PROJECT PROPOSAL FOR:

Poultry and Diary Farm

PROJECT LOCATION:

Around Diredawa Dry Port, Dire Dawa

PROMOTER: JAMAL MUKTAR

July. 2024. Dire Dawa

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 Contents

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List of table...................................................................................................................................................4

1. Executive Summary..................................................................................................................................................................1

2. Introduction...............................................................................................................................................................................2
2.1 General Background.............................................................................................................................................................2
2.2 Objective of the project........................................................................................................................................................3
2.3. Project description...............................................................................................................................................................3
2.4 Project Rationale...................................................................................................................................................................4
2.5. The significance of the project............................................................................................................................................4
2.6 Project Location....................................................................................................................................................................5

3. The market Study......................................................................................................................................................................6

3.1 Market Analysis....................................................................................................................................................................6
3.2 The Demand-Supply Gap.....................................................................................................................................................6
3.2.1 Current supply of Retail Trade of Industrial Agricultural and Construction machinery and equipment’s..................7
3.3 Future market or Demand of commercial Building rental...................................................................................................7
3.3.1 Target customers...........................................................................................................................................................8
3.3.2 Marketing promotion and strategy................................................................................................................................8
3.3.3 Competition..................................................................................................................................................................9
3.4. The project facilities and Services plan...............................................................................................................................9

4. Technical Study.......................................................................................................................................................................11
4.1. Description of the project Service/ Product mix...............................................................................................................11
4.2 Construction work and Technology...................................................................................................................................11
4.2.1 Construction schedule.................................................................................................................................................11
4.2.2 Architectural Design & Layout..................................................................................................................................12
4.2.3 Structural design.........................................................................................................................................................12
4.2.4 Reinforced concrete....................................................................................................................................................13
4.2.5 Foundation Design......................................................................................................................................................13
4.2.6 Construction Plan and process....................................................................................................................................13
4.3. Utilities..............................................................................................................................................................................14
4.4 Project implementation.......................................................................................................................................................14
4.5 Organizational Structure.....................................................................................................................................................15
4.5.1 Organization and management...................................................................................................................................15
4.5.2 Man Power..................................................................................................................................................................15
4.5.3 Organizational Structure.............................................................................................................................................15

5. Financial Requirement and Analysis.....................................................................................................................................18

5.1 Fixed Investment................................................................................................................................................................18

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 5.2 Working Capital.................................................................................................................................................................19
5.2.1 Operating Expense at full Capacity............................................................................................................................19
5.2.2 Operating Expenses....................................................................................................................................................20
5.3 Total initial investment cost...............................................................................................................................................20
5.4 Financial analysis and Statements......................................................................................................................................20
5.4.1 Underlying Assumption..............................................................................................................................................20
5.5 Sources of Fund..................................................................................................................................................................21
5.6 Financial evaluation............................................................................................................................................................21
5.6.1 Profitability.................................................................................................................................................................21
5.6.2 Ratios..........................................................................................................................................................................21
5.6.2 Break-even Analysis...................................................................................................................................................22
5.6.3 Pay-back Period..........................................................................................................................................................22
5.6.4 Internal Rate of Return...............................................................................................................................................22

6. Environmental impact of the project...................................................................................................................................23

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List of table

Table 1 1 Office Space Demand Forecast.......................................................................................................8

Table 1 2Building functions.............................................................................................................................9
Table 1 3 project Implementation schedule....................................................................................................15
Table 1. 4 L a n d , Building & Construction...................................................................................................18
Table 1. 5 Office Equipment..........................................................................................................................18
Table 1. 6 salary Expense...............................................................................................................................19
Table 1. 7 Annual Operating Cost At Full Capacity......................................................................................20
Table 1. 8 Source of fund...............................................................................................................................21

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 1. Executive Summary
1. Project name: Integrated cows and chicken Farming

2. Project Type : Poultry and Diary Farm

3. Nationality: Ethiopian

4. Project Owner: Jamal Muktar

5. Project location: Around Diredawa Dry Port Dire Dawa , Ethiopia

6. Project composition: Milk, meat ,cheese, egg and so on

7. Total investment Cost: 20 million ETB is required from this amount 30% or 6 million
ETB from owner equity and the rest 70% 14 million ETB from bank loan.

