PROJECCT PROPOSAL

OF --------SCHOOL

IN

ADDIS ABABA YEKA SUB-CITY

DISTRICT (Woreda)---

May 2012/2004 E.C)

 Table of content page

1. Executive summary 1

2. Background 3

3. Marketing opportunity 6

4. Organization and management 10

5. Physical facilities 13

6. Finance 14

7. Specification and bill of quantities 17

8. Tuition 17

9. Financial analysis and forecasts 19

Executive Summary

Education forms part of the basic needs of a society. It is a factor in the development
endeavor as a country’s future ultimately depends on education and training of its population for
the realization of its human potential. It’s with this reality that the founders of “ -------- SCHOOL “
are motivated for the establishment of high standard kindergarten, primary and secondary school
levels phase by phase.
The owners
---------------------------------------------------------------------------------------------------------------------
----------- are young entrepreneurs engaged in various occupation of education, Administration,
Business etc. previously. As they a acquired different skills and experiences that help them to
enhance their business successfully.
The location of “-------- SCHOOL“is also a factor of attraction due to accessibility and
proximity to especially to ------------ (around Kotebe College and --------- ) dwellers. It is
assumed also that the school may satisfy most of the dwellers needs for their children to educate
them in “------- SCHOOL”. It targets families with capacity to for better education but lacks the
opportunity. Then ----------SCHOOL wants to serve these dwellers by providing quality education
with reasonable costs at suitable environment.
The feasibility study is classified into two major parts namely Market Research Study and
Business Planning Study. The first step is the Market Research Study (section 3.1 to 3.2) for this
study we used data gathered for national census of population enumeration to identify
demographic factors that has close relation with our study eg.
1. High percentages of population are young.
2. Average no of child per family is 3.
3. House holds density is high.
Through this process and few interviews with some residents and local leaders we identify the
targeted area for our feasibility study. According to the gathered data this society has many
school children’s as well as the capacity to pay for better education that accommodates teachers
with better qualifications. In addition to environmental suitability the school fees is economical
(reasonable tuition) as compared to other institutions in Yeka.
 The business planning study ( BPS ) section 1 to 9. It follows the market research section of
the feasibility study. In section 3.2. We compared “--------SCHOOL” with other educational
schools includes Roots, Deliverance, Ediget tajeb and Hill Side to show how “---------SCHOOL”
works in this industry.
The purpose of business plan is to access the important Inputs purchased, staffing, partnerships
and better education system etc.

We used the experience and advice of the experts in the Industry to develop recommendations
for “--------- SCHOOL”. We plan to use advertisements, to enter as well as to increase our market
share in the industry. By creating ample opportunity for its demand. The final task of BPS was to
develop a detailed operational budget and a five-year growth vision phase by phase.

We devised two assumptions based on adding 60 and 70 new students per year respectively.
We calculate yearly business in come and estimated fixed and variable expenses for each year
assumption and we calculate annual Net in come for 3 rd and 4th year using those assumptions.
The financial viability is analyzed &presented in this study whether the project is feasible or not.
So it is feasible and attractive then “ ---------- SCHOOL” is very important and highly
recommended.

2. BACK GROUND

2.1 General
 During the past decades the educational system in Ethiopia was faced with a number of
problems. Like any other developing countries, the Ethiopian Education sector has experienced
massive student population without conducive physical facility, institutional manpower and
irrelevant curriculum,etc.The increase in the number of schools and expansion of existing
institutions is lag behind to absorb the total student population of the relevant school age group
(6-24).
The Ethiopian Education system does not seem to meet public expectations:

a) It couldn’t respond to the quantitative growth of student because of demographic factors and
public awareness to benefit from quality education which is not properly addressed.
b) The quality and relevance of education is not capable to laying foundation for development
of the country.
c) The education is not equitably distributed in terms of social economic class, geographical,
sex, etc among the society.

Hence the education system in Ethiopian more or less has failed to meet the important
measures of educational standard as it is found to be both inefficient unfair in its capacity to
generate creative &ethical well shaped new generation.

It is believed that such failure was primarily a result of wrongly conceive and educational
policies of the Government. In particular the previous Governments’ attempt to fully takeover
the responsibility of education financing and provision with abolition of private participation
have caused for the significant decline of the education performance observed.

