MM Ethiopia Soap

completed

IFC is proposing an equity investment in a proposed Joint Venture Project (“Project”) to set-up a soap manufacturing operation in Addis Ababa, Ethiopia. The Project will be led by Musim Mas Group (“MM” or the “Group”). MM is a privately owned, fully integrated palm oil corporation with operations spanning the entire palm oil value chain from upstream palm oil plantations to midstream and downstream operations such as kernel crushing, refining and manufacturing of specialty fats, biodiesel, oleochemicals, soap, palm wax and fine chemicals. MM operates globally and has its corporate headquarters in Singapore. MM markets its palm products to more than 80 countries. MM started as a soap manufacturing company and has been in the soap business for 70 years and in Ethiopia for the last 7 years. Currently MM sells multi-purpose soap to Ethiopia under the "Popular" brand name. The proposed Project initially involves importing palm oil based soap noodles produced by MM in Indonesia, value adding and packaging these soap noodles into soap bars in the proposed plant, to be sold in the Ethiopian market, and possibly to be exported to neighboring countries. The initial plan would be to tap on and expand the “Popular” soap brand’s existing market share before exploring diversification in other soap products and segments. MM is partnering with Luxury & Popular Trading Plc (LPT), a local Ethiopian general trading and distributing company. LPT has been distributing MM’s “Popular” soap in Ethiopia since MM started selling in Ethiopia 7 years ago and is well-placed as a local partner for the Project. In this partnership, MM will apply its technical knowhow, branding, supply integration and quality raw materials (soap noodles), while LPT will manage the sales and distribution network, and provide local knowledge. The project plant will be constructed at a designated 1.5 ha plot. Construction is expected to take about 18 months. Land concession rights have been issued to LPT by the Government for occupation of the land for 80 years.The plant will include ancillary facilities such as separate warehouses for raw materials (including packaging material) and packaged soap, office block and ablutions. The Project involves transforming the pre-formulated soap noodles into bar soap which will involve mixing; passing through a series of refiners; extruding into bars; cut to convenient lengths and then stamped into shape. There is minimal waste or byproducts from this process. The pressed bars are then packaged and distributed. At full production, the project will have a staff compliment of about 100 employees. The majority of these employees will be local Ethiopians.