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1 st West Africa Islamic Investment Forum

1 st West Africa Islamic Investment Forum. Date: 28 th February - 1 st March, 2011/ 26 th – 27 th Rabi’ul Auwal 1432 A.H . Venue : Tahir Guest Palace Kano, Federal Republic of Nigeria.

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1 st West Africa Islamic Investment Forum

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  1. 1st West Africa Islamic Investment Forum • Date: 28th February - 1st March, 2011/ 26th – 27thRabi’ulAuwal 1432 A.H. • Venue: Tahir Guest Palace Kano, Federal Republic of Nigeria

  2. Paper Title: INVESTORS’ GOLDMINE:COMMERCIAL GUM ARABIC (ACACIA SENEGAL) PRODUCTION IN NORTHERN BORNO STATE OF NIGERIA. PRESENTED BY KANEM BORNO HUMAN DEVELOPMENT ASSOCIATION(KABHUDA). AND AT-TA’AWUN HOUSING COOPERATIVE ADDRESS: PROJECT SECRETARIAT, KABHUDA, A103 RAMAT SHOPPING COMPLEX, SIR KASHIM IBRAHIM WAY, MAIDUGURI, BORNO STATE, NIGERIA. TEL:+2348026846659,+2348034352833. EMAIL: kabhuda@yahoo.co.uk, attaawuncooperativesociety@yahoo.com

  3. PRESENTATION OUTLINE • Brief on Northern Borno state • Climatic conditions of Northern Borno state • Soil & climatic conditions favorable for Acacia Senegal • Agro forestry of Gum Arabic • Environmental friendliness of Acacia Senegal • Practical farming operations in Gum Arabic production • Practical investment issues in Gum Arabic production • Current price of Gum Arabic in the global market place • Major Gum Arabic markets in the world • Uses of Acacia Senegal gum • Industrial uses of Gum Arabic • Processing of raw Gum Arabic to add more value • The investment economics of a hypothetical 100,000 trees plantation of Gum Arabic and real benefits to the host community • Investment risks in Gum Arabic production • A win-win situation for every stake holder in Gum Arabic production

  4. BRIEF ON NORTHERN BORNO STATE • Borno state is located in the extreme northeast of Nigeria within latitude 110 to 150e and longitude 100 and 250n • Northern Borno state was the centre of the famed Kanem Borno empire which had history of over 1,000 years of emperial dynasty. • Northern Borno state has a population figure of over 2 million inhabitants according to the Nigeria’s national census of 2006 • Inhabitants of the zone are mostly farmers, pastoralists, fishermen and traders • The pre-dominant religion in the zone is Islam. • The Lake Chad basin is located in Northern Borno state.

  5. CLIMATIC CONDITIONS OF NORTHERN BORNO STATE • The climate is semi arid • The climate is divided into dry and wet seasons • The dry season lasts for about 8 months from October to May with practically no rainfall • The raining season is usually between June and September with an average annual rainfall rarely exceeding 250mm • Temperature is as high as 340c during most parts of the year, while it is relatively cool during the months of December to February due to the prevailing North/East trade winds at these periods. • The rate of evaporation is very variable being high during winter season and low during summer season. • Vegetation is Sahel and is characterized by short grasses mostly drought resistant • Since the area is located in the North Eastern Nigeria, it is covered by infertile Aeolian deposits which are recently formed immature sandy well drained shallow soils and are characterized by low organic matter content.

  6. SOIL AND CLIMATIC CONDITIONS FAVOURABLE FOR ACACIA SENEGAL • Well drained sandy soil covers most of Northern Borno state thereby making it suitable for Acacia Senegal (Gum Arabic) production • Acacia grows best in sandy soils. • It requires the mean annual rainfall of about 20-40 inches. • Acacia Senegal withstands long periods of drought and grows well on degraded soil and sand dunes. Incidentally most part of Northern Borno state have such soil characteristics

  7. AGRO FORESTRY OF GUM ARABIC • Acacia Senegal is grown in agro forestry systems specially in Nigeria and Sudan for gum as well as to restore soil fertility • Five (5) year old trees are ready for gum tapping and gum production lasts for 25 years on average • Gum Arabic tree is ready for tapping 2-4 years after establishment provided the seed is the hybrid type. • When the trees are about 27 years old, they are chopped down for fire wood and charcoal • The harvest of gum takes 15 – 21 days after the tapping or slashing of the bark. The slashing is done immediately after raining season around December/ January . • The gum balls formed are picked many times during warm periods. • Collection of gum continues every two weeks depending on the hardening state of the gum until end of April • A single tree of Gum Arabic provided best farming practices are followed is capable of producing 6kg of gum per season (year)

  8. ENVIROMENTAL FRIENDLINESS OF ACACIA SENEGAL • Acacia Senegal can be planted as a wind breaker in shelter belt • Acacia Senegal can make an artificial forest for soil erosion • Acacia Senegal can be used in desertification control • It can be used for life fencing • It is considered the best fuel wood in the Sahelian countries and a good source of charcoal.