Indeed, educators, parents, students and other stakeholders (the public at large) have
expressed their dissatisfaction and genuine concern on the increasing deteriorating quality and
relevance of education conveyed through their demand for re-addressing the sector’s over all
management and formulation of policy direction to ensure more and more and better quality of
education.
With this problem and in response to the public concern the incumbent Government has
issued a new education and training policy (April, 1995) which among other issues to
encourage participation of the private sector to invest in education.
 Encouraged with such positive moves of the Government committed Based on this the
---------- SCHOOL was planned & established. It is initiated by founders and promoters of
--------------- SCHOOL with the intention of developing full-fledged educational institution
which shall provide full range of educational and training services through process.

2.2 Founders and Promoters

The founders and promoters of “--------- SCHOOL” are five business men by the
---------------------------------------------------------------------------------------------------------------------
---------- who are concerning to establish a school with reasonable standard to answer the need
of the citizens, particularly dwelling in and around Woreda 11(around-------- College and --------
) vicinities.

2.3 Vision
Owners and promoters, whose names mentioned above, have a well thought imagination
or vision of successfully developing national human capital that will play vital role in laying
down the foundation for sustainable development at national and global levels.

2.4 Mission
The mission of “-------- SCHOOL” is to be one of the best private educational institutions
in Woreda 11 (around -------- College and --------------- ) providing full range of educational
and training services at levels from KG to secondary, and creating opportunity for more and
better education to the society aimed at giving utmost satisfaction to parents, students, staff
members, owners and the public at large.

2.5 Objectives
 To establish and run schools at KG, primary and secondary
levels as a first phase program in a sustainable way.
 Ensure that the school age generation (citizen) of the target group is
getting quality and relevant education.
 Play exemplary role to other schools of the country.
To achieve the above stated objectives the school under formation will
 adapt at various levels, some or all of the following strategies:-
 Offer required syllabus of Ministry of Education with additional inputs
based on research findings to fill the gap.
 Develop effective and efficient quality education service delivery system.
 Develop adequate physical infrastructure and educational facility.
 Recruit trained , qualified and motivated teachers and constantly updating them
through various means.

3. MARKET ANALYSIS
3.1 General
Education that is provided by this School is generally believed to be economically and
socially productive investment. It is also both private and public good. It is private good
because people with more education earn on the average, more than those without it. It is
still public good because the benefits of someone education will in one way or another
affect the society. As private good it attracts private investment people demand for more
and better educational place is generally depend on:
a) Cost of education
 As strategy the“------------- SCHOOL” will follow a policy of medium fee charge,
without compromising on quality.
b) In come of potential student family
 The target group of the school project believed to be the middle and
Upper.
middle in come group of society in Woreda 11 (around -------
 College and ----------------------- ) .
c) Personal taste & Social custom
 Generally Private School has received relatively wider acceptance in Yeka.
continuous research and adjustment to the education and delivery system is hoped
to help in getting closer to the taste and customs of parents.
d) General trend in demand for education
 The general trend of demand for quality education not only nationally but also
globally growing.

3.2 Demand & Supply for education in Woreda 11

(around ------------ College and -------------------------- ) area
In 2011/12 of the total school age population only 0.14 % of children between age of 4 and
6 were enrolled in KG School, 64% of children between the age of 7 _ 14 were enrolled in
primary. Because of the rapid population growth resulting from migration from other parts to
Addis Ababa , shortage of pre school, primary and secondary school prevailed. In Yeka-A.A
where there are a total of 115schools with 1476 sections and 60622 total number of students
while the average number of students per class room for Yeka sub-city’s schools is 42., out of
which 23 KG-schools and 14 primary schools, 16 secondary schools which are operated by
government and others in 2011 in Yeka Woreda --------.

In 2011/12 there were approximately 91080 students found in in the schools of ---------
having 50 students on average per section (See Table 2). ------- City Administration Education
Office 2004 E.C / 2011/12 , shows that there are a total of 1762 class rooms in these schools of
which 28 is in government schools and 188 is in the public and others schools (see Table 1). The
average number of students per class room for --------- schools is 50. The low level of teacher’s
compensation has created shortage of trained teachers and instructors.

