2-Wood and Metal Work

Feasibility
Study
Nekemte Locality of Oromiya Region
By DICT
Submitted to: MoFED/UNDP
October 2010
[ INTEGRATED WASTE DISPOSAL AND

MANAGEMENT]
Feasibility Study Nekemte General Wood and Metal Work
Executive Summary
With the support of UNDP, the Government of Ethiopia (GoE) has been implementing a project,
entitled “Local Economic Development” (LED) in 7 municipalities of 4 Big Regions (Oromia,
Amhara, SNNPR and Tigray). These 7 municipalities are as follows: Oromia: Asella and
Nekemte; Amhara: Bahir Dar; SNNPR: Awassa and Sodo; and Tigray: Mekele and Adigrat. The
main objective of the project is to enhance the capacities of Regions and Woredas to promote pro-
poor economic growth and sustainable livelihoods, through investments, employment creation
and targeted economic interventions. The project has 2 main intervention areas to achieve the
objectives, these are: (1) local capacity development for creating enabling environment; and (2)
creating jobs opportunities. The project, which is being implemented since June 2009, has already
made several achievements, such as developing LED strategies of the Regions and localities;
setting up an inclusive microfinance system, providing employment opportunities to over 5,000
unemployed youth and women, providing job-related skills development training to over 3,000
youth, construction of infrastructure (road and sewage system), and others. In line with the GTP
(5 year National Development Plan), the project has been supporting the local governments for
pro-poor growth and economic development at local levels, by creating enabling environment and
promoting jobs creation.
In view of the above background, participatory assessment of the locality’s LED potential was
conducted and a five year LED strategy and viable interventions were developed for harnessing
the potentials. In this regard, six micro viable projects, which are geared towards improving the
income and employability of vulnerable youth and women groups, were identified for the year
2010 based on results of a pre-feasibility study conducted by the LED team for Nekemte. In fact,
Nekemte General Wood and Metal Work Project is one of the viable projects that are identified
and endorsed by the LED stakeholders in Nekemte.
Nekemte General Wood and Metal Work will produce and sale quality wood and metal products
including the windows, doors, cupboard, shelf, frames, different wood and metal designs, and other
office and household furniture to construction industry, the private sector, as well as the
government and the public in general and will mainly use the doo-to-door selling, word of mouth,
catalogs, broker’s incentives, as well as local newspapers to communicate with its clients.
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Nekemte General Wood and Metal Work is owned by about hundred ten (90 males and 20 females)
unemployed youths and women vulnerable groups that will be organized in association so as to
pledge their time, labor, and financial resource so as to create jobs for themselves. The seventy
youths and women will operate the business and that relevant training will be given to the members
about production and management of the wood and metal work as well the training of the ways of
handling customers, and courses on business management like record keeping, and marketing will
be provided. It is expected that Nekemte General Wood and Metal Work will start its operation in
the year 2010/2011.
The business investment is financially viable with an internal rate of return of 21.6616%, net
present value of birr 246,368.20 discounted at 15%, benefit/cost ratio of 1.173, and payback period
of three years and four months. These financial analysis criterions, all confirms the feasibility of the
business investment and their results indicate a promising investment opportunity. Further, the
investment sensitivity analysis, conducted under various conditions, results confirm that the
business investment is attractive to undertake.
Similarly, if we looked at the forecasted income statement, the Nekemte General Wood and Metal
Work investment will generate a total sales of birr 1,504,816 in the year 2010/2011 and birr
2,203,202 in the year 2015, indicating a more than 45% increase in the sales in the operating period
of the business and ensuring that the business start generating profit in the first year of operation.
Important ratios such as profit margin (net profit to total sales), net profit to equity (return on
equity), and net profit to total assets or investment (return on total investment) show an increasing
trend during the life-time of the project. In general, the Forecasted Income Statement and the other
indicators of profitability show that the investment is viable.
As an economic benefit the investment can create employment for 110 Ethiopian in the year
2010/2011 and the job opportunities for our citizens and will increase in the successive years. In
addition to supply of the domestic needs, the investment will generate birr 952,447 in terms of tax
revenue to the government. Lastly, by enhancing the potential to increase productivity and,
managing or minimizing the various costs such as material cost, labor cost, supplies expense, and
others, the business will implement its investment profitably.
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Contents
Executive Summary………………………………………………………………………………………………………………………2
1. Description of the Business......................................................................................................................6
2. Industry Analysis....................................................................................................................................10
3. Production Plan......................................................................................................................................11
4. Marketing Strategy................................................................................................................................13
5. Management and Personnel..................................................................................................................13
6. Financial Feasibility Study......................................................................................................................14
6.1 Capital Investment...............................................................................................................................15
6.2 Financing Plan......................................................................................................................................16
6.3 Forecasted Income Statement.............................................................................................................16
6.4 Forecasted Balance Sheet....................................................................................................................19
6.5 Forecasted Cash-Flow..........................................................................................................................20
6.6 Investment Analysis.............................................................................................................................22
7. Sensitivity Analysis.................................................................................................................................23
8. Socio-Economic and Political Analysis....................................................................................................25
9. Conclusions and Recommendations......................................................................................................26
Annex: Action Plan and Project Summary Sheet
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1. Description of the Business

