University of Nigeria

Research Publications
UCHE, Remigius Iheanacho
Author

PG/MBA/93/18003
A Feasibility Study and Viability Appraisal of
the Establishment of a Small Scale Soap
Title

Manufacturing Industry in Ahiazu

Mbaise L. G A. Imo State
Faculty

Business Administration
Department

Management
Date

September, 1995
Signature

Digitally signed by Alice Okore

Alice DN: CN = Alice Okore, C = NG, O

= University of Nigeria, OU =
Library Department
Reason: I have reviewed this
Okore 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. L . IMAGA

5 SUPERVISOR.
1
 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 objective-

I 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 remember 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 terms 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 implemen- -
tation.
 PAGE ..
T A B L E OF CONTENTS .-

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 Terms

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
I
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
1
1
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
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
 LIST OF TABLES PAGE

.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 Cost Requirement 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 Account

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
 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 24A

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
 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. I t s scope i s l i m i t e d t o
two t y p e s o f q u e s t i o n s . 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 compe-
t 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 - t

I,
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
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 TERMS

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 . I t i s regarded a s
t h e a c t o r process of estimating value. 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 . I

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 ,
i
1 :

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 '
 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
I

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 .
1
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
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 I

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
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 contemp-
l 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 support
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 funda-
mental 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.

2.5 STAGES OF PROJECT FEASIBILITY ANALYSIS

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 I. -

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?: :

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 informa-
t 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 i .'

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
feedback 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 IDEAS F y S T U D Y
]

I IS INFORh!AL
ANALYSIS FAVOl?f\BLE' I
L .I
YES , NO
I5 P R E F C A S l B l L l T l
TERhllNATE

I
? PREFEAS!BILITY

/ YES
I ANALYSIS F A V O R A B L E ?

NO
.- , -- .-
I__]
; ? L A N F E A S I B I L I T Y ANALYSIS
__
<

1.-

i I S h l A R K E T AIJALYSIS
TAVORADLE'
YES
i 7ERb';itJATE C O N D U C T T E C t i N I C r l . 4rJALYSIS
I
!
i J1 .- -
I FAVORP.ELE?

FAVORABLE?

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

CONDUCT SOCIAL. 1
P R O F I T A B I L I T Y ANALYSIS

-1
A N A L Y S I S FAVORABLE?
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. 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 .
are 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. 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
production. 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 joined
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 petroche-
mical 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 I
I
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
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 reconstruct^^^ .;
. .
t h e economy.

2.13 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 cons-
t 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. Borrow-
ing 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 conseq-
u 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 accounting 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 : New York, 1953.
6. M.O. Kayode 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: 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

12. P. H a l l y 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 . Prentice

H a l l I n c . 1980. p.61.
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 G.C. Akkwaeze Small S c a l e I n d u s t r i e s And NAtional
Development ; Development
---- Outlo& Vol. 1
-.

NO. 1 0 Lagos, A p r i l 1987. p . 1 0

16. O.F. O j i a k o 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 Administrator;
---
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 ;
- Y P
..

V01.9. 1980. p . 6 3 .

19. K.H. Vesper New

-- V e n t u r e s t r a t----'
egies 3rd Edition
-
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 - METHODOLOGY, DATA PRESENTATION ANALYSIS

RESEARCH
3.1.1 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
contacted.

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 . Thisprovided t h e
r e s e a r c h e r t h e on-the-spot 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.
 3.14 SAMPLE SIZE AND PROCEDURES

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. The whole a r e a was d i v i d e d i n t o f o u r ( 4 )
zones - 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 o r 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 . . .. , = .17 or 17%
That i s

Therefore n = z2 (pq)
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
s a m p l i n g methods. Here, s t r a t i f i c a t i o n involved. d i v i d i n g
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 DATA PRESENTATION AND ANALYSIS

4.1 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 PRESENTATION AND ANALYSIS

4.2.1 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 respond-

e 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

AGE; ,GROUP:I 4U.E % OF MALE FEMALE b OF E b f W E TarM

IN Y Fm ESPONDENTS RESPONDENTS RESPCNDENT: RESPONDENTS RESPCNSE
Under 20 14 18.9

21: - 29 10 .. 13.5

30 - 39 20 10.3

40 and 'above 30 15.5

TOTAL 74
---------- .--------.
--------.

