BergRep1a

UNITED RESTRICTED
NATIONS
INDUSTRIAL
DEVELOPMENT February 2003
ORGANIZATION ENGLISH
_______________________________________________________________________________
SF/NIR/01/D01/11-52
TECHNICAL REPORT
Prepared for the Government of Nigeria by

the UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION
Based on the mission of
Juhani Berg
Shoe Industry Expert
Project Manager:
Ferenc Schmél
AGRO-INDUSTRIES AND SECTORAL SUPPORT BRANCH, LEATHER UNIT
PROGRAMME DEVELOPMENT AND TECHNICAL COOPERATION DIVISION
_____________________________
*This document has been reproduced without formal editing.
2
Table of Context
Summary .............................................................................................................................3
Purpose.............................................................................................................................................3
Mission Schedule .............................................................................................................................3
Achievements...................................................................................................................................3
Findings ...............................................................................................................................5
Structure of the Aba Shoe Cluster....................................................................................................5
Information Collected for CFC ........................................................................................................8
Summary of Calculations for Various CFC Costs ...........................................................................8
Building..........................................................................................................................................11
Conclusions and Recommendations .................................................................................13
Annexes
1. Job Description
2. Pictures from the Aba cluster
Appendix: Pre-feasibility study

Establishment of Common Facility Centre (CFC) in Aba Shoe Making Clusters, Nigeria
SF/NIR/01/D01/11-52 J. Berg
3
Summary
Purpose
• Check on the present status of establishment of the COMMON FACILITY CENTRE (CFC), the local
counterpart contribution, legal implications and government decisions made on these issues.
• Assess the situation of the building and collect information on its price, or leasing cost and
establish the cost of refurbishing.
• Collect information on local wages, salaries cost of utilities taxation, bank charges and
availability of raw materials.
• Analyze the potential of the local market for the services of the CFC its likely volume and price
structure.
• Prepare a pre-feasibility study on the expected results of the CFC operations.
Mission Schedule
The mission started on 6 January 2003 from St. Olof (Sweden) to Lagos via Copenhagen
and Frankfurt. Arrived in Lagos in the evening of 7 January 2003.
Briefing in Lagos by Mr. Jossy Thomas, Ms. Goodnews and Mr. Antti Vennala (Security).
Traveled to Aba via Port Harcourt on 8 January 2003 and was met by Mr. Ama Okorie at Port
Harcourt airport and traveled then by road to Aba. Transfer to Binez Hotel.
01.09 Briefing meeting with NASMSLAPI executives of the NIGERIAN ASSOCIATION OF SMALL &
MEDIUM SCALE LEATHER & ALLIED PRODUCTS INDUSTRIALISTS (NASMSLAPI),
specifically Chief E.A. Ibiam.
Meeting with CFC Steering Committee
01.10 Visit Umuehhilegbu (Bakassi) Zone
01.11 Visit proposed CFC site and try to locate other proposed sites
01.13 Visit Power Line Zone
01.14 Visit Shoe Plaza Zone
01.15 Visit AME and ATE Leather Goods Zones
01.16 Visit Imo Avenue
01.17 Visit Abia state Planning Commission and Director of Industries
01.18 Wrap-up session with CFC steering committee
01.20 Meetings with HPM/Sec Aba North and L.G.A
Meeting with HPM/Sec Osisoma Ngawa L.G.A
01.21 Travel to Lagos, telephone debriefing by UNIDO Country Director, Dr. K. Yumkella
01.28 Debriefing in Vienna, Mr. F. Schmél, UNIDO Project Manager.
Achievements
The registration of the ASSOCIATION, according to Chief E.A. Ibiam, has been completed.
However, I have not peen presented any documentary evidence of that. Evidence of that is agreed to
be e-mailed to Vienna on 27 January 2003.
The pre-selected building at 250 Faulkes Road turned to be too expensive. The other two
buildings proposed are not at all suitable. It is proposed that a new building will be erected on a
4
local Government’s plot at 4-20 Old Express road. (Just behind Faulkes Road and adjoining Power
Line Zone) Funds for the new building are expected to be received from the State Government and
are estimated to be totally about 15 million Naira.1 (12 million Naira for the building and 3 Naira
million for the utilities.) The pre-feasibility study has included a loan of US$ 120,000 (15.24
million Naira) for the building at 8% interest. This loan, according to the study, could be easily
paid back from the income of the CFC services.
The collection of information needed for the feasibility study has proceeded well and all the
information needed are now available. The pre-feasibility study is also completed made but needs
some more work on the financial analysis side. This will be completed in Vienna before end of the
month.
It is concluded that the establishment of the CFC is badly needed by the Aba Shoe and
leather goods cluster and is being considered as a necessary first step to rationalize the clusters
work. Without this type of assistance the Aba shoe and leather goods cluster will be unable to
adjust itself to the new global economic realities and will face major problems within the coming
years.
1
The official currency of Nigeria is Naira (NGN). The UNIDO official exchange rate by the time of the expert’s
mission was US$ 1 = 127 Naira (US$ stands for United States dollar).
5
Findings
Structure of the Aba Shoe Cluster
The Aba shoe and leather goods cluster is composed of seven zones. Each zone is
specialized in certain product line such as ladies sandals, mules, men’s closed shoes and sandals,
boots, leather goods such as bags and travel goods. It is estimated that the total number of
entrepreneurs in all the zones is 55,371. Average number of people employed is about 4.3
persons/entrepreneur making it totally to 240,000 people in the whole cluster. Average number of
dependants per entrepreneur is 7.8 and this means that 1.87 million people are depending their
livelihood on Aba shoe and leather goods community. Approximate combined production of
footwear and leather goods is 75,000 pieces/day.
Average percentage of materials used: genuine leather up to 40%, synthetics up to 60% and
other like textiles/natural fibers up to 5%. Estimated value per article manufactured: 400.00 Naira.
Estimated value of all goods manufactured within one month, based on 22 working days, multiplied
by 75,000 of articles manufactured corresponding to 1,650,000 articles per month or total value of
Naira 660 million/month. About 75% of the goods are exported to the neighboring countries
including Cameron, Togo, Benin, Niger and Burkina Faso. Exports find their way to the other
countries through informal, non recorded, cross boarder trade. (This information is taken from the
project document of SF/NIR/01/D01 and the source given was: Secretariat NASMSLAPI, Aba.)
The field survey, carried out by the UNIDO Project Officer showed somewhat different
picture. According this survey that physically counted all the shops in the different zones came up
with the following results:
Average Total number of

Zone Number of shops
entrepreneur/shop entrepreneurs
Power Line 2,208 4 8,832
Bakassi 2,520 4 10,80
Shoe Plaza 1,326 4 5,304
Imo Avenue 480 4 1,920
Omemma 450 4 1,800
A.M.E. 600 2 1,200
A.T.E 384 2 768
TOTAL 7,968 29,904
Workshops with up to 15 employees - 10% of the total

Workshops with up to 5 employees - 30% of the total
One-man workshops - 40% of the total
One man with one apprentice - 20% of the total
1/3 of the workforce is said to be none salaried apprentices.
Based on the above figures the total workforce in the Aba clusters 7 zones is about 92,000
people. This would mean that the total of people depending their livelihood on this cluster is
around 700,000 people.
6
The field survey shows that the figures provided by the secretariat of NASMSLAPI are over
estimated concerning the number of entrepreneurs and workforce in the cluster. However, the fact
remains that the Aba shoe and leather goods cluster is an important micro- and small-scale
community that needs and deserves assistance from the international community.
It is estimated that the average value of goods produced by each individual employed in the
cluster is minimum of 400 Naira. Therefore the total product value of the cluster is Naira 36.8
million/day or 809.6 million Naira /month (US$ 5.91 million/month) with 22 working days/month.
This estimate is higher than the earlier estimates by NASMSLAPI.
AME and ATE Zones

AME president is Sir. Salomon Oti, the Secretary is Mr. Cletus Ikene.
According to information provided by Mr. Wilson Ahialaka, AME has about 50
members. However, it was calculated that there is totally 600 workshops and/or
stores in the AME area. This would mean that about 1,200 people are working in the
zone. The rent of and double warehouse is 30,000 Naira/year.
ATE President is Mr. J. B. Obijak, the secretary is Mr. Uzoma E Kweonye.
ATE has about 760 entrepreneurs working under similar conditions as seen in AME.
Worker salaries are 2,500-3,000 Naira/month. A shop with 4 people produces some
100-150 bags/week depending on the type and quality or about 5-6 items/person/day.
So the labour cost per item is around 7-10 Naira/item. The main products of these
two zones are all type of leather goods such as handbags, travel goods, portfolios,
small leather goods and belts. Materials are mainly synthetics and various types of
textiles.
Shoe Plaza
President is Mr. Silva Emelogu, secretary is Mr. Kypian Agbasiere.
Shoe Plaza has about 1,300 workshops and there are totally some 5,300 people
working in the various workshops. Main products are
o men shoes, sandals and boots (military and oilfields) about 50%
o bags and travel goods about 40%
o belts and small leather goods about 10%.
No ladies shoes are produced in Shoe Plaza.
The workshop rent (size 12 x 12 m) is about 10,000 Naira/month.
There is a large market joining the Shoe plaza selling all components and materials
for the trade. This includes leather (local and imported stock-lots), PVC and polyurethane
(PU) coated textiles insole materials, shanks, locks, frames etc.
Lasts are made by hand in small last making workshops. The wood used is
mahogany, ebony and “white wood”. A pair of mahogany lasts cost about 2,000 Naira and a
pair of white wood lasts about 1,500 Naira.
The last maker (interviewed Sabic Last Designer) makes the templates for the
various profiles including side profile and bottom profile for various sizes. The timber
supplier saws the last block to rough shape. The last designer/maker axes and chisels then
the last out in accordance with the templates he has made for the last. The lasts are then
finished by filing and sand papering. This particular designer made surprisingly accurate
work and showed good handicraft skills in his work. These circumstances generate the
following questions:
o Can CFC be expected to introduce imported lasts when the price of the local last
is so low?
7
o Can the local last handicraft people be developed to make improved lasts with
simple tools?
Few machines such as band-saw, last modeling vices and improved tools would
already make big improvement. Only drilling a hole for “last-jack” and introducing hand-
lasting using last-jacks would bring a big improvement. The problem of lasts is the most
crucial point.
Imo Avenue
President is Mr. Chijioke Iroajarna, Secretary is Mr. Silas Uwa.
Imo Avenue is producing mainly ladies shoes but has also entrepreneurs making men
and children shoes. Number of workshops is about 480 and total entrepreneurs close to
2,000.
The shoes from Imo Avenue seem to be a bit better quality (see the pictures of the
shoes in Annex 2). Main products are ladies sandals and mules and men sandals. Some
children shoes are also manufactured.
Replies to the question about constraints were as follows:
Manual production. Machines are needed in order to mechanize and rationalize.
Division of labour in Italian way, i.e. certain entrepreneurs should specialize in
specific areas of the production chain.
Lack of capital for investments. No loans are available under 20% interest rates.
Raw materials are expensive due too many middle men.
Lack of skills and training opportunities.
Poor public services (power cuts, poor roads, water).
Shoe Lasts.
Power Line
President is Mr. Emmanuel Maduike, Secretary is Mr. Aloy Chukwy.
Power Line has some 2,200 shops and the total number of entrepreneurs is about
8,800 people. Power Line seem to be the most progressive zone for shoe making and the
quality is better than what one could expect under the prevailing conditions and working
environment.
The information provided by power line people showed that they knew what the
costs were and were willing to provide straight answers. The main products are ladies
sandals and mules. Also some men sandals and closed shoes are manufactured in some of
the workshops.
Umehilegbu Industrial Shoe Market (Bakassi)

