Chala, Yonas and Their Friends Partnership Market Center and Store

PROJECT PROPOSAL FOR THE ESTABLISHMENT OF
MARKET CENTER AND STORE

PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE
PARTNERSHIP
PROJECT LOCATION: OROMIA REGIONAL STATE, WEST ARSI ZONE, NAGELE ARSI TOWN
January 27, 2024 MARKET CENTER AND STORE BUILDING PROJECT PROPOSAL
Table of Contents
1. EXCUTIVE SUMMARY........................................................................................................3
2. INTRODUCTION.......................................................................................................................4
2.1.General background...............................................................................................................4
2.2. Promoter’s profile.............................................................................................................5
2.3. Purpose of the document...................................................................................................5
2.4. Objective of the project.........................................................................................................6
2.5. Project description.............................................................................................................6
2.6. Project rationale................................................................................................................6
2.7.The significance of the project...............................................................................................7
2.7.1. Source of revenue......................................................................................................7
2.7.2. Employment opportunity...........................................................................................7
2.7.3. Sources of social service............................................................................................8
2.8. Project location.................................................................................................................8
3.THE MARKET STUDY..............................................................................................................9
3.1.Market analysis......................................................................................................................9
3.2.The demand-supply gap.........................................................................................................9
3.3.Current supply of mixed use building..................................................................................10
3.4.Future market or demand of commercial building rental....................................................10
3.5.Target customers..................................................................................................................11
3.6.Marketing and promotion strategy.......................................................................................11
3.7.Competition..........................................................................................................................12
3.8.The project facilities and services plan................................................................................12
4. SWOT ANALYSIS...................................................................................................................13
4.1. Strength...............................................................................................................................13
4.2. Weakness............................................................................................................................13
4.3. Opportunities.......................................................................................................................13
4.4. Threat..................................................................................................................................14
5.TECHNICAL STUDY...............................................................................................................14
5.1. Mixed –use development....................................................................................................14
5.2. Types of mixed –use developments....................................................................................14
5.2.1.Main street.....................................................................................................................14
5.2.2.Shopping Mall/Department store conversion................................................................14
5.2.3.Vertical mixed –use developments................................................................................15
5.2.4.Horizontal mixed –use developments...........................................................................15
5.3.Benefits of mixed –use developments.................................................................................15
5.4..Description of the project’s service/ product mix...............................................................16
5.5.Land use plan.......................................................................................................................16
5.6.Utilities.................................................................................................................................16
5.7.Project implementation schedule.........................................................................................16
1 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP
5.8.Organizational structure.......................................................................................................16
5.8.1.Organization and management......................................................................................17
5.8.2.Man power.....................................................................................................................17
5.8.3.Organizational structure................................................................................................17
6. FINANCIAL REQUIREMENT AND USES........................................................................19
6.1. Fixed investment.............................................................................................................19
6.2. Working capital...............................................................................................................21
6.2.1. Salary expense.........................................................................................................21
6.2.2. Other operating expenses.........................................................................................22
6.2.3.Pre-service expenses......................................................................................................22
6.2.4.Summary of total initial investment cost.......................................................................23
7. FINANCIAL STATEMENT ANALYSIS, VIABILITY AND OTHER MEASURES OF
PROJECT WORTH.......................................................................................................................23
7.1.Underlying assumption........................................................................................................23
7.2.Sources of fund....................................................................................................................24
7.3. Bank loan repayment schedule...........................................................................................24
7.4.Depreciation schedule..........................................................................................................25
7.5. Financial statements analysis..............................................................................................25
7.5.1. Profit-Loss statement (statement of financial performance)........................................25
7.5.2. Cash flow statement.....................................................................................................26
7.6. Financial viability and other measure of project worth......................................................27
7.6.1. Profitability index (Benefit /cost ratio)........................................................................27
7.6.2. The net present value....................................................................................................27
7.6.3. Break-even point..........................................................................................................27
8. FUTURE DEVELOPMENT AND EXIT STRATEGIES........................................................28
9. SOCIO ECONOMIC AND ENVIRONMENTAL IMPACT OF THE PROJECT...................28
9.1. Positive impact of the project..............................................................................................28
9.2. Negative impact of the project and mitigation measures to be applied..............................29
10. CONCLUSION.......................................................................................................................29
11. ANNEXES:..............................................................................................................................30
11.1. Projected statement of financial position (Balance sheet)................................................30
11.2. Projected statement of financial performance (Income statement)...................................31
11.3. Projected cash flow statement...........................................................................................31