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

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

. -. above.
- .,.
~ 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
6
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.
 53
CLASSIFICATION OF RESPONDENTS ACCORDING MARITAL STATUS

TAR LE

MAR I TAL RESPONDENT % ESPONDENT % TOTAL %' TOTAL

STATUS MALE RESPONSE

Single 12.9 49 25.3

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 . Thus we had more o f t h e
. married respondents t h a n unmarried ones.
 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 ( NO OF RESPONDENTS PERCENTAGE

Employed 140 75.7

S e l f Employed 40 21.6
Pensioner 5 2.7

TOTAL 185 100%

.................... ....................................
................................................................. -------
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 PERCENTAGE

Truck 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

ESTIMATE N O OF RESPONDENTS PERCENTAGE

Do:-.not know 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. 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,
46 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 NO O F RESPONDENTS
I
1 PERCENTAGE

Very h i g h
I 65
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 NO O F RESPONDENTS PERCENTAGE

Yes

TOTAL
 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

RESPONSE I 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.

4.3 SUMMARY OF QUESTIONAIRE ANALYSIS

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 designing -.

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 con-
sumer 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 support 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
Administration.

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
Pre-investment
5 % C 0 n t i n g e n . c ~P r o v i s i o n - 115,100

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 % RETURN

1
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
administration. 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 t h a s slumped w i t h t h e d r o p
i n o i l revenue. 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 ,
t h e r u r a l a r e a s were &rained.
. + of labour. 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 , prod-

u 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, i t i s t o b e perfumed
andsohas auniquemarketniche. 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 I

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 i

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
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
conducted. 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 -
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 . Hence
m a r k e t s i z e i s 2 0 , 0 0 0 x 500 = W10,000,000 c u r r e n t l y .

5.3.5 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. 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
forecast. 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.

5.3.9 MARKETING STRATEGY

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 encompass 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 ADVERTISEMENT 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
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
e
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 . 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
in Table'S.1. 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 E s t i m a t e d C o s t o f "Raw
operations 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 .
5.4.1 INVENTORY CONTROL SYSTEM

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 administration.

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

ITEM I
REORDER POINT ORDE R AMOUNT STOCK CONTROL

IN OUT
DATE AMOUNT DATE AMOUNT BALANCE
 5.5 LOCATION ANDSITE
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 commer-
c 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
terms 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 'support 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 ' ,?nded f o r t h e pro-
d u c t i o n w i l l work f o r a p e r i o d o 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 Kettle: 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
-
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. The k e t t l e i s u s u a l l y l a g g e d '
t o conserve h e a t . 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 - 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 .
2 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 1 - Mechanical A g i t a t o r
f o r Soap
Making . 2 - Soap t a n k
3 - Heat b a s e
4 - Opening f o r h e a t
SUPP~Y
5 '- P i p e f o r removing l y
6 - Tap.

F i g . 5.4'
 ;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 . They a r e

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 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 : -
- Furnitures
- 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
 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. ------ -------
-,W45Q*QQQ----
5.6.2 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. 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
t h e next page.
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 : -

- Saponification
- 'Separation
- Washing
- Re-Saponif i c a t i o n
- Fitting
- Moulding and p a c k a g i n g

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
s a l t solution with the glycerol dissolved i n i t . Thus,
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) : This i s the

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 . 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

RAW MATERIALS 9 SOAP MIXING -4' S O A P MOULD

i & t -

CUTTING
I N T O BARS

r+l STAMPING

1 .

FINAL FINISHED
PRODUCT
d

I
6
? PACKAGING

F i g u r e 5.5
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 . I t forms t h e b a s i s f o r a n a l y s i s
and,c o s t estimating. 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 THE PROPOSED SCHEDULE OF PRODUCTION

YEAR OF PRODUCTION CAPACITY USAGE
I
I

NO. OF
SHIFT
1 P I O ~ J $ C ~!LJTPVT
~~s

1 70%
2 80%
3 80%
4 85%
5 100%
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) S t o r a g e Areas: 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

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 OFFICE AND SERVICE SPACE REOUIREMENTS

(i) Administration: 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
office. 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 .

