Nigeria’s shea butter industry is taking a new shape, empowering millions of women and their households owing to its extensive uses in cosmetics, confectionary and pharmaceutical. Presently Nigeria is the leading producer of Shea nuts, the nuts used in producing Shea butter, and is responsible for around 57% of the global production rate.
Shea butter is produced from shea nuts which are gotten from the shea tree. This tree produces its first fruit when it’s about 20 years old, and reaches its full production at about 45 years old.
The Shea tree can produce fruits for up to 200 years before reaching maturity, and the Shea fruit is edible and has a sweet taste.
After eating the Shea fruit, a shea nut in a shell is obtained. With a wide abundance of Shea nuts in Nigeria, the presence of skilled processing personnel in communities, and the vast global opportunities that Shea Butter production and export poses, this makes investing in shea butter production and export a profitable venture for any new and existing entrepreneur.
Shea butter processing company is classified under the cosmetic production industry and as a matter of fact, unpredictable incomes do not really affect cosmetics. The revenue generated in this industry has increased steadily in recent years as some of the industry’s largest export partners began to experience post – recessionary growth.
Shea butter is mostly used in the cosmetics and beauty care industry for skin and hair-related products (lip gloss, skin moisturizers, and hair conditioners). It is also used by soap manufacturing companies, but in small amounts (5–7 percent of the oils in the recipe).
The Cosmetic & Beauty Products Manufacturing Industry is a thriving sector of the economy and it generates over NGN5 billion annually from more than 2,000 registered and licensed cosmetics & beauty products manufacturing companies scattered all around the country.
A recent research conducted by IBISWORLD shows that the Cosmetic and Beauty Products Manufacturing industry that shea butter processing is part of, is in the growth phase of its life cycle, though it is likely to enter the mature phase in the near future. Industry value added is forecast to grow at an average annual rate of 0.7 percent in the 10 years to 2021.
This rate is significantly slower than GDP growth, which is anticipated to increase at an average annual rate of 2.2 percent during the same period. IVA growth which is slower than GDP growth is typically indicative of an industry in the mature or declining stage of its life cycle, the Cosmetic and Beauty Products Manufacturing industry is still growing as it is still experiencing high rates of industry entrants and product development.
One good thing about shea butter processing business is that the business can be targeted at national or international markets depending on your financial capacity. Shea butter processing business is a profitable industry and it is open for any aspiring entrepreneur to come in and establish his or her business and still compete for the available market and make profits.
Facts About Shea Butter Production
- Nigeria is the leading exporter of Shea nuts and Shea butter in the world.
- Nigeria has a comparative advantage in the processing and export of Shea butter in Africa over her counterparts due to the large land available for production
- Nigeria currently produces over 500,000 tons of shea nuts annually.
- Nigeria accounts for almost 60 per cent of the world’s supply of Shea nuts and Shea butter
- Nigeria generates about $3.8 billion every year from shea butter exportation
- The Shea butter industry in Nigeria is dominated by small scale production capacity of fewer than 0.1 tons per day.
- The Chinese are the largest importers of Shea butter from Nigeria
Business Opportunities In Shea Butter Production
1). Production Facility:
By owning a Shea butter production facility, you can charge a fee to people to process their shea butter at your factory. When this is done, you’d be serving a very large market and have consistent revenues.
2). Cosmetic Market:
This accounts for the majority of the demand for shea butter both locally and internationally, as it is mainly used as a moisturizer for both hair and skin, therefore making the shea butter market a very lucrative one.
3). Multiple Uses:
The demand for shea butter internationally keeps rising, as more of its uses have been discovered. China is the highest importer of shea butter importing over 70,000 metric tons annually.
Challenges Of The Shea Butter Production In Nigeria
- It is a seasonal business as the nuts are only gathered during a season once a year. So production cannot happen all year round.
- Lack of highly efficient storage facilities for the unprocessed nuts
- Lack of capital for large scale production
- Indiscriminate cutting of Shea trees
- Instability of the international market price of Shea butter
- Lack of technical input for large scale Shea butter production
- Lack of adequate government assistance
- Lack of knowledge on how to produce high-quality Shea butter
- Lack of funds to import international standard shea butter production machinery
- The profit margins on Shea butter is anywhere from 20% to over 100% because total production brings the cost price to between $900 to $1,200 per metric tonne, and it’s sold internationally for between $1,800 to up to $8,500 per metric tonne depending on the quality and where it is going to.
Shea butter production in Nigeria is a very lucrative business as the global demand keeps increasing. Depending on your production costs and where you’re selling to, the profit margins could be anywhere from 20% to over 100%, making it one of the largest and most profitable agro-business in Nigeria with and a very lucrative venture to for new and existing entrepreneurs to start.