Business plan

The problem

Millions of ink and toner cartridges are imported into Nigeria every year for use in education, healthcare, finance and other sectors. Since no cartridges are manufactured in Nigeria, the quality of those available for purchase is determined by the foreign exchange conditions. The value of naira (NGN) against the US dollar (USD) has fallen fourfold since 2008, pushing the importers to purchase the cheapest options - often these are low quality cartridges from China that contain inks and toners hazardous to human health.

Two options are available on the market - products from original equipment manufacturers (OEMs) and compatible products. OEM products are of high quality and produce high yields, but they are expensive. Compatible products, usually from China, are more affordable, but their quality is inconsistent, their yields are lower and they sometimes include toxic components. In both cases, once the cartridges are empty, they are disposed of together with the rest of unsorted waste, causing a detrimental impact on the environment. Due to high calorific value of cartridges they are often open burnt (thus substituting expensive kerosene) to make fire for cooking and to encourage burning of other waste, thus contributing to air pollution and exposing humans to inhalation of toxic substances.

Our solution

Our solution is to create a circular economy for ink and toner cartridges in Nigeria. Our key activities are:

1. Retrieving used cartridges through buy back schemes and other incentives.
2. Remanufacturing used cartridges using imported machinery and components. Used cartridges are cleaned, refilled with ink/toner, refitted with a new ink/toner sensor, and repackaged to be sold under our brand name.
3. Selling cartridges through our regional sales managers covering all 36 states in Nigeria. Our products do not add to the waste management burden on our clients, as we offer incentives and buy back schemes to retrieve used cartridges for remanufacturing.

Our unique selling proposition:

1. Lowest price as our production costs are low. We use recovered empty cartridges (that would otherwise be landfilled or open burnt), import all components in bulk and outsource packaging production to a local company. Price is often the most important factor driving cartridge purchasing decisions in Nigeria.
2. Best quality as we use reusable OEM components and imported components from high quality manufacturers. In Nigeria, locally made products are often perceived as inferior to imported products. We will dispel this perception by providing samples. Additionally, the fact that we import our ink from Japan, a country that is believed to produce the best quality raw materials and products, will boost customer confidence. All imports from Japan in Nigeria are of best quality because “back door” imports are not possible - all products imported from Japan go through pre-shipment verification and certification by Standards Organisation of Nigeria (SON) and their partners, such as Cotecna and SGS.
3. Non-toxic inks and toners, as we chose our suppliers with care. We will import ink from Wako, our partners in Japan, who use soya oil in manufacturing instead of petrochemicals. Their ink samples are analysed in specialised laboratories to test for toxicity; a laboratory-issued certificate verifying the safety of the product is attached to every shipment. We will make copies of these certificates available to our customers, to compete with other compatible products that are usually not tested for toxicity to avoid extra costs.
4. Zero waste to landfill as we recover our cartridges from our customers to either remanufacture or recycle them with our local partner Wecyclers. According to our partners in Japan, the same cartridge can be remanufactured 5 times before the quality starts to decline. Our packaging will be plastic free. Most importantly, our business will contribute to significantly reducing open burning of cartridges and the associated detrimental effect on human health.

Additionally, we will be making a difference by:

5. Building an inclusive and diverse team. We will aim to have an equal number of male and female employees, and we will reserve 30% of our vacancies for people with disabilities.
6. Supporting local charities and educational institutions. Every month we will donate 5% of our profit. We want to support tertiary educational institutions to strengthen their research capacity and fund students from disadvantaged backgrounds, and Diabetic Association of Nigeria, as diabetes rates are surging in Nigeria and many cannot afford the treatment they need.

Our competitors are OEM franchises (for example Ro-Marong Nigeria) and large-scale importers of compatible products (for example SFICO and COPYBAY). They import cartridges from China, South Africa and Dubai.

Our initial target markets

Currently our main target markets are tertiary educational institutions and small and medium-sized enterprises (SMEs) that specialise in cartridge sales. In the future, we will expand to primary and secondary schools, healthcare institutions, financial institutions, manufacturing businesses, packaging producers, supermarkets and other retailers, tourism industry, consultancies, etc.

Tertiary educational institutions

Tertiary educational institutions in Nigeria include universities, polytechnics, monotechnics and specialized institutions, colleges of agriculture, health technology and education, vocational, innovations and technical colleges. Almost all educational activities in these institutions are paper based - curricula, study materials, lecture handouts and exam papers all have to be printed for each student. During the pandemic online learning was trialed with disastrous results, showing that with the present day infrastructure learning has to remain paper based.

Tertiary educational institutions use duplicators for high volume printing, as they provide speed (up to 130 copies per minute) and cost efficiency that cannot be matched by printers or photocopiers. Ink cartridges for duplicators are easy to clean, refill and refit with a new ink sensor.