8. Employment opportunity: 9 individuals on permanent 50 on casual basis

9. Social and Economic Benefit: provide better product of cows and chicken, employment
opportunities, generation of income and benefits for the local area and people.

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 2. Introduction

2.1 General Background

The current fast and dynamic economic growth of Ethiopia especially in urban area necessitates
equivalent growth urban agriculture. The sector should expand rapidly to support the overall
economic development sustainable.

In the urban agriculture sector of the economy, the multi-purpose in the one becoming rapidly
expanding in urban areas of the nation since dynamic economic development of urban economy
requires the out these in cities to support the growing of demand of agricultural sectors . In this
regard, agricultural product demand is needed in the all parts of the country.

Investment and property development play an important role in any emerging markets or
economies. The property investment market in Ethiopia remained under developed for several
years. As a consequence, the supply urban agricultural that can be used for food, shopping and
luxury services in the urban centers of the country is disproportionately low to cope with the
growing demand in the country spinning from the average growth in GDP of 5.5 percent over the
last ten years and population increase. The relatively good performance of the macro-economy
(real growth in GDP, low inflation rate and growth in investment and export sector) has
stimulated unprecedented investment growth in the urban agricultural sector over the last five
years. The growth of investment in the property market over the last five years in consistent with
the global experience suggesting that investment in the urban agriculture is greatly influenced by
the performance of the macroeconomic conditions. In general, a stable macroeconomic condition
leads to economic and business growth and develops investors’ confidence. This certainly spurs
large demand meat and milk. Following growing demand trends, and with the expectation of
high return on their investment capital, large number of land developers pooled their financial
resources and invested in the property market.

To this effect, the owner to invest on urban center agriculture.

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who has founders been living for long time in this city, planned to construct urban farming in
Dire Dawa and undertaken this project study to check the market, technical and financial
feasibility of this project. The promoter is very ambitious and committed to realize the project.
Hence, expects to get the necessary support from the city administration to make the project to
be operational.

Looking at the past trends and permits issues by the Government to the construction of poultry
and diary farming properties including the Retail Trade of Industrial Agricultural and
Construction machinery and equipment’s in the major urban areas of the country especially in
Dire Dawa one can easily conclude that the momentum is more likely to continue.

Besides, the government policies and incentives for the private sector investment are very
promising that motivates the promoter to engage in Retail Trade of Industrial Agricultural and
Construction machinery and equipment’s business.

2.2 Objective of the project

The major goal of this project is to contribute towards the growth of the trade sector in Dire
Dawa. Its specific objectives include the following.

 To construct and develop modern Cloth outlets, shops, offices, and restaurant, bedroom &
cafeteria facilities that enable to provide standard services to visitors.

 To undertake trading and other refuted business activities that enable to generate a
reasonable to the invested capital.

 To develop a modern city agricultural food that would provide market to international
standard in order to attract foreign visitors and thereby contribute towards the generation of
hard currency for the country.

 To create employment opportunities for the population in the city and

 Contribute towards the beautification of the city through the construction of modern building
infrastructure and facilities.

2.3. Project description

The long-term goal of the project is become the best choice in Dire Dawa and its surrounding
areas by creating a differentiated experience capitalizing on personal service. The proposed
project will have a total area of 1000 m2, designed to construct poultry and ,diary which will in
turn plays significant role towards solving shortage of meat , eggs milk and milk product in
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Dire Dawa.

The relatively modern nature of the city as business unique location has laid a fertile ground for
future promising growth of the city. The owner plans the project to render Retail trade
and office services to create high quality class to satisfy the interest of customers in the city.
Based on environmental and other considerations, the entrepreneur has determined the type and
size of the building which is already determined by the site; conceptual planning and preliminary
analysis have been carried out by analysts.

In order to attract its clients to the service, the project will develop high standard Retail trade and
office of best choices and will also save best quality.

2.4 Project Rationale

Internationally the economic growth this country is experiencing, the good governance created
and even if the city is in its nascent stage of development these project are the first in kind in the
city are feasible and would be a model development in promoting and attracting different urban
investments.

In order to respond to the created environment the city is in need of a major, basic and feasible
urban projects to be developed.

