Shamshu Ziyad
Shamshu Ziyad
Shamshu Ziyad
OF INVESTMENT
By,-Shamshu Ziyad
OROMIYA, MAYA CITY,
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Contents
I. Executive Summary.............................................................................................................2
COST OF THE PROJECT................................................................................................................3
Employment Opportunity...........................................................................................................3
The total work force requirement of the project will be estimated at about 190 employees.
From total workersPermanent workers are 100 (Skilled 70, & Unskilled 30).Casual workers 90
(skilled 20 and unskilled 70)........................................................................................................3
Employment Opportunity.....................................................................................................3
1. Introduction.......................................................................................................................4
Ethiopian infrastructure construction remains robust................................................................5
Specific objective........................................................................................................................6
2.6 Project Rationale...................................................................................................................8
3. The market Study....................................................................................................................9
3.1 Market..................................................................................................................................9
Supply of Premises....................................................................................................................11
3.3 Current supply of mixed use and residential apartment building.......................................11
4.1 Description of the project Service the................................................................................14
Income.....................................................................................................................................30
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I. Executive Summary
PRODUCTION CAPACITY G+6 Building and 2 blocks of G+3 Malls services TO BE rendered Rental, Hospital
(higher Clinics) with standardized Pharmacy Public Library with average size Youth recreational
sites;Various Prayer sites &6Project Composition The underground floor designed for Car Rakingservices and
Warehouses, Ground Floor up to 2th Floordesigned for different business centers like,
Cafeteria,Supermarkets, Pharmacies, Banking & Insurance and otherbusiness activities,governmental,
private, NGO & otherofices services etc Related Facilities.
Play grounds Supermarkets & other facilities that may berequired by the ‘would be residents ‘Apartment and
Wholesales Shopping Mall .
For implementing this project a total of Required 5000 M2Planned InitialIv statment Capital The total initial
investment cost for implementing this project is ETB. 100,000,000 Out of the total budget of the project 50%
or ETB, 50,000,000 will be covered by the ownerequity; and Financial institutions will cover the rest 50%
orETB.50,000,000.00
Employment Opportunity
The total work force requirement of the project will be estimated at about 190 employees. From total
workersPermanent workers are 100 (Skilled 70, & Unskilled 30).Casual workers 90 (skilled 20 and
unskilled 70)
PROJECT LIFE 5 YEARS
Employment Opportunity The total work force requirement of the project will be estimated at about 190
employees. From total workersPermanent workers are 100 (Skilled 70, & Unskilled 30).Casual workers
90 (skilled 20 and unskilled 70)
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FINANCIAL VIABILITY
the Project Is Technically Feasible, Financially And Commercially Viable As Well As Socially And
EconomicallyAcceptable. Hence, The Project Is Worth Implementing of hotel investment
1. Introduction
With a per capita income of about 280 US Dollar, Ethiopia is one of the poorestcountries
in theworld. The agriculture sector which accounts for the average 45%ofGDP, is a
source of livelihood for about 80% of the country's manifested by persistently growing
unemployment; poor quality dwellings and homelessness; increasing number of slums
and squatter neighbors;congestion; lack of basic services and infrastructure. These
factors combine to produce the critical urban issue: the lack of affordable,healthy
commercial housing for all sectors of the urban population. Currently, in Maya, therein
strong commercial housing demand as a result of the mismatch between the expanding
urban population and limited commercial housing supply.In recognition of the
magnitude of the problem, the Ethiopian government has launched theIntegrated
Commercial Housing Development Program (IHDP) in 2004 which among other things,
aims to increase the commercial housing supply for the low tomiddle-incomegroups of
population (MoWUD, 2004). Up on launching the program, thegovernmentwas
confronted whichextremely high demand, and to date the program only managed to
build about half of the demandedunits (UN-HABITAT,2010). As commercial housing
supply lags behind demand, and commercialhousing conditions continue toworsenin the
face of teeming urban population in the country, it becameincreasinglyimperative that a
new paradigm has to be adopted if the commercial housing challenge is to be met. It is
little surprise that faced with ever expanding cities, poor anddwindlingfinancial
resources and unimpressive performance of public provision, commercial housing
policyemphasis is shifting from state provision towards facilitation of privatesector
participation incommercial housing development.Enablement strategy to commercial
housing would prefer the government to assume the role of supporter in contrast to
provider in the commercial housing sector. Instead of embarking one of dwelling units,
the government is to concentrate on reforming and managing the legal,regulatory and
financial policy framework in such a way asto create an environment for the people and
the private sector to housing.The requirement for private sector developers to make
affordable commercial housing or atleastinclude a percentage element of affordable
commercial housing provision within all mixed use and residential apartment and
residential developments over a certain threshold number of units wasacontentious
issue but has been accepted in most areas and situations by the privatehouse
buildingindustry. However, private developers are motivated by profit andsowhat is the
rationale for them to provide what is essentially a welfareservice?The argument is that
there are good economic and business justifications forthe private sector to be involved
in the provision of affordablecommercialhousing.Private developers, however, have
failed to deliver affordable commercial housing units evenfor best paid professionals
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such as Engineers and Doctors. So far, their main targethas been building high-value,
high-end homes for the few high income groups inandoutside thecountry.