Advantages of focussing on tertiary educational institutions:

1. It is a large market. There are 2 million students in 174 universities in Nigeria and many more in 564 other tertiary educational institutions. The sector is on a rapid growth trajectory, with new institutions opening every year, and for a good reason. Nigeria is a young country with 43.5% of population under the age of 14 - that is more than 87 million young people who will be looking for education. The literacy rate is 75% among people aged 15 to 24. Tertiary educational institutions are present throughout the country - about 45% of them are in capital cities of the states, 35% in other major towns, and 20% in remote towns and rural areas. They are not tied into long-term contracts with their cartridge suppliers. Some of them have maintenance contracts with SMEs that also supply cartridges to them, but the market is open and it is common to change suppliers based on the price they can offer.
2. It is easy to reach this market. Over 170 universities and colleges are members of the Committee of Vice-Chancellors (CVC). Over 300 polytechnics, colleges of agriculture and other technical and vocational education and training (TVET) institutions are under the management of National Board of Technical Education (NBTE). This means that we can access 64% of tertiary educational institutions simply by reaching out to CVC and NBTE. Our ink cartridges for duplicators are already being tested by both CVC and NBTE and they are very pleased with the high quality of our product. In contrast, Nigeria’s primary schools are administered by the local governments and hence the market is much more fragmented. But it is a big market - there are about 97,000 primary schools (64% of them are public) and about 33,000 secondary schools (38% of them are public) - and we will be targeting this market in the future.
3. Price is often the deciding factor for tertiary educational institutions, especially since present day economic challenges have led to decrease in government budgets for the education sector. Out of 738 institutions, 169 are federal government owned and 324 are state government owned. Since our production costs are low, we are able to offer the best price on the market while our products are also high quality and eco friendly.
4. The market is active all year round, since the calendar of tertiary educational institutions in Nigeria is not unified. This means that out of 738 institutions about 600 have ongoing academic activities in any given month. The demand peaks during the fourth month of every semester due to exams.

SMEs specialising in cartridge sales

Duplicator ink cartridge market in Nigeria is dominated by SMEs that operate by establishing close relationships with end users. Small-scale businesses with largely informal operations are the most common providers of maintenance and repairs for duplicators, and they also supply the ink cartridges. These often consist of a sole proprietor and a couple of apprentices. Medium-scale businesses are much less numerous compared to small-scale businesses. Their operations are more formalised, and they usually employ 1-6 staff members.

Vast majority of SMEs do not import ink cartridges directly, instead they rely on OEM franchises and large-scale importers of compatible products. The deciding factors for them are both price (to improve their profit margins) and quality as most of them also provide repair services. Poor quality cartridges and inks lead to increased need for repairs, which results in damage to reputation and loss of customers.

Through our regional sales managers covering all states in Nigeria, we will form a strong bond with these SMEs. About 90% of these SMEs are located in capital cities of the states, and SMEs within the same city usually all know each other and sometimes operate informal trade associations. This means that we will be able to quickly grow our market share through referrals as much as through approaching SMEs directly.

How we will reach our customers

Our regional sales managers will have close relationships with our existing and prospective customers in different parts of the country. This will be achieved through five main channels:

1. Currently in person communication is still the prevalent method to reach customers in this industry. To reach SMEs we will organise in person meetings, and network at events for stakeholders in the office equipment industry, for example events organised by the Association of Office Equipment Technicians of Nigeria. To reach tertiary educational institutions we will schedule product demonstrations with officials in charge of procurement, and network through umbrella bodies like CVC, NBTE and National Commission for Colleges of Education (NCCE).
2. Social media platforms - WhatsApp, Facebook, Instagram and Twitter - that are popular in Nigeria. Through advertisement on social media platforms and through our website and LinkedIn page we are able to reach a large segment of the market. This will also often be the main channel for communicating with our SME customers, since they are active on social media platforms both because it allows them to reach their customers and because it fits their highly mobile lifestyle - they spend more time visiting their customers to provide maintenance and repair services than in their offices.
3. Direct mail marketing will be used to reach officials in charge of procurement in tertiary educational institutions that cannot be reached otherwise. Physical mail delivered to educational institutions gets prompt attention, while marketing emails get lost in junk mail.
4. Bluesky Digitech network of young professionals in office equipment industry that now covers most of the country.
5. Referrals will also play an important role. To increase our market share among SMEs we will rely on word-of-mouth referrals. To increase our market share among tertiary educational institutions we will provide references from institutions already using our products.

Our achievements so far

Ecopath has signed two contracts with Wako, our partners in Japan. The first contract outlines the terms of sales of raw materials for the production of duplicator ink cartridges; the second guarantees technical guidance on producing duplicator ink cartridges using the materials they supply.

