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AFRICABIZ VOL 1 - ISSUES: 52 & 53
AUGUST 15 - OCTOBER 14, 2003
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Editor: Dr. Bienvenu-Magloire Quenum
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A WORD FROM THE EDITOR


Dear visitor and international investor,


We warmly welcome you, if this is your first visit to Africabiz Online - The ultimate newsletter on trading and investing in 49 sub-Saharan African countries. If you are a regular and faithful reader, welcome back.

- THIS DELIVERY STANDS FOR TWO ISSUES

AFRICABIZ Online's Editorial Team is taking one month break from September 1 to September 30. Therefore, this delivery covers two months: August 15 to September 14; and September 15 to October 14. The next issue N° 54 will be online on October 15, 2003.

- AFRICAN ENTREPRENEURS NEED TO MASTER INTERNATIONAL TRADE INTRICACIES

50 years after African countries recovered their sovereignty, Africa is still in the backyard of economic development as shown by its meager share (1-2%) of the international trade.

Africa is simply a marginal participant in the global trade. Why is it so?

It is always good to ask the right question in order to finding the adequate solution. Nowadays, we read and hear big powers' political leaders speak about "Trade And Not Aid" to solve the developing gap in Africa. Good.

However, before you sell anything, you have to produce it first. At competitive price and then find buyers. That is where the solution starts. To produce goods and services at competitive prices.

Once you find buyers, you need to act properly drafting efficient trading document such as Letters Of Credit - L/C. You can easily kill the deal and lose the hard-won client if your L/C is badly "structured".

THE NEED TO KNOW HOW TO DRAFT WINNING LETTERS OF CREDIT

Terms used in the L/C are paramount.

- Which company is in charge of the transportation of the goods to the buyer's location?
- At which point of the transaction the exported or imported goods are paid for by the purchaser?
- In which currency?

Above listed questions are vital for the success of the import or export transaction and a L/C that does not properly address these questions could become a major roadblock to successfully closing a deal.

Academic courses do not provide the answers which are only harvested by seasoned practitioners of international trading.

A UK's computer based training and e-learning company - Mantissa - brings the adequate solutions right to your doorstep. Mantissa, devised a course to teach you how to draft the perfect L/C and be a winner

With Mantissa's e-learning course you can work through the programme at times that suit you without leaving your office desk. Training can be taken in short spells of an hour or two, and can be repeated if necessary if skills need to be brushed up.


THE NEED TO EFFICIENTLY USE IMPORT AND EXPORT FINANCING TOOLS

Since the 1985's - the beginning of the enforcement of the Structural Adjustment Program (SAP) by the IMF and the World Bank - the so-called "globalization" of the economy took hold of the entire world and tightened its grip around sub-Saharan African countries fragile economies.

Sub-Saharan African countries are forced to compete, within the biased rules and regulations of the Uruguay Round / World Trade Organization (WTO), against the heavyweights countries of Americas, Europe and Asia. They are obliged, under SAP, to renounce to or alleviate any subvention granted to their vital economic sectors (Utilities, agricultural products in particular), while America and Europe continue to granting heavy financial subventions (billion of US$) to the actors of similar economic sectors in their countries. (See Farm Bill in the States and Common Agricultural Policy - CAP - in The European Union).

Furthermore, the selling prices of mineral and agricultural commodities produced by African countries (Iron, copper, manganese, coffee, cocoa, cotton, tea, cashew nut. Etc.) are under pressure from the "legal" trading speculation undertaken by international investors acting under the powerful umbrella of bourses located at Paris, Chicago, London, Amsterdam, Singapore.

In order to be in a better position to compete against the heavily subsidized products from Europe and America, African entrepreneurs need to get well acquainted with financial tools available to import or export; that way they have more chance to minimizing the costs of the transactions. The highlighted and featured article of this delivery titled: How To Import With No Money Down, by Shaun Beecham, gives leads.

- AFRICA MUST EMBRACE THE GENETICS REVOLUTION - PART 2

The Industrial Revolution took place without the participation of Africa, which is striving now to be part of the Information Technology one.