Economic empowerment of local peoples is both the means and an end of people-centered
development initiatives. In the framework of pro-poor Local Economic Development, capitalizing
on locally available resources is a key to reduce poverty and unemployment as well as enhancing
the revenue of local governments.
Meanwhile, Nekemte City Administration is one of the localities in Oromia that is endowed with
huge but untapped potentials. Its natural resource base, accessibility to market, better infrastructure
and service, human resource as well as existence of institutions are among the most prominent
potentials for generating growth and creating gainful employment to the residents. Moreover, the
growth and development of Nekemte is believed to stimulate the rapid transformation of
surrounding rural communities. Nevertheless, a significant proportion (35 to 40%) of the residents
is below poverty line of birr 1,075 for Ethiopia. Women headed households in Nekemte, estimated
to reach 40% of the households, are mostly suffering from poverty. Moreover, out of the total
46,426 people that are economically active, 8,706 or 19% are found to be registered job seekers.
The situation of unemployment is so rampant when considering the growing number of unskilled
and unregistered youth groups in the locality.
Furthermore, HIV/AIDS, disability and poor support to elders are increasingly threatening the
city’s socio-economic development. Finally, revenue base of the city administration has been
undiversified and inadequate to respond to the needs and priorities of the residents. Albeit positive
developments in the local business enabling environment, the level of private investment and Micro
and Small Enterprises development has been far below expectation. Support provided to Micro and
Small Enterprises has been very limited and women’s involvement in the enterprises has been
marginal. Besides, the number of youth, women, elders and other groups looking for support,
mainly.
The combined effect of these problems has been perpetuating the problems of poverty,
unemployment and weak capacity to finance public expenditures. In addition, the vulnerability
situation is adding to social problems that include crime/deviance, beggary, prostitution etc.
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In a nutshell, Nekemte town is not currently in a position to respond to the needs and priorities of
vulnerable groups by relying on its potentials. Among the leading causes is limited access to
finance, business premises, and trainings for skills development. The present undeveloped
partnership and collaboration among Local Economic Development actors is also a bottleneck in
initiating successful Local Economic Development interventions geared towards creating more jobs
and revenue.
This Local Economic Development project of Nekemte is, therefore, developed with due
recognition of the gravity of problems of unemployment, abject poverty and welfare among
vulnerable groups viz., youth, women, elders, the disabled and others in the town.
Nekemte General Wood and Metal Work will produce and sale quality wood and metal products
including the windows, doors, cupboard, shelf, frames, different wood and metal designs, and other
office and household furniture to construction industry, the private sector, as well as the
government and the public in general and will mainly use the doo-to-door selling, word of mouth,
catalogs, broker’s incentives, as well as local newspapers to communicate with its clients. It has an
overall objective of satisfying customers by producing quality windows, doors, cupboard, shelf,
frames, different wood and metal designs, and other office and household furniture and maintains a
steady growth in sales volume that will sustain the business for long period.
Nekemte General Wood and Metal Work is owned by about hundred ten (90 males and 20 females)
unemployed youths and women vulnerable groups that will be organized in association so as to
