EXECUTIVE SUMMARY

NAME OF BUSINESS: BEKA GLOBAL NIGERIA LIMITED

LOCATION OF BUSINESS: Aba, Abia State.

BUSINESS ACTIVITY: Cassava Flour Production

FINANCING PLAN:

Owners Equity/Contribution: 1,500,000

External Source of Finance: 5,500,000

PROPOSED LOAN TERMS:

(i) The loan/external finance shall be repaid in two (2) years and shall attract an interest of
20% per annum.
(ii) Moratorium shall be twelve (12) months.

RECOMMENDATIONS:

The projected cash flow analysis shows net cash inflow of 6.28m, 6.98m, 10.45m,
12.64m and 15.28m respectively have been projected over the 5-year period.

It is recommended that the business should be supported/financed with a loan/external

finance of 5.5million to be used as equity and working capital to process High Quality

Cassava Flour.

Note:

The recommendation is based on the Return on Investment is averaged at 147.58%

over the 5-year period.

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1.0 INTRODUCTION

Cassava is very important root crop in Nigeria. Apart from being a staple-food-

crop in both rural and urban households, cassava is a major source of income to

cassava farmers and processors in the country, recently. Cassava alone,

recently, contributes about 22% of agricultural GDP in Nigeria for food or

domestic purposes but its industrial processing and utilization has been very

limited.

Hence, the lunch or venture into commercial production of High Quality

Cassava Flour is a step forward in the development of a successful and

sustainable Cassava Flour needed in Nigeria.

Furthermore, it is no doubt that commercial High Quality Cassava Flour is

enormous growing industry in Nigeria. This is because; there is currently a

domestic shortfall of cassava flour production, which means more processors

are needed. The demand for cassava flour is sky-rocketing due to it being an

attractive alternative to imported wheat flour, which is used in these industries;

such as the bakery, paper, plywood manufacturing etc.

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Currently there is a national programme to boost the present level of cassava

production in Nigeria. Under the FADAMA World Bank Assisted

Agricultural programme, and the Roots and Tubers Improvement

Programme of the Federal Government, farmers are being supplied with high

yielding cassava species so that the present level of cassava production in the

country will be greatly increased. This will enhance the processing of cassava

into High Quality Cassava Flour (HQCF) for industrial purposes, such as the

bakery, paper, plywood manufacturing etc.

It has been established through research carried out by the Food Research

Institute and Forest Research Institute of Nigeria, that High Quality Cassava

Flour can be substituted or added in bakery, paperboard and plywood

manufacturing activities.

This business plan is to examine the financial viability or otherwise of

establishing High Quality Cassava Flour production in urban area of Aba in

Abia State, using as basic raw material, Cassava tubers and chips procured from

the cassava producing rural areas.

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2.0 BUSINESS BACKGROUND

2.1 TYPE OF BUSINESS

The enterprise is sole proprietorship engaged in the production of High Quality

Cassava Flour (HQCF) for use at the bakery, paperboard, plywood industries etc.

2.2 LOCATION OF BUSINESS

The business will be located in an urban town of Aba, close to cassava growing

areas.

2.3 ACCESS TO UTILITIES AND OTHER FACILITIES

The enterprise has access to reliable electricity. There is a good network of roads

connecting the raw material producing areas and to the marketing center.

2.4 OBJECTIVES OF THE BUSINESS

The objective of the business is process fresh cassava tubers into High Quality

Cassava Flour for industrial purposes. Cassava tubers as well as cassava chips will

be procured from the rural cassava growing areas and milled into flour.

The production of HQCF will give cassava farmers ready-market for their excess

production hence, improved income. The business will help reduce post-harvest

losses and encourage primary processing of fresh cassava into chips at the village

and urban levels.

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3.0 FINANCING PLAN

The business requires the sum of Seven million naira (7,000,000) for both assets

acquisition and working capital. The financial needs of the business are as follows:

(a) ASSETS

1. Structure for the mill N920,000

2. Equipments and Machinery N2,050,000

Sub Total N2,970,000

(b) WORKING CAPITAL

1. Raw materials (cassava tubers & chips)2,359,082
2. Labour costs N356,250
3. Utilities N 48,000
4. Other costs N1,266,668
Sub Total N4,030,000
GRAND TOTAL N7,000,000

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4.0 MARKET ANALYSIS
4.1 ASSESSMENT OF DEMAND

Research studies carried out by the Food Research Institute, Federal ministry of

Agricultural and the Natural Resources Institute of UK have shown that there is

great market potential for QHCF in the plywood, paperboard and bakery industries.

HQCF is an attractive alternative to imported wheat, which is used in these

industries.

In some awareness seminars held in Aba, and Port Harcourt in 2011 and 2012, I

was exposed to Expanded markets for locally produced cassava flour and Cassava

in Nigeria for industrialists in plywood, paperboard, potential entrepreneurs,

bakers, scientists and policy makers. The outcome of the information seminars

showed that there is a great market potential or unmet demand for High Quality

Cassava Flour by plywood and paperboard manufacturers and bakers who took

part.

4.2 COMPETITION

The alternative of High Quality Cassava Flour is imported flour. Studies have

shown that the price of imported flour is ever increasing due to high foreign

exchange and inflation. Also the cost of imported starches of glues for paperboard

industries is very high and starches derived from HQCF are cheaper alternative.

