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ESTABLISHMENT OF A PACKAGING
PLANT IN THE GAMBIA
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Contents
Introduction
1. COUNTRY BRIEF
1.1 Background
1.2 Economy
1.3 Geography
1.4 People
1.5 Why invest in The Gambia?
2. METHODOLGY
2.1 Sampling and Data collection Methods
2.2 Sampled Priority sectors relevant to packaging
2.3 Assumptions
3. RESULTS
3.1 Marketing
Feasibility
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INTRODUCTION
This pre-feasibility study was conducted with the objective of obtaining relevant baseline
information that is necessary to determine the commercial viability of a proposed plant for
packaging materials in The Gambia. The proposal consists of two components: (i) manufacturing
outfit for processing packaging materials and (ii) service center for packaging export products.
The pre-feasibility of the proposed enterprise is assessed in three core areas namely marketing,
financial, and technical feasibility.
A market opportunity was identified for the domestic production of good quality packaging
materials in The Gambia to be sold to a variety of individual and enterprise producers of made in
The Gambia products. Analysis of the financial feasibility of the proposed enterprise revealed
that total expenditure on packaging for 15 of the 29 surveyed enterprises is estimated at over
GMD21.6 million for the year ended 2012. In addition, most of the respondents projected their
packaging expenditure to increase by at least 5% annually in the next five years. Therefore, since
this analysis is based on 15 respondents packaging expenditure for 2012, the enterprise is
assumed, all things being equal, to have a projected income of GMD35.6 million over the longer
term. However, the above analysis does not sufficiently capture the ventures financial viability
as its related cost implications. Hence, it is advised that a proper feasibility study be conducted to
provide more relevant and update cost-benefit analysis on the project.
The strategic location of The Gambia will provide easy access to regional and international
source markets for the importation of raw materials as well as facilitate the efficient distribution
of excess production output from such operations. In addition, transport costs associated with the
distribution of the final packaging product within the country are not expected to have significant
impact on profitability.
Taking the net social benefit of the proposed enterprise into consideration, it can be concluded
that the investment will be socially rewarding. Surrounding communities would benefit in a
number of direct and indirect ways from the establishment of the proposed enterprise.
Based on the framework set out in this pre-feasibility study, it can be concluded that the
proposed packaging plant in The Gambia will be feasible and profitable if located closer to
centers of commerce such as Kanifing Municipal Council and West Coast Region. Furthermore,
results of this pre-feasibility study will depend upon the assumptions that conditions in the
macroeconomic, social, technological, legal, regulatory and ecological environments would
remain relatively stable. However, if any of these assumptions were to differ substantially from
actual circumstances, feasibility of the proposed packaging enterprise in The Gambia could
differ from current results.
GIEPA would like to thank all the business concerns that participated in providing information
without which this pre-feasibility study would not have been a success.
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1. COUNTRY BRIEF
1.1 Background
1.2 Economy
1.3 Geography
Situated in West Africa along the Atlantic Ocean bordering with Senegal
Total land area of 11,295 square kilometers
1,295 square kilometers of water bodies with 80 kilometers coastline
Exclusive fishing zone of 200 nautical miles with continental shelf
1.4 People
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A small open economy with low domestic demand given its population size.
Growth volatility given reliance on a few real sector activities and terms of trade
vulnerabilities.
In view of the Governments desire to make the Gambia the Gateway to West Africa, efforts
continue in earnest to improve the business environment in order to reduce cost of doing
business. The government is keen to make The Gambia a leading agro-industrial nation and
therefore is committed to providing incentives to increase agricultural productivity and
investment. The Gambia is attractive to foreign direct investment for a number of reasons. These
include:
Stable political environment: Has a stable democracy with legal system premised on
English law.
Sound macro-economic policies: Have macroeconomic policies with the principal
objective of ensuring price stability and prudent government expenditure.
Capital Accounts: Has a liberal business environment with provision for 100% foreign
investment ownership and allow for profit repatriation.
Access to ECOWAS Market: Is easily accessible to the markets of all the member states
of the ECOWAS with a market of about 300 million people.
Physical infrastructure: Has a relatively developed seaport, airport and road networks
capable of meeting the transportation needs of businesses. Telecommunication facilities
in The Gambia are excellent with more private service provides offering telephone,
internet and other telecommunication services.