pledge their time, labor, and financial resource so as to create jobs for themselves. The seventy
youths and women will operate the business and that relevant training will be given to the members
about production and management of the wood and metal work as well the training of the ways of
handling customers, and courses on business management like record keeping, and marketing will
be provided. It is expected that Nekemte General Wood and Metal Work will start its operation in
the year 2010/2011.
The business will operate in Nekemte town, Oromia Regional State, East Wollega zone. The site is
selected because it is located at the center of the town and nearer to most new constructions going
on in the town and that the town is located on crossroad in the western part Oromia regional state
and woredas of the surrounding that can purchase different office furniture and equipments from
the town. Given the different agro-ecological resources of the town, wood and metal work is a very
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good potential resource for the economic development of the town. Moreover, the expansion of the
construction industry in Nekemte (especially the beginning of Nekemte Stadium) in general and in
Western Wollega in particular is demanding the supply of different metal and wood products.
Wood and metal work production and management, which utilizes huge labor force, is a very good
income source and employment generation activity if tapped wisely. The wood and metal work is
an endeavor to create jobs for vulnerable women groups and youths.
The natural resource base, accessibility to market, better infrastructure and service, human resource
as well as existence of institutions are among the most prominent potentials for starting the wood
and metal work business that will generate growth and create gainful employment to the residents
of Nekemte Town. Moreover, the growth and development of Nekemte is believed to stimulate the
rapid transformation of surrounding rural communities.
In order to provide produce and sale wood and metal work products, the Nekemte General Wood
and Metal Work will acquire meter, try square, pilers, hammer, metal cutter, welding machine,
gesso, electric drill, bench saw, sand machine, and other all essential equipment to carryon its
activities from the Nekemte Town and its surroundings. As well, the Nekemte General Wood and
Metal Work will purchase essential raw materials such as flat wood with different sizes, different
metals, tubular, lamera, key for metal, key for wood work, and others from Nekemte town and its
surroundings.
Objectives: The overall objective of the project is to contribute to the reduction of poverty and
unemployment as well as growth generation endeavors in Nekemte. Specifically the project is
intended to improve living standard of 110 youth and women vulnerable groups, create job
opportunity, and to increase the quality and quantity of wood and metal production and sale of
product.
Outputs: The project is expected deliver outputs including increased employment opportunities,
increased purchasing power of target beneficiaries, and increased Production
Input/Activities: Important project inputs include financial support in the form of loan, technical
support. Business plan preparation, providing training to targets, provision of business premises
and political support, establishment of business association, provision of technical and business
information support.
The project’s impact flow is briefly presented herein below in the diagram that shows the logical
connection of the input/process, outputs, and outcome and impact.
Box-1 Impact Flow of wood and metal work Project
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Results Chain/Framework
Inputs/Processes (results relating to provision of resources and processes)
 Financial support in the form of loan with minimum interest rate