Our ink cartridges for duplicators imported from Japan are already being tested by both CVC (12 cartridges provided) and NBTE (6 cartridges provided) and they are very pleased with the high quality of our product. Lateef conducted a workshop for the members of CVC that was well attended; the verbal feedback received was very positive. CVC said they are interested in working with Ecopath to achieve circular economy in printing operations in Nigerian universities. Ecopath has non-binding agreements with both CVC and NBTE regarding future cartridge sales. Both are expecting a formal proposition for collaboration from Ecopath, which will be signed by the executive secretaries of these associations.

International Sustainability Academy (ISA) works closely with the Nigerian Ambassador to Germany. ISA offered Lateef an introduction, which will lead to Ecopath being able to work directly with the Government of Nigeria and to facilitate adoption of remanufactured cartridges in government owned primary and secondary schools. This effort will begin once Ecopath has obtained the funding required and started its operations.

Through Lateef and Ecopath’s three regional sales managers, 29 out of 738 tertiary educational institutions in Nigeria (i.e. 4% of the market) are already expecting to purchase duplicator cartridges supplied by Ecopath in the near future. This includes nine tertiary educational institutions in Oyo state, six in Ondo State, four in Lagos State, three in Ekiti and Osun States, and one in Enugu, Kaduna, Ogun and Rivers States. Out of these 29, 16 tertiary educational institutions will be our direct customers and 13 will be supplied through an SME they are already working with.

Most importantly, we’ve already assembled a stellar team of talented, environmentally minded people who all share the vision of our for-purpose business.

Our stellar team

Lateef Salami, CEO

Gbenga Hussein, CFO

Philip Ishaku, CTO

---

Dayo Oladele, RSM in Aba, Abia State

Bode Onileowo, RSM in Abuja, Nigeria's capital

Biodun Olanrewaju, RSM in Lagos, the largest city

---

Lateef Salami, the founder of Ecopath, has more than 15 years of experience in the office equipment industry in Nigeria. Lateef’s academic background is in Electrical Engineering (Higher National Diploma from The Polytechnic in Ibadan, Nigeria, 2001) and Sustainability and Environmental Management (Master’s degree from University of Derby, UK, 2019). Lateef’s career in office equipment industry began in 2004 when he joined CFAO Technologies as a Service Engineer. There he was responsible for maintenance and repairs of duplicators, photocopiers and printers, customer relationship management, product demonstrations, training and workshops.

In 2008 Lateef started Bluesky Digitech - a small informal office equipment repair consultancy. The idea was to create a for-purpose business that would serve as a social empowerment platform where unemployed graduates could gain new skills for free. Apart from providing hands-on training to graduates, Lateef was also mentoring technicians already working in the industry, and solving knotty technical problems with office equipment which provided a source of revenue. These activities made Bluesky Digitech a melting pot of novel technical solutions and ideas, and created a tight-knit network of professionals in the office equipment industry.

In 2019 Lateef moved to Germany to become a research fellow at the International Sustainability Academy (ISA) and join a global network of professionals from 12 different countries. There he learnt about best practices in sustainability and how to build impactful startups that contribute towards reaching Sustainable Development Goals (SDGs). That is where the idea for Ecopath was developed.

Gbenga Hussein is a chartered accountant and an associate member of the Chartered Institute of Taxation of Nigeria. He has skills in financial management, strategy and change management, and experience in financial services, manufacturing and construction industries. Gbenga worked with Sunflag Nigeria Limited, Haggai Mortgage Bank and Slava-Yeditepe Construction Group where he was the Head of Accounts. As a consultant, he has designed business development solutions for First Bank of Nigeria, Central Bank of Nigeria, Guaranty Trust Bank, Stanbic IBTC Bank, West Africa Ports Services, MainOne and Serve Consulting, to name a few. Gbenga is an enthusiastic person with a passion for human capital development - he coaches young people from disadvantaged backgrounds to help them realise their potential.

Philip Ishaku is an office equipment and automation professional with more than 15 years of experience. Philip’s academic background is in Electrical Engineering (Higher National Diploma from Federal Polytechnic, Mubi, Nigeria, 2001). He is experienced in working with duplicators, photocopiers, printers and multi-function printers, and with brands like Xerox, HP, Ricoh, Sharp and Kyocera.

Dayo Oladele has a background in Electrical Engineering. He has been consulting Bluesky Digitech team in office equipment repairs and maintenance since 2012. Due to his extensive experience, he is a bit of a celebrity among repair technicians. Many banks, schools and hospitals in Ondo and Osun states are among his current customers. He is Ecopath’s regional sales manager (RSM) in South East and South South states.

