t 30%

193

373

403

4 80

Net p r o f i t

450

871

942

1,121

Depreciation Total Operating Costs

-5.11.6

i

1

187

1,

CASH FLOW PROJECTIONS

This statement provides

useful information regarding

l i q u i d i t y p o s i t i o n o f an e n t e r p r i s e ?

I t shows changes

o c c u r i n g i n t h e c a s h p o s i t i o n o f an e n t e r p r i s e o v e r a p e r i o d o f time.

I n o t h e r words, it d e p i c t s whether o r n o t i n t e r n a -

l l y g e n e r a t e d f u n d s a r e s u f f i c i e n t t o meet o b l i g a t i o n s , working c a p i t a l r e q u i r e m e n t s and payment o f d i v i d e n e d t o shareholders.

TABLE 5 *'I3 FORECAST OF CASH

LOW PROI

SOURCE OF FUNDS

YEAR 0 ACTUALS

-

I

YEAR 11 YEAR 111 YEAR I '

Commercial Bank 147

Overdraft Long term l o a n

1000

Equity Capital

1000

Depreciation Net P r o f i t Total A p p l i c a t i o n Of Fur Repayment o f Long term l o a n I n c r e a s e I n Working Capital Investment Increase o r I n Funds Available1

-

Total Cash S u r p l u s Opening Balance C l o s i n g Balance 5.11.7

I

I

PROJECTED BALANCE SHEET

The b a l a n c e s h e e t p r e s e n t s t h e f i n a n c i a l p i c t u r e o f t h e company a t a p a r t i c u l a r p o i n t i n t i m e which c o n s i s t s of i t s assets as well a s l i a b i l i t i e s .

TABLE 5.14 BALANCE SHEET PROJECTION AS AT 31ST I CEMBEI YEAR R;:! 11 FIXED ASSETS W ' 000 W'OOO B u i l d i n g & C i v i l Works

1500

1500 450

T o t a l Gross Fixed Assets L e s s Cumulative De p r e c i a t i o n Net Fixed A s s e t s

1

1950

1 11773 7 7

P r e - i n v e s t m e n t Cost Less D e p r e c i a t i o n

10

I

I

Net P r e - i n v e s t m e n t c o s t s 1

40

I

Current Assets

I

I

I

M a t e r i a l S t o c k a t Cost i n c l u d i n g work i n P r o g r e s s & Stock of f i n i s h e d Products. O p e r a t i n g b a l a n c e broughC forward.

II

-

-

s R e c e i v a b l e

I

1 1

Total Current Assets

I

1

Cash kt hand & i n bank

Total Assets

1426

1718

112

3531

Long Term L i a b i l i t i e s Equity

1000

1 1 YF?

YE?

W'OOO

W'OOO

,

Retained Earnings Long t e r m Loan T o t a l Long Term Liabilities Current L i a b i l i t i e s Short term o v e r d r a f t s p a y a b l e Repayment o f Long Term Lo an Net P r o f i t Total Liabilities Current Ratio Debt-Equiq Ratio Q u i c k ( A c i d Test3 R a t i o

RATES OF RETURN'. ON INVESTMENTS

5.11.8

~ t u ? ? lon i n v e s t m e n t i s c a l c u l a t e d u s i n g t h e

Rates of f o r m u l a beLow:

Net P r o f i t Capital

RATES OF RETURN :

1st

Year

=

18.62%

2nd

Year

=

36.04'

x

100 -

1

3rd

Year

=

38.97%

4th

Year

=

46.38%

5th

Year

=

63.519

Average r a t e o f r e t u r n on i n v e s t m e n t i s t h e r e f o r e 40.7% 5.11.9

PAYBACK PERIOD

The payback p e r i o d o f t h e c a p i t a l employed i s s h o w n below. TABLE b.15 ( W ' 000)

YEAR

INFLOW

0

-

1

505

2

1351

3

2270

INITIAL INVESTMENT 2417 1912 56

From t h e a b o v e , t h e payback p e r i o d f o r t h e p r o j e c t

i s p r o j e c t e d t o be two ( 2 ) y e a r s and t h r e e ( 3 ) months. 5.11.10