  9. PRACTICAL FARMING OPERATIONS IN GUM ARABIC PRODUCTION • Hybrid seed procurement • Nursery site preparation • Sinking of water borehole • Land tillage preparatory to transplantation • Seedling transplantation • Tapping of gum starts 4-5 years after establishment • Tapping begins November and lasts up to February each year • Drying of harvested gum for bagging • Tapping of trees continues for the next 25 years • After 25 years the gum tree is fell down for firewood and charcoal

  10. PRACTICAL INVESTMENT ISSUES IN GUM ARABIC PRODUCTION • Investment facilitation is being done by Nigerian Investment Promotion Council (NIPC), for potential investors in Nigeria. NIPC’s Zonal Office in Maiduguri, the Borno state capital could be handy in this regard • Further facilitation may be done by the promoting agency (Kabhuda and At-taawun) • Leasing of land from the Borno state government for Gum Arabic production • Alternatively, an investor could work through farmers who have landholdings suitable for gum production and then buy their produce at the prevailing local market price. However all the production cost and knowhow is to be provided by the investor

  11. CURRENT PRICE OF GUM ARABIC IN THE GLOBAL MARKET PLACE • A metric tonne of grade one (1) Gum Arabic is selling for $2300. However grade 2 and 3 sell far less in terms of price • Grade 1 Gum Arabic is the benchmark in the global market place. • In 2007 a metric tonne of grade 1 gum was selling for $1300

  12. MAJOR GUM ARABIC MARKETS IN THE WORLD • USA • EUROPE • CHINA AND JAPAN

  13. USES OF ACACIA SENEGAL(GUM ARABIC) • Gum Arabic has been used for at least 4000 years by mankind in preparation of food, human and veterinary medicine, craft and cosmetics.

  14. INDUSTRIAL USES OF GUM ARABIC • Gum Arabic is used in the food industry as a flavour, fixature and emulsifier to prevent crystallization of product in confectionaries, as a stabilizer in frozen diary products and bakery products • In pharmaceutical industry, Gum Arabic is used as a stabilizer for emulsions, binding and coating for tablets and as an ingredient in cough drops and syrups • Gum Arabic is used in cosmetics as an adhesive for facial masks and powders and to give a smooth feel to lotion. • it is also used as a safeguarding agent for inks, sensitizer for lithographic plates • Gum Arabic is used as coating for special paper sizing. • Gum Arabic is also used in manufacture of matches and ceramics' pottery • Gum Arabic is used in the textile industry as a conditioning agent.

  15. PROCESSING OF RAW GUM ARABIC TO ADD MORE VALUE • Processing of Gum Arabic add substantial value in terms of price to the product in the global market place • One prominent business group related to the Dangote Group has a Gum Arabic processing plant at Kano, Nigeria. However the plant mainly processes its owners Gum Arabic merchandise.

  16. THE INVESTMENT ECONOMICS OF A HYPOTHETICAL 100,000 TREES PLANTATION OF GUM ARABIC AND REAL BENEFITS AND BENEFITS TO THE HOST COMMUNITY • Each transplantation ready seedling sells for N100 • 100,000 trees x N100 = N10,000,000 (about $66,000) • Cost of transplantation for each seedling is N50 • 100,000 trees x N50 = N5,000,000 (About $33,000) • After transplantation no additional cost is incurred in Gum Arabic production. • After 4 or 5 years, the 100,000 trees begin production of gum. Each tree has potential to produce 6kg of gum per year. • 100,000 x 6 kg = 600,000 kg or 6,000 metric tonnes of Gum Arabic • At the current $2300 per metric, then 6,000 metric tonnes = $13,800,000 • $13,800,000 x 23 years = $317,400,000 • So with initial investment of $96,000 the owner of the 100,000 trees plantation would be netting $ 13,800,000 per annum for the next 23 years! • All other additional investment and production costs may not exceed 25% of the initial investment cost of $96,000 • Creation of hundreds of job opportunities for youth and farmers in and around the plantation site. • Millions of Nigerian naira would be paid to the local government area as “produce tax”

  17. INVESTMENT RISKS IN GUM ARABIC PRODUCTION • Quela birds infection of Gum Arabic plantation. However, this risk can be mitigated by avoidance of millet production in and around the plantation.

  18. A win winwin outline for every stakeholder in gum Arabic production • From the foregoing presentation, Gum Arabic production creates win-win situation outcome for : • The soil upon which the plantation is established • The environment in which the plantation is located • The local economy • And of course the investor himself . • A trial will convince you all.

  19. Many thanks indeed for Listening Jazakumullahu Khairah !

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