Bode Onileowo has a background in Agricultural Economics. Since completing the apprenticeship at Bluesky Digitech in office equipment installation, maintenance and repairs, he has established an impressive professional network in Ekiti and Kwara states. Many banks and educational institutions are among his current customers. He is Ecopath’s RSM in North East and North Central states.

Biodun Olanrewaju joined Bluesky Digitech as an apprentice in 2008. He has since developed a large customer base in Oyo, Ogun and Lagos states. He is Ecopath’s RSM in South West and North West states.

The only thing that is missing in our team is gender diversity. This is how things are in Nigeria right now - office equipment industry is almost exclusively male dominated. We intend to change this by providing equal employment and training opportunities to both genders. We aim to have both genders represented equally in our team in the future.

Our advisors are Dr Karina Zile and Dr Eleftheria Egel.

Our growth plan

First year

During our first year of operation we will focus on the following:

1. Setting up a workspace in Lagos, the commercial capital of Nigeria, where we will be producing our products.
2. Start producing our first product - remanufactured duplicator ink cartridges. The components required are recovered empty cartridges; ink and ink sensors imported in bulk; and packaging outsourced to a local company. The competition in this segment of the office equipment market is minimal, since duplicators are mostly used in educational institutions and are hence perceives as a specialised market. We will be competing against OEM franchises (whose prices are significantly higher) and large-scale importers of compatible products (whose quality and yields are lower and prices are slightly higher).
3. Growing our team to 9 members by the end of the first year. We plan to hire 3 production staff. We will aim to have an equal number of male and female employees, and we will reserve 30% of our vacancies for people with disabilities. Our sales team will be trained in marketing, sales, and using social media for marketing activities and for customer relationship management (CRM). We will provide each member of our sales team with a phone and an internet connection.
4. To ensure reliable logistics services for transporting our products and recovered empty cartridges we will be working closely with National Union of Road Transport Workers (NURTW), whose members provide transportation services across the whole country.
5. Digitalising our operations to ensure transparency and efficiency. We will be using HubSpot’s Free CRM Platform to monitor sales and guide our marketing strategy.
6. Testing our pricing strategy. We will employ competition based pricing. The cheapest products currently on the market (available to SMEs in July 2021) are OEM cartridges for NGN 13,500 (USD 32.81) and compatible products from China for NGN 8,500 (USD 20.66). We will offer our duplicator ink cartridges to SMEs for NGN 8,000 (USD 19.47). Tertiary educational institutions buy OEM cartridges for NGN 14,500 - 18,000 and compatible products from China for NGN 11,000 - 14,000. We will also offer our duplicator ink cartridges directly to educational institutions for NGN 10,500 - 13,000, depending on the type of institution.

By the end of the first year of operation we expect to have at least 300 customers, each buying at least 20 cartridges per month. This is assuming at least 5 new customers per months acqired by each of the three regional sales managers, CEO and CTO. In practise the number of new customers per months will be higher, but we don’t want to assume 100% customer retention, which we will strive for.

To estimate the raw material costs to produce 6,000 cartridges, we assume that we will pay for recovery of 70% of the cartridges sold last months (i.e. 3850 cartridges) and that 50% of the cartridges sold this month (i.e. 3,000) will be remanufactured. We will assume that due to currency exchange fluctuations our raw material costs will be 10% higher than currently. To estimate the total revenue per month we will assume that 50% of the cartridges will be sold to SMEs for NGN 8,000 (USD 19.47) and the rest will be sold directly to tertiary educational institutions for NGN 10,500 (USD 25.51).

Further growth

After the first year of operations we are expecting to continue growing our team and our market share. We will be working directly with the Government of Nigeria to facilitate adoption of remanufactured cartridges in government owned primary and secondary schools. Once we gain a large portion of the market, that currently consists of 130,000 schools, our team will grow to about 150 employees and our revenue will be over USD 1 million per month.

In terms of products, we initially aim to expand into photocopier cartridges, that are easy to refill, and printer cartridges, for which remanufacturing is more complicated. This will be accompanied by continuous market research to ensure that we are familiar with market trends for office equipment, new emerging technologies, and advancements in cartridge remanufacturing techniques. To ensure continuos growth, we will be exploring options for Ecopath to become a remanufacturing and recycling hub for office equipment, printing paper, etc.

In terms of geographical reach, we aim to have distributors in at least 18 states in Nigeria by the end of the third year and distributors in every state in Nigeria by the end of the fifth year. We will be exploring options for expanding beyond Nigeria through franchising and collaborations with local companies. Ultimately, Lateef wants to create a sister organisation for European Toner and Inkjet Remanufacturers Association (ETIRA) in West Africa.