COSMETICS AND BEAUTY CARE PRODUCTS

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BACKGROUND ·         Cosmetics and beauty care products are substances used to enhance the hygiene and/or appearance of the human body or hair. Cosmetics and beauty care products include skin-care creams, lotions, powders, perfumes, lipsticks, fingernail and toe nail polish, eye and facial makeup, permanent hair waves, hair colours, hair sprays and gels, toiletries, deodorants, hand sanitizer, baby products, bath oils, bubble baths, bath salts, butters and many other types of products.

 

·         The performance of the Nigerian beauty and personal care market during 2014 recorded an impressive growth over that of previous years. This growth was driven by a growing middle-class, population growth (particularly of the young and baby populations), urbanisation and increasing employment in formal settings. Men and women in formal employment are more likely to desire better-quality beauty and personal care products as they attempt to boost their personal image and confidence.

TYPES OF BEAUTY CARE PRODUCTS Cosmetics and beauty care products can be classified into five (5) sub-clusters namely; Body Creams, Beauty Care, Hair Products, Fragrances and Personal Care.
 

RATIONALE

1.    Some of the notable players in the Nigerian cosmetics and beauty care products include Procter and Gamble, Unilever, PZ Cussons, House of Tara International, Soulmate Industries Ltd, etc. However, there is a need to grow the industry as the nation looks inwards to generate additional revenue from the non-oil sector.

 

2.    Nigeria’s cosmetic and beauty care products are largely imported. Imports from foreign countries currently account for 70% of the domestic market leaving Nigerian producers with just a 30% share. An improvement in the ability of local manufacturers to compete against imported products will result in income and employment growth.

 

3.    To target the consolidation and expansion of market share in neighbouring West African countries which is under threat due to poor quality products.

 

4.    To modernize the production process by providing local producers with access to finance for purchase of modern equipment and working capital.

 

5.    Substantial increase in the industry’s employment level.

SOURCE OF EQUIPMENT The basic equipment for a small scale operation are listed below:

 

i.        Stainless steel container or tanks.

ii.        Heater.

iii.        Cooler.

iv.        Mixer.

v.        High spinning turbo propeller.

vi.        Plodder machine.

vii.        Automatic dose liquid filling and capping.

viii.        Two head automatic cream filling machine.

ix.        Packaging machine.

 

However, while some of these equipment can easily be fabricated locally, the modern automated machines and equipment, for mass and specialized production, are imported from Germany, Italy, United States of America, Britain, India, China, etc.  Below are some equipment suppliers:

 

a)   Guangzhou Jutao Machinery Equipment Co., Ltd.

 

No. 25-26, Block 8, Area B, Shisheng Industrial Exhibition Center, East Side Of Guanghua Rd., Xiamao Village, Shijing Town, Baiyun Dist., Guangzhou, Guangdong, China (Mainland)

Website: www.jutaojx.com

 

b)   Wenzhou Flowtam Light Industry Machinery Co., Ltd.

 

Plot A501-B, Binhai Park, Economic And Technological Development District, Wenzhou, Zhejiang, China (Mainland)

Website: www.flowtam.com

 

c)            Making Cosmetics Inc.
35318 SE Center Street
Snoqualmie WA 98065

USA

Website: makingcosmetics.com

Phone: +425-292-9502 / +425-292-9503

TARGET MARKET/ CRITERIA The product will be available to existing and new Limited Liability Companies and Enterprises engaged in cosmetics and beauty products.
PROJECTED IMPACT A typical small- to medium scale factory will create an average of 5 – 10 direct jobs and 15 – 25 indirect jobs, totalling 20 – 70 jobs.

 

Small Medium
Direct 5 -10 20
Indirect 15 – 25 50
Total 20 – 35 70
SINGLE OBLIGOR LIMIT Up to N500 million
PRICING Interest Rate: 9 % per annum.

  • Fees: 1 % processing fee.
TENOR 31/2 – 7 years commencing at the end of the moratorium period
MORATORIUM 6 – 12 months
SECURITY
Loan Amount (N’m) Security Arrangement
5.0 – 10.0 1.    Specific charge over the equipment financed.

2.    Irrevocable Personal Guarantee of the Chief Promoter of the company.

3.    Two (2) external guarantors acceptable to BOI who must belong to any of the following categories:

  1. Senior Civil Servant (Level 12 and above) who should not be more than 53 years old or not more than 28 years in service (whichever comes first).
  2. Bankers (not below the level of Assistant Manager) and must have been confirmed by current employer.
  3. Professionals i.e. Medical Doctors, Lawyers, Accountants, Engineers, etc.
  4. Senior Staff (not less than a manager) of reputable quoted Companies, International Oil Companies, Telecommunications Companies (GSM providers)
  5. The guarantees must be supported with a Notarized Statement of Net worth acceptable to BOI.
>10.0 ≤ 20.0 1.    All assets debenture.

2.    Irrevocable Personal Guarantee of the Chief Promoter of the company.

3.    One (1) external guarantor acceptable to BOI who must belong to any of the following categories:

  1. Senior Civil Servant (Level 12 and above) who should not be more than 53 years old or not more than 28 years in service (whichever comes first.
  2. Bankers (not below the level of Assistant Manager) and must have been confirmed by current employer.
  3. Professionals i.e. Medical Doctors, Lawyers, Accountants, Engineers, etc.
  4. Senior Staff (not less than a manager) of reputable quoted Companies, International Oil Companies, Telecommunications Companies (GSM providers)

The guarantees must be supported with a Notarized Statement of Net worth acceptable to BOI.

Or

4.    Bank Guarantee from Commercial Banks acceptable to BOI.

> 20.0
  1. Irrevocable Personal Guarantee of the Chief Promoter of the company in addition to or a combination of the following:

i.        All assets debenture.

ii.        Legal mortgage on pledged property.

Or

iii.        Bank Guarantee from Commercial Banks acceptable to BOI.

FUNDING

STRUCTURE

·         Loan up to N50 million:

90% maximum from BOI (including working capital from BOI or the SME-friendly banks).

Contribution by the promoter – 10% (minimum)

·         Loan above N50 million:

80% maximum (including working capital from BOI or the SME-friendly banks).

Contribution by the promoter – 20% (minimum)

Existing Business:

For an existing project, the estimated value of the factory building and/or relevant processing equipment, may be applied against the borrower’s 10 – 20% contribution. The factory building and/or equipment must be valued professionally by any of BOI’s accredited valuers.

FUNDING SOURCES ·         Loans of N5 million – N50 million: BOI and CBN N220 billion Micro, Small and Medium Enterprise Development Fund (MSMEDF)

·         Loans above N50 million: BOI Fund

·         For those customers with exportable products: AfDB facility.

DISBURSEMENT Term Loan:

·         In phases in accordance with agreed milestones and shall be backed by provision of performance bond by the accredited equipment suppliers (where the suppliers demand for advance payment before delivery of the equipment).

·         Establishment of Letters of Credit where the plant and machinery are to be imported.

Working Capital:

After successful installation and testing of the equipment, payment shall be made directly to raw materials suppliers.

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