A cosmetics and personal care products business is one of the most profitable businesses that a budding entrepreneur in Ghana can venture into. This industry has experienced a lot of growth over the years, both locally and internationally, and is still showing further growth prospects. If you want to start a business in this sector, though, there are a couple of crucial pieces of information that might help you along the way. That is the purpose of this article – to address the essential facts, steps, and processes that would allow you to establish your cosmetics and toiletries business in Ghana successfully.
An overview of the cosmetics and personal care products industry
In Sub-Saharan Africa, the cosmetics and personal care products industry is predicted to grow exponentially over the next couple of years. In 2012, the beauty and personal care market in Africa was worth approximately 8.48 billion dollars. In 2017, just five years later, it was worth an estimate of around 11.26 billion dollars. As impressive as this sounds, there is more growth to come, with an expected 8 to 10 percent growth per year. Compared to the global market growth rate of 4 percent, it’s safe to say that the African cosmetics and personal care products industry is booming.
Research has shown that the most considerable beauty and personal care products market in South Africa within Sub-Saharan Africa. This is closely followed by Nigeria, whose sales are expected to reach 3.9 billion dollars by the end of 2020. In South Africa, a considerable percentage of this industry’s sales are made using structured distribution channels. However, in other parts of Africa, the sales infrastructure is more broken up. An example of this is Kenya, with only 15 percent of its beauty and personal care products being sold in supermarkets.
When it comes to Ghana, a considerable percentage of its cosmetic and personal care suppliers engage in both retail and wholesale activities. A handful of suppliers import finished products, and even less, so that engage in exports to international markets. This is because most companies in the country that produce cosmetics and personal care products are actually informal or sole-proprietorship businesses, with little strategy and operational infrastructure.
Because of the ease of entry into this industry, many entrepreneurs in Ghana venture into it. This, coupled with a rapid influx of new and foreign products into the market, results in a highly competitive and profitable sector. Suppliers in the renowned city of Takoradi have even attested to this, claiming that cosmetic products that arrive from Cote d’Ivoire sell out very quickly.
Generally, international brands are top-rated in Ghana, and although local brands experience growth, this is often overshadowed by products imported from places like Europe, Togo, Cote d’Ivoire, and Nigeria. Because of this, local brands find themselves having to compete with imported brands by heavily promoting their products, particularly emphasizing the benefits of their products to consumers.
Ghanaian consumers are drawn to products with attractive packaging, which international brands can provide. Local brands, though, despite their marketing efforts, still struggle with providing consumers with this feature, and so have to work twice as hard to convince the market that local brands are just as competent as foreign brands.
Another notable thing about Ghanaian consumers is that they prefer to purchase cosmetics and personal care products from cosmetics shops. They are also more likely to spend more money on high-quality products, regardless of where they come from. This poses as both a challenge and opportunity to the industry. A challenge because the industry currently lacks this kind of structured distribution channel and an opportunity because it means that there is room for growth.
Impact of the cosmetics and personal care products sector on the Ghanaian Economy
The cosmetics and personal care products industry makes a remarkable contribution to the Ghanaian Economy. While there is little statistical information about the overall performance of the cosmetic industry and its contribution to the manufacturing industry and the Ghanaian economy at large, there is an enormous belief that through the purchase of goods and services, and the payment of wages and taxes, this industry produces a cycle of spending and re-spending that benefits both the economy and its citizens.
In fact, the cosmetics and personal care products industry is known to contribute to the Economy in two ways: direct and indirect contribution.
It directly contributes to the Economy by means of the production of cosmetics and personal care products through the value chain. Included in this chain are raw material providers, processors of intermediate goods, and finished product manufacturers. The revenues derived from these stakeholders, and the taxes paid by them significantly contribute to Ghana’s GDP.
The industry contributes indirectly through stakeholders that provide services related to the secondary activities known for supporting the manufacture of cosmetics and personal care products in the country. These stakeholders include intermediary wholesalers, transporters, retailers, distributors, and regulators. This kind of contribution happens at the beginning of the supply chain. For example, when cosmetic manufacturers buy raw materials, packaging components, and other related goods and services, partially finished goods and finished goods occur when transportation of raw materials.
In addition to these, expenditures by the people employed directly and indirectly by cosmetic industry businesses also contribute to the growth of the Economy.
The impact of this industry is particularly evident in the northern part of the country, where the shea butter industry is rapidly progressing. It can also be seen in the middle and western belts of Ghana, where there is a high concentration of palm kernel oil and cocoa producers.
The income earned by the workforce in this industry is spent on goods and services, which further leads to improved economic activity and growth.
Besides, most cosmetics and personal care businesses are run by local entrepreneurs, who, by engaging in the value chain, impact their lives and the lives of their families and local communities positively.