From the above, it can be stated that HQCF is a cheaper alternative.

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The already availability of High Quality Cassava Flour locally as opposed to

imported wheat flour with its attendant ever rising foreign exchange costs, will

make HQCF a preference for plywood, paperboard and bakery producers.

4.3 MARKETING PLANS AND STRATEGIES

The business as a policy, will sell its products on cash down basis. However,

customers who buy in large quantities will be considered for one months credit on

their own merit.

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5.0 WORKPLAN

5.1 PRODUCTION PROCESS

(a) Buying and taking to site of cassava tubers and cassava chips.

(b) Mill of cassava tubers and chips.

(c) Sieve of milled product.

(d) Bag and seal in polyester bags.

5.2 MATERIAL USAGE, MACHINES AND MANPOWER

The raw materials to be used are high quality cassava tubers and chips. The

cassava tubers and chips will be obtained from cassava growers in the rural

growing areas and transported to central processing plant based in urban area of

Aba, Abia State. The tubers and chips will be processed into High Quality Cassava

Flour.

5.3 THE PROJECTED PRODUCTION PER ANNUM

Four hundred and Eighty (480) tons of High Quality Cassava Flour will be

produced in one year. The annual production of HQCF will be: 12 40 tons = 480

tons. Meanwhile, One (1) ton of cassava chaffs/byproducts has been projected

per annum (which will be sole as animal feed to animal farms owners).

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Appendix 4 shows the production capacity, while Appendix 5 shows raw usage

and cost per annum respectively.

The fixed assets to be procured are listed in Appendix 1.

The business shall have a work force of Nine (9) made up of the following:

1. Owner/Manager 1
2. Procurement officer 1
3. Accounts officer 1
4. Machine operator 1
5. Labourers 3
6. Security Guards 2
Total 9

(Appendix 4 shows the labour schedule and cost).

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6.0 MANAGEMENT

The business will be managed by the owner/manager who is an Accounting

graduate, a procurement officer who will procure cassava tubers and chips for

processing. An accounts officer handles the accounts of the business.

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 7.0 GENERAL ASSUMPTIONS

The financial evaluation of the business covers a 5-year period. The calculations on

production and finances in the report are based on the general assumptions as

stated below:

Production will be 12 months in a year.

Constant level of production for the 5-year period.

Revenue, raw material costs, transport, labour costs, packaging material

costs and utilities are projected over the years at 20%.

Other costs are projected at 15% annually.

Normal losses of 1% are assumed for cassava tubers and chips.

Marketing/Distribution expenses are equivalent to 2% of sales.

Interest on loan is projected at 20% per annum.

Insurance is equivalent of 2% of cost of fixed assets.

Tax is projected at 25% of Gross profit.

Depreciation is on straight-line basis.

Cassava chaffs projected at 1ton per annum which will be sole as animal

feed.

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8.0 FINANCIAL ANALYSIS

8.1 TOTAL INVESTMENT

The business plan requires an amount of Seven Million Naira (7,000,000) made

up of 1,500,000 owners equity and a loan/external finance of 5,500,000. (See

Appendix1&3).

8.2 PROFIT AND LOSS

Projection shows that net profit of 6.28m, 6.98m, 10.45m, 12.64m and

15.28m for the respective years over the period. These are based on the

assumptions as stated in section 7.0 above.

8.3 CASH FLOW ANALYSIS

Over the 5-year period positive net cash inflow of 4.93m, 4.55m, 10.24m,

12.45 and 15.10m have been projected. (See Appendix 11).

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9.0 RECOMMENDATIONS

The report shows that the production of High Quality Cassava Flour in the Urban

center of Aba, in Abia state is viable and worth promoting. The setting up of

urban-located cassava flour processing outfit will help reduce post-harvest losses

among cassava growing farmers in the rural areas and also improve their incomes

by the sale of cassava tubers.

(a) The interest on loan/external finance shall be 20%.

(b) The loan shall be repaid in two (2) years with twelve (12) months, 1year

moratorium

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APPENDIX 1

INVESTMENT SCHEDULE

A. FIXED ASSETS

Item Quantity Value

(a) Building 1 920,000
(b) Hammer mill/plate attrition 1 753,000
(c) Sifter 1 730,000
(d) Bagging machine 1 566,550
Sub-total 2,970,000
B. WORKING CAPITAL

(a) Raw materials 2,359,082

(b) Labour 356,250
(c) Utilities 48,000
(d) Other costs 1,266,668
Sub-total 4,030,000
GRAND TOTAL 7,000,000

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 APPENDIX 2

WORKING CAPITAL

Item Cost

Raw materials 2,359,082
Labour 356,250
Administrative Expenses 75,000
Utilities 48,000
Transport 800,000
Packaging materials 100,000
Insurance 83,334
Repairs and maintenance 208,334
Total 4,030,000

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 APPENDIX 3

TOTAL FINANCE REQUIRED

Item Owners Equity External Finance Total

Fixed Assets 1,500,000 1,470,000 2,970,000
Working capital 0.00 4,030,000 4,030,000
Total 1,500,000 5,500,000 7,000,000
Contribution 21% 79% 100%

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