 Prepare Business plan
 Provide training on wood and metal work, ways of handling customers, and courses on business
management like record keeping, and marketing.
 Business remises, licensing and registration services provided
 Association established, coordination undertaken
 Professional/technical assistant provided
 Information on business opportunities, marketing and apprenticeships provided
Leading to…
Outputs (results relating to short-term change effects and results sought)
 Improved technical capacity (knowledge and skill) to start and run businesses
 Stimulated VGs to engage in businesses
 Improved production and sale products
 Increased purchasing power of beneficiaries
 Decreased business failures
 Increased emergence new business
Leading to…
Outcomes (results relating to intermediate change and effects sought)
 Increased household income/ living standard of beneficiaries and their dependants

 Increased number and quality of jobs
 Enterprise development/investment stimulated
 Revenue expenditure gap reduced
Leading to…
Impacts (results relating to long-term change and effects sought)
 Reduction in poverty and unemployment /generation of growth
2. Industry Analysis
Nekemte is one of the best naturally endowed town in the country. Assessment results for the 2009
LED initiative indicated that the Nekemte town is endowed with fertile soil, water resources, forest,
sufficient precipitation, hotel and resorts, abundant and cheap labor force, livestock and animal
husbandry and above all, it has abundant minerals and raw materials. In addition, the town is
uniquely favorable to open and develop wood and metal work industries.
Moreover, The LED Strategy of Oromia confirms the competitive advantage of Nekemte town and
suggested that urban agriculture (such as dairy processing, wood and metal work, horticulture,
livestock fattening, beautification and gardening, Coffee and Honey processing), industry and
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construction as the main areas of investment, LED intervention and sustainable development (LED
Strategy of Oromia, September 2009).
According to Central Statistic Agency, 2007, Nekemte has a total population of above 76,817
(39,167 male 37,650 female). The population of the town is increasing due to rural–urban influx,
that is, people migrate from rural to urban seeking for job opportunity and suitability of the town
for work and living condition. The rapid population growth is a potential market for wood and
metal products. This implies that there exists huge market demand for windows, doors, cupboard,
shelf, frames, different wood and metal designs, and other office and household furniture in the
city. It also creates employment opportunities for a number of youth and women. Hence, running
the wood and metal work business shall be feasible, lucrative and fast income generating.
The expansion of the construction industry in Nekemte (especially the beginning of Nekemte
Stadium) in general and in Western Wollega in particular is demanding the supply of different
metal and wood products. Considering these demands, the Nekemte General Wood and Metal
Work is planning to involve in the production of wood and metal products to the construction
industry, the private sector, as well as the government and the public in general that are considered
to be the consumers of wood and metal products.
With emerging urbanization, the demand for wood and metal products is expected to increase. If
tapped sufficiently, this type of activity could create jobs for unemployed youths on the one hand,
and meet the demand for such products on the other hand.
There are few wood and metal work businesses in Nekemte town at the current period such as
Birra, ZAGS, Jitu, Wasasa, and others that produce furniture, door, and window. Though the
Nekemte General Wood and Metal Work will gradually involve in the production of quality
windows, doors, cupboard, shelf, frames, different wood and metal designs, and other office and
household furniture and will operate in Nekemte town the existing wood and metal work businesses
in Nekemte town will have insignificant direct computational effects on the business.
Moreover, by producing quality windows, doors, cupboard, shelf, frames, different wood and metal
designs, and other office and household furniture at low costs, satisfying customers, using the
advertizing, and others the Nekemte General Wood and Metal Work is planning to become strong
competitor and is planning to gain and maintain the market share and become strong competitor.
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3. Production Plan
Wood and Metal Work is an important source of income in Ethiopia and is one of the most suitable
interventions to improve the livelihood of the poor. Nekemte General Wood and Metal Work is
planning to participate in modern wood and metal production system and to achieve a better yield
by initially focusing on the production of windows, doors, cupboard, shelf, frames, different wood
and metal designs, and other office and household furniture.
In the year 2010/2011, Nekemte General Wood and Metal Work has a plan to produce and sale
various quantities of shelves, control bife, tables, chairs, wood doors, wood windows, beds, metal
doors, metal windows, metal shelf, containers, and metal cupboards. The costs to produce these
products are summarized in Table 1 below:
Table 1 Production Cost Plan for the Year 2010/2011

