Financial analysis of small-scale mango chips processing in Ghana

Abstract

Abstract Mango fruits contribute substantially to the socio-economic wellbeing of fruit value-chain actors in sub-Sahara Africa, but high incidences of post-harvest losses are posing serious threats to the survival and sustainability of the sub-sector. Therefore, this study aimed to provide evidence-based financial analysis of mango chip processing whose capital structure is within the capacity of small-scale processors in Ghana. The study uses a case study approach on a small-scale mango chip facility established at Lower Manya-Krobo district of Ghana. Cost-benefit analysis of investment worth such as net present value (NPV), benefit–cost ratio (BCR) and, internal rate of return (IRR) as well as payback period was used to measure the financial feasibility of mango chips processing. The results indicate that the total capital expenditure to establish a small-scale mango chip enterprise is Gh₵5, 638.60 (US$1,127.72) with an operating cost of Gh₵12, 100 (US$2,400). Using an opportunity cost of capital of 27%, the result reveals an NPV of Gh₵7,392.60 (US$1,478.52), BCR of 1.18 and an IRR of 77%. The payback period is 1 year and 5 months. These financial indicators suggest that investment in small-scale mango chips is profitable and viable. The findings have implications for including small-scale mango chips processing in interventions to partly address mango post-harvest losses in the country for employment creation, especially among the youth and women.