RETURN ON EQUITY

The r e t u r n on e q u i t y is c a l c u l a t e d u s i n g t h e f o r m u l a :

RATES OF RETURN Year

1

Year

11

Year

111

Year

IV

Year

V

Average r a t e of r e t u r n on equityemployed f o r t h e f i r s t f i v e y e a r s of o p e r a t i o n i s 3 2 . 3 % 5.12

ECONOMIC AND SOCIAL BENEFIT TO BE DERIVED The p r o j e c t a p p r a i s a l p r o c e s s a l s o looked a t t h e

economic b e n e f i t s and impact of t h e p r o j e c t , w i t h a. view t o s e e i n g whether o r n o t t h e p r o j e c t w i l l make any improvement on t h e socio-economic c o n d i t i o n . 6 ~the a r e a . The economic and s o c i a l b e n e f i t s t o be d e r i v e d from the p r o j e c t include t h e following. 5.12.1

CONTRIBUTION BY THE PROJECT TO GROSS DOMESTIC PRODUCT

The b e n e f i t s t o be d e r i v e d from t h e p r o f i t a r e immense.

The e x t e n t o f t h e n a t i o n a l economic b e n e f i t may

be s e e n from t h e p r o j e c t s e s t i m a t e d d i r e c t c o n t r i b u t i o n o f w e l l o v e r W15,000,000 ( f i f t e e n m i l l i o n ) t o t h e Gross Domestic P r o d u c t i o n i n t h e f i r s t f i v e y e a r s of o p e r a t i o n .

.

I t also

c o n t r i b u t e s more t h a n W800,OOO ( e i g h t hundred thousand n a i r a ) t o Gross C a p i t a l Formation f o r t h e same p e r i o d .

5.12.2

PROFITS EARNED BY PROJECT PROMOTERS/SPONSORS

E q u i t y i n v e s t o r s and common s h a r e s o f t h i s p r o j e c t s t a n d t o e a r n a t o t a l e s t i m a t e d Gross s u m o ~ 4 6 0 , 0 0 0 a s dividedd i n t h e f i r s t f i v e years of openation with reasonable l i q u i d i t y resexyes. 5.12.3

TAX PAID BY THE P R ~ E C T

A t o t a l sum o f W2,108,533 ( o v e r two m i l l i o n and

hundred t h o u s a n d n a i r a ) i s t o be p a i d t o t h e government a s company t a x o v e r t h e f i r s t f i v e y e a r s o f o p e r a t i o n . O t h e r t a x e s s u c h a s income t a x t o be p a i d by t h e p r o j e c t employees and t a x on d i v i d e n d s (when d e c l a r e d ) f o r t h e same p e r i o d would s u b s t a n t i a l l y i n c r e a s e t h e government t a x revenue. 5.12.4

MORE EFFECTIVE UTILISATION OF NIGERIAN LABOUR (EMPLOYMENT EFFECT)

The p r o j e c t i s e x p e c t e d t o employ 1 8 ( e i g h t e e n ) N I g e r i a n p e r s o n n e l , t h e r e b y h e l p i n g t o r e d u c e t h e unemployment f i g u r e i n t h e c o u n t r y i n g e n e r a l .

Goss r e m u n e r a t i o n

o f t h e l a b o u r t o be employed by t h e p r o j e c t d u r i n g t h e f i r s t f i v e years of operation i s expected t o t o t a l W2,017,221 ( o v e r two m i l l i o n n a i r a ) . 5.12.5

STIMULATION OF OTHER INDUSTRIAL EFFORTS :

The n e t c a s h income g e n e r a t e d by- t h e p r o j e c t i n

form o f t a x e s , d i v i d e n d s , wages and s a l a r i e s s h a l l most c e r t a i n l y be s p e n t i n t h e p u r c h a s e o f goods and services.