President is Mr. Ogbuji Ukagbu, Secretary is Mr. Sam Uwa.
This is the largest zone and the people there also produce the largest quantity of
goods. The quality is somewhat lower than in Imo Avenue and Power Line.
Bakassi is well known in Nigeria for starting a citizen security service “Bakasi
Boys”: this movement has spread to other areas. It is good to note that the security in the
zones is really very good. Crime rate is very low and the punishment by the “Bakassi Boys”
is fearsome and respected. Even as foreigner there is no any danger to mill around the
crowds in the different zones and interview and discuss with the people. People are
extremely helpful and polite.
Omemma
President is Mr. Tony Ani, Secretary is Mr. Cyril Obani.
8
The zone produces mainly gent’s shoes, bags and belts; it has 450 workshops and
some 1,800 entrepreneurs. It is producing about 3,000 pairs/day of footwear and about
10,000 bags and 1,000 belts.
Information Collected for CFC
One of the main tasks was to collect information for preparation of the pre-feasibility study.
Much effort was made through field visits and interviews to collect, update and verify information
available from previous UNIDO mission. The UNIDO Project Officer, Mr. Ama Okorie proved to
be very knowledgeable and at home in the cluster. Without his assistance the mission would have
had major difficulties to complete it’s task.
Summary of Calculations for Various CFC Costs
Labour Cost
Salary Labour cost
Employee No.
Naira/month Naira/month Naira/year
Cutting press operator 1 18 000 18 000 216 000
Shoe machine operators 5 16 000 80 000 960 000
Sewing/skiving, etc 12 12 000 144 000 1 728 000
Hand cutters 2 14 000 28 000 336 000
Watchmen 4 5 000 20 000 240 000
Driver 1 10 000 10 000 120 000
Cleaners 2 2 500 5 000 60 000
Total 27 305 000 3 660 000
US$ 2,226 US$ 26,715
Social cost
Pensions scheme “Nigeria Social Insurance Trust Fund” receives contribution from each
employee’s salary calculated at 10% of the salary. Employer pays 6.5% and employee pays
3.5 % not exceeding 4,400 Naira/month.
3.5% of 3,660,000 Naira = 128,100 Naira = US$ 935
Insurances
Fire 0.3% of the value. Burglary 0.5% of value (not including building). Workmen
compensation scheme 1.5% of salaries.
Equipment value US$ 100,000 = 13,700,000 Naira
Fire insurance: US$ 300 = 41,000 Naira
Burglary insurance: US$ 500 = 68,500 Naira
Workmen Compensation
1.5 % of 3,660,000 Naira (US$ 26,715) = 54,900 Naira (US$ 400)
9
Electricity
Total installed 1st phase 12 kW.
70% utilization factor = 8.4 kW * 8 hours = 67.2 kWh/day 22 days/month = 1,478.4
kWh/month * 12 = 17,740 kWh/year round up for office equipment etc. 20,000 kWh/year
total consumption.
Industrial rate: 8.2 Naira /kWh + kVA charge Naira 230 Naira/kVA.
Charge for meter: 63,000 Naira
Maintenance cost: 1,400 Naira/month
Service charge: 250 Naira/month
Logistics charge: 10,000 Naira
Cost component Computation Value, Naira
Power 8.2 Naira * 20,000 kWh 164,000
KVA charges 230 Naira/kVA 276,000
Meter charge 63,000
Maintenance 1,400 Naira /month 16,800
Service charge 250 Naira/month 3,000
Logistics 10,000
TOTAL 532,800
US$ 3,889
According to information obtained from an electric engineer the transformer required should
be 100 kVA. (100 kVA is the smallest transformer available for industrial purposes in
Nigeria.) The price for the transformer is 550,000 Naira and the installation of the same will
be about 350,000 Naira. It was mentioned that if it is a government project the transformer
would be delivered and installed free of charge by the NIGERIA ELECTRICITY BOARD,
however this would be a time consuming exercise. (The cost of transformer should be
included in the feasibility study. This is, of course, counterpart contribution.)
Fuel
Diesel oil for generator cost is 22 Naira/l (US$ 0.16/l). To run the plant fully on diesel
would need 110 l/8 hours = 2,420 Naira/day * 22 days = 53,240 Naira/month or 638,880
Naira/year (US$ 4,663). The cost for purchasing and installing appropriate generator is
estimated at 1.5 million Naira = US$ 11,000 (counterpart contribution).
Water
The compound needs a borehole and it is estimated that the complete well with water tower
etc. will cost about 500,000 Naira (US$ 3,650). This is considered as counterpart
contribution.
Repair and maintenance

Estimated at 2.5% of the total equipment, say 342,500 Naira (US$ 2,500).
10
Factory Overheads
Cost component No. Computation Naira
Instructors 3 Naira 20,000/month/instructor 720,000
Technician 1 Naira 18,000/month 216,000
Workmen compensation Insurance 54,900
Factory supplies 350,000
Waste disposal 1,000 Naira/month 12,000
P&T expenses 10,000 Naira/month 120,000
Insurances (fire and burglary) 109,000
Factory overheads TOTAL 1,581,900
US$ 11,547
Administrative Overheads
Cost component Naira/month Naira/year
Rent/lease 91,667 1,100,000
Manager 25,000 300,000
Accountant 20,000 240,000
Office girl/secretary 10,000 120,000
P&T expenses 10,000 120,000
Office supplies 1,000 12,000
TOTAL 1,892,000
US$ 13,811
No costs are involved for sales or distribution in accordance with the Steering Committee of
CFC. However, an estimated sum of US$ 2,500 or about 340,000 Naira should be included
in the study to cover costs that will be evident when starting operations.
Counterpart investment needs

Alternative I: Faulkes Road # 250
Cost component Naira
Building 33,000,000
Bore hole 1.500,000
Generator 500,000
Transformer 1,000,000
TOTAL 34,500,000
US$ 262,775
11
Alternative II: State Government covers building costs, local Government provides the plot
Building (new construction) 12,000,000
Bore hole available at site
Generator 500,000
El installation/water installation
Painting aircao etc. 1,500,000
TOTAL 15,000,000
US$ 109,489
Note: Additional local investment to be added to counterpart contribution
Telephone install 30,000 Naira
Computer, printer etc. 150,000 Naira
Internet connection 40,000 Naira
TOTAL 220,000 Naira
US$ 1,606
Building
One of the matters that have delayed the project execution for several months is the fact that
the pre-selected building at 250 Faulkes Road turned out to be too expensive. It could, of course,
have been leased but this solution is difficult to accept as the landlord seem to be difficult to get
hold of and to make legal, binding document for such lease contract. It is feared that when the
building has been refurbished and machines installed the landlord will press for higher lease cost.
The other two building sites proposed and inspected proved to be completely unsuitable. A
new alternative was proposed in discussion with the STATE GOVERNMENT and the local government
representatives.
The engineers of the planning commission have surveyed the pre-selected building at 250
Faulkes Road and the costs of refurbishment have been established. The outright purchasing of the
building would cost 27 million Naira (US$ 197,080) or could be leased at 1 million Naira (US$
7,300) per annum. The refurbishing cost has been estimated by the PLANNING COMMISSION
engineers to be totally 6 million Naira (US$ 43,795), including electric generator, installation, bore
hole for water and complete renovating and painting. This would make the price of the building to a
total of 33 million Naira (US$ 240,875)2. A letter with recommendation for the action has been
sent by the executive secretary of the planning commission to the State Governor. However, due to
other priorities the Governor has not been able to provide his decision as yet (primary elections
etc.). During the discussion it was emphasized that the building is the first priority to start the
project operations. It was promised that the UNIDO consultant would be contacted prior to my
departure with an answer. The other two proposed buildings (Jumbo Street 2 and Factory
Road/Industrial Road) were visited and have been deemed as unsuitable (or actually non-existing)
2
It seems that the cost of 33 million Naira is far too high to be approved by the STATE GOVERNMENT for the purpose.
The real reason for the pending Governors decision seems to be the high cost involved and inability to identify cheaper
alternative. Nobody in the STATE GOVERNMENT will like to go in real grips with this “hot potato”.
12
The Director of Industries welcomed to participate in the project and declared themselves
willing to work for suitable solution for the building. The next meeting with Mr. Ama was
scheduled for 23 January 2003. Mr. Ama promised to send by e-mail to UNIDO HEADQUARTERS in
Vienna the result of this meeting on 24 January 2003.
During the meeting with STATE PLANNING COMMISSION the consultant was asked if UNIDO
could provide any funds for the purchasing or leasing the building or it’s refurbishing. It was
explained that it is not in UNIDO’s mandate or interest to provide such inputs. The only item that
may fall in such category could be a power generator, but even this would be subject to budget
availability and UNIDO Project Manager’s approval.
On 18 January 2003, in conjunction with the wrap-up meeting with the Steering Committee, it was
proposed that a suitable empty site was available on local governments land at Old Express Way
No. 4 -20. The site is just behind Faulkes Road and close to the office of Chief Ibiam and adjoining
Power Line Zone. A visit was paid to the site and it is certainly a suitable location. According to
estimates the building cost would be about 12 million Naira + 3 million Naira for utilities. The
steering committee was optimistic that the site would be approved and assigned for the CFC by the
local Government and that the building cost up to 15 million Naira would be obtainable. Local
authorities were also optimistic that the building construction would be started immediately after
the approval (expected mid February 2003) and be completed by May 2003. This scenario is rather
overoptimistic. If the building and the site is going to be provided by the STATE GOVERNMENT it is
important that a legal document is drafted and signed assigning the building and the site solely to
the use of the CFC. Mr. Ama promised to send (by e-mail) to UNIDO HEADQUARTERS on 27
January 2003 to confirm the Government’s position.
The building problems were again discussed on 20 January 2003 in the meetings with the
local Government of Aba North (Chairman Hon. David M. Chigbu) and Aba Osisoma (Deputy
Chairman Chief Dr. S. C. Nwosu) and their staff. Both local governments were sympathetic and
ready to assist. The Deputy Chairman of Osisoma District was immediately agreeable to assign the
plot in Old Express Road 4-20 for the project, provided the STATE GOVERNMENT would provide the
funds for the building. Mr. Ama Okorie will follow-up this matter and report latest on 27 January
2003. According to the information received from the Chairman of Aba North, the director of
public works and architect Dirionyemma if a plot is required from them they could provide it on the
other side of the New Express Road. This is a bit too far from the cluster although could also be an
acceptable location. In any case, as the 250 Faulkes Road building is now considered too expensive
the best alternative is the plot and construction of new building at the Old Express Road 4-20.
The pre-feasibility study has included a loan of US$ 120,000 (15.24 million Naira) for the
building at 8% interest. This loan, according to the study, could be easily paid back from the
income of the CFC services.
13
Conclusions and Recommendations
The Aba cluster will soon face major difficulties in trying to compete in the new globalized
economical conditions. The competition from South-East Asian countries will become more and
more difficult year-by-year and major restructuring will be needed to save the jobs in the Aba
cluster. In the writer’s opinion the first three steps should be:
1. Establish urgently the first phase of CFC by making the counterpart funding for the building
available for the pre-selected building or finding another suitable building or building site in
close vicinity or within the cluster. The pre-feasibility study shows that a loan of US$
120,000 at interest rate of 8% could be easily paid back by the earnings from the CFC
services.
2. Additional funding should be obtained to expand the CFC, adding first of all equipment for
designing, pattern making and shoe engineering. Make a study how to further improve the
shoe last and sole making in the cluster.
3. Prepare a master plan for restructuring the Aba cluster in specialized workshops for
footwear and leather goods components facilitating easy assembly with simple tem-work in
“modified rink-work-system.”
4. Lack of capital to modernize the workshops is one of the very serious problems in the
further development of the cluster. A micro financing scheme and or a “revolving fund”
operation should be established jointly by UNIDO and some other funding organizations.
Te above recommendations is fully in line with the Steering Committee’s views.
i
Annex 1
UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION

Assistance to the Leather Industry Cluster in Aba
20 November 2002
JOB DESCRIPTION
SF/NIR/01/D01/11-52/430-D10
Post title Shoe Industry Expert
Duration Two weeks (15 calendar days)
Date required January 2003
Duty station Nigeria, with travel within the country (1 day Lagos, 14 days Aba) and
Vienna (1 day debriefing)
Counterparts FEDERAL MINISTRY OF INDUSTRY (FMI), NIGERIAN ASSOCIATION OF SMALL