2.1. General Background Ethiopia construction
industry updateThe current fast and dynamic economic growth of Ethiopia especially in
Mayatownnecessitates equivalent growth of building and construction sector. The
sector should expand rapidlyto support the overall economic development
sustainable.Ethiopia is undergoing a transformation. The East African state is prioritizing
a wealth of construction projects in order to stimulate its economy, reinvigorate its
infrastructure and supplyaffordable housing and power to its population of close to 110
million. Construction is a huge part of Ethiopia’s economic recovery. The building sector
has seen doubledigit growth, expanding by 37% annually, and is ushering in a new phase
of development for thecountry.So what is new in Ethiopia’s construction industry?
Major activity is ongoing throughout the nation,in both residential and infrastructure
sectors, as well commercial areas.7 Affordable housing construction keeps pace with
Ethiopian demandMaya, Ethiopia’s capital city is expanding at a rate of 3.3% each year,
creating a housingvoid that needs to be filled. In fact, affordable housing is something of
a nationwide priority for theEthiopian government, although at present much of the
house building activity is centered on thecapital. is the main focus and a collection of
ongoing developments arescattered across the capital – all with different price points
but each with affordability in mind. The 4 program, where tenants pay for 4% of an
apartment’s cost and the government contributing the remaining 60% is making solid
progress. Maya. 3 total condominium units are being built in in the city. further
apartment blocksare planned under the 4 scheme over the next five years.Outside the
affordable housing sector, more high-end developments are planned. China’s Sin mark
Real Estate is developing a -tower residential complex in Maya. The Chinese
developershave stated this will be “the biggest mixed use mall project in Ethiopia”, and
will feature swimming pools, a commercial zone and sports centers. Costs are expected
to reach over $94 million.
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road, Route Number One, measures 30 kilometers, connecting Diredawa and Harar
ineastern.Ethiopia’s building projects keep on rollingThis is just a snapshot of the construction
activity underway across Ethiopia. For a more in depthlook at the nation’s building sector, why
not download ITE Build & Interiors’ free guide today? Thereport goes in detail about Ethiopia’s
construction sector, the scale of imports of key building materials and the opportunities for
foreign companies East Africa’s fastest growing economy holds.In the building sector of the
economy, the multi- purpose in the one becoming rapidly expanding in Maya City since dynamic
economic development of urban economy requires the construction of these buildings in the
city to support the growing of business service sectors like supermarkets,Beauty salon, shops,
offices cinemas, Computer Center, Cafeterias
2.1 General Objective All business organizations are established with objectives of ensuring their
indefinite existence bychoosing promising businesses, operating profitably, owning assets and
securing capable humanresources while simultaneously discharging their social responsibilities.
Selecting a business sector that provides shelter for human kind, on the other hand, is response to
the moral, religious and business calls because of the drastic population increase in the world in
which Ethiopia is the one.In addition to meeting the above mentioned justifications, now a days,
suchMixed Use Buildingdevelopment project is one of the few business ventures that is believed to
have significanteconomic, social & demographic spill-over effects to the society.. ‘Its specific
objectives include the following.