1. EXCUTIVE SUMMARY
1. Project name Market center and store (G+0)

2. Project type Market center and store service business building
3. Project owner Chala, Yonas and their friends commodity trade partnership
4. Type of ownership Partnership (SME)
5. Nationality
6. Contact
7. Project location Oromia region, West Arsi zone, Nagele Arsi town
8. Project composition The development of market center and store building
9. Total capital Birr 10,000,000.00 out of this amount 20% birr 2,000,000.00 financed by
owner equity and 80% birr 8,000,000.00 financed by bank loan
10. Employment Total 40 employees, 15 permanent employees after commencement during
opportunity operation phase at full capacity and around 25 temporary employment
opportunity(casual) during construction phase
11. Benefit of the project  Providing working spaces for diverse business centers like Insurance,
super market, shops, restaurant, café, beauty salon, pharmacy and
offices
 Generate revenue for the government in the form of taxes.
 The most remarkable social benefits can be expressed in items of job
creation that leads to reduction in the level of unemployment.
12. Land required 1,600m2

2. INTRODUCTION
2.1.General background
The current fast and dynamic economic growth of Ethiopia especially in urban area necessitates
equivalent growth of building and construction sector. The sector should expand rapidly to
support the overall economic development sustainable.
In the building sector of the economy, the multipurpose is the one becoming rapidly expanding
in urban areas of the nation. Since dynamic economic development of urban economy requires
the construction of these buildings in towns to support the growing of business service sectors
like shops, cafeterias and restaurant, banks, training centers and other activities.
Investment and property development play an important role in any emerging markets or
economies. Property generally comprises reside villa houses and commercial real estate property
(mainly mixed us building) developed for rental business and sale. The property investment
market in Ethiopia remained under developed for several years. As a consequence, the supply of
residential houses and non-residential real estate that can be used for residence, office space,
shopping malls and catering 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 property 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 residential and commercial property (real
estate) 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 in the property market for office space, shopping
malls, catering services, apartment and residential houses. 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. Looking at the
past trends and permits issues by the government to the construction of real estate properties
including the market (shopping) center in the major urban areas of the country specially in
Nagele Arsi one can easily conclude that the momentum is more likely to continue. Besides the

government polices and incentives for such investment, the private sector investment are very
promising that motivates the promoter to engage in mixed use building business.To this effect,
the owner of the envisioned Market center and store building named Chala, Yonas and their
friends commodity trade partnership planned to construct Market center and store building
in Nagele Arsi town 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 town administration to make the
project to be operational.
2.2. Promoter’s profile
The promoter of the project Chala, Yonas and their friends commodity trade partnership is
an established active entreprise with sufficient experience in different activities in the area and as
the approved certificate from Oromia urban job opportunity creation and food security authority
shows by using the government provided opportunity and support the promoters has scored good
result on previous business and upgraded from small enterprise to medium investor. The
experience and skill gained on managing businesses and customers are inputs for the intended
project implementation. Moreover, the promoter has sufficient capital to implement the project..
2.3. Purpose of the document

The objective of this project study is primarily to facilitate potential entrepreneurships in project
identification for investment. The project study may form the basis of an important investment
decision and in order to serve this objective; the document/study covers various aspects of
project concept development, start-up, production, marketing, finance and business management.
The document also provides sectoral information and brief on government policies and
international scenario, which have some bearing on the project itself. This particular project
study is regarding the project Market center and store building to be established in west Arsi
zone, Nagele Arsi town. The promoter has not secured the land; therefore, the main purpose of
this project proposal is to obtain the land and an investment certificate and the advantage of
investment incentives. The total land area of 1,600m2 is required for the development of this
project and it is well designed to have sufficient spaces for different purposes.

2.4. Objective of the project

The major goal of this project is to contribute towards the growth of the trade sector in Nagele
Arsi town. Its specific objectives include the following.
 To construct and develop modern shops, offices, and restaurant, bedroom & cafeteria
facilities that enable to provide standard services to visitors.
 To undertake trading and other related business activities that enable the investors to generate
a reasonable return to the invested capital.
 To develop modern business center that would provide services of 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 town and
 Contribute towards the beautification of the town through the construction of modern
building infrastructure and facilities.
2.5. Project description
The long-term goal of the project is to become the best choice in Nagele Arsi and its
surrounding areas by creating a differentiated service. The proposed project will have a total
area of 1,600m2, designed to render a multipurpose giving business, which will in turn plays
significant role towards solving shortage of business center in Nagele Arsi town.The historical
nature of the town, as businesses unique location is one of the most attractive parts of the town
and these all makes a fertile ground for future promising growth of this project in the town. The
owners plan the project to render shopping facility, training centers, cafeteria services and others
to create high quality class to satisfy the interest of customers in the town. Based on
environmental and other considerations, the entrepreneurs 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 shop rooms and office of best choices and will also save best quality
restaurant and café, national and international dish and various types of soft drinks.
2.6. Project rationale
Internationally the economic growth this country is experiencing, the good governance created
and even if the town is in its nascent stage of development, this project will be among the

Market center and store buildings in the town which is feasible and would be a model
development in promoting and attracting different urban investments. In order to respond to the
created environment the town is in need of 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 promoters to initiate the multipurpose oriented business project to
be established. Despite the promising business opportunities of the town, the trend on such kinds
of investment found to minimal. Since there is excess amount of such kind of modern mixed use
facilities and business station in the town to accommodate the existing demand of these services
in the town and the surrounding areas. The mismatch between the demand for and supply of such
kind of services is easily observed in the town. 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.
2.7.The significance of the project