It is evident that the Government School system can attract quality teachers only when the
compensation paid to teachers is competitive with the compensation paid to teachers in the
private sector; and equally only when the teaching profession pay-scale is competitive with
compensation paid to other professions. Over the past years, teachers’ salaries of Government
schools have not kept pace with inflation and with salaries and wages paid in the private sector.
As a result, the demand for schools with quality instruction is high. For example, private schools
with good reputation for quality instruction such as Roots, Deliverance and Hill Side,etc.
administer own examination to select best teachers from many applicants.
Because of the shortage of schools, classrooms and teachers, Government schools operate
with at least two shifts in the past. As a result the school day and the number of hours in
classrooms for many students are very short relative to the amount of time they spend outside the
schools. This has created disciplinary and other problems for parents. For this reason alone there
is a large demand for schools that keep students for longer school hours. Working parents in
particular have a preference for schools that keep their children through the full day hoping that
this will keep their children out of trouble. But now the government also avoids the shift system,
however, it couldn’t absorb the school-age populations.

In summary, there is a large unmet demand for quality K.G. primary and secondary
education with longer school hours per day. Our survey also indicates that the willingness to pay
is very high relative to the average per capital income of households. Education is regarded as a
very important investment by many parents.

Table 1
Number of Schools in ------- town By Type in 2004 E.C. 2011/12
Public

Private& others

Total
Government

Grade Level

Kindergarten _ 5 89 94
Grade 1 - 8 19 3 60 82
Grade 9 – 12 4 _ 11 15
ABE _ 5 1 6
IFAL 5 14 _ 19
Total 28 27 161 216

ABE _ Alternative Basic Education

IFAL_ International Functional Adult Literacy
 Source: ---------- City Administration Education Office 2004 E.C / 2011/12

Number of enrollment, by sex and grade level in 2004 E.C. 2011/12

Table 2
S/N Level Male Female Total

1 KG 6683 6315 12998

2 Primary 26228 29031 55259
3 Secondary 9_10 7116 8158 15274
11_12 2168 2299 4467
Total 42195 45803 87998
4 ABE 345 387 732
5 IFAL 1115 1235 2350
Total 43655 47425 91080

Source: --------- City Administration Education Office 2004 E.C / 2011/12

d) Expected Income
The economic return from good education is believed to be very high in Ethiopia especially in
Yeka(A.A). Return on poor education is low or even negative as can be seen from the kind of
burden created by outputs of some secondary schools across the nation. --------- SCHOOL plans
to provide quality education that will surely prepare students for successful achievement in their
higher education.

e) General Trend
The general trend of demand for quality education not only nationally but also globally growing.
In summary all relevant factors affecting demand for education including demographic
indicators, economic and social factors show that there is a reliable demand for private
educational investment in the country in general and Yeka –A.A, in particular.
 4. ORGANIZATION AND MANAGEMENT OF ----------- SCHOOL
4.1 General
1. The highest governing body in the structure of ------------ SCHOOL
will be the general assembly of the shareholders. Policy formulation and long term plan shall be
handled by the General Manager/Director elected by the members. As such, the appointed
General Manager/Director is expected to be in charge of all the regular management duties and
responsibilities. During the first phase of the school operational program the structure will be
divided into 3 major activity units, headed by the following Heads:
-Head, Kindergarten Education
-Head, Primary Education
-Head, Secondary Education
Support units will be organized under the General Manager’s office to ensure proper handling of
Administration and Finance, logistics and related activities that are needed to run the educational
and training functions. At the initial stage, the overall school structure will be similar to what is
depicted in the chart next page.
 -------------- SCHOOL

ORGANIZATIONAL STRUCTURE

General Assembly

Director /Manager Advisory

Committee

Secretar
y

Administration
Audit & Finance

Logistic &
Maintenance

Head, Kg Head, Head,

Primary Secondary

4.2 Staffing Requirements

 In order to deliver high quality education-------- SCHOOL will recruit and hire trained
and qualified personnel. The Managing Director will manage the school according to the
rules and procedures established and approved by the owners. The Managing Director will
hire teachers and other personnel as appropriate. Teachers will be hired and be on board at
least two months before classes are scheduled to give them sufficient time to prepare their
lesson plans. All newly hired teachers will be given an orientation seminar to acquaint them
with the objectives and styles of ------------- SCHOOL and the schools quality standards. It is
anticipated that when fully operational in its first phase the school will employ 60 persons.
The breakdown of personnel is as follows:-