Specific objective
Commercial Mixed Use Building
To construct and developG+G5 Modern Mixed use on 4,000 square feet for facilities of rental
residential rooms, shops, offices, and restaurant & cafeteria, bed rooms, conferences hallfacilities that
enable to provide standard services to customers
.To undertake trading and other refuted business activities that enable to generate a reasonable
tothe invested capital.
To develop modern business center that would provide full services on city standard.To create
employment opportunities.Contribute towards the beautification of the city through the
construction of modern buildinginfrastructure and facilities
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Te emphasize on energy saving and environment protection. So we
will try to use solar energy as much as possible.The sewage water
will be recycled and used for gardening and similar
purposes.Corporate social responsibilities Besides, the envisaged
investment project has been designed in very attractive & modern
style to addecstatic value to the Maya City Administration.
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choices and will also save best quality apartments, restaurant and
café
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business activities. Therefore, the building will serve as sources of
revenue for the city.
3.1 Market Analysis There are a number of factors which affects the
demand of standardized mixed use and residential apartment
building. Of these factors, the most important to have influence is
population growth andthe level of income. The currently expanding
service industry in MAYA CITY, and from every corner of the country
the city has been inviting skilled and unskilled labor forces to the
center; in addition,the number of both national and international
offices has been increasing. Above all the increase inthe number of
population increases for the provision of different services. Nowadays,
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most of the private business organizations need their own small-
medium offices in order to give their servicesand provide their
products, and they prefer the place that found in the center or close
to the road. Asclearly indicated in the introductory part of this
proposal,MAYA CITY, is the dynamically growingurban center of
Ethiopia. Though the market demand gap for mixed use and
residential apartment building is not clearly understanding there is
wider gap for such demand as many merchants,organizations are
flouring to the city every day. From prior business experiences, the
demand of mixed use and residential apartment building is very high
and hence the demand and the supply gapis very wide. Rapid
urbanization, one of the greatest socio-economic changes during the
lastfivedecades or so, has caused the growth of squatter and informal
housing allaroundthe rapidlyexpanding cities of the developing world
(UN-Habitat,2010).Despite having one of the lowest proportions of
urban population in the world atonly16.7 percent, Ethiopia is rapidly
urbanizing at a high annual growth rate of 3.5 percent. Maya,the
capicity, dominates the urban hierarchy with a population of 689,000
holding 3 percent of the total urban population in the country(CSA,
2007). Maya is the capital cityof east Oromiya which occupies an area
of 32 squarekilometers has an estimated 3 million inhabitants. The
city is sub-divided into tensub-cities, each of which has an
averagepopulation of around 200,000people.The three largest sub-
cities by population are Awaday (with263,417inhabitants), Haramaya
(274,583) and Addele (141,743). In terms of landarea,thelargest sub-
cities Addele are like that. Population densities vary ouseholds in
thecity.Given this increase, the city's housing demand is increasing.
Accommodatingthisincreased demand will require additional housing
development and constructioninthe inhabitants.
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developed and that of the supply for modern Bank and cafeteria
accommodation hence this project would not face any problem of
demand scarcity for it business center and it would provide good
service to customers.
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3.4 Future market or Demand of Ccommercial Building 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 or nationaleconomy. Following
our survey of office space users in several areas are mainly firms
providing banking, offices, cafeteria and restaurants, supermarkets,
computer center service. Future demand for office space is actually
driven from growth in number of offices in the city which in turn
isinfluenced by the macro-economic growth in the country. Assuming
that demand for office space isdirectly related to the growth in the
economy, the forecast for office space demand is
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Advertising through different means focusing on the existing service
and facilitiesPromote in association to the key location and nearby
businessWorking on sustained promotional work.Working on
public relations to reach and influence key personas and organization
with acapacity 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 bythe company.
