REPORT

Table of Contents
Table of Contents............................................................................................................................ii
Project: PPP Arrangement (Government and Private Investor)......................................................2
Introduction.....................................................................................................................................2
Key Drivers......................................................................................................................................2
Technical Appraisal.........................................................................................................................2
Environmental Appraisal.................................................................................................................2
Economic Appraisal........................................................................................................................2
Social Appraisal...............................................................................................................................2
Commercial Appraisal.....................................................................................................................2
Financial Appraisal..........................................................................................................................2
Appraisal Plan..................................................................................................................................2
Discussion........................................................................................................................................2
Conclusion.......................................................................................................................................2
Appendices......................................................................................................................................2
Project: PPP Arrangement (Government and Private Investor)
Minister of Trade and Industry and his Chief Director attended the United Nations Conference on
Trade and Development and they found out that most countries around the world are leveraging the
private sector in the provision of health infrastructure and the management of the operations of the
existing facilities to secure value for the public money.

Upon their return, they decided to explore avenues for Public-Private Partnerships (PPPs) in the
areas of construction of warehouses and factories on build-operate and transfer options. The
Minister is passionate about the move and wants to implement it as quickly as possible. However,
the Chief Finance Director has drawn his attention to the National Public Private Partnership Policy
of the country and advises that they consider it seriously. Hence, a shea butter manufacturing plant
costing $3.5 million is considered to be built in the Northern Region. This investment proposal is a
Public-Private Partnership (PPP) arrangement that involves the building, operating, and transfer of
a manufacturing plant to the government after 8 years of operation by the private investor. The
manufacturing plant will have a contribution per ton of $ 350.00 after export. Below are the exports
for 8 years.

Year 1 2 3 4 5 6 7 8
Metric 8,000 12,000 16,000 20,000 24,000 28,000 32,000 36,000
tons

Other key information:

 The investor will incur $100,000.00 per annum as a fixed cost.
 Tax depreciation: 30% per annum on reducing balance method.
 Taxation rate: 25% of taxable profits. All of the tax is payable in the year in which it arises.
 The expected growth rate of the cash flows beyond the 8th year is 3%. The discount rate used
to evaluate the investment is 12%.
 The shear butter manufacturing plant will be transferred to the government after 8 years for $1
million. Therefore, this will become a national asset.
 No depreciation is charged on the year of transfer and the written-down value of the asset is
treated as the tax depreciation of the year.
Introduction

This investment appraisal report focuses on a Public-Private Partnership (PPP) arrangement that
involves the building, operating, and transfer of a manufacturing plant for the production of shea
butter in Northern Ghana for exports. The project aimed at enhancing the livelihoods of rural
communities in Northern Ghana by generating income through the processing and exportation of
shea butter to international markets. This report provides an analysis of the key appraisals to ensure
the project is worthwhile.

Key Drivers

This project will take into account some key appraisals. These include technical appraisal,
commercial appraisal, environmental appraisal, economic appraisal, and financial appraisal.

Technical

Financial
Commercial

Shea Butter
Manufacturing
Plant
Appraisals

Economic Social

Environmental

Figure 1: Project Key Drivers

Technical Appraisal
Technical feasibility is the process of determining how you will create your good or service to see
if it is feasible for your business (Indeed, 2022). Because the government will facilitate the land for
the project, which results in less litigation, the project is technically feasible. Also, shea butter is
treasured in the Northern Region, and since processing shea butter is the aim of this project, the
project is practical in terms of raw materials. The initiative will make use of cutting-edge
technological techniques to construct a green manufacturing plant that will not release CO2 gases
into the atmosphere. This makes the project sustainable, preserving the environment, creating jobs
for locals, and generating future profits for the investor and the government.
Environmental Appraisal
Sustainability is the anchor of this project. This project will use modern technology to build a green
manufacturing plant. This will limit the pollution of the environment. The well-being of the plant is
key and we are committed to the ESG framework used by companies for sustainable businesses.
Also, the rules and regulations upheld by the Environmental Protection Agency will be abided
with.
Economic Appraisal
Over the years the Northern Region has been classified as a less developed area. It is one of the
reasons why the current president demarcated the regions to form sizable ones for development.
This project will bring economic development to the people of the Nothern Region with an
employment capacity of 200 youths. The demand for raw materials (shea butter) will give
sustainable business to the farmers in the locality and this will avoid some post-harvest losses.
After the 8 years concession period, the manufacturing plant will become a national asset.
Social Appraisal
The government launched the entire project in the Northern Region by meeting the key
stakeholders including Yaa Naa Chief of the Gonja, and other prominent people in the place to
discuss the social acceptance of the project. The memorandum between the government, the
people, and private investors has been signed by these parties to ensure the project is kick-started
successfully.
Commercial Appraisal
Shea butter is a natural source product that is made from the nuts of the shea tree and is widely
utilized in the culinary and cosmetics industries. It can be used for lotions, soaps, shampoos, and
creams, among other things. The shea butter market is anticipated to reach $2.6 billion in 2022 and
is likely to expand at a CAGR of 7.7% between 2022 and 2032, according to the global shea butter
market (Future Market Insight, 2022). This demonstrates how profitable the global market is for the
production of shea butter.
Financial Appraisal
The project will cost $3.5 million and this includes the raw materials, labor, and other key expenses
that would be incurred to bring the manufacturing plant operation. Afterward, the private investor
will produce the shea butter and sell it for $350 per metric ton in the international market. To
ensure the manufacturing plant is transferred to the country, the private investor will operate on an
8-year concession agreement. Also, the net present value appraisal together with the terminal value
will be used to access the financial viability of the project.
Appraisal Plan
This plan shows how the appraisals will be implemented before the project will kick start.
Appraisal March April May June July August
Technical
Environmental
Economic
Social
Commercial
Financial
Commencement