The envisaged project deemed to add to the economic development of the nation in general and
the town in specific with following ways:
2.7.1. 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 town as well as for the region.
2.7.2. 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 15 individuals after commencement and more than
twenty five individual during construction.
2.7.3. 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,
 Since, the center encompasses different recreational areas; it will divert the attention of the
users from different evil deeds.
 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 townscape.
2.8. Project location

As aforementioned on the introductory part the envisaged project is intended to be implemented
in Nagele-Arsi town. Nagele-Arsi town is one of the towns with the state function in west Arsi
zone administrations. The town is located at a longitude and latitude of 7 o21’N 38o42’E/7.35oN
38.7oE and an elevation of 2043 meters above sea level. It is the administrative center of Negele
Arsi woreda. The town’s economic catchment extends beyond the woreda attracting peasants
from others woreda who trade cattle, cereals, potatoes and other seeds at the weekly market and
tourists since it is located near the lake Abijata, Langano and Shala.
3.THE MARKET STUDY

3.1.Market analysis
There are a number of factors which affects the demand of standardized mixed use building. Of
these factors, the most important to have influence is population growth and the level of income.
The currently expanding wheat flour processing industry in the town and around the town has
been inviting skilled and unskilled labor forces to the town; 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 town increases for the provision of different services. Nowadays,
most of the private business organizations need their own small-medium offices in order to give

their services and provide their products, and they prefer the place that found in the center of the
town or close to the road.
As clearly indicated in the introductory part of this proposal Nagele Arsi town is the
dynamically growing town of west Arsi zone. From prior business experiences, the demand of
mixed use building in Nagele Arsi town is very high and hence the demand and the supply gap is
very wide. As clearly understood, there is wider demend and supply gap for such Market center
and store building as many merchants and organizations are flourishing the town every day.
3.2.The demand-supply gap

Nagele Arsi is situated in very center of West Arsi zone at a very high market area, 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 banking and insurance, shopping facility,
training center and cafeteria services. Even though when compared with similar town’s in the
zone, Nagele Arsi town seems to have limited number of developed Market center and store
building, the existing supply is far behind the growing demand for standard service. Hence, the
project will solve the serous demand problem in the town.
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
activities and partly due to an increase in the flow of international and local traders in to the
town. Since Nagele Arsi town is an important commercial center, there is a significant increase
in business activities and the number of traders that flow to the town. Eventhough there is a lack
of quantitative estimates that show the number of traders that flow to the town and that depict
the actual demand and the annual growth rate, hotel facilities and urban commercial facilities are
scarce in the town to accommodate these traders need. So far in the town there is some
development of such kind standard building and it is an addition of its kind in the town and will
promote other investors from the town and the surrounding areas. They are mostly villa type
premises modified as show rooms and selling posts. As a result there is a large gap between the
developed and that of the supply for modern bed rooms; 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.
3.3.Current supply of market center building

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 Market center and store buildings in Nagele Arsi town is booming highly due
to the recent rapid growth experienced in Ethiopia. As a result, a good number of local and
international organizations 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.
3.4.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 Nagele Arsi are mainly firms
providing banking and insurance, shopping facility, training center and cafeteria services. 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 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 11% for base case scenario and 14%
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: Shops and office space demand forecast
Shops and office space demand under Shops and office space demand under
base case economic high case economic
Years Growth Growth

2013/2014 9,916,543 11,304,859

2014/2015 11,007,363 12,057,416
2015/2016 12,218,173 12,953,878
2016/2017 13,562,173 13,963,577
2017/2018 15,054,011 14,554,534
2018/2019 16,709,952 14,987,431
Source: GTP’s forecasted Ethiopian economic growth
3.5.Target customers
The target customers of this envisaged project include:-
1. Business Community
2. Nearby business organization
3. The government bureau
4. Micro and small enterprises
5. Nongovernmental organizations
3.6.Marketing and promotion 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 clients. Due emphasis must be
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 personas and organization with a
capacity of making decision.
 Keeping the quality of its service/ facilities and consistently improving with changing
situations.
 Seasonal discount pricing and different other customer centred marketing strategies will be
used by the company.
3.7.Competition

Different forms of competition may face the envisaged Market center and store building.
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 Market center and store
building under discussion has diversified marketing strategies that could enable it cope 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.
3.8.The project facilities and services plan