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Labor force: Currently has an educated human resource base, both skilled and unskilled
labour, with relatively cheap wage rates.
Warm and friendly people: Gambia is internationally acclaimed for her hospitality to
investors and tourists.
METHODOLGY
This pre-feasibility study is conducted with the objective of obtaining relevant baseline
information that is necessary to determine the commercial viability of a proposed plant for
packaging materials in The Gambia. The proposal consists of two components: (i) manufacturing
outfit for processing packaging materials and (ii) service center for packaging export products.
2.1 Sampling and Data Collection Methods
A simple random sampling method was used du ring selection of data sources for this study. It
took into consideration key enterprises in The Gambia and their packaging requirements to serve
as useful baseline information. Data used in this study was obtained through the administration
of survey questionnaires on indentified respondents with relevance to packaging. A critical
output from the study would be an indication of the viability of a plant for packaging materials in
The Gambia. If viable, the results from this study can be used to compile a comprehensive
business plan for such a venture.
2.2 Sampled Productive Sectors Relevant to Packaging
A total of 29 enterprises were surveyed cutting across different priority sectors of the economy.
Being the largest consumers of packaging materials and services, manufacturing and agricultural
sectors constituted seventy-five percent of survey respondents as shown on figure 1 below:
Figure 1:
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2.3 Assumptions
The results of this pre-feasibility study will depend upon the assumptions that conditions in the
macroeconomic, social, technological, legal, regulatory and ecological environments would
remain relatively stable. However, if any of these assumptions were to differ substantially from
actual circumstances, feasibility of the proposed packaging enterprise in The Gambia could
differ from current results.
.
3
RESULTS
3.1 Marketing
Feasibility
The main users of packaging materials and services in The Gambia include manufacturing outfits,
fruit, vegetable and beverage producers, fishing companies, supermarkets, hotels, and retail
shops. This snap-shot survey was conducted to determine the packaging material requirements of
a variety of business entities in the country. In total, 29 entities consented to participate in the
survey. Results revealed that all of the 29 surveyed respondents are currently producing products
for the domestic market which reflects the existing market demand for packaging products. This
market reality is further buttressed by the fact that ten out of the total are engaged in exporting to
foreign markets, such as Senegal, Guinea Bissau, Mali, the USA and Europe.
3.1.2 Source
The analysis has shown that less than half of the surveyed respondents are currently purchasing
their packaging materials from local market dealers. This indicates that a significant volume of
packaging materials are regularly purchased and imported from third countries which clearly
reflects the supply-side constraints of such products in The Gambia and the need to establish such
an investment in The Gambia. Key source markets for these imported materials were found to be
Senegal, Lebanon, Germany, India, Morocco, Nigeria, Spain, Holland, Bangladesh, Philippines
Sierra Leone, China, UK, USA and Italy.
3.1.3
With regards to the importance of product packaging, the survey revealed that respondents valued
the preservation of the product more than any other factor. This is followed by its protection and
containment. As shown in figure 2 below, most of the respondents considered preservation,
protection and containment of the product to be very important in packaging. On the other hand, a
considerable number of respondents also opined that environmental protection and information
transmission are the least important to product packaging.
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No
a.
b.
c.
d.
e.
f.
g.
h.
i.
j.
k.
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Sector/subsector
Food Processing
Paint Manufacturing
Dairy Farming
Soap Manufacturing
Beverage and soft drinks Manufacturing
Cement Manufacturing
Commercial Honey Production
Water Processing and Packaging
Poultry Farming
Cashew Processing and Packaging
Sea Food Processing and Packaging
Number of
Respondents
1
1
1
2
1
Packaging %
Total Cost
40%
30%
14%
10%
2%
Not Available
Not Available
Not Available
Not Available
Not Available
Not Available
Since this analysis is based on only half of the surveyed respondents packaging expenditure for
2012, the enterprise is assumed, all things being equal, to have a projected income of GMD35.6
million over the longer term. However, the above analysis does not sufficiently capture the
ventures financial viability as its related cost implications are not fully covered. Therefore, it is
advised that a proper feasibility study be conducted to provide more relevant and update costbenefit analysis on the project.