& MEDIUM LEATHER/ALLIED PRODUCTS INDUSTRIALISTS (NASMLAPI)
Duties The consultant will specifically be expected to:
Expected Expected
Main duties Location
duration Results
1. Review the actual status of establishing 1 day Lagos Briefing at the UNIDO
the Common Facility Centre (CFC) for the Representative’s office
local shoe manufacturing cluster,
availability of local/counterpart
contribution, legal implications and
government decisions made in these
respects.
2. Assess the situation of acquiring the 1 days Aba Information on fixed
selected building for CFC, collect capital costs and/or rent,
information on its price or expected leasing expenses associated with
costs, estimate the volume and likely costs adjusting the building to
of refurbishing. CFC needs
ii
Expected Expected
Main duties Location
duration Results
3. Collect information on local wages and 4 days Aba Input data for the
salaries, utility costs, depreciation practice opportunity/feasibility
or legislation, taxation, bank charges, study
availability of materials.
4. Analyze the potential local market for 2 days Aba List, volume and value of
services (facilities, training, materials, CFC services
components etc.) to be offered by the CFC,
assess the likely volume and price structure.
5. Prepare a pre-feasibility study on the 5 days Aba Financial analysis of the
expected operation of the CFC using expected operation of the
UNIDO methodology, compute financial CFC
indicators for the coming ten years period,
analyze sensitivity of the project, establish
the pay-back period for the investments.
6. Discuss results of the analysis with local 1 day Aba Feedback on viability of
counterparts. CFC
7. Discuss findings and recommendations 1 day Vienna Debriefing
with UNIDO HQ officials.
Qualification Footwear/leather products technologist with broad experience in institution

building and thorough knowledge of preparing opportunity and
(pre)feasibility studies. Previous experience in developing countries is
required.
Language English
Background information
The Government of Nigeria attaches high priority to strengthen the output and performance of the
manufacturing sector, particularly the agro-based industries with its broad employment base is expected to
increase its contribution towards the national economy. The allied leather sector, employing some 800,000-
900,000 people is a substantial earner of foreign exchange. However, to facilitate the enhancement of the
sub-sector, it is vital to improve the manufacturing skill of the entrepreneurs at the base, resulting in the
creation of better quality end products with wider marketability and improved returns. In order to achieve
this goal comprehensive training programs at different levels specifically tailored to meet the objectives has
to be implemented including the provision of tools and selected equipment for the individual and common
use.
The subject project represents an integrated part of the large scale umbrella program entitled
“Institutional Strengthening for the Economic Development (Private Sector Support Program 4)” prepared
by UNIDO in 2000.The leather sector was, inter alia, identified as an industry with an in build high growth
potential. In order to assess the situation of the leather sector in Nigeria and update the substantive
information available an UNIDO mission was fielded from 10-31 October 2001 to evaluate and recommend
on measures and assistance required for the further development of the allied sector.
Apart from the support and help required in the area of hides and skins improvement, leather
processing and tannery waste treatment the mission has identified and recognized the urgent need to provide
comprehensive assistance to the small/medium-scale establishments of the footwear and leather goods
manufacturers.
iii
Beside the “Aba leather cluster” similar large clusters are also active in other towns like Onitsha,
Ibadan, Lagos and Kano. The Aba, cluster located within the designated large area in the centre of Aba
where the leather based works are concentrated employs a large number of people, supports adjacent
industries and contributes substantially to the economy of the town. The area is distinguishly divided in six
zones, each zone has manufacturers its distinctive type of products like ladies, gents, children footwear,
travel bags, belts etc., suppliers of auxiliaries including leather and synthetic material supply merchants.
Each zone has its elected representation in the association. The variety of styles, different colors and
assortment of goods produced is virtually endless; the leather used in the manufacturing process is mainly
produced in Kano, although some top grade upper leather is sourced externally. Within the cluster only
limited number of enterprises are equipped with simple machines, powered by small generators. The
reduced but ongoing importation of second-hand footwear appears according to the association, not to be a
problem and of serious concern as the locally manufactured footwear is considered superior in quality and
cost wise competitive offering a wide range of products to the public at reasonable prices.
The association is at present made up of about 53,000 registered members, the membership fee per
annum depends on the size of the enterprise and varies between N 350 and N 5,000. The Aba leather cluster,
lacking any integrated training facility including the opportunity to have access in market oriented product
development is in need of a common facility centre, adequately equipped for the designed purpose, where
the entrepreneurs can make use of machinery and tools against nominal payment. The common facility
centre, being the focal point of the leather cluster, will provide the infrastructure for conducting workshops
training courses and holding of association meetings.
The project addresses foremost the small/medium scale enterprises based within the leather cluster in
Aba. It provides assistance to manufacturing leather and related products with a view to enhance design,
productivity and quality. It further aims at developing production and business management skills through
purpose designed training programs including on the job training, where possible.
The concept is to provide the appropriate environment vital and stimulating for the further
development of the sub-sector. Improved production methods linked with better understanding of quality
awareness will result in increased demand for the variety of articles manufactured, for which a ready
domestic and export market exist. Additional production and sales also generate increased demand of leather
to the benefit of the local tanning industry, creating more employment opportunities.
The establishment of a Common Facility Centre (CFC) within or in close vicinity of the leather
cluster in Aba will provide the basis for training the entrepreneurs and make available the use of tools and
equipment installed in the centre. The creation of such a facility, within the large area covered by thousands
of small footwear and leather goods workshops, called “Aba leather cluster” will assist the many resident
entrepreneurs willing to learn and to acquire improved technologies in their strive to manufacture good
quality leather products and generate reasonable returns.
The established CFC, located within the area of the Aba leather cluster will be the cornerstone for
the further development of the industry. The centre adequately equipped and provided with the means to
conduct training programs and workshops including extension services will be extensively used. The centre,
featuring a purpose designed workshop where the entrepreneurs have the opportunity to bring their own raw
materials or semi finished products utilizing improved manufacturing technologies and have the article
completed by using tools and machinery installed at the Centre against nominal payment. The centre will
also become the administrative focal point for the established and registered enterprises in the footwear and
leather goods manufacture of all the zones operating within the Aba leather cluster and as such will serve as
a model for similar leather clusters in the country. The adequately staffed and well functioning CFC will not
only strengthen the status of the NIGERIAN ASSOCIATION OF SMALL & MEDIUM SCALE LEATHER/ALLIED
PRODUCTS INDUSTRIALISTS but also to enhance the association’s negotiation power with the Government
authorities concerned in the formulation of improved industrial strategies welcome by the sector.
The project features a three pronged approach: firstly it will focus on the establishment of the CFC at
the leather cluster in Aba, secondly it will provide and deliver tailor made assistance for the large number of
small and medium footwear and leather goods manufacturer located within the leather cluster and thirdly it
will strengthen the status and management of the NIGERIAN ASSOCIATION OF SMALL & MEDIUM SCALE
LEATHER/ALLIED PRODUCTS INDUSTRIALISTS in the execution of its local and national programs.
The overall coordination will be the responsibility of UNIDO through the Project Coordinator in
conjunction with the FEDERAL MINISTRY OF INDUSTRY (FMI) and the local government. However, the
involved national association will play a decisive role in the implementation of the project commencing from
iv
the selection of the most suitable building at a site/location agreed upon to accommodate the centre, through
the final stage of commissioning. The association will liaise closely with the zonal representatives to inform
on the project and mobilize financial support for the provision of the infrastructural requirements in line with
the refurbishing of the designated building.
The association will further be responsible to orderly maintain the centre properly and meet the
running costs for the proper operation of the CFC once the project lifetime has expired.
The main objective of the project is to improve performance (product range, quality and
productivity) of footwear and other leather products manufactured by small-scale entrepreneurs of the Aba
leather cluster, thus enhance the operation and of the entire cluster.
Annex 2
Bakassi
AME
Aba shoe Cluster – Imo-Avenue
The shoes are quite modern in styling and quality is

acceptable for the regional market
Working conditions and

technology needs to be
improved
Shoe Plaza
i
Appendix
Pre-feasibility Study
Establishment of Common Facility Centre (CFC)
in Aba Shoe Making Clusters, Nigeria
Executive Summary
This pre-feasibility study has examined all the aspects for the viability of a Common Facility
Centre (CFC) in the Aba shoe and leather products cluster. It was realized that the type of limited
services that had originally been planed as the CFC scope could not make major improvements to
the operations and viability of the huge Aba shoe and leather goods cluster and it will also give
problems to keep the centre fully self-supporting on that level of operations. However, the
establishment of the CFC is considered as an excellent and well-needed first step that should be
urgently completed. Much larger inputs and efforts, however, from the side of the international
organizations and from the side of the cluster are needed to keep the Aba cluster competitive and
economically viable in to-days globalized economy environment.
The problem is to make the CFC self-sustainable. The main reasons impeding the self-
sustainability is that the end users of the services cannot afford to pay high fees for the rental of
equipment nor can they pay high training fees to send their children or selected trainees to the
centre. The only way that the centre can be made fully self-supporting is that the centre has top
provide additional services such as pattern and prototype making, produce series of products and
possibly supply materials and distribute selected components for shoe and leather goods
manufacture. The constellations how these products can be processed in the CFC, without being
seen as competition to the entrepreneur’s own production, has to be carefully taken into
consideration. This pre-feasibility study is therefore providing various alternatives that should be
taken into consideration when making the final decision for continuous support. It is, in any case,
very obvious to the writer of this study that the CFC is very well needed in order to develop the Aba
footwear and leather products cluster further and it is the firm believe of the writer that without this
type of establishment and assistant the Aba shoe and leather products cluster cannot adjust itself to
the modern operations needed in order to compete in this globalized industry environment and will
face major problems within the coming years.
Project Background and Basic Idea
UNIDO projects and involvement
The Government of Nigerian attaches high priority to strengthen the output and performance
of the manufacturing sector. The leather footwear and leather product sector of Nigeria employs
some 800,000-900,000 people and has a large potential to become an important foreign exchange
earner. However, the sectoral performance needs to be improved concerning the product quality
and design, entrepreneurial knowledge, marketing capabilities and technician and worker skills.
In order to enhance the sectoral performance UNIDO launched two Technical Assistant
projects entitled “Hides and Skins Improvement in Northern Nigeria” (SF/NIR/01/E01) and
“Assistance to the Leather Industry Cluster in Aba” (SF/NIR/01/D01). These projects are
ii
integrated parts of a large-scale umbrella project entitled “Institutional Strengthening for the
Economic Development – Private Sector Support Program 4”.
Both of the above mentioned UNIDO projects for leather and footwear industry support
started to operate as scheduled. Mr. Terry McCallin carried out a mission to Aba shoe industry
cluster between 21/7/2002 and 16/8/2002 to make the first assessment of the assistance needs and to
recommend the equipment and terms of reference for operations of the CFC. Mr. McCallin, in
close cooperation with local counterparts, prepared the machinery and equipment list, identified a
suitable building for the CFC, prepared an initial work plan, terms of reference for the CFC Steering
Committee work and also prepared a financial forecast for the first year of the project.
NIGERIAN ASSOCIATION OF SMALL & MEDIUM SCALE LEATHER & ALLIED PRODUCTS
INDUSTRIES (NASMSLAPI)
As recommended by Mr. McCallin and agreed by the counterparts, the centre will be
operated by the leather cluster themselves. Implementation by UNIDO will be done through its
counterpart the NASMSLAPI. This organisation will lease the building and manage the enterprise
through a board/committee comprising the presidents of the individual zones. UNIDO and FEDERAL
MINISTRY OF INDUSTRY will have non-voting observers on the committee.
National inputs included appropriate premises, auxiliary equipment, furniture etc as office
facilities according to internationally accepted standard. When the building is ready, machinery
will be ordered and installed so that staff training can begin prior to opening the doors for business
as soon as possible.
Steering Committee
Through NASMSLAPI a meeting was called for all interested parties from all the zones,
irrespective of status, to discuss the formation of a steering committee to act as the implementing
local partner for the purposes of establishing the CFC.
At the meeting an outline of the implementation plans was given to the participants,
emphasizing that the CFC was to be established with their agreement and consultation. It was
stressed that the eventual operation of the CFC was also the responsibility of local entrepreneurs
through their steering committee. It was not intended to be operated by or influenced by any
outside body. It had to be self financed and given enthusiastic support from the SMEs operating in
the various zones. UNIDO would implement the project with the agreement and support of the
steering committee in the early stages eventually handing over the entire project to the Aba shoe
and bag manufacturing cluster.
It was also mentioned that according to the project document local inputs were required in
the form of cash contributions for the establishment and renting of a building in which to operate
the CFC. These were to be levied from the members of the various zones through their zone
presidents. It was also confirmed that the working counterpart for UNIDO was to be NASMSLAPI.
It was agreed at the meeting that the steering committee would consist of the chairman of
NASMSLAPI, as the chairman of the committee and the board would consist of the presidents of
the 7 zones (5 shoes and 2 bags) or their official alternates. The UNIDO local project officer, yet to
be appointed, and a representative from FMI, would be official observers at board meetings,
without voting rights. A quorum for committee meetings would be 5 members. Initially the minute
iii
secretary would be the UNIDO project officer. It was emphasized that the board consisted of the
positions of the appointees rather than the persons currently holding the posts.
Terms of reference for the steering committee were drawn up and given to the committee
members (see Annex 6).
Market Analysis and Marketing Concept
Marketing of the CFC services is not expected to be a problem. On the contrary, field
survey made to assess the needs of the centre and the expected demand for the services shows that
the first phase of the project needs to be extended to provide additional and increased services.
Traders from the region and neighboring countries presently carry out the marketing of the
products from Aba cluster. There is no any marketing concept or marketing strategy – the cluster
exists in a “sellers market” situation and the workshops are producing, without any marketing plan,
as many shoes and bags as they can, hoping that the products will sell and the traders will be
successful in moving the products from the cluster to the consumers of the region at prices that
provides enough mark-up for living and buying the next lot of materials.
The CFC should be helpful to advice and assist in preparing a marketing concept, fashion
and sales forecasts and new products to match the expected market demand. For this reason the
CFC should be equipped in its second phase to provide such services.
Raw Materials and Supplies
The Aba shoe and leather goods cluster includes large footwear and leather goods raw-
material market. Finished leathers from the Northern Nigeria tanneries and imported leathers
(mainly stock-lots) are available at quite reasonable prices. All type of PVC and PU coated fabrics,
fiberboard and components of all types are readily available. Annex 7 provides a list and present
prices for materials available.
Before the CFC will take any steps about establishing a material sales unit, the present
market situation should be further studied in great detail.
Location, Site and Environment
The location of the site is crucial for the project success. A suitable building within close
distance to the main zones has been located at 250. Foulkes Road, Aba. The building needs
refurbishing and a plan and cost estimate has been made by the previous study. There are
possibilities to further extend the building if this would be necessary in the future (see the building
and machinery lay-out in Annex 1).
At the time of writing the final building site has not been decided. An alternative has been
proposed on another site at Old Express Road 4 -20 behind Faulkes Road and adjoining the Power
Line Zone. As soon as final decision is made in this matter a new plant lay-out will be provided by
UNIDO.
iv
Proposed sites at factory road and Jumbo street are not suitable and too far from the cluster.
See sketch Aba North (Annex 9).
Engineering and Technology
Production Program, Plant capacity, and Product Mix
The production program of the CFC is planned to include the production of selected
footwear and leather product items. This production is necessary in order to make the operations of
the CFC self-sustainable. Initially it is planned to start with a limited production of footwear
mainly a product line specially designed to be clearly identifiable as the product of CFC and not
originating from the clusters (see Annex 5 for proposed product description).
Production of designs and prototypes with complete shoe engineering package is expected to
be an important product to be sold to the workshops of the cluster. This package will include the
basic pattern, technical description, material specification, graded patterns for hand-cutting and a
proto-type sample.
The rental of machinery for specific operations is expected to be one of the most needed
“products” of the CFC.
Insoles and soles for sandals and shoes are expected to be an important item in the CFC
product mix that would give important contribution towards the self-sustainability of the CFC.
Technology and Technical Choices; Selection of Equipment and Tools
The selected technology for the first phase of the CFC operations is very straightforward and
the obvious technical choice is to select suitable equipment for the first stages of mechanized shoe
production. The initial equipment list (see Annex 8) includes shoe lasts for men’s and ladies shoes
and sets of graded patterns for selected styles. It also includes equipment for cutting of various
shoe- and/or leather product components with a traveling head cutting press and cutting dies for
soles for ladies and men’s shoes.
The initial machinery list includes equipment for making of insoles and soles. Such
equipment is badly needed by the workshops of the cluster and manufacturing these items in the
CFC is expected to be an additional income creation possibility for the Centre.
In addition to the cutting and sole making equipment there is a small shoe upper making
department included with five sewing machines, eyeleting machine, hand lasting and sole and heel
attaching equipment and a combined finishing machine. These machines are foreseen mainly for
training purposes but at the same time for the limited production of special products both footwear
and leather goods (see Annex 5 for production program).
Ecological Considerations and Environmental Impact Assessment
The CFC production is not going to have any negative impact on the environment. The
small quantity of cutting waste can be easily disposed off as land filling material or incinerated.
The CFC will have a positive impact on the Aba clusters environment by teaching how to reduce
cutting waste and how to improve good workshop house-keeping.
v
Detailed Plant Layout
The detailed plant-lay-out is included as Annex 1 and sketch of Aba North is provided in
Annex 9.
Maintenance and Replacement Requirements
The maintenance of the simple mechanical equipment is not expected to give any problems.
The installation engineer who will install and commission the machinery will teach a maintenance
mechanic in the preventive maintenance and correct settings and adjustments of the machines.
Initial spare parts are included with the machinery.
Cost of utilities such as power, water and fuel, repair and maintenance are calculated as
follows.
Electricity
Total installed 1st phase 12 kW. Assuming 70% utilization factor = 8.4 kW * 8 hours =
67.2 kWh/day x 22 days = 1,478.4 kWh/month x 12 months = 17,740 kWh/year; round up
for consumption of office equipment etc. makes the total consumption 20,000 kWh/year.
Industrial rate: 8.2 Naira/kWh + KVA charge of 230 Naira/KVA. Charge for meter is
63,000 Naira. Maintenance cost 1,400 Naira/month, service charge 250 Naira /month.
Logistics charge 10,000 Naira.
Industrial rate: 8.2 Naira /kWh * 20,000 kWh 164,000 Naira
KVA charge: Naira 230/month 276,000 Naira
Charge for meter 63,000 Naira
Maintenance: Naira 1,400/month 16,800 Naira
Service charge: Naira 250/month 3,000 Naira
Logistics 10,000 Naira
Total cost per annum 532,800 Naira
US$ 3,889
Note: Due to frequent power cuts (about 50% of the time) the electricity consumption is reduced by 50% or $
600. – in the feasibility calculations.
Fuel
Naira/year (US$ 4,663/year). The cost for purchasing and installing appropriate generator is
estimated at 1.5 million Naira (US$ 11,000) – considered as counterpart contribution.
Note: Due to frequent power cuts the fuel consumption is calculated at half of the running time in the
feasibility calculations or US$ 2.330.
Water
etc. will cost about 500,000 Naira (US$ 3,650). This is considered as counterpart
contribution.
Repair and Maintenance