The existing promising investment opportunities, the demands of service needs along with
relatively sound investment support made by the government in such kinds of feasible projects,
compelled the project promoter to initiate the multipurpose oriented business project to be
established. The mismatch between the demand for and supply of such kind of services in easily
observed in the city.

Therefore, the existing shortage or absence in the supply of these services, along with its
commercial and administrative access, better location and infrastructure access, escalating trend
of urbanization and business activities, thus it is with such reason that this project is identified
and proposed and assumed to be more profitable.

In general, the country’s decentralized state based economy, privatized and free market
economy; good governance creates a favorable environment for the development of investment
for private investors.

2.5. The significance of the project

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The envisaged project deemed to add to the economic development of the nation in general and
city in specific with following ways: Source of Revenue As public policy of any nation, the
government collects different forms of taxes from different business organizations and
individuals. Among the different forms of taxes, business income taxes, payroll income tax and
VAT are collected from undertaking business activities. Therefore, the building will serve as
sources of revenue for the city as well as for the region.

A. Employment opportunity

One of the problems that our country faced is unemployment. Therefore, the current objective of
the government is working on tackling the problem of unemployment and fostering the
development process either through creating self-employment or employment in other
organization. Hence, this project will hire 9 individuals on permanent 50 individual as casuals
during construction and operation.

B. Sources of social service

In addition to serving as a source of employment and income for the region, the project renders
social services for different group of people. Hence, it is also provide the following services;

 Serve as a source of mental satisfaction for the different users,

 It deemed to minimize the demand for shops and other bundles of services in the area.
Furthermore, it serves as the pilot experience and ground for other investor to enter in to such
kinds of urban development. It also contributes on the efforts made on as a character given
building for physical development pattern of the cityscape.

2.6 Project Location

As aforementioned on the introductory part the envisioned project is intended to be located in

Dire Dawa city, Ethiopia.

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 3. The market Study

3.1 Market Analysis

There are a number of factors which affects the demand of agricultural product ; Of these factors,
the most important to have influence is population growth and the level of income. The currently
expanding service industry in the city and around the city has been inviting skilled and unskilled
labor forces to the city; in addition, the number of both government and non-government
offices has been increasing. Above all the increase in the number of population of the city
increases for the provision of different services. Nowadays, most of the private business
organizations need their own small-medium offices in order to render their services and provide
their products, and they prefer places that are found in the center of the city or close to the road.
As clearly indicated in the introductory part of this proposal. Dire Dawa is
dynamically growing city. Though the market demand gap for Retail Trade of Industrial
Agricultural and Construction machinery and equipment’s in Dire Dawa is not clearly
understand there is wider gap for such demand as many merchants, organizations are
flowing to the city every day. From prior business experiences, the demand of Retail Trade
of Industrial Agricultural and Construction machinery and equipment’s in Dire Dawa is very
high and hence the demand and the supply gap is very wide.

3.2 The Demand-Supply Gap

Dire Dawa city is situated in the very center of Ethiopian service industry. Dire Dawa city is
also a major business center and commercial route that attracts thousands of business travelers.
These are also the most important groups of potential customers that include both the local and
foreign tourists and the modern business community who choose services that range from
economic to high class standards. These groups would also choose a healthy comfortable climate
that combines a more traditional type with that of modern shops, offices, bedrooms restaurants
and cafeterias. Hence, the project will solve the serious demand problem in the city.

Over the last decade, there has been a significant growth in the number of local and international
trades across the country. This increase is mainly associated with the stimulation of economic
activist and partly due to an increase in the flow of international and local traders in to the city.

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Since Dire Dawa is an important commercial center in addition there is a significant increase in
business activates and hence increasing the number of traders to the city. Even though there is a
lack of quantitative estimates that number of traders to the city. Even though there is a lack of
quantitative estimates that deficit the actual demand and also the annual growth rate Hotel
facilities and urban commercial facilities are scarce in the city. So far in the city there is no
development of such kind standard retail building and it is the first of its kind in the city and will
promote other investors from the city and the surrounding areas. As a result there is a large gap
between the developed and that of the supply for modern Retail Trade of Industrial Agricultural
and Construction machinery and equipment’s, so, this project would not face any problem of
demand scarcity for it business center and it would provide good service to customers.

