Shea butter, fat extracted from the nuts of the Shea tree, can earn Nigeria about $10billion annually in exports if the right investments are made to grow, harness and process it to international standard, according to a recent report by the Nigerian Export Promotion Council.
Entrepreneurs who invest in value addition along the lengthy value chain of the valuable product will make millions from the vastly untapped industry in the country.
It is a travesty that Nigeria which contributes about 500,000 metric tonnes of Shea, constituting about 60% of the global production annually, earns less income from Shea than other countries which contribute far less to global supply.
Out of the huge quantity Nigeria produces, only about 25% is exported, while majority of the butter either cannot be processed to meet international standard or are sold at a cheap rate to traders from other West African countries who have the expertise to process and export from their countries.
The popular and lucrative export destinations for Shea are European and American countries where it is used mainly in the food, cosmetics and pharmaceutical industry.
These markets are highly competitive, with many suppliers especially from Africa, so export quality has to be of high standard to earn maximum income. 90% of Shea exported from Africa are used in the food industry, where it is processed into stearin which can be used as a substitute for cocoa.
The Shea is also useful in the cosmetics industry due to its excellent emollient property (softening of the skin). It is used in body care and face care products, especially in treating dry skin areas, and in hair care.
There is also a demand for the Shea in the pharmaceutical industry for various medicinal creams to treat burns, anti-aging and so on.
Shea price in the international market is determined by the quality of the product, with the preferred being the certified premium grade A Shea butter. Other factors include the length of time it has stayed in the warehouse, the country of origin, the age of the butter and the quantity.
Shea tree grows naturally in the wild in 21 African countries along the dry savannah belt of West Africa, from Senegal in the west to Sudan in the east and onto the foothills of the Ethiopian highlands. In Nigeria, the Shea trees are mostly found in Niger, Kwara and Kebbi states with Niger state being the main production hub.
A lot of people are making money along the value chain in these states, but more money can be made by investing in infrastructure like technology-driven production plants, training the farmers and production workers and packaging.
Even more money can be made from exporting processed and well packaged products or in backward integration for investors willing to startup companies that require Shea as raw material.
The federal government has added Shea to its focal commodity for rapid development list alongside other commodities like cocoa, oil palm and cashew, due to its foreign exchange earning potential and under the Nigerian Export Facilitation Initiative, entrepreneurs can benefit from single-digit interest loans from the N200billion the CBN has set aside for the scheme. The scheme can be accessed to support creative ideas.
What many people in Nigeria are doing now is buying the product from some interior communities and re-selling in cities to exporters and local users. Though they are making reasonable margins from the trade, the potential income that can be earned from a more structured business strategy is huge and should be explored.