No Products Qty Unit Cost Total Costs
1. Shelf 1x1.5m 35 871 Birr 30,479
2. Control Bife 40 3,300 132,000
3. Table 135 560 75,600
4. Chair 270 300 81,000
5. Door 1x1.9m 140 1,050 147,000
6. Window 1x1m 90 201 18,086
7. Bed 38 860 32,680
8. Metal Door 130 804 104,499
9. Metal window 110 281 30,947
10. Metal shelf 35 804 28,134
11. Container 20 7,560 151,200
12. Metal cupboard 30 2,679 80,384
Total Costs Birr 912,010
In order to produce shelves, control bife, tables, chairs, wood doors, wood windows, beds, metal
doors, metal windows, metal shelves, containers, and metal cupboards, the Nekemte General Wood
and Metal Work will purchase essential raw materials such as flat wood with different sizes,
different metals, tubular, lamera, key for metal, key for wood work, and others, which are
summarized in Table 2 below.
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Table 2 Raw Material Requirements and Cost for the Year 2010/2011
No Type of Raw Material Unit of Measure Qty Unit Cost Total Costs
1. Flat wood 50cm No 520 140 Birr 72,800
2. Flat wood 40cm ” 190 85 16,150
3. Flat wood 35cm ” 765 70 53,550
4. Flat wood 30cm ” 215 50 10,750
5. Flat wood 25cm ” 140 40 5,600
6. Flat wood 20cm ” 1230 35 43,050
7. Flat wood 7x1.20cm ” 530 7 3,710
8. L-Metal ” 140 85 11,900
9. T-Metal ” 305 85 25,925
10. Z-Metal ” 305 85 25,925
11. Tubulare (20x30) ” 860 130 111,800
12. Lamera ” 870 265 230,550
13. Key for Metal ” 210 56 11,760
14. Key for wood work ” 245 10 2,450
Total Yearly Raw Material Birr 625,920
4. Marketing Strategy
The Nekemte General Wood and Metal Work marketing strategies are simple but aim to reach a
large amount of people. Nekemte General Wood and Metal Work will mainly use the Internet to
communicate with its clients, doo-to-door selling, word of mouth, catalogs, broker’s incentives, and
others. As well, in the future it will also advertise in the local newspapers including Capital,
Reporter, Fortune, and Addis Zemen. In a given year, the business has a plan to spend up to birr
2,000 on advertising and promotion and it is planning to spend more in the future.
The Nekemte General Wood and Metal Work follows a low pricing strategy to attract large
numbers of customers and benefit from the large numbers. In comparison with others, the price of
the business will be low and it will charge low prices by minimizing its costs to the minimum yet,
the business is planning to have average prices and compete on quality and service in the future.
Despite the fact that there are few competitors such as Birra, ZAGS, Jitu, Wasasa, and others that
produce furniture, door, and window, there is a potential market for wood and metal work products
in the Nekemte town and that the Nekemte General Wood and Metal Work is targeting construction
industry, the private sector, as well as the government and the public in general that are considered
to be the consumers of wood and metal products.
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5. Management and Personnel

Most of the strategic and day-to-day business activities of the Nekemte General Wood and Metal
Work will be managed by employees. In addition to this, the employees will also be responsible for
managing the overall activities of the business, coordinating the efforts of people, and deciding on
the authority and performance of other employees. The employees shall follow the recording of the
daily performance data including products production, labor requirement, costs incurred and sales,
and others.
Regarding the personnel requirement, the business will operate with efficient and effortful
participation of the beneficiaries and hire a total of 110 youths and women vulnerable groups only
from beneficiaries, specifically 5 accountants, 5 cashiers, 5 janitors, 5 storekeepers, 5 guards, and
25 clerical workers. Correspondingly, total labor cost is estimated at birr 282,000 for the year
2010/2010/2011. Table 3 provides the list of manpower required and the estimated monthly as well
as annual labor costs.
Table 3 Manpower Requirement and Labor Cost for the Year 2010/2011
No. Positions Req. No. Monthly Salary Yearly Salary
1. Accountant 5 400 Birr 24,000
2. Cashier 5 250 15,000
3. Janitor 5 200 12,000
4. Store keeper 5 250 15,000
5. Guard 5 200 12,000
6. Clerical Workers 85 200 204,000
Total 110 Birr 282,000
Even though the employment of a manager who run the business profitability, enable the business
pay the loan it borrows, generate more income to the owner, and others is a necessary condition,
his/her employment is not incorporated in the feasibility study. It is the consultant’s strong believe
that the business is managed by one experienced and qualified manager.
6. Financial Feasibility Study