3.2.1 Current supply of Retail Trade of Industrial Agricultural and Construction machinery and
equipment’s
Commercial building/office sector has shown a dynamic change in the past few years. The
reason for this could be rapid economic growth and a supporting public infrastructural
development. Other factors relevant in the specific case of commercial buildings are the large
increases in national and international businesses, particularly firms in the services sector.

The business of Retail Trade buildings in Dire Dawa in booming highly due to the recent rapid
growth experienced in Ethiopia. As a result, a good number of local and international
organizational are coming in place. Government offices which used to operate in limited spaces
all over the city are also concentrating on leasing new and modern buildings. Increasing numbers
of international organization and NGOs which in the past had typically converted residences into
office space are now moving towards renting whole floors or even multiple floors in modern
city-center commercial buildings.

3.3 Future market or Demand of commercial Building rental

The demand for office space is a derived demand because firms rent space as an input to the
production of services or goods they provide to businesses and households in the local regional
or national economy.

Following our survey of office space users in Dire Dawa are mainly firms providing banking,
cafeteria and restaurants, bed room, supermarkets service, computer Center Crevice. The
different customers for commercial buildings also include shops and offices that are currently
renting out to provide their goods and services.

Future demand for office space is actually driven from growth in number of offices in the city

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which in turn is influenced by the macro-economic growth in the country. Following the
government five year growth and transformation plan (GTP), the Ethiopian economy is expected
to increase by 10% for base case scenario and 12% under the optimistic case scenario.

Assuming that demand for office space is directly related to the growth in the economy, the
forecast for office space demand is shown in the following table;

Table 1 1 Office Space Demand Forecast

Office space demand under base Office space demand under high case

case economic in m2 economic in m2

Years Growth Growth

2020/2021 9,916,543 11,304,859

2021/2022 11,007,363 12,057,416

2022/2023 12,218,173 12,953,878

2023/2024 13,562,173 13,963,577

2024/2025 15,054,011 14,554,534

2025/2026 16,709,952 14,987,431

Source: estimation based on GTP’s forecasted Ethiopian Economic Growth

3.3.1 Target customers

The target customers of this envisaged project include:-

1. Mixed business Community

2. Nearby business organization

3. the government bureau

4. small accounts(SOHO) SME

5. Nongovernmental organizations

3.3.2 Marketing promotion and strategy

In order to penetrate and gain considerable market share, one of the major marketing strategies
for the project is consistently rendering quality service to its tenants. Due emphasis must be
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placed on improving quality of service and facilities. The major marketing strategies to promote
the project and gain considerable market share include:

 Advertising through different means focusing on the existing service and facilities

 Promote in association to the key location and nearby business

 Working on sustained promotional work.

 Working on public relations to reach and influence key personals and organization with
a capacity of making decision.

 Keeping the quality of its service/ facilities and consistently improving with changing
situations.

 Seasonal discount pricing different others customer centric marketing strategies will be
used by the company.

3.3.3 Competition

There are different forms of competition that may face the envisaged Retail Trade of Industrial
Agricultural and Construction machinery and equipment’s. These are price and non-price based
competition. Moreover, there are different competitors that will compete with the project either
directly or indirectly. But the Retail Trade of Industrial Agricultural and Construction machinery
and equipment’s under discussion has diversified marketing strategies that could enable it cop up
with the different competitors in the market. Moreover it will frequently conduct competitors
research which focuses on, the strength and the weaknesses, the different competitors’ strategies,
the techniques they use in rendering the service, their customer handling methods, and others.
Generally the project has many other projects all over Ethiopia which compete with it.

3.4. The project facilities and Services plan

In order to provide Retail Trade use business center building services of a high standard, it has
been planned to construct and develop the infrastructure and facilities that would viable to meet
the requirements of an international standard business center. Accordingly, various buildings and
facilities will be constructed phase by phase starting with the most needed ones that are essential
to commence the operation of its business activities. With the completion of construction, the
building will provide a combined service such as shops, and office service as well as modern
business center that primarily serve its guests and major clients. The plan is that the building will
be partitioned in to different functions:

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 Table 1 2Building functions
Building Description UOM Availed area