Estimated at 2.5 % of the total equipment, say 342,500 Naira (US$ 2,500).
vi
Organization and overhead costs
To start with the management structure of the CFC is fairly simple. It consists of an overall
manager, 2 technicians cum trainers and an accountant and a secretary. The steering committee
suggested that the manager should be paid around 25,000 Naira/month (US$ 200/month). It is
presently unclear how the CFC will develop and evolve although the indications are there will be a
great demand for its services. In the start up phase the local UNIDO project officer will have a
positive input in establishing the management structure, through his Terms of Reference (draft
administrative and operational guidelines and Job Descriptions for staff). He will, de facto,
effectively be the general manager in this phase (6 months to 1 year) no matter who is eventually
appointed.
During this period an assessment of what calibre of manager is actually needed, how he
would relate to the board, and perhaps more importantly, how the board will relate to him, can be
made. An indication will also then be available as to the employment costs involved and the ability
of the CFC to afford them. This is important not only for the general management of the facility but
for credibility in the eyes of potential future lenders (B.O.I., STATE GOVERNMENT, APDF, WORLD
BANK etc.).
The initial appointee (for 25,000 Naira/month) should therefore not be appointed as
“manager” per se but, in the interim, as “supervisor” or “superintendent” until such times a clearer
picture emerges as to the needs. If things work out well he can be upgraded if and when this is felt
to be justified.
The recruitment of technicians should not be a problem from the many thousands of shoe
people available in Aba.
The proposed management structure of the CFC in Aba is as follows:
CFC
S t e e r in g
C o m m it t e e
U N ID O
PO
CFC M anager
U N ID O U N ID O
S e c re ta ry C o n s u lt a n t s E x p e rts
A c c o u n ta n t
T r a in i n g M a c h in e
in s tru c to r P ro d u c tio n
h irin g
s u p e rv is o r
s u p e rv is o r
T r a i n in g c o u r s e s &
P ro g ra m s C o m m o n f a c i li t y P ro d u c tio n o f s h o e s
m a c h in e s a n d le a t h e r g o o d s
CFC
O RG ANO G R AM
CFC overhead costs are calculated on the basis of following considerations and actual data.
vii
Factory Overheads
Instructors 3 20,000 Naira/month/instructor 720,000
Technician 1 18,000 Naira/month 216,000
US$ 11,547
Rent/lease 91,667 1,100,000
Manager 25,000 300,000
Accountant 20,000 240,000
Office girl/secretary 10,000 120,000
P&T expenses 10,000 120,000
Office supplies 1,000 12,000
Pension scheme 64,050 128,100
TOTAL 2,020,100
US$ 14,746
Human Resources
No problems are expected to identify well-qualified personnel to be employed by the CFC.

The present UNIDO Project Officer Mr. Ama Okorie will be needed in the initial stage to assist the
establishment of the CFC. As he is a local man with roots in the cluster he is a very important asset
for getting the project started and recommending the employment of suitable personnel. Mr. Okorie
is also excellently connected with the STATE GOVERNMENT officials and his help is paramount in
solving any problems.
It is expected that the UNIDO experts and/or consultants that will be sent to install and
commission the equipment will easily carry out the labour training. The cost of labour and social
cost are detailed below:
viii
Labour Costs
Salary Labour cost
Employee No.
Sewing/skiving etc 12 12 000 144 000 1 728 000
Hand cutters 2 14 000 28 000 336 000
Watchmen 4 5 000 20 000 240 000
Driver 1 10 000 10 000 120 000
Cleaners 2 2 500 5 000 60 000
Total 27 305 000 3 660 000
US$ 2,226 US$ 26,715
Social costs
Pensions scheme “Nigeria Social Insurance Trust Fund” receives contribution from each
employee’s salary calculated at 10% of the salary. Employer pays 6.5% and employee pays
3.5 % not exceeding 4,400 Naira/month.
3.5% of 3,660,000 Naira = 128,100 Naira = US$ 935
Training
It will be necessary to provide funds for training and fellowships abroad. Training for CAD
shoe design will be necessary in later stage of the project and there should be funds available
for some study tours. A study tour to some other African service and training centres such
as the TRAINING AND PRODUCTION CENTRE FOR THE SHOE INDUSTRY (TPCSI) in Thika,
Kenya and/or the FOOTWEAR AND LEATHER INDUSTRY SERVICE CENTRE (FLISC) in Cairo,
Egypt would be suitable study tour objects
Implementation Planning and Budgeting
The project implementation schedule for the first phase is very straightforward but depends
entirely on the counterpart inputs availability. As soon as building is ready and all the legal and
financial problems with this are solved the equipment will be ordered and shipped. The equipment
selected by the UNIDO expert Mr. McCallin is well suited for the first phase operations of the
centre. The implementation schedule is enclosed as Annex 2.
Financial Analysis and Investment Appraisal
The financial analysis and investment appraisal is included in Annex 3 to this document.
Two variations have been made:
Variant 1
It covers the present “first phase” of the project. The total investment is calculated to be
US$ 394,000 including building (loan of US$120,000), equipment, working capital, as well
as pre-production expenditure. The operations are expected to start with 30% output of the
total capacity and increase slowly – in seven years – to 100%. The project would make a
profit as of the third year of operations and pay back the investment in 7 years. The cost and
ix
the sales income of the products and services are based on detailed study of the actual cost
of materials and sales income paid and obtained for these products in the cluster at present.
Variant 2
It has much higher investment as well as higher expected outputs levels. The total
investment would include additional equipment for shoe design and engineering and
additional production equipment. Further detail study will be needed to decide on the final
equipment selection. The total investment of this study is calculated to be US$ 504,000.
This variant is expected to be profitable as of second year of operations and pay back its
investment within 5 years.
Annexes
Annex 1. Plant layouts
Annex 2. Work plan and implementation schedule
Annex 3. Financial analysis
Annex 4. Summary of cost calculations
Annex 5. Production program and product description
Annex 6. Terms of Reference for the steering Committee
Annex 7. Raw materials available in the Cluster Market
Annex 8. Machinery list
Annex 9. Sketch of Aba North
1
Annex 1
Building and machine layout

250 Folkes Road, Aba
2
Building and machine layout

New building to be constructed at Old Express Way 4-20, Aba
i
Annex 2
WORK_PLAN FOR REFURBISHING AND EQUIPPING THE COMMON FACILITY CENTRE (CFC) IN ABA
Responsible January February March April May June July

Activity
Week 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 26
Mr. Berg’s mission UNIDO
Agreement of government Government/PO
Inputs and legalities Government/PO
Building construction Government/PO
Transformer + installation. Government/PO
Water installation Government/PO
Generator Government/PO
Air conditioning offices Government/PO
Order machines UNIDO
Delivery/shipment UNIDO
Installation UNIDO
Commissioning/training UNIDO
Preparation of work and UNIDO
Training programmes UNIDO
Start operations Steering Committee
Official opening Steering Committee
1
Project: CFC Aba Annex 3.1