Nekemte General Wood and Metal Work financial feasibility study depends on the assumptions
that are made below. These are annual and monthly assumptions that show the consistent growth of
the business. As well, some of the underlying and general assumptions are:
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 The business assumes a healthy growth trend in the international and local market, along
with a continued strong international and local economy.
 The business assumes that it stay in line with the continuing advances in technology and
business.
 The business is expected to be self sustained in terms of finance with the payment they
obtain from their clients back from the product they sell.
 Overall activities of the business will grow from time to time and finally will be one of the
medium size industries in the country through expanding their business from time to time.
 The interest rate assumed to be 10% over the five years.
 The profit income tax rate is assumed to be 30% in the five years.
The financial feasibility study that incorporate the capital investment, financing plan, the
Forecasted Income Statement, the Forecasted Balance Sheet, and the Forecasted Cash Flow
Statement are provided in the parts that follow.
6.1 Capital Investment

The lists of various types of fixed assets (equipment and property) or capital assets or capital
investment, which will be needed, are provided as follows and summarized in Table 4:
 The business will construct a building to operate the business at a total cost of birr 450,000
at the beginning of the year 2010/2011. It is assumed that the building will have 5 years
useful life and estimated salvage value of birr 50,000.
 The business will acquire Metal Cutter at a total cost of birr 24,000 at the beginning of the
year 2010/2011. It is assumed that the Metal Cutter will have 5 years useful life and
estimated salvage value of birr 4,000.
 The business will acquire Welding Machine at a total cost of birr 36,000 at the beginning of
the year 2010/2011. It is assumed that the Welding Machine will have 5 years useful life
and estimated salvage value of birr 4,000.
 The business will acquire Electric Drill at a total cost of birr 12,000 at the beginning of the
year 2010/2011. It is assumed that the Electric Drill will have 5 years useful life and
 The business will acquire Bench Saw at a total cost of birr 72,000 at the beginning of the
year 2010/2011. It is assumed that the Bench Saw will have 5 years useful life and
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 The business will acquire other assets such as meter, try square, pilers, hammer, gesso, and
sand machine at a total cost of birr 22,960 at the beginning of year 2010/2011. It is assumed
that the other assets will have 5 years useful life and zero estimated salvage value.
Table 4 Capital Investment Cost

No. Type of Equipment Qty Unit Cost Total Costs
1. Metal Cutter 6 4,000 24,000
2. Welding Machine 6 6,000 36,000
3. Electric Drill 6 2,000 12,000
4. Bench Saw 6 12,000 72,000
5. Other Assets 22,960
Estimated Total Capital Investment Cost Birr 166,960
6.2 Financing Plan

In order to start the business operation and to acquire equipments, raw materials, working capital,
to be prepared ahead to be able to produce and sales the products to customers, and others the
business needs money. Since customers are very receptive and if they do not obtain quality
products and service and timely, they may not be interested to come again, the business shall need
funds to provide quality service and satisfy its customers.
The Nekemte General Wood and Metal Work generally requires a total of birr 1,425,000 to meet
estimated capital requirements as well as to cover various costs incurred to start and run the
operation. Hence, to meet estimated capital requirements as well as to cover various costs incurred
to start and run the operation, the business expects to borrow birr 1,425,000 from financial
institutions (such as microfinance or banks) at the beginning of year 2010/2011, at 10% interest rate
that will be repayable in five years on monthly basis.
6.3 Forecasted Income Statement