Ground Retail Trade Supermarket, Pharmacy, M2 100

Banking &

Insurance

1st FLOOR Bank, Office, Cafeteria & Restaurant M2 100

2nd FLOOR Pharmacy, beauty salon, gym-center M2 100

Since the project will be engaged in mixed building the main sources of its annual revenue
would be from the rental of building spaces such as shops, offices, and banking, café &
restaurant bedrooms. Therefore, the sources of revenue have been classified in to one category
namely the rental of banking & supermarket, offices, shops, bedrooms restaurant and café
based on these Classifications. Based on the market price of similar Retail Trade of Industrial
Agricultural and Construction machinery and equipment’s in the area, the envisioned buildings
set the following fair price (Before VAT) for its service, hence when the building construction
fully get operational it is assumed to generate a yearly income of ETB 3.2 Million.

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 4. Technical Study
4.1. Description of the project Service/ Product mix

The envisioned mixed purpose building will provide different rental services to the different
customer groups for different purpose. The building will have basement, ground and four floors.
The purpose of the building explained as follows;

 the ground floor and first floor will be designed for different business centers like stores
banks, supermarket, beauty salon(man and women), Computer center, pharmacy,
internet café, boutiques, different shops and other business activities,

 The second to fourth will be designed as apartments.

Besides, the buildings will have enough parking facility for its customers and green area in its
compound.

4.2 Construction work and Technology

4.2.1 Construction schedule

The construction project is started on July 2024, and is expected to be finished on July 2025. as
seen in the abbreviated construction schedule above, a majority of the schedule’s time is made
up of five major activities; Concrete, building Enclosure, masonry, mechanical &HVAC and
Electrical installations. Concrete activities include processes such as placing foundations and
slab on deck. The Building Enclosure Phase includes erecting the scaffolding that will allow for
exterior sheathing installation and bricklaying and aluminum works. Mechanical and Electrical
install coincide with each other due to the need for coordination between the two divisions.
There are several periods of construction during the schedule in which there are multiple
construction activities occurring at the same time.

The construction site must be organized accordingly as these processes take place. As with any
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construction project, the goal of the schedule was to complete all construction activities before
the required Date of completion.

This date of completion is practical based on the time of year in which the building will be
completed. The team allowed a two week contingency for any setbacks. Typically, winter
construction tends to cause unforeseen delays that negatively impact a construction project.
These conditions can and will almost undoubtedly impact the project schedule by causing
unforeseen delays and project inefficiency.

4.2.2 Architectural Design & Layout

Although functional spaces for the project were laid out in significant detail, the rest of the
building had designated spaces but n set layouts. It was at the discretion of the project promoter
to devise typical layouts for the non-detailed commercial and office spaces. To make sure that
the building’s layouts were practical, the project owner researched typical architectural layouts
for laboratory and executive office spaces.

The walls and partitions throughout the floor were congruent with the structural frame and
column locations.

4.2.3 Structural design

One of principle deliverables of our project is the structural design of the building. The structural
elements were coordinated with the layout of the building adjustments were made to the columns
if specific layouts are necessary. The frame was made up of a grid with repeating standard
structural bays. Included in the structural system are bay sizes, shape and size of structural
members, floor compositions and curtain walls. These elements were established to resist gravity
ad lateral loads as appropriate.

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The gravity load design was completed for two frames; one of structural steel and one of
reinforced concrete. Reinforced concrete frame was chosen for further design based on cost per
square foot, local availability of material and constructability considerations, such as erection
and casting. The concrete system was then designed for lateral loading with necessary
adjustment being made to framing.

4.2.4 Reinforced concrete

The project group prepared hand structural design calculations for a typical bay of a reinforced
concrete frame. In all reinforced concrete designs, a superimposed dead load of 800kN per
square meter was assumed for mechanical equipment, floor coverings and ceilings.

Similarly, the design of the typical bay accounted for the use of different commercial space, in
which a live load of 500 kilos per square meter was assumed. Loads were calculated based on
the requirements of the minimum Design loads for Buildings and other Structures.

4.2.5 Foundation Design

Since foundation design are site and material specific, the promoter is holding off on the design
of the foundations.