Nigeria Variant 1
OPPORTUNITY STUDY
BASIC DATA
Starting year 2003
Working days/year 240
Monetary unit 1,000 US$ 1,000 US$
Total investments 394 100% Initial fixed investment 230
Equity capital 274 70% Pre-production capital expenditure 40
Total loan 120 30% Current assets (at target capacity) 153
Interest on loan % 8 TOTAL INITIAL ASSETS 423
Repay in years 10
Grace period years 2
Tax holiday years 0
Corporate tax % 0
Sales tax % 0
Dividend on equity % 0
Discount factor % 16
TOTAL INVESTMENT COSTS 1,000 US$

Construction 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 TOTAL
Initial fixed investments 240 240
Replacement 0 0 0 0 13 0 0 1,000 2,015 1,000 0 4,028
Fixed investments 240 0 0 0 13 0 0 1,000 2,015 1,000 0 4,268
Pre-production capital 40 40
Working capital increase 67 9 18 13 13 0 8 0 0 0 128
TOTAL INVESTMENTS 280 67 9 18 26 13 0 1,008 2,015 1,000 0 4,436
CFC Aba, Variant 1 UNIDO

2
|::
PRODUCTION PROGRAMME AND MATERIALS 1,000 US$

Quantity Unit price
pairs ( US$) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Capacity (%): 100.0 30.0 40.0 60.0 75.0 90.0 90.0 100.0 100.0 100.0 100.0
MATERIALS:
Prototypes and samples 200 5.00 0 0 1 1 1 1 1 1 1 1
Ladies Sandals 12,500 4.00 15 20 30 38 45 45 50 50 50 50
Mens Sandals 6,000 5.00 9 12 18 23 27 27 30 30 30 30
Bags and Lather Goods 2,500 5.00 4 5 8 9 11 11 13 13 13 13
Machine rental 500 2.00 0 0 1 1 1 1 1 1 1 1
Material sales 1,000 10.00 3 4 6 8 9 9 10 10 10 10
Trining courses 4 240.00 0 0 1 1 1 1 1 1 1 1
Insoles 220,000 0.15 10 13 20 25 30 30 33 33 33 33
Soles 220,000 0.80 53 70 106 132 158 158 176 176 176 176
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.000 0 0 0 0 0 0 0 0 0 0
TOTAL 94 126 189 236 283 283 314 314 314 314

3
1000 US$
0 Quantity Unit price
0 pairs ( US$) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Capacity (%): 100 0 30 40 60 75 90 90 100 100 100 100
PRODUCTS:
Ladies Sandals 12,500 8.00 30 40 60 75 90 90 100 100 100 100
Mens Sandals 6,000 10.00 18 24 36 45 54 54 60 60 60 60
Bags and Leather Gods 2,500 10.00 8 10 15 19 23 23 25 25 25 25
Machine rental 500 10.00 2 2 3 4 5 5 5 5 5 5
Material Sales 1,000 10.00 3 4 6 8 9 9 10 10 10 10
Training courses 4 240.00 0 0 1 1 1 1 1 1 1 1
Insoles 220,000 0.20 13 18 26 33 40 40 44 44 44 44
Soles 220,000 1.00 66 88 132 165 198 198 220 220 220 220
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0
TOTAL 140 187 280 350 420 420 467 467 467 467

4
|::
PROJECTED PRODUCTION ACCOUNT 1,000 US$

100% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Materials 314 94 126 189 236 283 283 314 314 314 314
Labour 27 8 11 16 20 24 24 27 27 27 27
Electricity 2 1 1 1 2 2 2 2 2 2 2
Fuel 6 2 2 4 5 5 5 6 6 6 6
Repair & Maintenance 3 1 1 2 2 2 2 3 3 3 3
Factory Overheads 12 12 12 12 12 12 12 12 12 12 12
FACTORY COSTS 363 117 152 223 275 328 328 363 363 363 363
Administrative Overhead 14 14 14 14 14 14 14 14 14 14 14
Sales Costs 2 2 2 2 2 2 2 2 2 2 2
Distribution Costs 0 0 0 0 0 0 0 0 0 0 0
OPERATING COSTS 379 133 168 239 291 344 344 379 379 379 379
Interests 10 10 9 8 7 6 5 4 3 2
Depreciation 18 18 18 18 19 19 19 19 20 20
Amortization 0 0 0 0 0 0 0 0 0 0
PRODUCTION COSTS 161 196 266 318 370 369 403 402 402 401

5
WORKING CAPITAL 1,000 US$

Days 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
A. CURRENT ASSETS
1. Account receivable 15 9 12 18 22 27 26 29 29 29 29
2. Inventories
Basic materials 30 12 16 24 29 35 35 39 39 39 39
Auxiliary materials 30 0 0 0 0 0 0 0 0 0 0
Work-in-progress 15 6 8 12 15 18 18 20 20 20 20
Finished goods 2 1 2 2 3 4 4 4 4 4 4
Spare-parts 2 2 2 2 2 2 2 2 2 2
Subtotal 21 27 40 49 59 59 65 65 65 65
3. Cash-in-hand 46 49 54 57 61 60 62 61 60 59
TOTAL 76 88 111 129 146 145 156 155 154 153
B. CURRENT LIABILITIES
Account payable 15 (9) (12) (18) (22) (26) (26) (29) (29) (29) (29)
NET WORKING CAPITAL 67 76 94 107 120 118 127 126 125 124
Increment 67 9 18 13 13 (1) 8 (1) (1) (1)
CASH IN HAND 1,000 US$

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Production costs 161 196 266 318 370 369 403 402 402 401
Less:
Raw materials (94) (126) (189) (236) (283) (283) (314) (314) (314) (314)
Utilities (2) (3) (5) (6) (7) (7) (8) (8) (8) (8)
Depreciation (18) (18) (18) (18) (19) (19) (19) (19) (20) (20)
Amortization 0 0 0 0 0 0 0 0 0 0
Total (115) (147) (212) (260) (309) (309) (342) (342) (342) (342)
Cash-in-hand 46 49 54 57 61 60 62 61 60 59

6
|::
FUNDS FLOW STATEMENT (Financing Plan) 1,000 US$

Construction 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
A. CASH INFLOW
1. Financial resources 394 9 3 6 4 4 0 0 0 0 0
2. Sales revenue 140 187 280 350 420 420 467 467 467 467
TOTAL 394 149 190 286 355 425 420 467 467 467 467
B. CASH OUTFLOW
1. Total assets (270) (76) (12) (24) (17) (30) 0 (11) (999) (2,014) (999)
2. Operating costs (133) (168) (239) (291) (344) (344) (379) (379) (379) (379)
3. Dept services
Repayment 0 (12) (12) (12) (12) (12) (12) (12) (12) (12)
Interest (10) (10) (9) (8) (7) (6) (5) (4) (3) (2)
4. Corporate tax 0 0 0 0 0 0 0 0 0 0
5. Sales tax 0 0 0 0 0 0 0 0 0 0
5. Dividends 0 0 0 0 0 0 0 0 0 0
TOTAL (270) (219) (202) (283) (328) (393) (362) (407) (1,394) (2,408) (1,392)
Surplus(+)/Deficit(-) 124 (70) (12) 3 26 31 58 60 (927) (1,941) (925)
Cumulative Cash Balance 124 54 42 45 71 103 161 220 (707) (2,648) (3,574)
Loan balance (120) (120) (108) (96) (84) (72) (60) (48) (36) (24) (12)

7
PROJECTED PROFIT AND LOSS ACCOUNT 1,000 US$

100% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Revenue 467 140 187 280 350 420 420 467 467 467 467
Operating costs 379 133 168 239 291 344 344 379 379 379 379
OPERATING PROFIT 88 7 19 42 59 76 76 88 88 88 88
Interest 10 10 9 8 7 6 5 4 3 2
Depreciation 18 18 18 18 19 19 19 19 20 20
Amortization 0 0 0 0 0 0 0 0 0 0
NET PROFIT BEFORE TAX (21) (10) 14 33 50 51 64 65 65 66
Corporate tax 0 0 0 0 0 0 0 0 0 0 0
Sales tax 10 0 0 0 0 0 0 0 0 0 0
NET PROFIT AFTER TAX (21) (10) 14 33 50 51 64 65 65 66
Dividends on equity 0 0 0 0 0 0 0 0 0 0
Undistributed profit (21) (10) 14 33 50 51 64 65 65 66
Accumulated undistributed profit (21) (31) (16) 17 67 118 181 246 311 377

8
|::
DEPRECIATION SCHEDULE 1,000 US$

% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Building & Civil Works
Principal value 110 105 99 94 88 83 77 72 66 61
Replacement 0 0 0 0 0 0 0 0 0 0
Depreciation 5.0 6 6 6 6 6 6 6 6 6 6
Balance 105 99 94 88 83 77 72 66 61 55
Plant & Equipment
Principal value 100 90 80 70 60 50 40 30 1,020 3,010
Replacement 0 0 0 0 0 0 0 1,000 2,000 1,000
Depreciation 10.0 10 10 10 10 10 10 10 10 10 10
Balance 90 80 70 60 50 40 30 1,020 3,010 4,000
Furniture
Principal value 10 10 9 9 8 8 8 7 7 6
Replacement 0 0 0 0 0 0 0 0 0
Depreciation 4.0 0 0 0 0 0 0 0 0 0 0
Balance 10 9 9 8 8 8 7 7 6 6
Motor vehicles
Principal value 10 8 5 3 0 10 7 3 0 11
Replacement 0 0 0 0 13 0 0 0 15 0
Depreciation 25.0 3 3 3 3 3 3 3 3 4 4
Balance 8 5 3 0 10 7 3 0 11 8
DEPRECIATION 18 18 18 18 19 19 19 19 20 20
Cumulated depreciation 18 37 55 74 93 112 131 150 170 190

9
|::
PROJECTED BALANCE SHEET AT 31st December 1,000 US$

Construction 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
A. ASSETS
1. Current Assets
a) Cash balance 124 54 42 45 71 103 161 220 (707) (2,648) (3,574)
b) Current assets 76 88 111 129 146 145 156 155 154 153
2. Fixed assets 270 252 233 215 196 190 171 152 1,133 3,128 4,109
Total assets 394 382 363 371 396 439 477 528 581 634 688
B. LIABILITIES
1. Current liabilities 9 12 18 22 26 26 29 29 29 29
2. Loan 120 120 108 96 84 72 60 48 36 24 12
3. Equity 274 274 274 274 274 274 274 274 274 274 274
4. Reserves (21) (31) (16) 17 67 118 181 246 311 377
Total liabilities 394 382 363 371 396 439 478 532 585 638 692
CASH-FLOW TABLE FOR CALCULATION OF PRESENT VALUE 1,000 US$

Construction 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Salvage value
A. CASH INFLOW
Revenue 140 187 280 350 420 420 467 467 467 467
B. CASH OUTFLOW
1. Total investments (394) 0 0 0 0 (13) 0 0 (1,000) (2,015) (1,000) 4,232
2. Operating costs (133) (168) (239) (291) (344) (344) (379) (379) (379) (379)
3. Corporate tax 0 0 0 0 0 0 0 0 0 0
4. Sales tax 5 0 0 0 0 0 0 0 0 0
Total outflow (394) (128) (168) (239) (291) (357) (344) (379) (1,379) (2,394) (1,379) 4,232
C. NET CASH FLOW (394) 12 19 42 59 63 76 88 (913) (1,928) (913) 4,232
D. PRESENT VALUE (394) 10 14 27 32 30 31 31 (278) (507) (207) 959
NET PRESENT VALUE (251)

10
|::
INTERNAL RATE OF RETURN 1,000 US$
% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total
Net cash flow 12 19 42 59 63 76 88 -913 -1928 -913
Present value 17.0 10 14 26 31 29 30 29 (260) (469) (190) (1,144)
20.0 10 13 24 28 25 25 24 (212) (374) (147) (977)
25.0 10 12 21 24 21 20 18 (153) (259) (98) (778)
0.0 0 0 0 0 0 0 0 0 0 0 0
0.0 0 0 0 0 0 0 0 0 0 0 0
FINANCIAL INDICATORS
Unit 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Debt/Equity ratio 0.44 0.39 0.35 0.31 0.26 0.22 0.18 0.13 0.09 0.04
Current ratio 8.69 7.53 6.36 5.88 5.55 5.51 5.34 5.31 5.27 5.24
Quick ratio 6.31 5.20 4.10 3.63 3.32 3.28 3.12 3.08 3.05 3.02
Debt service coverage (0.27) 0.41 1.59 2.60 3.70 3.95 4.92 5.28 5.69 6.15
Gross profit margin % (14.99) (5.09) 5.16 9.33 11.93 12.16 13.61 13.81 13.91 14.12
Net profit margin % (14.99) (5.09) 5.16 9.33 11.93 12.16 13.61 13.81 13.91 14.12
Internal rate of return 15.38 15.38 15.38 15.38 15.38 15.38 15.38 15.38 15.38 15.38
Break-even point % 400.00 216.22 94.07 64.82 49.83 48.57 41.09 39.99 39.46 38.37
Net present value 1000 US$ (251.14) (251.14) (251.14) (251.14) (251.14) (251.14) (251.14) (251.14) (251.14) (251.14)
Net value added 1000 US$ (3.30) 10.90 39.30 60.60 81.15 81.15 95.35 95.35 94.85 94.85
Gross value added 1000 US$ 15.10 29.30 57.70 79.00 100.30 100.30 114.50 114.50 114.50 114.50
Payback period 1000 US$ 396.37 387.47 354.61 303.54 234.26 164.02 81.32 (2.34) (86.96) (172.54)