The n e t e f f e c t o f s u c h p u r c h a s e s wou1.d b e

t h e stimulation of o t h e r production a c t i v i t i e s . The magnitude o f t h e p r o d u c t i o n would depend on t h e r e t e v a n t income m u l t i p l i e r .

CHAPTER SIX 6.0

SUMMARY AND CONCLUSION The need f o r p r o j e c t o r i n v e s t m e n t a n a l y s i s a r i s e s

from t h e s c a r c i t y of r e s o u r c e s which i s a t t h e r o o t o f most o r g a n i s a t i o n a l d e c i s i o n s .

The a t t a i n m e n t o f

organisational objectives i s a process involving t h e a l l o c a t i o n o f r e s o u r c e s between money s p e n t i n one way t o b e t t e r a c h i e v e one o b j e c t i v e and t h a t s p e n t i n a n o t h e r t o achieve another objective.

Once t h i s b a s i c concept of

resource a l l o c a t i o n i s understood, t h e assence of p r o j e c t e v a l u a t i o n can t h e n be a p p r c i a t e d . S i n c e r e s o u r c e s a r e s c a r c e and l i m i t e d , t h e y must be p u t t o t h e most e f f e c t i v e u s e .

The purpose o f p r o j e c t

a n a l y s i s i s t o a c h i e v e t h i s e.nd by making a s s u r e a s t h e c i r c u s m t a n c e s p e r m i t t h a t t h e p r o j e c t i s t e c h n i c a l l y sound, t h a i t w i l l p r o v i d e a r e a s o n a b l e economic and whew a p p r o p r i t e ,

f i n a n c i a l r e t u r n , t h a t i t s o b j e c t i v e cannot be a c h i e v e d i n some l e s s c o s t l y way.

T h i s purpose i s deemed t o have be-en

achieved by t h i s s t u d y . I n v e s t o r s a r e u s u a l l y concerned w i t h t h e o v e r a l l performance o f t h e i r company.

There a r e may measures of

corporate-performance but t h e a b i l i t y t o generate p r o f i t i s t h e most r e a d i l y used.

The p r o f i t a b i l i t y i n d i c a t e d i n

t h e s t u d y g i v e f a i r l y conducive answer t o how e f f e c t i v e l y t h e o p e r a t i o n s of t h e p r o j e c t based on t h e f o r e c a s t c a p i t a l

investment and annual o p e r a t i n g r e s u l t s w i l l be.

The

p e r c e n t a g e r a t e s o f T e t u r n on investment a r e h i g h e r t h a n t h e p ~ o j e c t e dgrowth r a t e o f N i g e r i a ' s Gross Domestic p r o d u c t a t c u r r e n t market p r i c e .

They a r e a l s o

h i g h e r t h a n t h e p r e s e n t l e n d i n g r a t e , t h i s makes t h e p r o j e c t v e r y v i a b l e . The s c h e d u l e o f c a s h flow a l s o shows a very healthy cash p o s i t i o n f o r the p r o j e c t .

The s u r p l u s

b a l a n c e s s a t i s f y t h e l o a n repayment, t h e o v e r d r a f t r e t i r e m e n t , working c a p i t a l needs a s w e l l a s t h e d i v i d e n d repayment when d e c l a r e d .

The p r o f i t and l o s s

and t h e b a l a n c e r s h e e t p r o j e c t d d n s a l s o show a v e r y h e a l t h y f i n a n c i a l p i c t u r e f o r t h e f i r s t f i v e y e a r s of t h e p r o j e c t . From t h e f o r e g o i n g a n a l y s i s , t h e p r o j e c t can be s a i d t o be p r o f i t a b l e and i n d e e d v i a b l e . I t i s a l s o very s a t i s f a c t o r y t h a t t h e p r o j e c t i s t e c h n i c a l l y f e a s i b l e t o c o n t r u c t and o p e r a t e a t t h e l o c a t i o n earmarked f o r i t .