In order to provide Market center and store 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, restaurant and café service as well as
modern business center that primarily serve its guests and major clients.
Table:Estimated base year rent revenue
Building floors To be rented for Area Annual rent income
Ground Shops, banks 600m2 0.00
Total 0.00
Since the project will be engaged in Market center and store building the main sources of its
annual revenue would be from the rental of building spaces for banking and insurance
companies, shopping facility, training center and cafeteria services. Therefore, the sources of
revenue have been classified in to one category namely the rental income based on these
classifications. Based on the market price of similar Market center and store in the area, the
envisioned buildings set the following fair price (before VAT) for its service, hence when the
planned building fully get operational, it is assumed to generate a yearly income of ETB
3,456,000.00
4. SWOT ANALYSIS
The envisaged Market center and store building is a well-structured Market center and store
building business that can favorably compete in the building industry in Nagele Arsi town. Here

is a summary from the result of the SWOT analysis that conducted on Market center and store
building center
4.1. Strength
 The location of the building will be in one of central areas in Nagele Arsi town, which
happens to be one of the busiest Market center and store center in Nagele Arsi.
 The project can boast of having a result and service driven team and have access to pool of
finance these are some of the strength of business
 The project will also employ professional and capable employees who thoroughly understand
the business and are dedicated to help the Market center and store building business
services.
4.2. Weakness
As a new business company, it might take some time for the project to inter into the market and
gain acceptance especially from top profile clients.
4.3. Opportunities
The opportunities available to this business are enormous because, as the number of business
increases, demand for commercial and retail space is assumed to increase at a parallel rate.
Additional businesses entering in Ethiopian economy provide a greater pool of potential clients
for Market center and store building. Interestingly, the number of businesses in Ethiopia is
expected to increase in the coming years, presenting a potential opportunity for the
industry.Finally there is also strong support and incentives from the government to encourage
such investment.

4.4. Threat
It is the fact that online shopping is a direct threat to traditional brick and mortar retailers. With
more consumers opting to shop online, many retailers have shuttered physical locations to
preserve margins. As more store’s downscale operations, a business such as ours lose out on rent,
thereby depleting our projected revenue. E-commerce sales are expected to increase in posing a
possible threat to Market center and store building companies.
5.TECHNICAL STUDY
5.1. Mixed –use development
Traditionally, people didn’t segregate their buildings based on their function. Throughout
history, it was natural to build homes next to markets, eateries taverns, places of worship and
various shops. The earliest cities and towns sprouted around a ‘’ main street ‘’ –a thorough fare
lined with ground –floor businesses and upper –floor dwellings . Only with the advent of zoning
laws did we start to regulate where buildings of the specific function can be placed. Then during
the postwar inner –city decline, land use became more distinct and large swathes of residential
homes and enormous retail plazas became the 20 th –century zoning model. A few decades ago,
things changed. The younger generation embraced city living and everything it represented –
diversity, authenticity, vibrant social life, walk ability, and proximity to venues. On the heels of
the urban revival, returned the millennia –old, mixed –use building model. Mixed-use
developments combine several profits –producing residential, commercial, institutional and or
industrial uses into one building. The uses vary but commonly include dwelling units, retail
spaces, cultural, and entertainment venues, among others.
5.2. Types of mixed –use developments

5.2.1.Main street
The ‘’Main Street’’ model has survived the urban decline to return and energize urban
communities in towns and cities a like across. However, in the modern version, mom-and –pop
shops has been largely replaced with services, hospitality, and entertainment venues, while still
containing dwelling units above or behind the store fronts.
5.2.2.Shopping Mall/Department store conversion

As electronic commerce took America by storm, many brick –and mortar retails businesses
simply could not compete and went out of business. Vacated shopping malls and large

department stores found a new purpose as mixed –use centers, featuring residential units and
businesses better –suited to compete with e-commerce store. Such redevelopments have surfaced
across the continent, breathing new life into defunct, yet precious real estate
5.2.3.Vertical mixed –use developments

Falling into a broader category of mixed –use developments, a vertical mixed –use building may
house any combination of businesses .Typically, however, public uses such as restaurants, coffee
shops, government offices, and even transit facilities congregate on the lower floors, while
private uses the likes of condo units or hotel rooms are located higher up.
5.2.4.Horizontal mixed –use developments

These combine various single –use buildings in a single, mixed –use lot. Such an arrangement
allows for the combination of businesses and dwellings to evolve into a walk able community or
even a neighborhood.
5.3.Benefits of mixed –use developments

Today, mixed-use developments present an attractive investment opportunity. Young
professionals and seniors a like are drawn to mixed-use buildings. Both groups enjoy the comfort
of having shops, restaurants and various services at their door step. Environmentally conscious
millennial reverse the sustainability aspect of reduced vehicle reliance made possible by such
buildings. Seniors prefer the more affordable rents, easier maintenance, and the proximity of
amenities.
Commercial tenants rely on their community relation ships to keep their businesses running, and
favor locations where their consumers can have easy access to their products and services.
 Greater housing variety and density, more affordable housing (smaller units ), life –cycle
housing (starter homes to larger homes to senior housing)
 More walk able neighborhoods
 Reduced distances between housing, work places, retail businesses, and other amenities and
destinations.
 Better access to fresh , healthy foods (as food retail and farmers markets can be accessed on
foot/bike or by transit)
 More compact development , land –use synergy (e.g. residents provide customers for retail
which provide amenities for residents)