BREAK-EVEN ANALYSIS
700
600
Costs and Revenues [1000 US$]
500
400
Fixed costs
Variable costs
Sales revenue
300
200
100
0
0 20 40 60 80 100 120 140
Capacity utilization [%]

1
Project: CFC Aba Annex 3.2

Nigeria Variant 2
OPPORTUNITY STUDY
BASIC DATA
Starting year 2003
Working days/year 240
Monetary unit 1,000 US$ 1,000 US$
Total investments 504 100% Initial fixed investment 230
Equity capital 384 76% Pre-production capital expenditure 60
Total loan 120 24% Current assets (at target capacity) 270
Interest on loan % 8 TOTAL INITIAL ASSETS 560
Repay in years 10
Grace period years 2
Tax holiday years 0
Corporate tax % 0
Sales tax % 0
Dividend on equity % 0
Discount factor % 16
TOTAL INVESTMENT COSTS 1,000 US$

Construction 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 TOTAL
Initial fixed investments 340 340
Replacement 0 0 0 0 13 0 0 1,000 2,015 1,000 0 4,028
Fixed investments 340 0 0 0 13 0 0 1,000 2,015 1,000 0 4,368
Pre-production capital 60 60
Working capital increase 106 16 33 24 24 0 16 0 0 0 218
TOTAL INVESTMENTS 400 106 16 33 37 24 0 1,016 2,015 1,000 0 4,646

2
|::
PRODUCTION PROGRAMME AND MATERIALS 1,000 US$

Quantity Unit price
pairs ( US$) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Capacity (%): 100.0 30.0 40.0 60.0 75.0 90.0 90.0 100.0 100.0 100.0 100.0
MATERIALS:
Ladies Sandals 25,000 4.00 30 40 60 75 90 90 100 100 100 100
Mens Sandals 12,500 5.00 19 25 38 47 56 56 63 63 63 63
Bags and Lather Goods 2,500 5.00 4 5 8 9 11 11 13 13 13 13
Machine rental 500 2.00 0 0 1 1 1 1 1 1 1 1
Material sales 1,000 10.00 3 4 6 8 9 9 10 10 10 10
Trining courses 4 240.00 0 0 1 1 1 1 1 1 1 1
Insoles 440,000 0.15 20 26 40 50 59 59 66 66 66 66
Soles 440,000 0.80 106 141 211 264 317 317 352 352 352 352
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.000 0 0 0 0 0 0 0 0 0 0
TOTAL 182 242 364 454 545 545 606 606 606 606

3
1000 US$
0 Quantity Unit price
0 pairs ( US$) 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Capacity (%): 100 0 30 40 60 75 90 90 100 100 100 100
PRODUCTS:
Ladies Sandals 25,000 8.00 60 80 120 150 180 180 200 200 200 200
Mens Sandals 12,500 10.00 38 50 75 94 113 113 125 125 125 125
Bags and Leather Gods 2,500 10.00 8 10 15 19 23 23 25 25 25 25
Machine rental 500 10.00 2 2 3 4 5 5 5 5 5 5
Material Sales 1,000 10.00 3 4 6 8 9 9 10 10 10 10
Training courses 4 240.00 0 0 1 1 1 1 1 1 1 1
Insoles 440,000 0.20 26 35 53 66 79 79 88 88 88 88
Soles 440,000 1.00 132 176 264 330 396 396 440 440 440 440
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0.00 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0
TOTAL 269 358 538 672 806 806 896 896 896 896

4
|::
PROJECTED PRODUCTION ACCOUNT 1,000 US$

100% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Materials 606 182 242 364 454 545 545 606 606 606 606
Labour 40 12 16 24 30 36 36 40 40 40 40
Electricity 3 1 1 2 2 3 3 3 3 3 3
Fuel 9 3 4 5 7 8 8 9 9 9 9
Repair & Maintenance 5 2 2 3 4 5 5 5 5 5 5
Factory Overheads 18 18 18 18 18 18 18 18 18 18 18
FACTORY COSTS 681 217 283 416 515 615 615 681 681 681 681
Administrative Overhead 21 21 21 21 21 21 21 21 21 21 21
Sales Costs 4 4 4 4 4 4 4 4 4 4 4
Distribution Costs 1 0 0 1 1 1 1 1 1 1 1
OPERATING COSTS 707 242 309 441 541 641 641 707 707 707 707
Interests 10 10 9 8 7 6 5 4 3 2
Depreciation 18 18 18 18 19 19 19 19 20 20
Amortization 0 0 0 0 0 0 0 0 0 0
PRODUCTION COSTS 270 337 468 567 666 665 731 730 729 729

5
WORKING CAPITAL 1,000 US$

Days 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
A. CURRENT ASSETS
1. Account receivable 15 18 23 34 43 51 50 56 56 56 56
2. Inventories
Basic materials 30 23 30 45 57 68 68 76 76 76 76
Auxiliary materials 30 0 0 0 0 0 0 0 0 0 0
Work-in-progress 15 11 15 23 28 34 34 38 38 38 38
Finished goods 2 2 3 4 6 7 7 7 7 7 7
Spare-parts 2 2 2 2 2 2 2 2 2 2
Subtotal 38 50 75 93 111 111 123 123 123 123
3. Cash-in-hand 66 71 79 85 91 90 94 93 92 91
TOTAL 123 144 188 221 253 252 273 272 271 270
B. CURRENT LIABILITIES
Account payable 15 (17) (22) (34) (42) (50) (50) (56) (56) (56) (56)
NET WORKING CAPITAL 106 122 155 179 203 201 217 216 215 214
Increment 106 16 33 24 24 (1) 16 (1) (1) (1)
CASH IN HAND 1,000 US$

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Production costs 270 337 468 567 666 665 731 730 729 729
Less:
Raw materials (182) (242) (364) (454) (545) (545) (606) (606) (606) (606)
Utilities (4) (5) (7) (9) (11) (11) (12) (12) (12) (12)
Depreciation (18) (18) (18) (18) (19) (19) (19) (19) (20) (20)
Amortization 0 0 0 0 0 0 0 0 0 0
Total (204) (266) (389) (482) (575) (575) (637) (637) (638) (638)
Cash-in-hand 66 71 79 85 91 90 94 93 92 91

6
|::
FUNDS FLOW STATEMENT (Financing Plan) 1,000 US$

Construction 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
A. CASH INFLOW
1. Financial resources 504 17 6 11 8 8 0 0 0 0 0
2. Sales revenue 269 358 538 672 806 806 896 896 896 896
TOTAL 504 286 364 549 680 815 806 896 896 896 896
B. CASH OUTFLOW
1. Total assets (290) (123) (22) (44) (32) (46) 0 (21) (999) (2,014) (999)
2. Operating costs (242) (309) (441) (541) (641) (641) (707) (707) (707) (707)
3. Dept services
Repayment 0 (12) (12) (12) (12) (12) (12) (12) (12) (12)
Interest (10) (10) (9) (8) (7) (6) (5) (4) (3) (2)
4. Corporate tax 0 0 0 0 0 0 0 0 0 0
5. Sales tax 0 0 0 0 0 0 0 0 0 0
5. Dividends 0 0 0 0 0 0 0 0 0 0
TOTAL (290) (374) (352) (506) (593) (705) (658) (745) (1,722) (2,736) (1,720)
Surplus(+)/Deficit(-) 214 (89) 12 43 87 110 148 151 (826) (1,840) (824)
Cumulative Cash Balance 214 125 137 180 268 378 526 676 (149) (1,989) (2,813)
Loan balance (120) (120) (108) (96) (84) (72) (60) (48) (36) (24) (12)

7
PROJECTED PROFIT AND LOSS ACCOUNT 1,000 US$

100% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Revenue 896 269 358 538 672 806 806 896 896 896 896
Operating costs 707 242 309 441 541 641 641 707 707 707 707
OPERATING PROFIT 189 27 50 96 131 166 166 189 189 189 189
Interest 10 10 9 8 7 6 5 4 3 2
Depreciation 18 18 18 18 19 19 19 19 20 20
Amortization 0 0 0 0 0 0 0 0 0 0
NET PROFIT BEFORE TAX (1) 22 69 105 140 141 165 166 166 167
Corporate tax 0 0 0 0 0 0 0 0 0 0 0
Sales tax 10 0 0 0 0 0 0 0 0 0 0
NET PROFIT AFTER TAX (1) 22 69 105 140 141 165 166 166 167
Dividends on equity 0 0 0 0 0 0 0 0 0 0
Undistributed profit (1) 22 69 105 140 141 165 166 166 167
Accumulated undistributed profit (1) 20 90 194 334 475 640 806 973 1,140

8
|::
DEPRECIATION SCHEDULE 1,000 US$

% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Building & Civil Works
Principal value 110 105 99 94 88 83 77 72 66 61
Replacement 0 0 0 0 0 0 0 0 0 0
Depreciation 5.0 6 6 6 6 6 6 6 6 6 6
Balance 105 99 94 88 83 77 72 66 61 55
Plant & Equipment
Principal value 100 90 80 70 60 50 40 30 1,020 3,010
Replacement 0 0 0 0 0 0 0 1,000 2,000 1,000
Depreciation 10.0 10 10 10 10 10 10 10 10 10 10
Balance 90 80 70 60 50 40 30 1,020 3,010 4,000
Furniture
Principal value 10 10 9 9 8 8 8 7 7 6
Replacement 0 0 0 0 0 0 0 0 0
Depreciation 4.0 0 0 0 0 0 0 0 0 0 0
Balance 10 9 9 8 8 8 7 7 6 6
Motor vehicles
Principal value 10 8 5 3 0 10 7 3 0 11
Replacement 0 0 0 0 13 0 0 0 15 0
Depreciation 25.0 3 3 3 3 3 3 3 3 4 4
Balance 8 5 3 0 10 7 3 0 11 8
DEPRECIATION 18 18 18 18 19 19 19 19 20 20
Cumulated depreciation 18 37 55 74 93 112 131 150 170 190

9
|::
PROJECTED BALANCE SHEET AT 31st December 1,000 US$

Construction 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
A. ASSETS
1. Current Assets
a) Cash balance 214 125 137 180 268 378 526 676 (149) (1,989) (2,813)
b) Current assets 123 144 188 221 253 252 273 272 271 270
2. Fixed assets 290 272 253 235 216 210 191 172 1,153 3,148 4,129
Total assets 504 519 535 603 704 841 968 1,121 1,275 1,430 1,585
B. LIABILITIES
1. Current liabilities 17 22 34 42 50 50 56 56 56 56
2. Loan 120 120 108 96 84 72 60 48 36 24 12
3. Equity 384 384 384 384 384 384 384 384 384 384 384
4. Reserves (1) 20 90 194 334 475 640 806 973 1,140
Total liabilities 504 519 535 603 704 841 970 1,128 1,282 1,437 1,592
CASH-FLOW TABLE FOR CALCULATION OF PRESENT VALUE 1,000 US$

Construction 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Salvage value
A. CASH INFLOW
Revenue 269 358 538 672 806 806 896 896 896 896
B. CASH OUTFLOW
1. Total investments (504) 0 0 0 0 (13) 0 0 (1,000) (2,015) (1,000) 4,343
2. Operating costs (242) (309) (441) (541) (641) (641) (707) (707) (707) (707)
3. Corporate tax 0 0 0 0 0 0 0 0 0 0
4. Sales tax 5 0 0 0 0 0 0 0 0 0
Total outflow (504) (237) (309) (441) (541) (654) (641) (707) (1,707) (2,722) (1,707) 4,343
C. NET CASH FLOW (504) 32 50 96 131 153 166 189 (811) (1,826) (811) 4,343
D. PRESENT VALUE (504) 27 37 62 72 73 68 67 (247) (480) (184) 984
NET PRESENT VALUE (25)