The environment i s v e r y

conducive w i t h t h e a v a i l a b i l i t y o f needed u t i l i t i e s and raw m a t e r i a l s i n p u t f o r t h e s u c c e s s f u l o p e r a t i o n o f t h e project. A 'bright future for the project is further evidenced i n t h e d a t a c o l l e c t e d . The m a r k e t i n g s t r a t e g y adopted s h o u l d e n s u r e t h a t , p r o d u c t i o n s c h e d u l e i s k e p t a t d e s i r e d l e v e l s t o enhance quick b ~ e a k e v e n . A s e a r l i e r i n d i c a t e d , t h e r e i s s t r o n g feeling that the

p r o j e c t i s f i n a n c i a l l y i i a b l e a s can

be e s t a b l i s h e d from g e n e r a t e d a c c o u n t i n g s t a t e m e n t S . a n d sensitivity analysis.

This p r o j e c t i s capable of generating

enough c a s h i n i t s r o u t i n e o p e r a t i o n s t o meet a l l t h e company1s f i n a n c i a l o b l i g a t i o n s i n a d d i t i o n t o making s i g n i f i c a n t p r o f i t s f o r t i s promoters. The NERFUND and N B C I whose o b j e c t i v e s a r e t o a s s i s t s m a l l and medium s c a l e e n t e r p r i s e s i n o b t a i n i n g medium t o l o n g term l o a n s t h r o u g h some p a r t i c i p a t i n g f i n a n c i a l i n t e r m e d i a r i e s may be approached f o r l o a n a t lower i n t e r e s t r a t e s t h a n i s a v a i l a b l e from c o n v e n t i o n a l banking transactions. F i n a l l y , t h e a n a l y s i s of t h e f i n a n c i a l implications of t h e p r o j e c t have some s i g n i f i c a n t e f f e c t s ' i n e n a b l i n g u s reach decision.

I t is c r y s t a l c l e a r t h a t t h e i n t e r e s t s

of b o t h t h e owners and c r e d i t o r s a r e w e l l p r o t e c t e d a s e v i d e n c e d by t h e v a r i o u s e n c o u r a g i n g r a t e s computed.

The

p r o j e c t i s t h e r e f o r e recommended w i t h o u t r e s e r v a t i o n t o f i n a n c i a l i n s t i t u t i o n s f o r fihanciB;1. a s s i s t a n c e a s w e l l a s ko p o t e n t i a l s p o n s o r s and i n v e s t o r s .

--A P P E N D I X 5,

DEPARTMENT O F MANAGEMENT Tel: 332091 Ext. 42 21st Junc;1995

DATE.....................................................

---

TO WKOM IT MAY CONCERN

The a b o v e ~ n n m e d is an MBA s t u d e n t in t h e department of

~ n n & e r n e n t , U n i v e r s i t y -of' Nigeria, E a u p Cnmpus.

He&&ia

u n d e r t a k i n g Renear&

h i s b e * H13A dissertation.

work

i n odmection .

with

. ...

We r e q u e s t t h a t you please g i v e h i m / h e r y o u r m~xirnum

ce-operat ion,

.

.

OUESTIONAIRE APPENDIX I 1 Dear Respohdent

, CONSUMER QIJESTIONAI RE

The q u e s t i o n s below a r e f o r a r e s e a r c h work on t h e establishment of a small s c a l e soap manufacturing i n d u s t r y i n Ahiazu L o c a l Government Area w i t h s p e c i a l emphasis on h o u s e h o l d consumption o f s o a p .

The q u e s t i o n a i r e i s

i n t e n d e d t o p r o v i d e a n s w e r s on t h e b e s t way o f m e e t i n g t h e n e e d and demand o f p o t e n t i a l consumers o f t h e p r o d u c t . I hope y o u r answer t o t h e s k r q u e s t i o n s w i l l b e o f

g r e a t h e l p t o me i n t h e s e s e a c h ; You a r e n o t e x p e c t e d t o w r i t e y o u r name on t h i s p a p e r . I w i l l b e v e r y g r a t e f u l i f you w i l l answer t h e s e q u e s t i o n s

objectively.