 Stronger neighborhood character ,’’sense of place ‘’ community identity
5.4.Description of the project’s service/ product mix

The envisioned Market center and store building will provide different rental services to
different customer groups that uses for different purpose. The building will have ground floors.
The purpose of the building explained as follows;
 The ground floor designed for different business centers like shops, stores and other
business activities,
5.5.Land use plan

The total land required for the envisioned project is estimated to be 1,600m2 . The total area for
the construction of the building will be 600m2 as revealed below.
Table: Land utilization plan
S/N Description Ground (Land M2 )
1 Building (G+0)
1.1. Ground 600
2 Parking and green area 1,000
Total 1,600
5.6.Utilities
A number of utilities would be put in place in order to ensure smooth functioning of the project.
These utilities include:
 Water supply,
 Supplementary electricity supply.
 Telephone line, internet broadband
 Fuel, oil and lubricant
 Drainage facility
5.7.Project implementation schedule

The project’s implementation is expected to take 4 years. 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 mantioned major
activities is presented below:

Table: Project implementation schedule

S/N Activities Date
1 Processing of investment and building permit January 2024 – March 2024
2 Land preparation April – July 2024
3 Processing of bank loan August - September 2024
4 Construction of the building October 2024 – September 2027
5 Preparation for service October 2027
6 Service execution November 2027
5.8.Organizational structure
5.8.1.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 clients.
5.8.2.Man power
The total manpower required for the building will be 15 persons. The manpower list and the
corresponding labor cost are shown in part five of this document.
5.8.3.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 amanager 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 performed; there exist auxiliary units under the
general manager. Employees under each unit will be supervised by the department head that is
accountable for the general manager. General manager is appointed by owners.
Owners
General Manager
Building Admin Marketing Technical and maintenance
HRM and finance IT, Electricity and plumber

Fig: Organization structure of the building

As clearly shown in the organizational structure, the 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 administration department there exist
two sections i.e., HRM & finance. 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, finance and general service section). It has responsible for undertaking the following
activities;
 Manage the human resources and control employee’s activity
 Manage non human resources of the project, which include; effective handling of the
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
6. FINANCIAL REQUIREMENT AND USES
The financial resource is a prime resource for undertaking any activities. Hence for
implementing of this Market center and store building a total of 10,000,000.00 ETB is
required. From this 20%, ETB 2,000,000.00 will be covered by the promoters of the project
while the rest 80%, ETB 8,000,000.00 will be covered through loan from bank at the prevailing
interest rate. Therefore the said amount of finance is needed for undertaking the following.
6.1. Fixed investment

A. Building and civil works
S/N Description of works Total cost in birr
1 Building construction and civil works 6,580,469.89
Total 6,580,469.89
B. Building machineries and equipment’s
S/N Description Measurement Qty Unit cost in birr Total cost in birr
1 Generator Unit 1 400,000.00 400,000.00
2 Carpentry tool box Set 1 27,000.00 27,000.00
3 Electrician tools box Set 1 28,500.00 28,500.00
4 Plumber tools kit Set 1 22,300.00 22,300.00
5 Fire extinguisher(Security equipment) Unit 10 12,000.00 120,000.00
Total 597800.00

C. Vehicle
S/ Description UOM Qty Unit cost in birr Total cost in birr Remark
N
1 Mini-Bus Unit 1 800,000.00 800,000.00 Duty free
Total 800,000.00
D. Office equipment’s
S/N Description Measurement Qty Unit cost in birr Total cost in birr
1 Managerial tables PCS 1 3,600.00 3,600.00
2 Managerial chairs PCS 1 2,950.00 2,950.00
3 Office table with chair PCS 2 2,350.00 4,700.00
4 Secretarial table with chairs PCS 1 2,450.00 2,450.00
5 Computers PCS 1 20,000.00 20,000.00
6 Printers PCS 1 15,000.00 15,000.00
7 Shelf PCS 1 5,500.00 5,500.00
8 Guest chairs PCS 1 1,500.00 1,500.00
Total 55700.00

6.2. Working capital

6.2.1. Salary expense
S/ Monthly salary in Annual salary
Position No Qualification
N birr in birr
1 General manager 1 BA in management 5,000 60,000.00
2 Building admin 1 BA in Acct/Mgt 4,000 48,000.00
Technical
3 1 Diploma building maintenance 3,000 36,000.00
maintenance manager
4 Finance head 1 BA in Accounting 4,000 48,000.00
5 IT Technician 1 Diploma IT 3,000 36,000.00
6 Marketer 1 Diploma in marketing 3,000 36,000.00
7 Accountant 1 Diploma in accounting 3,000 36,000.00
8 Guards/Security 2 Basic 1,500 36,000.00
9 Electrician 1 10+2 in general electricity 3,000 36,000.00
10 Plumber 1 10+2 in general mechanic 2,500 30,000.00
11 Cashier 1 10+1 in bookkeeping 3,000 72,000.00
12 Cleaner 2 Unskilled 1,500 36,000.00
13 Driver 1 10 completed 3,000 36,000.00
Total 15 546000.00
Benefit (20%) 109,200.00
Grand total 655,200.00