10
|::
INTERNAL RATE OF RETURN 1,000 US$
% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total
Net cash flow 32 50 96 131 153 166 189 -811 -1826 -811
Present value 17.0 27 36 60 70 70 65 63 (231) (444) (169) (957)
20.0 26 35 56 63 61 56 53 (189) (354) (131) (828)
25.0 25 32 49 54 50 43 40 (136) (245) (87) (679)
0.0 0 0 0 0 0 0 0 0 0 0 0
0.0 0 0 0 0 0 0 0 0 0 0 0
FINANCIAL INDICATORS
Unit 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Debt/Equity ratio 0.31 0.28 0.25 0.22 0.19 0.16 0.12 0.09 0.06 0.03
Current ratio 7.30 6.44 5.60 5.25 5.02 4.99 4.87 4.86 4.84 4.82
Quick ratio 5.02 4.19 3.38 3.04 2.82 2.79 2.68 2.66 2.64 2.62
Debt service coverage 1.77 1.86 4.24 6.27 8.50 9.01 10.96 11.69 12.51 13.44
Gross profit margin % (0.52) 6.08 12.87 15.61 17.35 17.47 18.42 18.53 18.58 18.69
Net profit margin % (0.52) 6.08 12.87 15.61 17.35 17.47 18.42 18.53 18.58 18.69
Internal rate of return 15.39 15.39 15.39 15.39 15.39 15.39 15.39 15.39 15.39 15.39
Break-even point % 105.26 80.32 40.58 29.07 22.84 22.26 19.02 18.51 18.27 17.76
Net present value 1000 US$ (25.09) (25.09) (25.09) (25.09) (25.09) (25.09) (25.09) (25.09) (25.09) (25.09)
Net value added 1000 US$ 20.20 47.40 101.80 142.60 182.65 182.65 209.85 209.85 209.35 209.35
Gross value added 1000 US$ 38.60 65.80 120.20 161.00 201.80 201.80 229.00 229.00 229.00 229.00
Payback period 1000 US$ 487.00 446.80 359.24 235.92 76.84 (83.20) (267.40) (452.56) (638.68) (825.76)

BREAK-EVEN ANALYSIS
1,400
1,200
1,000
Costs and Revenues [1000 US$]
800
Fixed costs
Variable costs
Sales revenue
600
400
200
0
0 20 40 60 80 100 120 140
Capacity utilization [%]

i
Annex 4
Summary of Calculations for Various CFC Costs
Labour Costs
Salary Labour cost

Employee No.
Sewing/skiving etc 12 12 000 144 000 1 728 000
Hand cutters 2 14 000 28 000 336 000
Watchmen 4 5 000 20 000 240 000
Driver 1 10 000 10 000 120 000
Cleaners 2 2 500 5 000 60 000
Total 27 305 000 3 660 000
US$ 2,226 US$ 26,715
Social Costs
Pensions scheme entitled “Nigeria Social Insurance Trust Fund” receives contribution from
each employee’s salary calculated at 10% of the salary. Employer pays 6.5% and Employee
pays 3.5 % not exceeding 4,400 Naira/month.
3.5% of 3,660,00 Naira = 128,100 Naira = US$ 935.
Insurances
Fire 0.3% of the value.
Burglary 0.5% of value (not including building).
Workmen compensation scheme 1.5% of salaries.
Equipment value US$ 100,000 = 13,700,000 Naira
Fire insurance US$ 300 = 41,000 Naira
Burglary insurance US$ 500 =68,500 Naira
Workmen compensation: 1.5% of 3,660,000 Naira (US$ 26,715) = 54,900 Naira (US$
400).
Utilities
Electricity
Total installed 1st phase 12 kW. Assuming 70% utilization factor 8.4 kW * 8 hours = 67.2
kWh/day * 22 days = 1,478.4 kWh/month * 12 months = 17,740 kWh/year, round up for
consumption of office equipment etc. 20,000 kWh/year total consumption. Industrial rate:
8.2 Naira/kWh + kVA charge 230Naira/kVA. Charge for meter 63,000 Naira, Maintenance
cost 1,400 Naira/month, service charge 250 Naira/month. Logistics charge 10,000 Naira.
ii
Industrial rate 8.2 Naira * 20,000 164,000 Naira

KVA charge 230 Naira/month 276,000 Naira
Charge for meter 63,000 Naira
Maintenance 1,400 Naira/month 16,800 Naira
Service Charge 250 Naira/month 3,000 Naira
Logistics 10,000 Naira
TOTAL cost per annum 532,800 Naira (US$
3,889)
According to information obtained from an electric engineer the transformer required should
be 100 kVA. (100 kVA is the smallest transformer available for industrial purposes in
Nigeria.) The price for the transformer is 550,000 Naira and the installation of the same will
be about 350,000 Naira. It was mentioned that if it is a government project the transformer
would be delivered and installed free of charge by the NIGERIA ELECTRICITY BOARD,
however this would be a time consuming exercise.
Fuel
Naira/year (US$ 4,663). The cost for purchasing and installing appropriate generator is
estimated at 1.5 million Naira = US$ 11,000 (considered as counterpart contribution).
Water
etc will cost about 500,000 Naira (US$ 3,650). This is counterpart contribution.
Repair and Maintenance
Estimated at 2.5 % of the total equipment, say 342,500 Naira (US$ 2,500)
Overheads
Factory Overheads
Instructors 3 20,000 Naira/month/instructor 720,000
Technician 1 18,000 Naira/month 216,000
US$ 11,547
iii
Rent/lease 91,667
1,100,000
Manager 25,000
300,000
Accountant 20,000
240,000
Office girl/secretary 10,000
120,000
P&T expenses 10,000
120,000
Office supplies 1,000
12,000
Taxes ??? ???
TOTAL 1,892,000
US$ 13,811
No costs are involved for sales or distribution in accordance with the Steering Committee of
CFC. However, an estimated sum of about 300,000 Naira should be included in the study to
cover costs that will be evident when starting operations.
Counterpart Investment Needs
Alternative I: Faulkes Road # 250

Building 33,000,000
Bore hole 1.500,000
Generator 500,000
TOTAL 34,500,000
US$ 262,775
Alternative II: State Government covers building costs, local Government provides the plot
Building (new construction) 12,000,000
Bore hole available at site
Generator 500,000
El installation/water installation
Painting aircao etc. 1,500,000
TOTAL 15,000,000
US$ 109,489
Note: Additional local investment to be added to counterpart contribution
Telephone install 30,000 Naira
Computer, printer etc. 150,000 Naira
Internet connection 40,000 Naira
TOTAL 220,000 Naira
US$ 1,606
Question: Is it worth to make investments for refurbishing of building including generator, electric installation, bore
hole etc before the building lease, and “fixed price” purchase contract for later date has been signed and sealed?
i
Annex 5
Production Program
Material cost Sales price

Product Unit Quantity
Naira/Unit
Prototypes and samples pcs. 200 5.00 10.00
Ladies Sandals pairs 12,500 4.00 8.00
Men’s Sandals pairs 6,000 5.00 10.00
Bags and Leather Gods pcs. 2,500 5.00 10.00
Machine rental h 500 5.00 10.00
Material Sales units 1,000 10.00 10.00
Training courses 4 100.00 250.00
Insoles pairs 220,000 0.15 0.20
Soles pairs 220,000 0.80 1.00
Prototypes and Samples
This represents complete packages of shoe and leather goods engineering works for new
type of products. A complete package includes half pair sample shoe or leather product with
material specification, cost calculation, set of hand cutting and marking patterns.
Ladies Sandal
A small production of sandals, 50 pairs per day (at full production) will be included in the CFC
production program. The sandal has to be a special design that can be clearly identified as a CFC
product of excellent quality standard. The material price is calculated at 548 Naira/pair (US$
4.00/pair) and sales income 1,096 Naira/pair. See suggested design drawings.
Men’s Sandal
Small-scale men’s sandal production, 25 pairs/day in full capacity, is planned to support the
self-sustainability of the CFC. Here again the products need a special design and directly
identifiable with the CFC. Serious efforts are needed to design these products to a high standard.
The material price is calculated to be US$ 5.00/pair and the sales income US$ 10/pair.
Bags and Leather Goods
Specially designed bags and leather goods will be included to the CFC production program.
It is suggested by the writer that special designs with native textiles such as screen prints etc. will be
incorporated in such articles. The production is planned to be very small only a dozen items per
ii
day. However, these bags and leather goods are not only as training material but are expected also
to contribute to the sustainability.
Machine Rentals
One of the most needed services of the centre, judged from the interviews with the stake-
holders, will be the common facility equipment. When the centre is in full swing (100% capacity) it
is calculated that about 500 machinery rentals per year (average 4 hours each) will take place and be
charged at US$ 2.50/hour. An exact price list and machine-hiring schedule will be worked out at
the beginning of the operations.
Material Sales
One of the activities of the CFC as requested by the stakeholders is the sale and distribution
of materials. This is expected by the stakeholders to be an important activity in order to cut out the
many middlemen and thereby obtaining competitive prices for the materials. It should be noted that
the Cluster has a very large raw material market selling every thing for the shoe and leather goods
production, including leathers (imported stock lots and local leather from the Northern Nigeria,
mainly Kano), all type of coated fabrics, stiffeners, adhesives, sewing threads, nails, eyelets, rivets
etc.
It will not be simple for the CFC to enter into this market and a careful market survey and
study should be made about the material sales by CFC before starting the activity. Please see Annex
7 for listing of basic materials presently available on the market. Some small cuts are also available
of these materials in the UNIDO LEATHER UNIT for the consultant that may be selected to carry an
in-depth survey.
The Version 1 of the pre-feasibility study has included this activity in the calculations. The
total sales were taken at 1,000 sales per year at cost and value of US$ 10.00 each. In other words
this activity was considered as a “non profit”, service bringing no financial contribution towards the
CFC sustainability.
Training Courses
It has been calculated that the centre should run 4 training courses per year. Each course
will have 12 participants paying a fee of US$ 20 each or providing an income of $ 240/course to the
CFC. On the other hand to run the courses will cost about the same so there is no contribution
towards self-sustainability from these courses.
Soles and Insoles
The CFC is well equipped to produce insoles and soles by cutting sheet materials and
rounding, skiving, trimming, molding and assembling them to readily usable units. The pre-
feasibility study has calculated that a production of about 1,000 pairs/day will take place in full
production. Only a very conservative margin has been calculated as contribution for the centre. For
insoles US$ 0.05/pair and for soles US$ 0.20/pair.
i
Annex 6
UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION
FEDERAL MINISTRY OF INDUSTRY
NIGERIAN ASSOCIATION OF SMALL AND MEDIUM LEATHER/ALLIED PRODUCTS INDUSTRIALISTS
Assistance to the Leather Industry Cluster in Aba

(SF/NIR/01/D01)
DRAFT TERMS OF REFERENCE FOR THE

COMMON FACILITY CENTRE (CFC) STEERING COMMITTEE
A. Objective for establishing the Steering Committee
To stimulate further co-ordination and linkages between key players and to build local
capacities for self-help activities by involving key stakeholders in the leather industry cluster in the
establishment and management of the common facility centre.
B. Composition of the CFC Steering Committee
Permanent members from the following associations/zones will compose the CFC Steering
Committee.
• NASMSLAPI (referred here as Leather and Allied)
• A.M.E Bags and Leatherette
• A.T.E. Bags and Leatherette
• United Shoe Industrial Imo Avenue
• Powerline Zone
• Aba North Shoe Plaza
• Umehilegbu (Bakassi) Industrial Shoe Market
• Omenma Worker and Traders
• UNIDO (non-voting member)
• Federal Ministry of Industry (observer)
C. Organisational Arrangements
1. Leather and Allied will chair the Steering Committee.