3.8 The project facilities and Services planIn order to provide mixed
use and residential apartment business center building services of a
highstandard, it has been planned to construct and develop the
infrastructure and facilities that wouldviable 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 thatare essential to commence the
operation of its business activities. With the completion of
construction, the building will provide a combined service such as
rental Bed rooms, shops, offices,restaurant and café service as well as
at modern business center that primarilyserve its guests and major
clients. Since the project will be engaged in mixed building the main
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sources of its annual revenue would befrom the rental of building
spaces such as shops, offices, and banking, café and
restaurant,apartments and mall. Therefore, the sources of revenue
have been classified in to one category namely the rental of banking
and supermarket, offices, shops, bedrooms restaurant and café based
onthese classifications. Based on the market price of similar mixed
use and residential apartment building in the area, the envisioned
buildings set the following fair price (Before VAT) for itsservice, hence
when the building construction fully get operational it is assumed to
generate a yearlyincome of ETB 341,347,500.00.
4 Technical Studies
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4-5 floors designed for Offices.,
4.1.1 Land Use PlanThe total land required for the envisioned project
is estimated to be5,000m2.The total area for theconstruction of the
building will be 4,000 M2, as revealed below
Year Area 2
Grond 1,000
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4.2.1 Construction schedule The construction project is proposed to
be started onJuly 2023 and is expected to be finished onFebruary
2025. As seen in the abbreviated construction schedule above, a
majority of the schedule’stime is made up of five major activities;
concrete, building Enclosure, masonry, mechanical andElectrical
install. 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
sheathinginstallation and bricklaying. Mechanical and Electrical
install coincide with each other due to theneed for coordination
between the two divisions. There are several periods of construction
during theschedule in which there are multiple construction activities
occurring at the same time. Theconstruction site must be organized
accordingly as these processes take place. As with anyconstruction
project, the goal of the schedule will to complete all construction
activities before therequired Date of completion.This date of
completion is practical based on the time of year in which the building
will becompleted. The team allowed a two-week contingency for any
setbacks. Typically, winter construction tends to cause unforeseen
delays that negatively impact a construction project. Theseconditions
can and will almost undoubtedly impact the project schedule by
causing unforeseendelays and project inefficiency.
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4.2.3 Structural design One of principle deliverables of the project is
the structural design of the building. The structural bays were
coordinated with the layout of the building adjustments will be made
to the bays if specific layouts are necessary. The frame will be 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 asappropriate.The gravity
load design will have completed for two frames; one of structural steel
and one of reinforced concrete. The structural steel frame will choose
for further design based on cost per square foot, local availability of
material and constructability considerations, such as erection
andfabrication. The steel system will then have designed for lateral
loading with necessary adjustment being made to framing.
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foundation type, determination of the bearing capacity and the design
for typical interior and exterior spread footings.
Year 1 2
Grond 1,000
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Utility Quantity Costs
Telephone 10,000
5.1 Land, Building and Civil WorksThe Mixed use and residential
apartment building has a total site area of 5,000 m2. The open
spacearea has covered 1,000 m2 and the remaining 4,000 m2 is left
for construction. The type of buildingsand its corresponding civil
construction cost is given on:
NO CONSN Costs
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34
Roofing 2,171,108.
004
Finishing 3,111,379.
447
TOTAL 32,168,203
.6
VAT(15 4,825,230
%)
TOTAL 36,993,433
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2.2 Labor AvailabilityWorkers for this type of plant are available
throughout the year. No foreseeable problems areexpected as most of
the work requires no previous skills.
Preparration 16/4/2023
proposal
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20222Land acquisition November 20223Land requisition/approvalNovember- December
20224Bank loan processing January – June 20235Site Development January 20236Building and
construction work February 2023 - November 20246Preparation for service December,
20246Service execution February, 20255.
4. Organizational Structure5.
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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 toachieve the short and long run objectives of the
organization.