6.2.2. Other operating expenses

S/N List of items Annual cost in birr Assumptions used
1 Audit and legal fee 24,000.00 2000 birr/per month
2 Stationery supplies 12,000.00 1,000 birr/month
3 Promotional cost 5,000.00 Lump sum annual cost
4 Property insurance 48,000.00 1% of the building and minibus cost
5 Cleaning supplies 12,000.00 1000 br. Per month
6 Uniforms 4,500 300birr per person for 15 people
7 Water consumption 60,000 19047 m3 by 3.15 birr
8 Electric consumption 26,000.00 40000KWH By Br.0. 65
9 Fuel 105,672.00 5032 lit per year by Br. 21
10 Oil & lubricants 10,567.20 10% of fuel cost
11 Telephone & fax 6,000.00 500 per month
12 Repair expense 52,000.00 1% of the building, generator and minibus cost
13 Miscellaneous costs 12,000.00 1000 per month
Total 276739.20
6.2.3.Pre-service expenses
S/N Description Cost in birr
1 Project proposal 10,000.00
2 Licensing fee and others 1,000.00
3 Poject EIA 13,000.00
Total 24,000.00

6.2.4.Summary of total initial investment cost

S/N Description Cost in birr
1 Building and civil works 6,580,469.89
2 Building machines & equipment’s 6580469.89.00
3 Vehicle 800,000.00
4 Office equipment 13960939.78.00
Total fixed investment cost 8,033,969.89
5 Salary expense 655,200.00
6 Operating expense 28577079.560
7 Pre service expense 24,000.00
Total working capital 1,056,939.20
Sub total 9,090,909.09
8 Contingency (10%) 909,090.91
Total initial investment capital 10,000,000.00
7. FINANCIAL STATEMENT ANALYSIS, VIABILITY AND OTHER MEASURES OF

PROJECT WORTH
7.1.Underlying assumption
The financial analysis of the mixed use building is based on the data provided in the preceding
sections and the following assumptions.
A. Finance
Loan repayment peroid 10 years
Source of finance 20% equity and 80% loan
Bank interest rate 12%
B. Depreciation
Building 5% (straight line method)
Building machinery and equipment 20% (Pooling method)
Computers 25% (Pooling method)
Other office equipment 20% (Pooling method)
C. Administrative and operating costs
 All administrative and operating costs except insurance are assumed to increase by 10%
annually

D. Revenue
 Rent revenue will increase after each two years by 10%
7.2.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 20% and 80% respectively.
S/N Description Percentage share Amount
1 Owners share 20% 2,000,000.00
2 Bank loan 80% 8,000,000.00
Total 100% 10000000
7.3. Bank loan repayment schedule

Principal Interest Total annual Remaining principal
Year
payment (12%) payment balance
0 - - - 8,000,000.00
1 800,000 960,000 1,760,000 7,200,000
2 800,000 864,000 1,664,000 6,400,000
3 800,000 768,000 1,568,000 5,600,000
4 800,000 672,000 1,472,000 4,800,000
5 800,000 576,000 1,376,000 4,000,000
6 800,000 480,000 1,280,000 3,200,000
7 800,000 384,000 1,184,000 2,400,000
8 800,000 288,000 1,088,000 1,600,000
9 800,000 192,000 992,000 800,000
10 800,000 96,000 896,000 -

7.4.Depreciation schedule
S/N Description Original value in birr Depreciation rate in %
1 Construction and building 6,580,469.89 5
2 Bldg. machines & equipment’s 597,800.00 20
3 Vehicle 800,000.00 20
4 Office equipment 35,700.00 20
5 Computers 20,000.00 25
Total 8,033,969.89
7.5. Financial statements analysis

The establishment objective of the firm is primarily to generate profit; hence the project should
be financially viable for the promoters and further lending institution to allocate fund to the
project. Accordingly, some financial statements are employed to compare and analyses the
costs incurred and benefits generated through the project life. These are balance sheet, income
statement and Cash flow statements.
7.5.1. Profit-Loss statement (statement of financial performance)
Profit/loss forecast presents the results of project’s operations during a period of time. Total
project revenues and costs generated over the periods are compared here to see whether the
project generates profit or not. Starting from the first year of the project operation, the project
generates a reasonable amount of net profit for the owner through its life period. It shows income
earning from the project and expenses incurred in attaining the income. The projected profit/loss
statement of the project reveals that the project will earn profit after tax of birr 565,519.25 during
the first year of its operation and increasing thereafter and earn profit of birr 1,464,649.98 at the
end of (10th) year of projection. This indicates that the project could run profit table business
venture and can maintain objective of its establishment at competitive quality and price.