Discussion
After going through the appraisal analysis, the project passed the key appraisal considerations. This

gives the green light for the financial appraisal to validate the whole investment. The estimated

NPV of $66,762,361.01 and terminal value of $ 114,410,797.92 provide a strong case for accepting

the project. The project has the potential to generate significant social and economic benefits for

rural communities in Northern Ghana, and support the government of Ghana's efforts to promote

economic growth and development in the region.

Conclusion

As an analyst for this private investor, I would firmly advise that the project is worthwhile. This is

because it is sustainable and the stakeholders will benefit.

Appendices
Contribution
Year Metric Tons Unit Price ($) Total
1 8,000 350.00 2,800,000.00
2 12,000 350.00 4,200,000.00
3 16,000 350.00 5,600,000.00
4 20,000 350.00 7,000,000.00
5 24,000 350.00 8,400,000.00
6 28,000 350.00 9,800,000.00
7 32,000 350.00 11,200,000.00
8 36,000 350.00 12,600,000.00

Tax Depreciation
Year Cost/Written Down Value Rate Depreciation Written Down Value
1 3,500,000.00 30% 1,050,000.00 2,450,000.00
2 2,450,000.00 30% 735,000.00 1,715,000.00
3 1,715,000.00 30% 514,500.00 1,200,500.00
4 1,200,500.00 30% 360,150.00 840,350.00
5 840,350.00 30% 252,105.00 588,245.00
6 588,245.00 30% 176,473.50 411,771.50
7 411,771.50 30% 123,531.45 288,240.05
8 288,240.05   288,240.05 -

FCF ( year 8) 9,997,060.01

Growth rate 3%
Discount rate 12%
Terminal Value = FCF (Last year) * (1+g)/ WACC - g
Terminal value (perpetual growth model) 114,410,797.92
 PPP Arrangement
$ 3,500,000.00
$ 700,000.00
$ 1,000,000.00
30%
it 25%
nsfer to state (years) 8
0 1 2 3 4 5 6 7
2,800,000.00 4,200,000.00 5,600,000.00 7,000,000.00 8,400,000.00 9,800,000.00 11,200,000.00 12,600,000
(700,000.00) (700,000.00) (700,000.00) (700,000.00) (700,000.00) (700,000.00) (700,000.00) (700,000
(1,050,000.00) (735,000.00) (514,500.00) (360,150.00) (252,105.00) (176,473.50) (123,531.45) (288,240
1,050,000.00 2,765,000.00 4,385,500.00 5,939,850.00 7,447,895.00 8,923,526.50 10,376,468.55 11,611,759
(262,500.00) (691,250.00) (1,096,375.00) (1,484,962.50) (1,861,973.75) (2,230,881.63) (2,594,117.14) (2,902,939
787,500.00 2,073,750.00 3,289,125.00 4,454,887.50 5,585,921.25 6,692,644.88 7,782,351.41 8,708,819
ion 1,050,000.00 735,000.00 514,500.00 360,150.00 252,105.00 176,473.50 123,531.45 288,240
1,000,000
,500,000.00) 1,837,500.00 2,808,750.00 3,803,625.00 4,815,037.50 5,838,026.25 6,869,118.38 7,905,882.86 9,997,060
1.0000 0.8929 0.7972 0.7118 0.6355 0.5674 0.5066 0.4523 0.4
(3,500,000.00) 1,640,625.00 2,239,118.30 2,707,345.15 3,060,043.38 3,312,652.88 3,480,109.14 3,576,219.91 4,037,644