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D.Technical and maintenance managerWill handle the overall
physical maintenance and related issuesWill make sure electricity
and back up is organized.Follow up security issues and educate
tenantsWorks in collaboration with general service to make sure
tenants are well served Figure 1.organizational structure
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Finishing period-2 years
Source of finance-50 %
equityDebt finance 50 %
loan,Bank interest13%
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Raw material (perishable)3 days
Machinery 5%
and
equipment
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Building and 2%
civil works
Utilities 5%
6.3 Total Revenue Based on the projected profit and loss statement,
the project will generate a profit
1 2 3 4 5
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insurance cost
6.5 Cash flow The projected cash flow of the envisaged project shows
that the project would generate positive netcash flows throughout
the operation years. Cumulative cash flow generated by the project
towardsthe end of the first operation year will amount to
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Birr68,091,250.At the end of the project life, thisamount will rise to
Birr1,280,912,500.00.
6.6 Benefit cost ratioThe BCR is defined as the ratio of the sum of the
project’s discounted benefits to the sum of itsdiscounted investment
and operating costs.When BCR > 1, accept the projectWhen BCR < 1,
reject the projectWhen BCR = 1, be indifferent BCR Br C r t t t nt t t
n ( )( )1100BCR is 5 and positive this indicates this
project would return 5 birr in benefits for eac
6.8 Net present value Net present value (NPV) is defined as the total
present (discounted) value of a time series of cashflows. NPV
aggregates cash flows that occur during different periods of time
during the life of a project into a common measuring unit i.e. present
value. It is a standard method for using the timevalue of money to
asses’ long-term projects. NPV is an indicator of how much value an
investmentor project adds to the capital invested. In principle a
project is accepted if the NPV is non-negative.Accordingly, the net
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present value of the project at 10% discount rate is found to be
Birr154,439,417which is acceptable.
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any delaying to implement the project creates some problem on its
profitability as there is always change like change in price of services
and goods, cost of raw materials, customers preference and
purchasing power etc.….So, it isrecommended that investors should
implement the project as soon as possible before any changeoccurre
important investment decision and in order to serve this objective,
the documentcovers various aspects of Concept Development, Start-
up, Production, Marketing, Finance andBusiness Management. The
feasibility is based on the information obtained from various
agricultural sources as well as discussions with business men. For
financial model, since theforecast/projections relate to the future
periods, actual results are likely to differ because of the events and
circumstances that don’t occur frequently as expected. Whilst due
care and attentionhas been taken in performing the exercise, no
liability can be inferred for any in-accuracy or omissions reported
from the results thereof. It is essential that our report be read in its
entirety withfinancial model in order to fully comprehend the impact
of key assumptions on the range of valuesdetermined
Income
Year 1 2 3 4 5
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6.7 Internal Rate of ReturnThe internal rate of return (IRR) 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 that could beearned by alternate investments or putting the
money in a bank account. Accordingly, the IRR of the project after tax is computed to be34.13%
indicating the viability of the project.6.8 Net present value Net present value (NPV) is defined as
the total present (discounted) value of a time series of cashflows. NPV aggregates cash flows
that occur during different periods of time during the life of a project into a common measuring
unit i.e. present value. It is a standard method for using the timevalue of money to asses’ long-
term projects. NPV is an indicator of how much value an investmentor project adds to the
capital invested. In principle a project is accepted if the NPV is non-negative.Accordingly, the net
present value of the project at 10% discount rate is found to be Birr 554,439,417which is
acceptable.7. Conclusions and Recommendations.The objective of this proposed feasibility study
is primarily to facilitate the entrepreneur with theinvestment information and provide an
overview about project. The proposed feasibility may formthe basis of an important investment
decision and in order to serve this objective, the documentcovers various aspects of Concept
Development, Start-up, Production, Marketing, Finance andBusiness Management. The
feasibility is based on the information obtained from variousagricultural sources as well as
discussions with businessmen. For financial model, since theforecast/projections relate to the
future periods, actual results are likely to differ because of theevents and circumstances that
don’t occur frequently as expected. Whilst due care and attentionhas been taken in performing
the exercise, no liability can be inferred for any in-accuracy or omissions reported from the
results thereof. It is essential that our report be read in its entirety withfinancial model in order
to fully comprehend the impact of key assumptions on the range of valuesdetermined.The
project is accessible and has the necessary infrastructure such as road, telephone, water
andelectric power. The proposed project clearly identifies all the necessary equipment ,
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