1. School principal (Managing Director) 1

2. School registrar & Secretary 2
3. School treasurer & secretary 1

4. Cleaners /Janitors 2
5. School guards 2

6.Academic teachers
7.1 K.G. Head 2

7.2 Primary grades 1-4 Head 10

7.3 K.G. head teachers 6

7.4 K.G. Partner teachers 4

7.5 Baby seaters 2

7.6 Primary teachers 8

8. Arts and crafts instructor 2

9. Music teacher 2

10. Physical education teacher 2

11. Laboratory technician 2

12. Computer technician 2

13. Drivers 4

14. Store keeper 2

15. Librarian 2

16. Office boy & Duplicator 1

17. Cluster Supervisor 1
TOTAL 60

5. PHYSICAL FACILITIES
------------ SCHOOL has rented Private buildings by ________________________
. By contract agreement.

6.1 Financing Arrangement

The overall financial requirement of the project for investment purpose is to be covered from
major sources, namely, owners’ contributions.

6.2 Project Life

Education is well known to be long term investment. However, for purpose of testing the
financial viability and sustainability the operational life of the project is assumed to be 20 years
excluding one year preparatory period.

6.3 Revenue
The major operational source of income for the project will be tuition fee. Other income like
registration fee and sales of some supplementary references, etc. might also have some share in
the overall expected collections.

6.4 Expenses
Operational expenses of the project will include, wage and salary for employees,
depreciation and amortization of investment, other recurrent (running) costs, and may be
interest, etc.

6.6 Taxes
The project pays related taxes for the concerned government body .
6.7 Profitability

The project generates profit throughout its operational life with average annual net profit of
Birr 75,000 can be achieved for 10 years. The analysis shows that the project will generate
increasing annual profit throughout the project life.
------------ SCHOOL will provide an attractive earning environment. It will have a fully
equipped language, science and computer laboratories; well stock library with adequate reading
space, adequate supply of text books, workbooks and other teaching materials, adequate
recreation facilities including football, basket ball and volleyball fields and a play ground.

Although ------------ SCHOOL location is accessible by public transport the founders

anticipate providing transportation to and from school to some students.
 Table 5

Furniture and Equipment Requirements

No. Item Quantity Total Cost

1 Total desk 750 73,500 Br.
2 Total table 10 2,200 Br.
3 Total chair 10 4,000 Br.
4 Total blackboard 16 6,400 Br.
5 Total cupboard 2 2,000 Br.
6 Notice board 5 3,00 Br.
7 Shelf 35 18,250 Br.
8 General Laboratory Equipment 528,800 Br.
9 Music room Equipment 40,120 Br.
10 Computer Lab 270,000 Br.
11 Clinical Equipment 10,000 Br.
12 Sport Material Set 20,000 Br.
13 Out door 30,000 Br.
14 Audio Visual Material 36,000 Br.
15 Duplicate Machine 54,000 Br.
16 Office Equipment 37,000 Br.
17 Pedagogical and art center 35,000 Br.
18 Metal Cabinet 8,000 Br.
19 Maintenance tools 35,000 Br.
20 Over head projector 28,000 Br.
21 Second phase total 54,000 Br.
Total 1,684,120

Table 6
Annual Operating Expenses

S.No. Description Total Salary

1. Salary & Wage Expense 828,600
2 Rent expense
3. Utility Costs 20,550
4. Materials and Supplies 261,500
 5. Repair and Maintenance Costs 33,000
6. Student Costs 10,000
7. Travel & Transport Costs 3,000
8 Miscellaneous expense
9. Other Administrative Costs 508,550

G. Pre-Operational Costs

Labor cost .................................................................……………. Birr 53,000

Transport & fuel.......................................................…………. ….Birr 25,000
Consultancy fee........................................................…………….. “ 10,000
License and permit charges.......................................……………. “ 5,000
Utilities......................................................................…………….. “ 80,000
Instrastructure costs...................................................…………….. “ 180,000
Miscellaneous............................................................…………….. “ 20,000
Total Birr 373,000

8. TUITION AND STUDENT ENROLLMENT

After analysis the current annual school tuition of three schools in Yeka sub-city which
rates range from Eth, Birr 3250 to 6000 per student per year we found it appropriate to charge
Eth. Birr 2000 – 2500 per annum neglecting registration fee for ------------- SCHOOL.

