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Finance, others limit Nigeria’s cosmetics export opportunity

Finance, others limit Nigeria’s cosmetics export opportunity

Nigeria’s cosmetic industry is lagging its African peers in profiting from the global cosmetics market as numerous challenges – especially limited export opportunities – hinder prospects, experts have said.

According to the Allied Market Research (AMR) cosmetic market report, the global cosmetics industry is projected to hit $463.5 billion by 2027 from $380.2 billion in 2019 growing at a Compound Annual Growth Rate (CAGR) of 5.3 percent which depicts the industry as a growing and profitable industry.

According to Beauty Africa – Demand For Cosmetics Grows In Africa report, the beauty industry in the Middle East and Africa was estimated at about $25 billion in 2018. Of this figure, South Africa alone represented over $4.1 billion; Nigeria and Kenya are second and third among sub-Saharan nations, with Kenya’s market totaling more than $300 million.

“Africa’s middle-class has tripled in size in the last 30 years and is driving the continent’s demand for cosmetics. As a result, cosmetics companies are racing for market share,” the report stated.

“While multinational brands dominate the market in Kenya and Uganda and lack of capacity for local manufacturing remains an issue, local entrepreneurs are outsourcing manufacturing and are using unique sales strategies.”

Nigeria’s cosmetics industry has a lot of Micro, Small and Medium Enterprises (MSMEs) whose prospects are constrained by limited access to finance, export constraints which hinder the prospects of a larger market among other challenges.

Speaking at a town hall meeting held on Tuesday at NECA House Building, Alausa, for beauty products and cosmetics manufacturers, Kola Awe, chief executive officer, XPT Group of Companies said businesses in Nigeria’s cosmetic industry face different challenges which limit their ability to compete in a global market and even scale locally.

Read also: NEPC moves to tackle export supply chain constraints

He highlighted some of these problems to include access to finance, access to market, quality, standardisation, poor packaging and labeling, capacity building, infrastructural deficiency, multiple registration and regulations, and high cost of production, among others.

“In spite of the contributions of MSMEs they were burdened by these challenges hence the cosmetics sector requires intervention through its entire process from production to packaging, sales, distribution, and export value chain,” Awe said.

The town hall meeting organised by Mince International Concept in collaboration with Nigeria Export Promotion Council (NEPC) was themed “breaking the barriers of MSMEs in the cosmetics industry for enhanced production capacity, sales, and export in AfCFTA and beyond.”

He explained that agencies such as MINCE, a trade, and advocacy group aim to prepare and equip players in the beauty and cosmetic sector for the Africa Continental Free Trade Agreement (AfCFTA) and cross-border trade which would open up opportunities for a larger market.

Awe added that the agency wants to create sustainable solutions for Nigeria’s cosmetics SMEs and promote locally produced beauty products and cosmetics globally.

Despite the challenges, Ifeoluwa Folawiyo, CEO, Tafe Organic Rack maintained that the industry in Nigeria is growing rapidly and becoming more lucrative.

“The Nigerian beauty and personal care market is experiencing rapid and dynamic growth due to increased demand for cosmetics, thereby providing lucrative opportunities for beauty businesses from around the region and beyond,” Folawiyo said.

She stated that cosmetics businesses in other countries also see a large market in Africa which Nigeria can take advantage of because they have some of the resources and willpower to make it work.

Folawiyo added that other countries in Africa such as South Africa, and Côte d’Ivoire are taking advantage of the cosmetic industry, and Nigeria needs to follow suit.

Peter Omonade, CEO, Runo integrated industries limited explained that although there are chances for profitability in the industry, this is been dampened by the challenges highlighted earlier.

“In addition to these issues, constant increase in prices of raw materials is affecting us because it is increasing our cost of production, if this is addressed we can compete favorably within and outside the country,” he said.