Most popular cosmetics products in Ghana
Ghana is the home of a very large market when it comes to cosmetics and personal care products, and in this market, there are a couple of products that are popular and highly demanded. They are:
Hair care products: This can be separated into two categories – hair extensions and hair care and treatment. Hair extensions consist of attachments, weaves, and wigs, while hair care and treatment include hair creams, hair growth oils, hair sprays, relaxers, hair gels, and more.
Skin care products: Popular skincare products in Ghana include but are not limited to moisturizers, anti-acne cream, and anti-aging creams.
Fragrances: In this category, you can find products like perfumes, deodorants, and body sprays and mists.
Personal care and toiletries: This consists of daily necessities such as bathing soaps, female sanitary products, toilet paper, etc.
Makeup products: Products like foundation, lipstick, mascara, false lashes, and eyeshadows are the most popular in this category.
Regulatory authorities and certification services in the cosmetics industry
There are a couple of regulatory bodies, standards, and services that govern Ghana’s cosmetics industry. They are as follows:
Food and Drugs Authority (FDA):
The FDA is Ghana’s regulatory body responsible for the regulation of food, drugs, food supplements, herbal and homeopathic medicines, veterinary medicine, cosmetics, medical devices, and a host of other substances. It was established in 1992 on the basis of the Food and Drugs Law. Some of the functions of this body include but are not limited to:
- Approving the initiation and conduct of clinical trials in Ghana
- Advising the government on measures for the protection of the health of consumers
- Ensuring adequate and effective standards for food, drugs, cosmetics, household chemicals, and other devices.
Ghana Standard Authority (GSA):
The GSA is an agency that is responsible for the establishing, publishing, and promoting of standards in Ghana. The actions of the GSA ensure that products, services, and goods produced in the country, be it for local consumption or for exports, are reliable, safe, and of good quality for consumption. Some of the services of the GSA include:
- Testing and inspection
- Standards development
- Library management and information dissemination
- Calibration and verification
- Training and sensitization
The GSA has a cosmetics lab that carries out chemical analysis on cosmetic products. This lab guides cosmetics producers on things such as product certification, factory inspection, and audits.
International Organization for Standardization (ISO):
This ISO is an independent body separate from the Ghanaian government and is known for being the world’s largest developer of voluntary international standards. These standards are adhered to in order to produce products that are safe, reliable, and of good quality. The standards also help businesses to improve their productivity and minimize waste and error.
The GSA relies on the ISO standards to help establish better standards for regulation.
SGS: The SGS is the world’s most extensive inspection, verification, testing, and certification company. It has its headquarters in Geneva, Switzerland, and has more than 97,000 employees. It also operates over 2,500 labs and offices worldwide.
The SGS is responsible for carrying out cosmetics GMP audits to ensure compliance with the relevant national standards, why vary from country to country. An SGS certificate is globally accepted and allows cosmetics manufacturers to sell their products internationally.
- SGS has been present in Ghana since 1960 and operates through:
- SGS Ghana Limited
- SGS Laboratory Services Ghana Limited
- SGS Inspection and Testing Services Limited
- TMP Ghana Limited
Intertek ensures that the products meet quality, health, environmental, safety, and social accountability standards in markets worldwide. This body provides a range of services marketed to beauty and personal care product manufacturers to help them achieve security and regulatory compliance. Some of their services include:
- Analytical cosmetics testing
- Beauty and personal care research and development solutions
- Supply chain management and audit services
- Cosmetics safety assessments and toxicology services
Other regulatory authorities and regulations include:
- Cosmetics industry regulation in the European Union
- US Food and Drug Administration (US FDA) cosmetics regulations: www.fda.gov/cosmetics-international-activities
Steps to register a cosmetics business in Ghana
As aforementioned, one of the great benefits of starting a cosmetics and personal care products business in Ghana is the ease of entry into the industry. Starting a business in this sector is straightforward, as there are only a couple of steps you would need to follow. To register your cosmetics business in Ghana, you would need to do the following:
- Use your business idea and goals to generate a business plan.
- Register for and attain your Tax Identification Number: to register your Tax identification number, you would need to first of all download the form from the www.rgd.gov.gh website. Once you’ve filled it, you would need to attach a copy of your photo ID (driver’s license, passport bio-data, voters ID). You can get your TIN number at the Ghana Revenue Authority Office within 24 to 48 hours of form submission.
- Register at the Registrar General’s Department: Registering at the Registrar General’s department is also a straightforward process. However, it is important to note that some of these steps may take a substantial amount of time to complete, and this may be one of them. To register at this department, you would need to provide a copy of your photo ID, your Tax Identification Number, and a name for your business. You would need to have conducted a business name search at RGD prior to this step. A company name search helps you determine whether your proposed business name is available. You can then have your business name reserved for 30 days. Once you have this, you can be procced to register at the Registrar General’s department. This registration may take about 1 to 2 weeks to be finalized.
- Open a business account: Opening a business account in Ghana is easy. Simply visit your preferred bank, and they would direct you to all the necessary information needed to open the account.
- Apply for Business Operating Permit from the Metropolitan /Municipal / District Assembly
- Register for Social Security