Economic Analysis of Forest-Based Small Scale Enterprises (FB-SSEs) in Herbal Soap Processing in South West, Nigeria

Abstract

This study investigated the economic effects of forest-based small-scale enterprises (FB-SSEs) for economic sustainability in southwest Nigeria. With focus on forest-based processing. Multistage sampling technique was adopted to purposively select 502 entrepreneurs from the six states of Southwest Nigeria. A pre-tested and open-ended questionnaire on socio-economic characteristics; Non-timber forest products identification; agricultural waste products and value-addition products (VAPs) were administered and data collected were analysed using descriptive and inferential statistics. The results revealed that 51.80% of the respondents were in the productive age group (31-50 years), majority (87.60%) were females, while 84.00% were illiterate the results revealed that twenty-seven tree species from 18 families and agricultural-wastes were used as fuel-wood and/or as ashes production for lye and soap making. Majority (51.80%) of the respondents were in the productive age group (31-50 years), 87.60% were females, and 84.00% of respondents were illiterate with indigenous knowledge of forest based products. All respondents sourced credit from informal sector. Costs and returns to investor were ₦58,571.90 and ₦516,147.00 respectively while rate of return on investment (rori) was 781.22%. Net present value (NPV) of ₦776,774.81 and benefit/cost (b/c) ratio (8.30) at discount factor of 10% confirmed that investment in the enterprise was profitable and economically viable. Economic inefficiency factors like educational level and membership of cooperative group were highly significant (p<0.01). Conclusively, forest-based products have high economic and health potentials but with imperfect markets.