First Phase program ( 2005)

Grade Level Tuition per Annual Tuition Enrollment Annual Collection
Quarter/per /Per Student
Student
Kindergarten 525 2100 3 750,000
Grade 1 – 4 575 2300 960 2208,000
Total 1260 2,958,000

2nd Phase program ( After one year, 2009)

 Grade Level Tuition per Annual Tuition Enrollment Annual Collection
Quarter/per /Per Student
Student
Kindergarten Birr 625 2500 300 750,000
Grade 1 – 8 575 2300 960 2208,000
3. Grade 9-12 625 2500 320 800,000
Total 1260 3,758,000

9 – FINANCIAL ANALYSIS AND FORECASTS

This financial analysis table shows that the required amount of initial investment after
ex,revenues, expenses as well as the profitability of the project.
NO Description unit Quan. unitcost Total cost
1 House rent expense
2 Salary expense
3 Office furniture equipment
4 Computer lab. & related
5 Library furniture’s &references
6 Pedagogical center facilities
7 Class room Desks, chairs &tables
8 KG. playing tools
9 KG. nap room facilities
10 Black board & class room shelfs
 Table 9
Forecasted Balance Sheet (000)
Y E A R
1 2 3 4 5 6 7 8 9 10 11
Description
Assets
(437) 199 176 404 439 674 724 996 1,050 1,107
Cash
1,456 941 1,103 1,233 1,600 2,001 2,637 3,323 4,281 5,293
Current Assets 4,393 13,281 12,289 11,362 10,502 9,692 8,921 8,182 7,467 6,774
Fixed Assets (net)
Total Assets 14,371 14,421 13,562 12,999 12,541 12,367 12,282 12,501 12,798 13,174
Liabilities and Capital:
Bank Loan
Equity capital 10.500 10,080 8,960 7,840 6,720 5,600 4,480 3,360 2,240 1,120
4,500 4,800 4,800 4,800 4,800 4,800 4,480 4,800 4,800 4,800
Cumulative Earnings
(629) 459 198 359 1,021 1,967 3,002 4,341 5,758 7,254
Total Liabilities & Capital 14,371 14,421 13,562 12,999 12,541 12,367 12,282 12,501 12,798 13,174

Table 10
Profit and Loss Statement Forecast (000)
Y E A R
1 2 3 4 5 6 7 8 9 10 11
Description
Gross Income 2,958 3,758 3,758 4,134 4,134 4,547 4,547 5,002 5,002 5,002
Net Sales 2,958 3,758 3,758 4,134 4,134 4,547 4,547 5,002 5,002 5,002
Less: Expenses 262 288 288 902 902 317 317 333 333 333
Material supplies
Salaries & Wages 829 912 912 1,003 1,003 1,109 1,109 1,213 1,213 1,213
Utilities 21 21 22 22 23 23 24 24 25 25
Depreciation & Amortization 1,271 1,149 1,035 958 897 848 890 777 753 731
Bank Interest 896 896 860 717 627 538 448 358 269 179
Repair & maintenance 33 36 36 40 40 44 44 48 48 48
Insurance 157 157 157 157 157 172 172 172 172 172
Fuel & Lubricants 85 94 94 190 130 113 119 124 124 124
Miscellaneous 33 35 35 36 96 38 38 40 40 40
Total 3,587 3,588 3,385 3,338 3,188 3,196 3,680 3,089 2,977 2,865
170 979 796 946 1,351 1,479 1,913 2,025 2,137
Profit before tax (629) - 112 239 284 450 444 574 608 641
Less: Profit tax 30% (629) 170 261 557 662 946 1,035 1,390 1,417 1,496
Net Income (629) 459 (198) 359 1,021 1,967 3,002 4,341 5,758 7,254
Cumulative Net Income

Table 11
Schedule of Depreciation and Amortization Forecast
(000)
Amou Rate Year
nt 1 2 3 4 5 6 7 8 9 10 11
Type of Fixed Assets %
1 Building & Civil Works 11,613 5% 631 631 631 631 631 631 631 631 631 631