TABLE 5 . 3 REQUIRED INDUSTRIAL LAND AR

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
administration 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
administration.
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

b I
Raw M a t e r i a l s
1
Store d
i
/n

L. I 4
4
Off l o a d i n g P r o d u c t i o n Area
Area Machinery & Equipments
b

And Peronnel
* 4
I

w
I i

F i n i s h e d Goods
Store
i

P a r k i n g And
K
Loading Area.
4

Figure: 5.6
 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) I

ITEM 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 administrat 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 .

5.8.2 PERSONNEL REQUIREMENTS: 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 .

- General Manager
- Administrative/Personnel Manager
- Supervisors
- Technical S t a f f
- Accounts O f f i c e r
- D r i v e r Salesmad?
- Depot S a l e s l a d y
- F a c t o r y workers.

5.8.3 J O B DESCRIPTION AND QUALIFICATION

(i) General Manager:- 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

industr?:. 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
 members 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.

ADMINISTRATIVE/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.

ACCOUNTS 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

accounts 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. He s h o u l d p o s s e s s a B.Sc/HND

i n accounts.
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. He s h o u l d p o s s e s s a minimum o f WASC and a l s o
an. 'El 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: 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

f a c t o r y depot. 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
DESIGNATION NO ( W ) MONTHLY SALARY (W) ANNUALSALARY
G e n e r a l Manager
Admin/Personnel Manager
1 5,000
3 , 500 1 60,000
42,000
Supervisors
Accounts O f f i c e r
, .
Technical S t a f f
DriverlSalesman 3 2,800 33,600
Depot S a l e s l a d y 1 1,000 12,000
, . , . ' ." .. .. . ' . .
108',000
F a c t o r y Workers . . ."lo
TOTAL Pi18,700 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
effectively. 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
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 controls the a f f a i r s
of t h e o r g a n i s a t i o n . Below t h e General Manager a r e , t h e ; '

Admin/Personnel Manager, t h e S u p e r v i s o r s , Accounts 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

Accounts
I i
LC Technical S t a f f

r t
Admin/Personnel
*

z Officer
Manager
v

1 supervisor I ( Supervisor I
1 I ( production
Sales1
I I
1 1
Driver/Sales Depot
Man
L
5.9. IMPLEMENTATION SCHEDULE

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
p e r i o d f o r a c h i e v i n g them. I t i s a work p l a n f o r a c h i e v i n g
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 ESTIMATED
PROJECT IMPLEMENTATION FUND DURATION
1. B u i l d i n g C o n s t r u c t i o n l 1 Long t e r m
I
C i v i l E n g i n e e r i n g Works Loan 1 2 months

2. P u r c h a s e o f Machinery Long t e r m
,
And Equipment And t h e i r Loan
Inst a l l a t ion

3 . S t a f f Recuitment

4 . P u r c h a s e o f Raw
Equity Capital

E q u i t y And
r ,
I 2 months

Materials S h o r t t e r m Loan 2 months

5. T e s t P r o d u c t i o n I 1
1 month

* 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.
 iio
5.10 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
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 . The r e a s 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)

L__I
YEAR
YEAR YEAR YEAR YEAR YEAR YEAR
0 i ii iii iv
taw m a t e r i a l s 2 months -3mJ- 130 136 152 76-
;t o c k

;tack o f Work i n P r o -
:ess 2 d a y s v a l u e o f
tnnual s a l e s 16 19 20 22 27
;tack 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

Debtors: 1 4 days value

of t o t a l annual s a l e s 112 134 140 156 192
 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 in t h e given s o c i o -
economic environment. 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 50,000

Working C a p i t a l ( 1 y e a r ) 302,000 1
Part Total W2,302,000
P l u s 5% contingency p r o v i s i o n 115,100
Grand T o t a l 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
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

long term loans. The p r o m o t e r s ' o f t h e prefect c o u l d

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.
LONG TERM LOAN: The l o n g t e r m l o a n e s t i m a t e d a t W1,000,000J