You a r e v e r y f r e e t o e x p r e s s y o u r o p i n i o n

where you do n o t have c h o i c e among t h e a l t e r n a t i v e s p r o v i d e d . Thanks f o r y o u r e x p e c t e d c o - o p e r a t i o n . Yours f a i t h f u l l y ,

INSTRUCTION

-

P l e a s e , t i c k 'X' i n t h e s p a c e [-/ SECTION A:

PERSONAL DATA

p r o v i d e d f o r answers

Male

/-'/

130

[7-'

Female

Age: ( a ) Under 20 y r s /

(b)

-

M a r i t a l S t a t u s : M a r r i e d /--/

21-29 y r s /.-/

7

Single

E d u c a t i o n a l Q u a l i f i c a t i o n : ( a ) S t a n d a r d S i x and below //

-

- -.

(b) S c h o o l C e r t i f i c a t e and below / /

(c)NCE and above /

Income p e r annum: ( a ) W1200-W3900 //

(b)W1000-~6900/-

.

Tc) W7000 and above //

7

(d) No F i x e d Income

P l a c e o f Residence: (a) Within t h e L.G.A. t h e L.G.A

//

-.

// (b) O u t s i d e

L 7

Occupation: I n d i c a t e a s a p p r o p r i a t e . SECTION B : I n which zone o f t h e L . G . A . ( a ) Ahiazu E h s t

7 (b) -

do you l i v e i n .

East // ( d ) Ekwerazu West Do you u s e s o a p

J , -

Yes

-

Ahiazu West //

( d ) Ekwerazu

/7 No

1 7

Which b r a n d o f b a r s o a p do you u s e p r e s e n t l y

// How o f t e n do you u s e b a r s o a p ( a ) Very o f t e n (b) O c c a s i o n a l l y ';r--fCc) Not a t a l l /-/' \

E s t i m a t e y o u r monthly e x p e n d i t u r e on s o a p consumption What do you p r e f e r most i n y o u r b r a n d o f b a r s o a p ( a ) The colour

/71b)Degree

(d) P r i c e

/7 -

o f foaming // (c) Q u a l i t y

1 7

7.

Who makes t h e b u y i n g d e c i s i o n i n t h e h o u s e h o l d (a) Myself

-

7-/ 8.

(b) my w i f e

/ 7 ( c ) my -

(c) Quality of product

(b) P r e v a i l i n g p r i c e /j/

If (d) N o t h i n g //

Where do you u s u a l l y buy y o u r s o a p (b) Local markets // (c) Provision

( a ) S u p e r m a r k e t s // stores 10.

-

Anybody //

What i n f l u e n c e s . y o u r b u y i n g d e c i s i o n

//, ( a ) Brand l o y a l t y -

9.

-

husband, 7-{(d)

/ 7 -

What i s y o u r b u y i n g b e h a v i o u r l i k e r e g a r d i n g q u a n t i t y

-,

(a).::Bklk:-purchase /

(b) S i n g l e p u r c h a s e when needed

/ 7 11.

How do you c o n s i d e r t h e p r e s e n t p r i c e o f y o u r b r a n d o f soap (a) very h i g h (c) Affordable

12.

/ 7 ( b ) Mollerately

high

/ 7

I-/'

Does i n c r e a s e i n p r i c e a f f e c t y o u r d e c i s i o n t o buy a product ( a ) Yes /

/ 7

No

(13) Would you c o n s i d e r t h e p r i c e o f l o c a l l y m a n u f a c t u r e d s o a p as a reflection of i t s quality

14.

Does a d v e r t i s e m e n t o f a p r o d u c t i n f l u e n c e y o u r b u y i n g decision of t h a t p a r t i c u l a r product

-

( a ) Yes //

- 7 -

ment 7

(b)

No

//

( c ) Do n o t l i s t e n t o a d v e r t i s e -

15.

-

I f y e s , which media i n f l u e n c e s you ( a ) Radio //

(b) T e l e v i s i o n

' 7 7

(c) Newspapers /-'/ (d) Hand b i l l -- .. .

