Are you thinking of starting a charcoal business in Nigeria and you want to know the capital needed to start, how profitable and lucrative the business is in Nigeria? You just landed on the right article and on the right blog for this topic. Just in case you do not know charcoal business is a lucrative business in Nigeria and it is lucrative for so many reasons.
Asides from the fact that charcoal is been used to cook as a kind of carbon, especially in the rural areas in Nigeria it is also used for medical or health purposes. It can be used to brush the teeth to get whiter teeth, to cure poison ingested through the mouth, and to treat the skin (on skin-related issues). These are the most common uses of charcoal in Nigeria and all over the world.
However, there are more uses. Asides from these reasons charcoal business is a lucrative business because you can make millions exporting it to countries that depend on it for various reasons.
Is Charcoal Business Profitable?
Yes, the charcoal business is profitable in Nigeria especially if you are going into the business for the sake of export. You want to export charcoal to the United Kingdom, Belgium, Greece, Germany, and Spain. It is also profitable because you can sell your charcoal both to households and other businesses like restaurants, grills, and barbecue shops in Nigeria. Asides from the importance of gas the use of charcoal to cook cannot be underestimated in Nigeria.
Capital Needed to Start Charcoal Business
The capital needed to start a charcoal business in Nigeria depends on how big you want to start the business. Do you want to start the charcoal business as a wholesaler or distributor or retailer in Nigeria? This factor often determines how much capital you will need.
To start a charcoal business as a wholesaler or distributor in Nigeria you will need a starting capital of #1,000,000 and to start a charcoal business as a retailer in Nigeria you will need a starting capital of about #200,000 – #500,000. This is why the charcoal business is capital intensive and many Nigerians that are not buoyant enough financially stay away from it.
Types of Charcoal in Nigeria
These are the major types of charcoal in Nigeria. These types of charcoals are also suitable for export (international trade). There are:
1. BBQ Charcoal
2. Hardwood Charcoal
3. Shisha Charcoal
4. Briquettes Charcoal
Now, that we are done with the introduction to the charcoal business let us go into how you can start charcoal business as a newbie.
How to Start Charcoal Business in Nigeria
How to start a charcoal business in Nigeria as a wholesaler or retailer or as an exporter.
1. Write a Business Plan
Writing a charcoal business plan is very important especially if you are going into the charcoal business in Nigeria as a distributor/wholesaler or you want to be an exporter in the business. A good charcoal business plan helps your charcoal business to be on track when you finally start.
It lets you know the capital you need to start the charcoal business, the location suitable for the charcoal business in Nigeria, the equipment needed to start the charcoal business, how you make profits and estimated profits from the business, and so on.
But as a retailer, you can go into the charcoal business without necessarily writing a charcoal business plan as long as you do your Market survey and other findings of the charcoal business to a satisfactory level. A charcoal business plan will never fail you in your charcoal business as long as the business plan is written by a professional.
2. Locate Local Charcoal Markets
After writing your charcoal business plan, the next thing you should do is locate a charcoal market or dealer in charcoal around you. If you want to go into the charcoal business in Nigeria as a wholesaler you need to locate a charcoal market close to you where you can be buying your charcoal at the cheapest prices.
But if you are going into the business as a wholesaler you need to then locate a charcoal dealer in your area that can be delivering charcoal to you when you order them. And if you are capable of inter-state trade you can be buying your charcoal from any of the charcoal-producing states and transport them to where you reside or where your shop is located in Nigeria.
Like I said earlier the price of charcoal varies based on the type of charcoal, its quality, and the location you are in Nigeria. So make sure when you are buying them you are buying them at the best prices.
3. Get Capital for Your Business
Getting capital is very important in a business like the charcoal business because the charcoal business is not one of the businesses you cannot start without money. You need capital (money) to buy the charcoals; you need capital to rent a space or shop for the charcoal business, and more.
As for how you can source the money for this capital you can self-fund the business depending on how much you have, you can borrow the money from family and friends or from banks and you can look for trusted friends who can support you by investing in the business. Read our article on how to get funding for your startup in Nigeria
4. Register your Business Name
Depending on the kind of charcoal business you want to start you will need to register your business name under the corporate affairs commission (CAC). This is to make sure your charcoal business runs smoothly and legally. You should our guide on how to register your business name in Nigeria for detailed info on this.
The business name registration under CAC takes an average of 27 – 30 days and to do this registration successfully you will need your full name, your company/business address, phone number, passport, signature, and a utility document. If you cannot do this registration yourself you can get an agent to do it for you.
5. Get a Location for Charcoal Business
The location as to where you will be selling your charcoal should not be ignored in your charcoal business. It will determine whether you will make profits in your charcoal business in Nigeria or you will make losses.
For example: Setting up a charcoal business in a high-brow area of Lagos like Lekki Phase 1 will not be profitable for your charcoal business. And this is because in Lekki phase 1 about 90% of Nigerians, there can afford gas and electric cookers so they will rather go for these options than buy charcoal to cook.
So you need to carefully choose an area where people will really depend on charcoal to survive. If you are choosing an area to sell your charcoal make sure it is a middle-income or low-income area.
6. Profits in Charcoal Business
You can make good profits from the charcoal business in Nigeria whether as a distributor or retailer in the charcoal business. Just make sure you carefully choose your location and make you always buy your charcoal at good prices. If you can do these 2 perfectly you will make profits from your charcoal business. Also; because charcoal doesn’t spoil you will not lose in terms of expiration.
Why Start Charcoal Business?
There are a few reasons why you should invest in the charcoal business in Nigeria. Some of these are because.
1. It doesn’t spoil. Yes, charcoal can last for a long period of time without getting spoiled.
2. It is as important as kerosene, gas, and other cooking agents, especially in rural areas.
3. It is a business that can stand the test of time. Yes, just like the cooking Gas business (retail and wholesale), kerosene business, and firewood business charcoal business is a business that also stands the test of time.
Prices of Charcoal in Nigeria
As for the price of charcoal in Nigeria, there is no fixed price to it, what matters is the availability, whether it’s in season and transportation. For example, charcoal is cheaper in Oyo, Kwara, and Benin because it is produced in these Nigerian states. So the price is relative, however, if you want to go into the charcoal business in Nigeria as a wholesaler you can buy a 40ft container of charcoal for #410,000 – #430,000.
And if you want to go into the charcoal business in Nigeria as a retailer you can buy a bag of charcoal for #2,000 – #3,000 depending whether you are in a rural area or an urban area in Nigeria.
The charcoal business in Nigeria is lucrative if you are willing to get your hands dirty and can labour. It is a business that if done well can take your of your family’s expenses and more. And it is not a must to start with the capital I mentioned earlier. You can start with whatever you think will be enough and gradually grow the business as time goes by.
Also please note that for now that there is a ban on charcoal export in Nigeria for now due to reasons best known to the federal government. However, this does not mean you cannot make profits from the charcoal business. You can make profits from the options I mentioned earlier.