The signs of a transformed shea industry abound: Seven years ago, a five-acre patch of land just north of Tamale in northern Ghana was just a barren piece of land, pasture for some goats. Today, it’s a hub of activity – 150 women report to work every day at Sekaf Ghana Limited’s Shea Butter Village.

 

 

Not far away, a multi-million dollar shea processing factory is getting ready to start industrial scale processing of sheanuts – 40,000 tons annually. Once operational it will join the already existing five active factories operating in Ghana.  

 

Although of varying sizes, these plants have a combined capacity of 200,000 tons of sheanuts – three to four times the nation’s annual exportable harvest – establishing Ghana as West Africa’s lead shea processor in under a decade and requiring reliable supplies to be sourced from across the sub-region. That, in turn, increases the urgency to reduce transport costs, increase efficiency and build stronger commercial relationships.

 

But progress in other countries shows that Ghana is hardly alone seeking competitive advantage in shea. New plants or renovations of existing ones are planned in Burkina Faso, Mali and Nigeria.

 

Meanwhile, in Benin, August 31 to Sept. 2, more than 150 stakeholders convened for the first national shea conference in the country, electing a national and representative committee that will also be helping to organize “Shea 2012: Shared Value,” the annual two-day industry conference set for late April  2012.

 

Across the region, companies are growing, new companies are starting up and the Global Shea Alliance is adding new members while international demand for shea continues to rise – for natural cosmetics but also in the food industry, particularly as additional research confirms the health benefits of shea.

 

“Collaboration between all stakeholders - private industry small or big, community level support for the women, market players, NGOs and others - is part of what the Global Shea Alliance hopes will create a strong and vibrant shea industry for the benefit of all stakeholders,” said Eugenia Akuete, CEO and Founder of Naasakle Ltd. and president of the Alliance. Her company, which started processing 1,000 pounds of shea nuts, now produces more than three tons of shea butter per month.

 

“The shea industry today is vigorous and robust,” said Santosh Pillai, Managing Director/West Africa at Wilmar International and a member of the Global Shea Alliance Executive Committee. The company today processes tens of thousands of tons of nuts annually in Tema, Ghana, home to the country’s largest port. “We expect this positive growth to continue and see the industry delivering returns to stakeholders at all levels, which is key to its future.”

 

In recent interviews across the industry, stakeholders said the USAID Trade Hub’s work in the industry over the past seven years has contributed significantly to the sector’s growth. The launch of the Global Shea Alliance in April 2011 culminated years of work led by Dr. Peter Lovett, the Trade Hub’s shea sector advisor, who has worked in the industry for almost 20 years.

 

“The industry today has grown significantly over the last five years,” Lovett said. “Industrial-scale processing capacity was virtually non-existent in Africa 10 years ago. Raw sheanuts were shipped out – and all of the jobs and revenue, from shea butter extraction, occurred elsewhere.”

 

A key to this transformation was information exchange and networking, fostered by Trade Hub-assisted industry trainings and conferences. The Trade Hub’s shea supply chain studies published in early 2005 were also important, stakeholders said.

 

Within the coming years, the capability to process the entire harvest in Africa could be attained, and more and more of it already is. As the demand for shea increases worldwide, the opportunities for this industry to improve livelihoods across the region are being realized.

 

Shea nut prices have steadily climbed, Lovett pointed out. A review of data obtained in Wechiau, Ghana, showed that women collectors saw the price of the sheanuts they collected increase by 50% from 2006 to 2011. An 80 kg bag of sheanuts fetched about US$20 in 2006; in 2011, the price is about US$30. 

 

That means more income for the approximately four million women who collect sheanuts in West Africa for export and for people in the communities where they collect the nuts. A USAID Trade Hub multiplier effect study in 2010 showed that for every $1,000 of sheanuts sold at the farmgate level, US$1,580 in additional household income is generated in the local economy. 

 

To be sure, there is still plenty of work to do to improve the sector’s competitiveness. Transport costs are a significant constraint, for example. Eliminating corruption that occurs at checkpoints along West Africa’s trade corridors could mean an 8-10% increase in the price of sheanuts at the village level, economists have pointed out.

 

In July and August, USAID Trade Hub Technical Assistance visits to factories in Benin and Ghana, Burkina Faso and Mali provided further insight into the state of the industry. Stakeholders expressed broad support for the Global Shea Alliance and optimism on the news that the Alliance has discussed collaboration with ECOWAS.

 

“The Global Shea Alliance facilitates private sector development and shows how it can be done in a successful fashion,” said Roger Brou, Business & Finance Director at the USAID Trade Hub. “Working with ECOWAS is a win-win for the public and private sector, which will both benefit enormously.” 

 

When the USAID Trade Hub assessed the shea sector seven years ago, the business opportunities were apparent – but the industry was chaotic and opaque. The industry’s growth since has been dramatic – thousands of jobs have been created and millions of dollars in revenue generated. Shea companies cite USAID Trade Hub assistance – and the initial industry assessment – as fundamental to the industry’s growth.

 

“The implantation of our facility was based on what the USAID Trade Hub’s initial study showed,” said one manager who asked to remain anonymous because he is not authorized to speak for his company. “The study made the opportunity clear and now we’re successfully processing thousands of tons of shea annually.”

 

In Benin, Fludor, which plans to mechanically process 12,000 tons of sheanuts in the 2011/2012 season into shea butter for the food industry, credited the USAID Trade Hub’s study, too (see related story). Now, the Global Shea Alliance, housed at the USAID Trade Hub, is picking up the mantle.

 

“The foundation is set,” said Jacob Shinka of Meena Agro Oil Ltd, Nigeria. “All stakeholders can now see the importance of intensive collaboration. There is a lot to do, but there is a common understanding of its importance and how to do it and a cooperative spirit from years of work across the region.”

 

Nigerian stakeholders elected a new executive committee for its National Association of Shea Products of Nigeria in January, he noted, and the group will host Nigeria’s first ever National Shea Convention in November. Government has set up a technical committee to promote and develop the industry.

 

“The opportunities are clear and the time is right for shea,” Shinka said.