Summary of Furniture Village Integrating local carpenters in the furniture value chain

Project Name Country Companies involved Partners involved Sectors Key dates for Business Innovation Facility support Support from the Business Innovation Facility for Furniture Village Integrating local carpenters in the furniture value chain Nigeria The Chair Centre Ltd., Frontier Capital Ltd. (Project management) Ogun State Government Furniture Approved for support: July 2011; Support ongoing: 2011/12 Securing investment to establish the Furniture Village

The proposed inclusive business initiative Furniture Makers Village Ltd. (FVL) is a Nigerian start up company, promoted by the Chair Centre Ltd, aiming to set up a local furniture manufacturing cluster that combines workshop units, factory spaces, housing for entrepreneurs, employees and their families, large-scale manufacturing facilities as well as a retail unit for business-to-business and business-to-consumer sales at one location. Through the creation of this industry ecosystem FVL will benefit individual craftsmen (known as carpenters in Nigeria) along with small and medium enterprises by giving them access to infrastructure, equipment and markets. With businesses from different sectors (e.g. property, furniture manufacturing, retail and services) relocating to the village, FVL will benefit from profits through long term leases and ground rents. Businesses will benefit from direct access to their suppliers and customers. Manufacturers, for example, can optimise the use of their production facilities to increase productivity which will ultimately result in growth of their businesses. The business of business: what are the commercial drivers? FVLs main commercial driver for setting up the cluster is to establish a profitable pro-poor business and enhance its 1 appeal to potential customers to achieve business growth. Furniture is currently on Nigerias import prohibition list , therefore local demand for furniture is high, but local manufacturing is inhibited by a high degree of fragmentation of the industry, lack of specialist skills and equipment. FVL offers several short term gains to the manufacturing businesses (being one of its key customer groups): direct access to craftsmen and other suppliers can boost productivity and reduce costs; sharing infrastructure and machinery with other manufacturers can optimise use of production facilities; and the location of FVL with its retail unit, just 30 minutes from Lagos, will ensure proximity to customers. In the medium to long term, as other companies from the same and other market segments (e.g. metal working and soft furnishing businesses) relocate to the village, there is potential for additional benefits. For example, information spill-over and potential for innovation arise. Ideally, businesses will be able to leverage proximity to other sections of the value chain to extend their product ranges by developing innovative products.

As of September 2011 http://www.customs.gov.ng/ProhibitionList/import.php The Business Innovation Facility is managed for DFID by PricewaterhouseCoopers LLP in alliance with the International Business Leaders Forum and Accenture Development Partnerships. For further information visit: www.businessinnovationfacility.org or contact the Facility management at: enquiries@businessinnovationfacility.org

Version 1.0, September 2011

Business Innovation Facility

An inclusive business: how does the business support development? The project will directly benefit individual craftsmen and small and medium furniture enterprises by providing access to infrastructure (e.g. housing, workspaces, and electricity), equipment (e.g. machinery required for the production of standardised and high quality bulk furniture), skills development and markets. All of these factors currently constrain the economic situation for many of the craftsmen due to geographical fragmentation of the value chain. As a result many craftsmen face difficulties in earning a living wage for them and their dependents. In addition to the direct benefits for the craftsmen, establishing a commercial ecosystem around FVL will also stimulate job creation within the services sector, for instance for transporters, restaurants, traders, hawkers, domestic staff etc. In the long term, the project offers potential for wider systemic impacts such as the development of the Nigerian furniture sector to meet requirements and standards for export to international markets.

Support from the Business Innovation Facility Project implementation requires external funding. Support from the Business Innovation Facility will focus on identifying long term financing options and help prepare applications to different groups of potential investors such as venture capital funds, development finance institutions and foundations. In particular, the Facility will help to strengthen the inclusive business value proposition highlighting both commercial and developmental benefits as this is considered to be a potential advantage to secure investments.

Pursuing innovation and scale in inclusive business The cluster model is an innovation in Nigeria where currently many labour-intensive value chains in Nigeria are very fragmented. If successful, industrial clusters can offer various benefits including potential for innovation by attracting talent from different parts of a value chain. The FVL concept not only offers potential for scale within the furniture sector but also for replication within other sectors.

Further information Facility contact: Soji Apampa, nigeria@businessinnovationfacility.org FVL contact: Ibukun Awosika, biliawosika@yahoo.com, Tayo Oduwole: t.oduwole@frontiercapital.com.ng The Chair Centre Ltd. http://www.thechaircentrenigeria.com

The Business Innovation Facility is managed for DFID by PricewaterhouseCoopers LLP in alliance with the International Business Leaders Forum and Accenture Development Partnerships. For further information visit: www.businessinnovationfacility.org or contact the Facility management at: enquiries@businessinnovationfacility.org Version 1.0, September 2011 Business Innovation Facility