Australian born Nobel Prize winner Professor Doherty
said: "Double helix is the shape of things to come...If we are to be responsible citizens, we must all learn more about genetics."

It is then compulsory that Africa becomes a player in the Genetics Revolution. To emulating emerging countries like India and China, which understood the challenge and are taking necessary steps not to be let aside. Otherwise, Africa will be let aside for good and remain under the political, economic and social domination of western European countries and the United States of America.

Last delivery gave a brief about the history of the Genetics Revolution. Part 2 summarizes the reasons why Africa should not miss the Genetics Revolution. Click here for more

- Contributor's Guidelines are here to review. Your contribution on "How African countries / entrepreneurs could bridge the developing gap" is welcome.

Many thanks for dropping by and see you here on October 15, 2003. We are taking one month break from September 1 to September 30, 2003.


Dr. B.M. Quenum

Editor of AFRICABIZ
Contact Dr. Bienvenu-Magloire Quenum

BUSINESS OPPORTUNITIES IN AFRICA


- Several business opportunities - component parts of the Integrated Developing Scheme described in Africans, Stop Being Poor! are listed in following table.


a- SHEA BUTTER (Issues 5, 6, 7, 11, 12, 13)
b- BLUE GOLD (Issues 14, 15, 16, 17, 18, 19)
c- FREEZE-DRIED PAPAIN (Issues 20, 21, 22 and here)
d- KENAF (Issues 23, 24)
e- VEGETABLE OIL (Issues 25, 26, 27 and 28)
f- CEREALS (Issues 30, 31, 32, 33)
g- FRUITS (34, 35, 36, 37, 38, 39, 40, 42, 43, 44, 45, 46)
h- ESSENTIAL OILS (47, 48, 49, 50, 51)

- TROPICAL FLOWERS AND FRAGRANCE PLANTS AGRIBUSINESS AS INCOME BUILDING POWER FOR AN AFRICAN COMMUNITY: PART - V - INDUSTRIAL SCALE PRODUCTION OF GERANIUM, CITRONELLA AND LEMONGRASS ESSENTIAL OILS - INVESTMENT DATA'S BRIEFS

Essential oils are odorous products from natural raw materials such as leaves, fruits, roots and wood of many seasonal or perennial plants. They are of complex composition and contain alcohol, aldehydes, ketones, phenols, esters, ethers, and turpenes in varying proportions. An estimated 3,000 essential oils exist of which around 300 are of commercial importance. Most of them obtained from agricultural plants, but some 28 essential oils collected in commercial quantities from wild sources Here is a short-list of essential oils and the plants they originated from; with the main producing countries.

- WHY AFRICAN COUNTRIES SHOULD CONSIDER ESSENTIAL OILS INDUSTRY

The size of essential oils' market exposed in Issue 47 averages US$ 8 billion export a year and increases at the annual rate of 10.9%. Africa' share is less than 1% of that market. Doubtless, there is room for Africa to have a better portion of the cake and kill two birds with one stone.

Indeed, most sub-Saharan African countries suffer recurrent drought, which results in increasing desert territories. A well planned and carried out reforestation policy is the answer to the problem. Trees species, which are raw material to produce aromatic oils should be planted. The most promising speculations are essential oils from: Geranium, Citronella, Lemongrass or Sweet calamus, Eucalyptus.
(See Issue 47 for briefs about said plants)

In sub-Saharan African countries, Malawi is the one country that already has plantations of Eucalyptus (15,000 ha); Lemongrass (3,200 ha) and Citronella (2,800 ha).

- PRODUCTION ESTIMATES OF MALAWI'S PLANTATIONS

In Table below are reported the production's estimates of various essential oils generated from plants available in Malawi.