4.2.6 Construction Plan and process

The project team developed a coordinated project schedule and construction plans that would
reflect the expectations for an actual construction project. The project schedule was developed
using the preliminary designs given to the project team. Additionally, the group considered
typical construction activities and durations taken from similar construction projects as well as
realistic constraints on building development. For instance, it is necessary for the structural
frame to be completed before concrete can be placed for the slab on deck. Hand drawn
construction plans detailing site entrances and storage areas were coordinated with the project
schedule to give the reader visualizations of the construction site set up through various periods
of the construction process.

Based on a general program of the project owners the consultant who is going to be hired makes
site studies, develops structural designs, prepares drawings and specifications, determines
quantities involved and estimated the resultants costs. All these activities will be done in the first
phase of the project which is the design stage after the document are produced by the designers
have been received, and the works secured the project is supposed to enter the tendering stage.
At this stage contractors study the project document analyze and subsequently determine the

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construction methods, built up their unit rates and submit their bids for the works. The promoter
of this project intends to compare the bids and award the contract for the lowest responsible
bidder. This, is of course, presupposes that the favorable proposal does not exceed the allocated
budget.

After the award is made and the contract signed between this project owner and the contractor,
the project constructor is expected to prepare and submits a detailed construction program which
includes material schedule, manpower requirement and cash flow forecast.

After the award is made and the contract signed between this project owner and the contractor,
the project constructor is expected to prepare and submits a detailed construction program which
includes material schedule, manpower requirement and cash flow forecast.

4.3. Utilities

A number of utilities world be put in place in order to ensure smooth functioning of the project.
These utilities include:

 Water Supply,

 Solar powered offices

 Supplementary Electricity supply.

 Telephone line Internet Broadband

 Well landscaped areas

 Responsible waste removal

 Well thought about site arrangement

4.4 Project implementation

The project’s implementation is expected to take 12 months. The major activities include Bank
loan processing, construction of the building, cleaning the area around the building, Procurement
of equipment and start rendering services. The time schedule for the above matured major
activities is presented below:

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 Table 1 3 project Implementation schedule
SN ACTIVITIES DATE

1 Construction work permit processing AUGUST,, 2024

2 Construction Bid Processing Sept, 2024

3 Site Development octo 2024

4 Building and construction work Phase I octo, 2024- JUn,2025

5 Bank loan processing Feb,2025-march,2025

6 Building and construction work Phase IIApri, 2025- MAY,2025

7 PREPARATION FOR SERVICE July, 2025

4.5 Organizational Structure

4.5.1 Organization and management

The organizational structure should be in a way that the company able to achieve its objectives
as well as the satisfaction of standard requirement. In addition to this, the structure should fit the
dynamics of all customers in the building ranging from small business to large tenants.

4.5.2 Man Power

The total manpower required for the building will be 59 persons. The manpower list and the
corresponding labor cost are shown in part five of this document.

4.5.3 Organizational Structure

The organizational structure of the project is designed by including all the necessary personnel
under the right division. At the top of the organizational structure, there will be manager with the
responsibility of supervising the overall activity of the building. Depending up on the nature of
the center and the amount of work to be performs; there exist auxiliary units under the general
manager.

Employees under each unit will be supervised by the department head that is accountable for the

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general manager. General Manager is appointed by owner.

Owner

General
Manager

Marketing
Building Admin Technical and maintenance
manager

HRM and
finance

As clearly shown in the organizational structure, the center organization has one general
manager and three main sections. Under the general manager there are the, marketing
Department, maintenance and building administration department. Under building admin dept
there exist two sections i.e., HRM & finance and general service. Further sub sections are also
organized under technical and maintenance manager. The following section deals with the duties
and responsibilities of each department.

A. The General Manager’s Duties and Responsibilities

 He/she will plan, organize, direct and control the overall activities of the building.

 He/she will devise policies and strategies that will enable the center to be profitable.

 He/she will incorporate modern technological innovation that will facilitate the service
delivery of the building to increase customer’s satisfaction.

 He/she will plan, organize, direct and control the human and non-human resources of the
building so as to achieve the short and long run objectives of the organization.

B. Building Administration Department: - The building Administration Department of the multipurpose

building has two main sections (HRM and Finance and General Service section). It has responsible for
undertaking the following activities;

 Manage the human resources and control employee’s activity

 Well non-human resources of the project, which include; effective handling of the
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 different resources of the building, and devise strategies of controlling against fraud and
damage.