When choosing the location of a processing facility various factors need to be taken into account.
These include:
Access to raw materials
Access to the market
Labour supply at the processing facility location
Infrastructure at the processing facility location
After giving due consideration to the criteria as set out above, the following have been confirmed
as available:
i.
Packaging performs many special important functions as an integral part of a final product.
These functions are:
It protects the quality of the product
It provides consumers with convenience
It conveys a certain image
It provides information with regards to the product
It adds value to a product through differentiation
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ii.
For a packaging investment enterprise to compete in local and regional target markets, careful
consideration must be giving to choices of consumers. The results of this study revealed that
choice of type of packaging in The Gambia depends largely on a number of factors. These
includes marketing, quality assurance, regulatory requirements, products physical and structural
design, weight and value, as well as user friendliness (i.e. ease of opening and reading labels).
This is true because there are strict regulatory requirements in packaging goods, especially food
items and hazardous products in almost all jurisdictions. Other factors determining the choice of
packages by manufacturers and distributors are the cost associated to package graphic design,
logistics, and products self life as shown in figure 3 below:
Figure 3: Factors Influencing the Choice of Packages for Products
i.
On average, most of the respondents agreed that all elements listed on figure 4 are important
information required on product labels. However, the degree of importance attached to Special
Handling Instructions appears lower than all other information requirements on packages.
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ii.
The factors that can influence consumer choice for an ideal material to be used in product
packaging include cost, strength and durability, regulatory requirements and weight. However,
ease of recycling was considered by many to be the least important as shown in figure 5 below.
Notwithstanding, it deserves due attention because government environmental regulations would
sanction anyone found wanting as a result of irresponsible waste management practices.
Figure 5: Factors determining the ideal material for packaging products
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iii.
Results from figure 6 below indicated that on average the different types of packages frequently
used for products in The Gambia consist of boxes/cartons, Jute bags/sacks, bottles and crates.
However, it should born in mind that other types such as trays, buckets, wrappers, pouches,
barrels, drums and cans, baskets, jars and jugs are also used by enterprises and households in the
country.
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Investment incentives are offered by the Gambia Government and administered by the Gambia
Investment and Export Promotion Agency (GIEPA). Minimum investment of Two Hundred and
Fifty Thousand US Dollars (USD250, 000) in priority sectors (Manufacturing is a priority sector)
qualify for a Special Investment Certificate (SIC) for a period of 5 years. Investments located in
a priority geographical area get an additional 3 years. Holders of a SIC qualify for the following:
A ten percent (10%) corporate or turnover tax concession for five (5) years.
Exemption from withholding tax on dividend payments.
Import Sales Tax Waiver on importation of capital equipment, construction materials,
and spare parts for a period of 5 years from date of signing an investment agreement.
Import Sales Tax Waiver on importation of raw and intermediate inputs for a period of
5 years from the date of commencement of operations.
Further to the above incentives, investors operating within a priority investment area that
continually export at least 80% of their products can be granted an Export Processing Zones
License (EPZL). In addition to the above benefits (under SIC), EPZL holders are entitled to the
below benefits, which in addition to the benefits (under SIC) are tenable for a period of 10 years:
Export duty waivers
Municipal Tax waivers
An investment enterprise located outside the export processing zone that exports at least 30% of
its output is entitled to the following incentives and facilities provided by the Agency:
Ten percent concession on the Corporate Tax rate for 5 Years
EPZ Licenses entitling investors to the above benefits are, however, renewable on a yearly basis
under circumstances of evidence of compliance with the agreed indications of employment
creation, export thresholds, and general EPZ protocol and statutes.
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APPENDIX
NO
1.
Fine Beverages
2.
3.
Chellarms Ltd.
4.
5.
Gacem Ltd.
6.
7.
Gambega Ltd.
8.
9.
20. Le Parisienne
22. GPPC
30.
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Average Score
4.39
4.32
4.25
4.00
3.68
Average Score
4.29
4.00
3.64
3.50
3.39
3.25
3.07
3.00
3.00
2.96
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Average Score
4.50
4.18
4.07
3.39
2.79
2.32
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Average Score
3.11
2.54
2.36
2.25
2.00
1.93
1.93
1.89
1.86
1.68
1.54
1.46
1.46
1.36
1.04