Table: Projected Income statement (statement of financial performance)

Items Year 1 Year 2 Year 3 Year 4 Year 5 Year 10
3,456,000.0 4,181,760.0
Rent revenue 3,801,600.00 3,801,600.00 5,059,929.60
3,456,000.00 0 0
Costs and expenses:
Electricity charges and water utilities 86,000.00 94,600.00 104,060.00 114,466.00 125,912.60 202,783.50
Salaries and wages 655,200.00 720,720.00 792,792.00 872,071.20 959,278.32 1,544,927.33
Repair & maintenance 52,000.00 57,200.00 62,920.00 69,212.00 76,133.20 122,613.28
Depreciation expense 620,723.49 562,133.49 515,323.99 477,923.27 448,037.85 367,879.14
Fuel and lubricant 116,239.20 127,863.12 140,649.43 154,714.38 170,185.81 274,085.95
Insurance 48,000.00 48,000.00 48,000.00 48,000.00 48,000.00 48,000.00
Telephone 6,000.00 6,600.00 7,260.00 7,986.00 8,784.60 14,147.69
Stationary and office supplies 12,000.00 13,200.00 14,520.00 15,972.00 17,569.20 28,295.37
Marketing and promotion expense 5,000.00 5,500.00 6,050.00 6,655.00 7,320.50 11,789.74
Audit and legal fee 24,000.00 26,400.00 29,040.00 31,944.00 35,138.40 56,590.74
Cleaning supplies 12,000.00 13,200.00 14,520.00 15,972.00 17,569.20 28,295.37
Uniforms 4,500.00 4,950.00 5,445.00 5,989.50 6,588.45 10,610.76
Interest expense 960,000.00 864,000.00 768,000.00 672,000.00 576,000.00 96,000.00
Miscellaneous expense 12,000.00 13,200.00 14,520.00 15,972.00 17,569.20 28,295.37
2,557,566.6 2,514,087.3
Total costs and expenses 2,613,662.69 2,523,100.43 2,508,877.34 2,834,314.25
1 3
1,667,672.6
Profit before tax 842,337.31 898,433.39 1,278,499.57 1,292,722.66 2,225,615.35
7
Income tax @ 35%-18,000 276,818.06 296,451.68 429,474.85 434,452.93 565,685.44 760,965.37
1,101,987.2
Net profit 565,519.25 601,981.70 849,024.72 858,269.73 1,464,649.98
4
7.5.2. Cash flow statement
Cash flow projection provides a look at the movement of cash in and out of the project. It is
important in determining whether or not a company has enough cash to pay its bills, handle
expenses and acquire assets. Thus, it is important to give due attention to identify whether the
total inflows of the project have the capacity to cover all cash outflows during its operational
period. Unless, the project will faces liquidity crisis and fail before achieving its objective of
establishment. Based on this fact, the forecasted cumulative cash balance shows a balance of birr
1,901,672.85 in the first year and will drop to birr 3,227,757.86 at the end of (10th) year of projection
period, demonstrating that the project will not face liquidity constraint to finance its operational
costs as well as meeting its debt obligation.

Table: Projected cash flow statement

Items Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 10
Total cash inflow 10,000,000.00 3,456,000.00 3,456,000.00 3,801,600.00 3,801,600.00 4,181,760.00 5,059,929.60
Inflow of funds 10,000,000.00
Inflow of operation 3,456,000.00 3,456,000.00 3,801,600.00 3,801,600.00 4,181,760.00 5,059,929.60
Other income
Total cash outflow 8,033,969.89 3,520,357.26 3,542,484.80 3,687,851.28 3,716,007.00 3,882,334.92 4,778,000.48
Increase in fixed assets 8,033,969.89 - - - - - -
Increase in current assets
Operating costs 1,032,939.20 1,131,433.12 1,239,776.43 1,358,954.08 1,490,049.48 2,370,435.11
Income tax 276,818.06 296,451.68 429,474.85 434,452.93 565,685.44 760,965.37
Financial Costs 960,000.00 864,000.00 768,000.00 672,000.00 576,000.00 96,000.00
Loan repayment 800,000.00 800,000.00 800,000.00 800,000.00 800,000.00 800,000.00
Owners Withdrawal 450,600.00 450,600.00 450,600.00 450,600.00 450,600.00 750,600.00
Surplus (deficit) 1,966,030.11 - 64,357.26 - 86,484.80 113,748.72 85,593.00 299,425.08 281,929.12
Cumulative cash balance 1,966,030.11 1,901,672.85 1,815,188.05 1,928,936.77 2,014,529.76 2,313,954.84 3,227,757.86
7.6. Financial viability and other measure of project worth
7.6.1. Profitability index (Benefit /cost ratio)
The profitability index is the ratio of the total PV of future cash inflows to the initial investment,
that is, PV/I. PI=PV/I= 25,456,548.88 /10,000,000.00=2.54
Since this project generates 2.54 birr for each birr invested (i.e., its profitability index is
greaterthan1), the project is acceptable
7.6.2. The net present value
This is the present value of future net benefits discounted at the appropriate cost of capital minus
the cost of investment. To calculate NPV, we need to find the present value of expected net
benefits of the project discounted at 12% per cent and subtract it from the initial cost of the
project. The envisaged project has a positive NPV of birr 15,456,548.88 after taxes.
7.6.3. Break-even point
It is number of units that must be sold in order to produce a profit of zero, point that recovers all
associated costs. In other words, the beak – even point is the point at which your product stops

costing you money to produce and sell, and starts to generate a profit for your company, as the
projections depict the project will break even in the first year of operation.

