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Monday, December 25, 2017

Sample Business Plan on Commercial Pure Water Production in Nigeria

The business of producing drinking water in nylon sachets or pure water production in Nigeria has come to stay. Recall that in the early 1990s, pure water was not very common in Nigeria in place was manually packaged water in hand tied cellophane bags called ‘ice water’ which was the common man’s way of quenching his thirst on the move.
This fast moving product has huge potentials but also has a lot of risk factors to deal with as with little over 5 million naira you can start a small production unit of between 1,100 to 3,500 bags (each containing 20 sachets) daily which you can sell at N70 to N80 per bag at wholesale whereas the cost of production is in the region of 74 to 85% depending on power supply and delivery costs.

The market is huge as at least 80 million Nigerians consume at least 4 sachets of pure water weekly and the population of pure water drinkers can only but keep going up with time. Secondly, pure water is relatively of equal value as some premium packaged bottled water which means some people who buy bottled water may start consuming pure water to make sense of their expenses. The success or otherwise of the business is driven by sufficient demand from the target markets, minimizing operating costs and working with an effective marketing plan that will enable the new pure water factory compete effectively against other operators.

Market Summary for Pure Water Production Business in Nigeria

  • Over 960 billion naira worth of sachet water is consumed yearly in Nigeria
  • Key market regions are densely populated urban centers with high commercial activities
  • The sales to operators constantly improves due to urbanization and population increase
  • Over 40,000 licensed operators in Nigeria operate pure water production plants from residential and commercial buildings
  • Entry requirement is relatively easy as within 6 months operators may be licensed to commence business

Opportunities that Favour Pure Water Production Business in Nigeria
  • Large population of city dwellers especially those living in slums
  • Inadequate portable drinking water
  • High population of informal commercial and business activities within limited land areas
  • High cost of bottled drinkable water and other beverages
  • Large number of corporate and social events within densely populated areas
  • Traffic congestion
  • Hot weather during the dry season
  • Among several other factors creates demand for pure water from many urban city dwellers 
Challenges facing Pure Water Production Business in Nigeria
  • High number of unregistered operators
  • High cost of machinery and maintenance cost
  • High operating costs with low profit margin
  • Too many operators working within a limited land area
  • Inadequate power supply
  • Activities of local government revenue collectors and tout
  • High employee turnover due to poor remuneration
Among other factors that cannot be ignored

Outlook for Pure Water Production Business in Nigeria                                                                                              The Market for pure water in Nigeria will continue to rise as long as there is inadequate portable drinking water, declining purchasing power, rural-urban drift, population increase and increased public acceptance of this essential commodity. Judging by past trends where inflation has increased revenue base for operators and current economic situation favoring hike in consumer living expenses, there is likely to be increased sales as well for operators. On the other hand, the challenge posed by poor road networks, power supply and rising fuel costs means operators will continue to struggle with low profit margins into the future.

Startup Costs for pure water Production business in Nigeria
In order to start a pure water production factory, there is need to check ensure that the most essential requirements are determined and met before actual production commences.
  • Dingli Pure Water Machine – 800,000
  • Borehole drilling – 150,000
  • Water reservoirs – 170,000
  • Borehole pump – 58,000
  • Store Shelves – 300,000
  • 1 pickup van – 1,500,000
  • 10 KVA generator set – 1,000,000
  • Other expenses – 2,000,700
  • Total – 5,978,700
Kindly note this is an estimate rather than an exact figure – inflation, traders’ margin and other costs not factored in.  

Paul Onwueme is a professional Business Plan writer since February 2014, has achieved respectable results with his business plan writing service with several of his clients securing funding and leaving positive feedback about his writing service. You can connect with him via phone: 0803 206 4106 or email: paulonwueme@gmail.com