 Will provide the right material or inventory to the center with right price at the right time.

 Will plan, organize direct and control the financial transaction of the building by using all
the necessary documents.

 Accountant and casher that will collect money from the customers.

 Will develop sound financial control system by developing modern financial control
systems.

 Will prepare the annual financial statements and prepare condensed reports for both the
General Manager and other concerned government body.

 Follow the overall status of the business and provide maintenance and repair services

C. The marketing Department

 Will handle the overall marketing activities of the organization which include planning,
organizing, directing, and controlling.

 Will develop the marketing strategies for future multipurpose building development

 Will develop effective customer handling strategies.

 Execute the promotion methods.

D. Technical and maintenance manager

 Will handle the overall physical maintenance and related issues

 Will make sure electricity and back up is organized.

 Follow up security issues and educate tenants

 Works in collaboration with general service to make sure tenants are well served

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 5. Financial Requirement and Analysis

The financial resource is a prime resource for undertaking any activities. Hence for
implementing this Retail Trade of Industrial Agricultural and Construction machinery and
equipment’s a total of 9.47 million ETB is required. From this 30% 2.8 million birr will be
covered by the promoter of the project while the rest 70% 6.6 million will be covered through
loan from bank at the prevailing interest rate.

Therefore the said amount of finance is needed for undertaking the following.

5.1 Fixed Investment

A. Land, Building & Construction

Table 1. 4 L a n d , Building & Construction

S.N Description of works Total Cost in birr

1 Building construction 1000,000

2 Site Development 15000

3 Design and supervision 350000

Total 1,500,000

B. Office Equipment

Table 1. 5 Office Equipment

SN Description Measurement Qty Unit cost in Total cost in

birr Birr

1 Executive table Unit 1.00 25,000.00 25000

2 Managerial Table Unit 2.00 17,500.00 35000

3 Working Table Unit 2.00 12,000.00 24000

4 Document shelf Unit 4.00 7,100.00 28400

5 File cabinet Unit 3.00 2,430.00 7290

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 6 Desktop computer Unit 4.00 6,100.00 24400

7 Laptop Unit 1.00 24,000.00 24000

8 Printer Unit 1.00 15,000.00 15000

9 Fax & Telephone machine Unit 2.00 1,300.00 2600

10 Carpet and Curtain LS 1.00 21,000.00 21,000.00

Total 206,690.00

5.2 Working Capital

5.2.1 Operating Expense at full Capacity

A. s a l a r y Expense

Table 1. 6 salary Expense

SN Position No Qualification Monthly Annual

salary in salary in
Birr Birr

1 General manager 1 BA in management 3000 36,000

2 Building admin 1 BA in Acct/Mgt 2500 30,000

3 Secretary 1 10+2 in secretariat science 900 10,800

4 Custodians 1 Basic 950 11,400

5 Technical and 1 Diploma in building maintenance 1500 18,000

maintenance manager

6 Guards/Security 4 Basic 500 24,000

Total 9 130,200

Benefit (20%) 26,040

Grand Total 156,240

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5.2.2 Operating Expenses

The annual operating cost at full operation capacity is estimated at Birr 1.9 million (see Table
10). The cost of Office stationary account for 0.5% of the operating cost. The other major
components of the operating cost are financial cost (82 %). For detail production cost see
Appendix A.2..

Table 1. 7 Annual Operating Cost At Full Capacity

Items Cost %

Office stationary 10,000 0.5%

Utilities 54,000 2.7%

Maintenance and repair 78,000 4.0%

Labor direct 156,240 7.9%

Administration Costs 25,000 1.3%

Land lease cost 20000 1.0%

Cost of marketing 0.0%

Total Operating Costs 343,240 17.4%

Depreciation 0.0%

Cost of Finance 1,625,277.0 82.6%

Total Production Cost 1,968,517 100.0%

5.3 Total initial investment cost

The total investment cost of the project including working capital is estimated at Birr 1.5 million
(See Table 11). From the total investment cost the highest share (Birr 1.3 million or 91 %) is
accounted by Building and civil work cost.

5.4 Financial analysis and Statements

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5.4.1 Underlying Assumption

The financial analysis of the Retail Trade of Industrial Agricultural and Construction machinery
and equipment’s is based on the data provided in the preceding sections and the following
assumptions.