2. All Steering Committee members in consultation with their respective Executive Board will
designate one specific representative and an alternate, to attend the Steering Committee
meetings in order to guarantee continuity and consistency in the functioning of the
committee. The associations/zones shall submit in writing to the Secretary of the
Committee their designated representative and alternate members to the committee.
3. The Steering Committee can co-opt any other organisations or persons to attend their
meetings when necessary.
4. The Steering Committee may create sub-committees, as they deem necessary.
ii
5. While the CFC is being established, (approximately six months), the CFC UNIDO Project
Officer shall act as the secretary of the Steering Committee. He will provide the chair the
proposed agenda and date of each meeting. Upon approval of the agenda and date, the
Project Officer will send out invitations to the members in behalf of the chair. As Secretary,
the Project Officer is responsible for organising the meetings, taking minutes and
distributing the minutes.
6. After 6 months or earlier, the members will elect a secretary of the committee among
themselves. He/she will be responsible for organising/convening the meetings, taking
minutes and distributing the minutes. If a UNIDO Project Officer is on board, he/she will
provide assistance to the secretary of the committee in carrying out his/her duties.
7. The UNIDO Country Representative, UNIDO national and international experts, and
representatives from the Federal Ministry of Industry may attend all the meetings of the
Steering Committee as observers and technical resource persons.
8. The Steering Committee shall meet at least once every month. However, the Chair in co-
ordination with the UNIDO Project Officer may call for special meetings when found
necessary.
9. Extra-ordinary meetings may also be called, upon the verbal request of two members of the
Steering Committee during an official meeting; or in writing if request is not made during an
official meeting.
10. The quorum for the Steering Committee is five members (excluding the non-voting
members).
D. Duties
The CFC Steering Committee shall provide the overall policy guidance in the establishment
and management of the Common Facility Centre. Specifically, the Committee will carry out the
following duties:
CFC Organizational Phase (first 6 months)

a. Review recommendations provided by UNIDO expert on machinery to be purchased
for the CFC and endorse for approval and purchase by UNIDO Vienna.
b. Identify suitable site for the CFC, decide on the site in consultation with UNIDO
Expert, mobilise local resources for the costs related to the acquisition or leasing of
the identified site as well as required refurbishing of the premises/building and for
other required expenditures.
c. Supervise the refurbishing of the rented/acquired premises in accordance with the
agreed layout, specifications for utilities and lighting.
d. Establish posts for the day-to-day operations of the CFC; set remuneration package
and hire people for the established posts taking into consideration the actual needs of
the CFC and financial implications to CFC.
e. Undertake all required activities that need to be done to fully establish the CFC.
f. Review, provide recommendations and approve the CFC Administrative and
Operational Guideline. The UNIDO Project Officer will formulate the working draft
of this document within the first two months of his/her appointment. The document
will contain the CFC Policies on Management and Security of the Assets, Financial
and Accounting System; Office Rules, Staffing and Remuneration Packages; etc.
The Administrative and Operational Guideline will be updated to reflect changes
made within the CFC. The Steering Committee will give particular attention to the
iii
sustainability; cost efficiency, transparency and accountability mechanisms in the

day-to-day operations of the CFC.
CFC Operational Phase

a. Develop and agree on overall strategy for the sustainable operations of the CFC.
b. Determine other core services to be offered by the CFC to the leather cluster,
compute costs in delivering the services and set the fees for the services considering
affordability to the entrepreneurs, project sustainability principles and mission and/or
objectives of the CFC.
c. Provide overall policy guidance and undertake any administrative measures required
in the management of the CFC during and beyond the period supported by UNIDO.
d. Monitor and determine the progress of the technical assistance activities provided by
UNIDO in the establishment and management of the CFC.
e. Monitor and determine the progress of the CFC operations in terms of impact of the
services to the leather cluster; number of entrepreneurs benefiting from the services
offered; appropriateness of the facilities and services being offered; sustainability of
operations; financial performance of the CFC, etc. Take necessary actions as
required.
f. Evaluate the performance of the CFC staff.
g. Disseminate the services offered by the CFC to the entrepreneurs within the leather
cluster.
h. Identify and tap resources that can strengthen the functioning of the CFC.
i. Provide periodic reports to the association/zone members on the performance of the
CFC.
j. Review reports prepared by UNIDO national and international experts and make
recommendations when necessary.
k. Provide periodic report to UNIDO and the FEDERAL MINISTRY OF INDUSTRY on the
performance of the CFC.
l. Propose during the Tripartite Review Meetings, any technical amendments to the
project document or project activities when necessary.
i
Annex 7
Materials available for footwear and leather goods making
in Aba shoe community
(as per field survey made on 15 January 2003)
Shoe Material
Type of material Description Supplier Price, Naira
Upper leather Local bovine leather 12-15 Kano 115-160/sq.ft
sq.ft/side
Local goat skins 3-5 sq.ft/pc Kano 50-60/sq.ft
Imported side leather Italian origin 150-180/sq.ft
(stock-lots, various colors)
Imported goat skin (stock-lots, Italian origin 130-140/sq.ft
various colors)
Lining leather Local, various colors Kano 30-40 N/sq.ft
PVC cloth for upper Italy 500/yd
Leatherette Lining Italy 250/yd
Leatherette PVC for uppers Italy 300/yd
Leatherette Lining quality Germany 180/yd
Insole board BONTEX fiber board Germany 300/sheet
Shank board Too light for good quality Germany 259/sheet
Counters pre- molded Cardboard Local, Abia 10/pair
Toe-puff thermoplastic Germany 250/sheet
Welt Rolls of 54 yards Italy 1,500/roll
Sewing thread Nylon 3,000 m/cone, various Italy/Germany 150/cone
colors
Unit soles, Men Local, rubber Benin 120/pair
Unit soles, Men Foreign, rubber Italy 220/pair
Soling material Foreign (Amazon) Italy 800/sheet
Soling material Nora Foreign Italy 950/sheet
beige
Micro-cell Soling Local Lagos 220/sheet
Eyelets Imported Italy 100/gross
Rivets Imported Italy 50/gross
Shanks Local Abis, Aba 50/dozen
ii
Leather Goods Materials

Type of material Description Supplier Price, Naira
Satin imitation for bags Imported, various colors Taiwan 220/yard
Tafita for bags Imported, various colors Taiwan 150/yard
Piping/binding for bags Various colors Taiwan 500/roll
Belts for travel bags Nylon belt ½” Taiwan 10/yard
Zippers Taiwan 150/dozen for 27”
Flower pattern cloth for Taiwan 330/yard
bags
Hooks and accessories for Various types metal & plastic Taiwan 10/dozen
bags
Decoration stamps/trade Local Aba 15/dozen
marks
Stiffening carton Carton, local Abis, Aba 20/big sheet
for bags
Bottom studs With nail, local Abis, Aba 50/gross
Magic gum Carrboro band Taiwan 400/roll
Socket fastener Plastic, large size Taiwan 14/set
i
Annex 8
Proposed Equipment for the CFC
Item Description Estimated

cost, US$
Ladies sandal lasts, 3 styles 37/1, 38/2, 39/3, 40/2, 41/2 = 10 * 3 = 30 600
pairs @ US$ 20 each
Men’s casual last, 1 style 40/1, 41/1, 42/3, 43/2, 44/2, 45/1= 10 @ 200
US$ 20 each
Graded patterns for ladies styles 3 lasts * 3 styles = 9 sets @ US$ 500/sset 4,500
(including insoles, shank board, shank
cover, insole cover)
Graded patterns for men’s styles 1 last * 3 styles = 3 sets @ US$ 500/set 1,500
(including insole, shank board, inner sock)
32mm upper cutting dies, ladies 9 styles @ average of US$ 150/set * 5 3,750
sizes = US$ 750
32 mm upper cutting dies, men’s 3 styles @ US$ 300/set * 6 sizes 1,800
32 mm bottom cutting dies, ladies 4 pieces * 5 sizes =20 @ US$ 20 each 400
32 mm bottom cutting 3 pieces * 6 sizes = 18 @ US$ 20 each 360
dies men’s
Patterns for 3 bags 3 sets @ US$ 100 300
32 mm cutting dies for bags 3 sets @ US$ 100 300
Travelling head press 80 - 100 t power 10,000
Bottom skiving machine Shank, insole boards 2,500
Cementing machine Bottom stock 2,500
Insole moulding machine Together with 4 mould sets 8,000
Laminating press Insole covers etc 3,500
Strip cutting machine Uppers, binding, bag stripping 2,000
32 mm castor shape cutting dies 3 * US$ 50 150
sheet soling materials, ladies
32 mm castor shape cutting dies 4 * US$ 50 200
sheet soling materials, men’s
Sole rounding machine Together with various cutters and 12,000
templates
2 Post bed single needle sewing PFAFF @ US$ 2,500 (with roller foot) 5,000
machines with 90, 100, 110 needles
2 Flat bed single needle sewing PFAFF @ US$ 1,500 (with roller foot) 3,000
machines with 90, 100, 110 needles
Heavy duty post bed for luggage & ADLER with interchangeable feet and 8,000
leather goods corresponding needles
Hand eyeleting/riveting machine With clenching dies 1,000
Embossing and stamping machine With initial supply of gold foil 2,500
with foil
2 Hand cutting tables With cutting pads 1,000
ii
Item Description Estimated

cost, US$
3 lasting jacks 1,000
Sole press Combination for flats and heels 5,000
Cement activating machine Automatic (without compressed air) 1,500
Heel nailing machine Hand loaded, with buttress heel nails, 4,000
various lengths
Edge finishing Edge trimming, scouring, finishing, 5,000
combination machine
Various hand tools Lasting pliers, shoemakers knives, hand 1,000
clicking knives, punches, glue pots,
shoemakers hammer, tack extractors, awls
500 sheets 2.5 mm shank board @ US$ 7/sheet 3,500
TOTAL 96,060
Note: all machines to be specified with 3 phase motors, 400 Volts.
Prioritised list of machines and equipment
MACHINERY
Item Priority
Travelling head clicking press 1
Sole press 2
Cement activating 3
Edge finishing 4
2 post bed single needle sewing 5
2 flat bed single needle sewing 6
Insole moulding 7
Bottom skiving 7=
500 sheets 2.5 mm shank board 7=
Sole rounding machine 8
32 mm castor shape cutting dies sheet soling material, ladies 8=
32 mm castor shape cutting dies sheet soling material, men’s 8=
Heavy duty post bed for luggage & leather goods 9
Heel nailing 10
Various hand tools 11
2 hand cutting tables 11=
3 lasting jacks 11=
Cementing machine 12
Laminating press 13
Strip cutting 14
Hand eyeleting/riveting 15
Embossing & stamping with foil 16
iii
EQUIPMENT
Item Priority
Ladies sandal lasts 3 styles 1
Graded patterns for ladies styles 1=
32 mm upper cutting dies ladies 1=
32 mm bottom cutting dies ladies 1=
Patterns for 3 bags 2
32 mm cutting dies for bags 2=
Men’s casual last 1 style 3
Graded patterns for men’s style 3=
32 mm upper cutting dies men’s 3=
32 mm bottom cutting dies men’s 3=
i
Annex 9
The shoe and leather goods cluster in Aba, Nigeria

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UNITED RESTRICTED

Prepared for the Government of Nigeria by

Based on the mission of

Appendix: Pre-feasibility study

Structure of the Aba Shoe Cluster

Average Total number of

Workshops with up to 15 employees - 10% of the total

1/3 of the workforce is said to be none salaried apprentices.

AME and ATE Zones

Umehilegbu Industrial Shoe Market (Bakassi)

Information Collected for CFC

Summary of Calculations for Various CFC Costs

Repair and maintenance

Counterpart investment needs

Conclusions and Recommendations

Te above recommendations is fully in line with the Steering Committee’s views.

UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION

Post title Shoe Industry Expert

Duration Two weeks (15 calendar days)

Date required January 2003

Counterparts FEDERAL MINISTRY OF INDUSTRY (FMI), NIGERIAN ASSOCIATION OF SMALL

Duties The consultant will specifically be expected to:

Qualification Footwear/leather products technologist with broad experience in institution

The shoes are quite modern in styling and quality is

Working conditions and

Project Background and Basic Idea

UNIDO projects and involvement

Market Analysis and Marketing Concept

Raw Materials and Supplies

Location, Site and Environment

Engineering and Technology

Production Program, Plant capacity, and Product Mix

Technology and Technical Choices; Selection of Equipment and Tools

Ecological Considerations and Environmental Impact Assessment

Detailed Plant Layout

Maintenance and Replacement Requirements

Repair and Maintenance

Organization and overhead costs

The proposed management structure of the CFC in Aba is as follows:

No problems are expected to identify well-qualified personnel to be employed by the CFC.

Implementation Planning and Budgeting

Financial Analysis and Investment Appraisal

Building and machine layout

Building and machine layout

Responsible January February March April May June July

Project: CFC Aba Annex 3.1

TOTAL INVESTMENT COSTS 1,000 US$

CFC Aba, Variant 1 UNIDO

PRODUCTION PROGRAMME AND MATERIALS 1,000 US$

CFC Aba, Variant 1 UNIDO

CFC Aba, Variant 1 UNIDO

PROJECTED PRODUCTION ACCOUNT 1,000 US$

CFC Aba, Variant 1 UNIDO

WORKING CAPITAL 1,000 US$

CASH IN HAND 1,000 US$

CFC Aba, Variant 1 UNIDO

FUNDS FLOW STATEMENT (Financing Plan) 1,000 US$

CFC Aba, Variant 1 UNIDO

PROJECTED PROFIT AND LOSS ACCOUNT 1,000 US$

CFC Aba, Variant 1 UNIDO

DEPRECIATION SCHEDULE 1,000 US$

CFC Aba, Variant 1 UNIDO

PROJECTED BALANCE SHEET AT 31st December 1,000 US$