16. P l e a s e s u g g e s t any improvement you w i l l e x p e c t i n new brands of soap t o be introduced i n t h e market i n future.

BIBLIOGRAPHY A l b e r t , K. J;

S t r a i g h t T a l k About S m a l l B u s i n e s s ; 2nd E d i t i o n Englewood C l i f f s ; N . J . P r e n t i c e H a l l I n c . 1980.

A l s s o p , M:

Survival I n Business Enterprises,; London Mercury House I n c . , 1975.

C l i f t o n , S. David J n r . And F y f f e , F . David:

P r o j e c t F e a s i b i l i t y A n a l y s i s , ...A Guide To P r o f i t a b i l i t y New V e n t u r e s . G e o r g i a I n s t i t u t e o f Tech. A Wiley I n t e r s c i e n c e ! P u b l i c a t i o n , 1977.

E n c y c l o p e a d i a B r i t a i n i c a i . Vol. 1 6 , 1 5 t h E d i t i o n 1973. Ezeanyagu, J . E :

P r a t i c a l Guide To P r e p a r a t i o n o f F e a s i b i l i t y S t u d i e s ; A s t u d e n t Companion UNEC, 1994.

F r e u n d , J . E . And Williams F.J:

Modern B u s i n e s s S t a t i s t i c s ; 2nd E d i t i o n M a r s h a l l f i e l d , Massachusettes, Pitman P u b l i s h i n g I n c . , 1990.

H a l l y , P:

S m a l l B u s i n e s s V e n t u r e s : 2nd . E d i t i o n - C a r l i f o r n i a Wedsworth P u b l i s h i n g Co.198

Imaga E . U . L :

Theory And P r a c t i c e Of P r o d u c t i o n Management; A f r i t r a d e I n t e r n a t i o n a l L i m i t e d , Lagos, 1994.

Kayode, M.0:

The A r t o f P r o j e c t E v a l u a t i o n ; I b a d a n University Press.

Kotler, Philip:

P r i n c i p l e s o f M a r k e t i n g \ , Englewood C l i New J e r g y . P r e n t i c e H a l l I n c . 1980.

Oshubiyi, 0 :

E n s u r i n g S u r v i v a l Of Small S c a l e I n d u s t r i e s ; B u s i n e s s Times; A p r i l 10,1989.

Osuala E.C:

Rice, G.H:

I n t r o d u c t i o n To R e s e a r c h M e t h o d o l o ~ y -2nd E d i t i o n , Awka. A f r i c a n a FEB. P u b l i s h i n g 1987. Strategic' Business"

D e c i s i o n Making I n S m a l l J o u r n a l Of G e n e r a l Management

Vol. 9 , 1980. Roger, G :

S c h u t z L.GWrSe:

The A p p r a i s a l P r o c e s s ; New York 1953

Umeh A . John:

F e a s i b i l i t y And V i a b i l i t y A p p r a i s a l ; 0nibon0,j.e P u b l i s h e r s , 1977.

Vesper K . H .

Young G . 1 . M :

I V

39

59

-

"A P r a c t i c a l P l a n n i n g For Small B u s i n e s s "

'H:av-~ardB u s i n e s s ne-view, Vol. 4 2 No 5 , 1964.

UNIDO:

-

i7

5 19

6

-

7 ?The S t a g e s Of P r e p a r a t i o n And Implement a t i o n of Industrial Projects1'; IndQstrial.7 i s a t i o n And P r o d u c t i v i t y B u l l e t i n No 1 9 , New York, 1973.

2

New V e n t u r e s S t r a t e g i e s ; 3 r d E d i t i o n Englewobd~C l i f f s N . J . P r e n t i c e H a l l I n c . 1987.

2,

" F e a s i b i l i t y S t u d i e s " , The A p p r a i s a l J o u r n a l Vol. 38, Chicago, American Real E s t a t e I n s t i t u t e 1970.

3

-