A. construction and finance

Construction period 2 Years

Source of finance 30% equity and 70 loan

Bank interest rate 16%

B. depreciation

Building No depreciation

5.5 Sources of Fund

The source of fund to finance the project is planned to be from two sources. These are
promoter’s equity and bank loan. The loan is expected to be obtained from one of the local
lending institutions. Since the project is expected to take some times to repay all its debts, the
bank loan is assumed to obtain on long term credit basis. Taking the financial position of the
Promoters into account, equity contribution and bank loan to finance the total investment outlays
of the project are assumed to be 30% and 70% respectively. Accordingly, the total financial
requirement from the two sources will be;

Table 1. 8 Source of fund

SN Description Percentage share Amount

Owners Share 30% 45000

Bank Loan 70% 1.

Total 100% 9,478,031

5.6 Financial evaluation

5.6.1 Profitability
Based on the projected profit and loss statement, the project will generate a profit throughout its
operation life. Annual net profit after tax will grow from Birr 448,533 to 1.9 million during the
life of the project. Moreover, at the end of the project life the accumulated net cash flow amounts

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to Birr 12.8 million. For profit and loss statement and cash flow projection see Appendix A.3
and A.4, respectively.

5.6.2 Ratios
In financial analysis financial ratios and efficiency ratios are used as an index or yardstick for
evaluating the financial position of a firm. It is also an indicator for the strength and weakness of
the firm or a project. Using the year-end balance sheet figures and other relevant data, the most
important ratios such as return on sales which is computed by dividing net income by revenue,
return on assets (operating income divided by assets), return on equity (net profit divided by
equity) and return on total investment (net profit plus interest divided by total investment) has
been carried out over the period of the project life and all the results are found to be satisfactory.

5.6.2 Break-even Analysis

The break-even analysis establishes a relationship between operation costs and revenues. It
indicates the level at which costs and revenue are in equilibrium. To this end, the break-even
point for capacity utilization and sales value estimated by using income statement projection are
computed as followed.

Variable Margin ratio (%)

Break- Even Sales Value = F i x e d Cost + Financial Cost = B i r r 1,835,469.18

Sales revenue

Break- Even Capacity utilization = B r e a k -even Sales Value X 100 = 5 6 %

5.6.3 Pay-back Period

The pay-back period, also called pay – off period is defined as the period required for recovering
the original investment outlay through the accumulated net cash flows earned by the project.
Accordingly, based on the projected cash flow it is estimated that the project’s initial investment
will be fully recovered within 5 years.

5.6.4 Internal Rate of Return

The internal rate of return (IRR) is the annualized effective compounded return rate that can be
earned on the invested capital, i.e., the yield on the investment. Put another way, the internal rate
of return for an investment is the discount rate that makes the net present value of the
investment’s income stream total to zero. It is an indicator of the efficiency or quality of an
investment. A project is a good investment proposition if its IRR is greater than the rate of return
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that could be earned by alternate investments or putting the money in a bank account.
Accordingly, the IRR of this project is computed to be 12 % indicating the viability of the
project.

6. Environmental impact of the project

The EIA of the project activities was determined by identifying the environmental aspects and
then undertaking an environmental risk assessment to determine the significant environmental
aspects. The environmental impact assessment has included all phases of the project namely
construction phase and operational phase. The building has both positive and negative impact
The positive impact of the project is:-

 Generation of employment opportunity

 Source income for the government through business income tax

 Income generation for the promoter

 Being exemplary for other investors who want to engage in the same business
line. Negative impact of the project

The project has the following negative impacts:

1. noise and Dust emission during Construction

There are some noises during the construction due to the construction operation and the
company will use construct the construction during the day time. Again there is the
emission of dust which will be mitigated by sprinkling water on the service.

2. problem on workers on construction

During construction there are some problems that will materialize on workers. These are:
damage on operation by using machines, construction materials and others. To mitigate such
impact the company will provide safety insurance and safety equipment.

3. swages during operation

During operation there are some wastes emitting from the Retail Trade of Industrial Agricultural
and Construction machinery and equipment’s. These are wastes from the latrine and will be
mitigated by using modern waste treatment technology.
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