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
and I n d u s t r y . 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
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 LOAN REPAYMENT: Repayment o f l o n g t e r m l o a n -
within a 5 - 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 PRINCIPAL CAPITAL OUTSTANDING
W ' 000 W '000 W'OOO

5.11.4 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 1

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 .
Table 5 . 1 1
FORECAST ANNUAL DEPRECIATION I

CAPITAL ITEM ANNUAL DEPRECIATION(W)

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

Total I W187,500

5.11.5 PROJECTED INCOME STATEMENT (PROFIT AND LOSS ACCOUNT)

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 ACCOUNT BASED ON THE PROPOSED
TABLE 5.12 PRODUCTION SCHEDULE , (W ' 000) ,
I I I I I
ESTIMATED INCOME YEAR 1 YEAR 11. YEAR 111 YEAR:.rv Y s
FROM OPERATIONS
I 1

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 1 I 1

T o t a l Gross S a l e s 1ncorne12,400 1 2,879 1 3,023 1 3,366 14,

Operating Costs
Raw m a t e r i a l s 540 647 680 758
S a l a r i e s And Wages 357 557 393 432
Overhead Expenses 163 171 180 189

i
F i n a n c e Bank Charges (21%
I n t e r e s t on t e r m l a a n 507 269 326 198

Depreciation 187 187 187 1 187

Total Operating Costs 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 1,

-5.11.6 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
Overdraft 147

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 Work-
ing Capital

Investment

Increase o r
I n Funds Available1 -
Total

Cash S u r p l u s
Opening Balance
I
C l o s i n g Balance

5.11.7
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

FIXED ASSETS
YEAR R;:!
11
W ' 000 W'OOO
1 1
YF?
W'OOO
YE?
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 1950
L e s s Cumulative
De p r e c i a t i o n
Net Fixed A s s e t s

P r e - i n v e s t m e n t Cost
1 1 11773
7 7

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 I
Current Assets
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.
Cash kt hand & i n bank
II -
1 1426
Accounts R e c e i v a b l e I 1 112
Total Current Assets I 1 1718

Total Assets 3531

Long Term L i a b i l i t i e s
Equity 1000
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
Accounts 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

5.11.8 RATES OF RETURN'. ON INVESTMENTS

Rates of ~ 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
f o r m u l a beLow: -
Net P r o f i t x 100
-
Capital 1

RATES OF RETURN :

1st Year = 18.62%

2nd Year = 36.04'

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 INITIAL INVESTMENT

0 - 2417

1 505 1912
2 1351 56
3 2270

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 unemploy-
ment 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 account
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& work i n odmection with

h i s b e * H13A dissertation. . . ...

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 [-/ - p r o v i d e d f o r answers

SECTION A: PERSONAL DATA
 130
Male /-'/ Female [-
7-'
Age: ( a ) Under 20 y r s -
/ (b) 21-29 y r s /.-/

-
M a r i t a l S t a t u s : M a r r i e d /--/ Single -
7
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. //
-.
(b) O u t s i d e
t h e L.G.A L7
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 . do you l i v e i n .
( a ) Ahiazu E h s t 7 (b)
- Ahiazu West // - ( d ) Ekwerazu
//
East - ( d ) Ekwerazu West /7
-
Do you u s e s o a p Yes J ,
- 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 o f foaming -
// (c) Q u a l i t y 1
7
(d) P r i c e /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-/ (b) my w i f e -
/7( c ) my -
husband, 7-{(d) Anybody // -
8. 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 -
//, (b) P r e v a i l i n g p r i c e -
/j/

(c) Quality of product -

If(d) N o t h i n g -
//
9. Where do you u s u a l l y buy y o u r s o a p
( a ) S u p e r m a r k e t s // (b) Local markets -
// (c) Provision
stores /
-7
10. 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 /7

( b ) Mollerately high /7
(c) Affordable -
I-/'

12. 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 / No /7
(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 // (b) No // ( c ) Do n o t l i s t e n t o a d v e r t i s e -
ment 7 -- 7
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.
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