PlantationsExisting
ha
To be used
ha
Raw material
Metric Tons
% Oil In MTIn Liters
Eucalyptus15,000 ha3009,6001%96109,464
Lemongrass3,200 ha3007,0000.4%2832,000
Citronella2,800 ha3007,0001%7078,000

For more on facts, data and assumptions, which are background to the figures listed in above table, click here

- INVESTMENT DATA BRIEFS ON AN INDUSTRIAL SCALE OPERATION TO PRODUCING ESSENTIAL OILS

Let us consider an operation in Malawi to produce essential oils of Eucalyptus, Lemongrass and Citronella as per the production's yelds above listed. Table below summarizes the investment and operational costs and data:

Items
Amount
(US$ x 1,000)
INVESTMENT

1- Land and buildings: Land acquisition - Plant (300 sq. meter) - Offices (150 sq. meter) - Housing for management (3 x 100 sq. meter)

120

2- Processing Equipment: Know How acquisition - Equipment purchase and setup - Blank Startup Assistance (for three months) - Spare Parts - Storage tanks - Cold room. Etc.

220

3- Other Equipment: Offices equipment - Four 10 metric tons trucks - Three four wheelers - Housing furniture. Etc.

50

4- Starting expenses: Feasibility study / Business Plan for the processing plant - startup technical assistance (for six months) Etc. Click here for tentative terms of references covering production and investment planning by Dr. Quenum & Associates.

40

Total investment

430
FULL CAPACITY YEARLY PRODUCTION LEVEL
Eucalyptus = 109,464 liters
Lemongrass = 32,000 liters
Citronella = 78,000 liters
OPERATING COSTS

Operational Expenses: Raw material purchasing - plantations managing - production costs: insurance - utilities - staff and hands - management salaries - packaging - external management assistance - amortization - interests on loan. Etc.

350
PRODUCTION COST PER LITER EX-WORKS
Global production of 219,464 liters of essential oils: 350,000/ 219,4641,595
GENERATED GROSS REVENUES*
Eucalyptus: 109,464 x 3,9875 US $ 436,488
Lemongrass: 32,000 x 4,785 US $ 153,120
Citronella: 78,000 x 4,785 US $ 373,320
TOTAL GROSS REVENUES 962,928
GROSS PROFIT: Total Gross Revenues minus Operating Costs612,928

This site gives an idea of the pricing of most used essential oils on the world's marketplace. One can see that the selling prices listed in the Generated Gross Revenues' section are far below the international prices - and the production shall remain highly competitive after transport costs to port and harbor's taxes are added for Free On Board (FOB) purposes.

The production of essential oils on an industrial scale basis - in Africa and particularly in Malawi - is a high profit making operation. Loans to establishing the business will be paid back easily in a short span of time. Annual Gross Profit is twice Operating Costs. No doubt a more detailed Business Plan will reveal positive Cash Flow allowing for a lucrative expansion drive.


Once an essential oil industry set up in a sub-Saharan African country, it will open the way to develop a large spectrum of economic activities in following sectors: foods, cosmetics, detergent, pesticides, pharmaceuticals; etc.; and contribute to the Self-Inducing And Accelerating Impact Factor or Synergetic Impact Factor to speeding up the economic development of said country.

MORE ON ESSENTIAL OILS
1- Essential Oils Desk Reference
By Essential Science Publishing (Hardcover - Oct 2007)
2- The Complete Book of Essential Oils and Aromatherapy: Over 600 Natural, Non-Toxic and Fragrant Recipes
By Valerie Ann Worwood (Paperback - Mar 1, 1993)
3- The Essential Oils Book: Creating Personal Blends for Mind & Body
By Colleen K. Dodt (Paperback - Jan 3, 1996)
4- Essential Oils Pocket Reference 3rd Edition (Spiral Bound 2004, 3rd Edition) (Spiral-bound - 2004) - Unabridged
5- Releasing Emotional Patterns with Essential Oils
By Carolyn L. Mein (Paperback - Sep 1, 1998)
6- Essential Oils Integrative Medical Guide: Building Immunity, Increasing Longevity, and Enhancing Mental Performance
By D. Gary Young N.D. and Ronald M. Lawrence M.D. Ph.D. (Hardcover - April 1, 2003)
7- Quick Reference Guide for Using Essential Oils2006 10th Edition
By Connie and Alan Higley (Spiral-bound - 2006)
8- Magical Oils by Moonlight: Understand Essential Oils, Their Blends and Uses; Choose the Appropriate Day
By Maya Heath (Paperback - April 2004)

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