8. FUTURE DEVELOPMENT AND EXIT STRATEGIES
Whenever you create a business that’s profitable, you most likely create something worth selling.
If it’s worth selling, many would argue it’s worth protecting. The question is how? High quality
protection begins with asking a question, which evolves into a confident, well-developed plan
protecting both you and your family. In business terminology, an ending for a business owner is
called an “exit’’ while the planning of a defined ending is called an ‘’exist strategy. Having an
‘exit strategy’ tells others you associate with that you are in control of your business and your
destiny, that you’re aware of the goal and focused on achieving it, and that you have a plan for
an organized and profitable ending.
Therefore, every business undertakings whether are it large or small should have to have future
development plan. It is a plan fact that business activities are under took in a dynamic and
turbulent environment. Hence, to overcome or minimize the risks of uncertain future businesses
should devise effective strategies that enable them to be successful in their operation. Likewise
this market center and store building business owner has devised strategies to overcome the
future risk of operation. The first strategy is diversification of its activities to different other
business forms. The second future development plan of this is expanding the branches in many
parts of the country. Finally, selling its share so that builds its financial position and capacitating
its position.
9. SOCIO ECONOMIC AND 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.
9.1. Positive impact of the project

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.

9.2. Negative impact of the project and mitigation measures to be applied

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 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’s.
3. Sewages during operation
During operation there are some wastes emitting from the mixed use building. These are wastes
from the latrine and will be mitigated by using modern waste treatment technology.
10. CONCLUSION
As per the market, economic, technical and financial analysis presented in previous sections of
this proposal put in picture, the project is worth to invest on. The project has positive net
income starting from first year of operation, positive cash flow throughout the project period
and all the viability rations are indicating the project’s viability.
Significant employment creating nature of the project in the locality also justifies the investment.
Moreover, the project contributes significantly for the achievement of the overall national goal –
of the nation. The envisaged project is also environmentally friendly.Beyond these, with the
promoters capacity, skill and experience in business and contribution of capital and finance
from bank, the proposed project is strongly believed that it will consistently be implemented
within the estimated time schedule .
Therefore, in view of the above all considerations, implementation of the project deserves to be
given one of the priorities and supported by the concerned authorities and financial
institutions in facilitating the project implementation and to motivate local investors and
promote competitive investment throughout the region.


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PROJECT PROPOSAL FOR THE ESTABLISHMENT OF

MARKET CENTER AND STORE

2 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

1. Project name Market center and store (G+0)

3 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

4 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

2.2. Promoter’s profile

2.3. Purpose of the document

5 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

2.4. Objective of the project

2.6. Project rationale

6 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

2.7.The significance of the project

2.7.1. Source of revenue

2.7.2. Employment opportunity

7 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

2.7.3. Sources of social service

2.8. Project location

3.THE MARKET STUDY

8 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

3.2.The demand-supply gap

9 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

3.3.Current supply of market center building

3.4.Future market or demand of commercial building rental

10 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

2013/2014 9,916,543 11,304,859

Source: GTP’s forecasted Ethiopian economic growth

3.6.Marketing and promotion strategy

11 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

3.8.The project facilities and services plan

12 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

13 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

5.2. Types of mixed –use developments

5.2.2.Shopping Mall/Department store conversion

14 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

5.2.3.Vertical mixed –use developments

5.2.4.Horizontal mixed –use developments

5.3.Benefits of mixed –use developments

15 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

 Stronger neighborhood character ,’’sense of place ‘’ community identity

5.4.Description of the project’s service/ product mix

5.5.Land use plan

5.7.Project implementation schedule

16 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

Table: Project implementation schedule

Building Admin Marketing Technical and maintenance

HRM and finance IT, Electricity and plumber

17 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

18 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

C. The marketing department

6. FINANCIAL REQUIREMENT AND USES

6.1. Fixed investment

19 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

20 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

6.2. Working capital

21 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

6.2.2. Other operating expenses

22 PROMOTER: CHALA,YONAS AND THEIR FRIENDS COMMODITY TRADE PARTNERSHIP

6.2.4.Summary of total initial investment cost

7. FINANCIAL STATEMENT ANALYSIS, VIABILITY AND OTHER MEASURES OF