2 Vehicles 1,330 20% 266 212 170 136 190 87 70 56 45 35

3 Office Furniture & 1,684 20% 337 269 215 172 138 110 88 70 57 45

Equipment
4 Total Fixed Assets 14,627 - 1,234 1,112 998 921 860 810 771 739 715 693
5 Pre-operation Cost 373 10% 37 37 37 37 37 38 38 38 38 38
Total Investment 15,000 1,271 1,149 1,035 958 897 848 809 777 753 731
Book Value 14,393 13,281 12,289 11,362 10,502 9,692 8,921 8,182 7,467 6,774

Table 12
Cash Flow Forecast (000)
Y E A R
1 2 3 4 5 6 7 8 9 10 11
Particulars
Cash Inflow
Sales Revenue 2,958 3,758 3,758 4,134 4,134 4,547 4,547 5,002 5,002 5,002
Cash Outflow
Operating costs 1,420 1,543 1,544 1,663 1,664 1,810 1,811 1,954 1,955 1,955
Profit tax - - 112 239 284 405 444 574 608 641
Total Cash outflow 3,436 3,559 3,582 3,739 3,695 3,873 3,823 4,006 3,952 3,895
Net Cash in-flow (478) 199 176 404 439 674 724 996 1,050 1,107
Cumulative Cash (478) (279) (103) 301 740 1,414 2,138 3,134 4,184 5,291
Table 13
Cash flow forecast in million (000)
Y E A R
1 2 3 4 5 6 7 8 9 10 11
Particulars
Inflow 2458 3758 3758 4134 4134 4547 4547 5002 5002 5002
Outflow
Operating Expense 1420 1543 1544 1663 1664 1810 1811 1955 1955 1955
Profit tax - - 112 234 284 405 444 574 608 641
Total Cash outflow 1420 1543 1656 1902 1948 2215 2255 2529 2563 2596
Net Cash in-flow 1538 2215 2102 2232 2186 2332 2292 2473 2439 2406
Table 14
Year 0 1 2 3 4 5 6 7 8 9 10
Cash flow (15,000) 1,538 2,215 2,102 2,232 2,186 2,332 2,292 2,473 2,439 2,406
inmil
Cum. CF (15,000) 14,446 12,251 10,149 7,917 5,731 3,399 1107

1. PBP = 7 Year + 1107

2473
= 7 Year + 0.45
= 0.45 x 12 month
= 7 Year & 5 month
 2. ARR = AV.Income. After tax
Io
AV.Inv. after tax > 7,254 = 725.4
ARR = 725.4 = 0.048 = 4.8%
15,000

3. NPV r%

NPV = ECFn - Io
(1+r)n

= 1538 + 2215 + 2102 +2232 + 2186 + 2332 + 2292 + 2473 + 2439 + 2406
1.06 1.12 1.19 1.26 1.34 1.42 1.50 1.60 1.69 1.79

= 1450.94 + 1977.67 + 1766.39 + 1771.43 + 1642.25 + 1528 + 1545.63 + 1443.20 +

1344.14
= 15813.79 – 15,000
= 813.79 so the project is feasible.

BCR = EPVCI
4. BCR = Io

BCR = 15813.79
15,000

= 1.05 the project is feasible, because BCR is greater than one so accept the project.

5.IRR = Lower + PV Low dis. Rate – PV of Io x Higher DR – Lower DR

PV at lower dis. rate – PV at higher
discount rate
= 1538 + 2215 + 2102 + 2232 + 2186 + 2332 + 2292 + 2473 + 2439 + 2406
1.05 1.10 1.16 1.22 1.28 1.34 1.41 1.48 1.55 1.63

= 1464.76 + 2013.63 + 1814.68 + 1829.51 + 1707.81 + 1740.30 + 1625.53 + 1670.95 + 1573.55 +

1476.07

= 16916.76

= 5% + 16916.76 – 16000 x 6% - 5%
16916.76 – 15813.79
 = 5% + 916.76
1102.97

= 5% + 0.83

IRR = 5.83%
IRR is less than the cost of capital, there fore is not acceptable.

Table 7
Vehicles Requirement
Unit Price Total Price
No. Type Qty In Birr In Birr
1 Automobile 1 120,000 120,000
2 Minibus, 12 seaters 1 160,00 160,000
3 Medium size buses of 30 seaters 3 350,000 1,050,000
Total Birr 1,330,000