The Forecasted Income Statement for the five years (2010/2011 to 2015) is prepared using the
forecasted sales and the costs. Hence, the sales are estimated based on the economic forecasts
(considering the economy of the region, country and industry), effect of competition, market share,
and pricing policy or elasticity of demand (competitive response). In the year 2010/2011, the
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Nekemte General Wood and Metal Work expects a Total Sale of birr 1,504,816 as a result of
selling:
No Products Qty Unit Price Total Sales

1. Shelf 1x1.5m 35 1,437 Birr 50,290
2. Control Bife 40 5,445 217,800
3. Table 135 924 124,740
4. Chair 270 495 133,650
5. Door 1x1.9m 140 1,733 242,550
6. Window 1x1m 90 332 29,843
7. Bed 38 1,419 53,922
8. Metal Door 130 1,326 172,424
9. Metal window 110 464 51,063
10. Metal shelf 35 1,326 46,422
11. Container 20 12,474 249,480
12. Metal cupboard 30 4,421 132,633
Total Sales Birr 1,504,816
Similarly, the Total Sales for the year 2012 and successive years have been computed in a similar
manner assuming a 10% annual increase in total sales.
The forecasted costs and expenses for the year 2010/2011 and successive years for the business are
provided in the parts that follow. Note that, for the purposes of various analyses, the costs and
expenses are treated in the same way.
1. Material cost. In the year 2010/2011, the business estimated to incur a total of birr 625,920
material cost and that the material cost is expected to increase by 2% per year for the
successive years.
2. Labor cost. In the year 2010/2011, the business estimated to incur a total of birr 282,000
labor cost and that the labor cost is expected to increase by 2% per year for the successive
years.
3. Transportation cost. In the year 2010/2011, the business estimated to incur a total of birr
5,000 transportation cost and that the transportation cost is expected to increase by 2% per
year for the successive years.
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4. Repair and maintenance. In the year 2010/2011, the business estimated to incur a total of
birr 2,000 repair and maintenance of business facilities and that the repair and maintenance
is expected to increase by 2% per year for the successive years.
5. Utility expense. In the year 2010/2011, the business estimated to incur a total of birr 25,000
utility expenses for the electricity, water, and telephone and that the utility expense is
expected to increase by 2% per year for the successive years.
6. Advertising and promotion. In the year 2010/2011, the business estimated to incur a total
of birr 2,000 advertising and promotion and that the advertising and promotion is expected
to increase by 2% per year for the successive years.
7. Insurance expense. In the year 2010/2011, the business estimated to incur a total of birr
2,000 insurance expenses to insure the business properties and that the insurance expense is
expected to increase by 2% per year for the successive years.
8. Supplies expense. In the year 2010/2011, the business estimated to incur a total of birr
40,925 supplies expenses (fermo vitae at birr 545, fermo at birr 3,000, electrode at birr 675,
wire at birr 2,620, antirust at birr 3,030, manuela at birr 810, varnish at birr 7,350, kola at
birr 10,400, nail at birr 1,350, handle for metal at birr 740, “matfia” at birr 1,090, gomini at
birr 365, sand paper at birr 7,840, “meshogoria” at birr 820, and “bilon” at birr 290) and that
the supplies expense is expected to increase by 2% per year for the successive years.
9. Other costs and expenses. Other costs and expenses including the compensation and
severance, stationery and office supply, professional fee, legal fee, consultancy fee, cleaning
and sanitation, revenue stamp, uniform expense, per-diem, license and renewal fee, and
others are assumed to be birr 5,000 in the year 2010/2011 and expected to increase by 2% in
the successive years.
10. Depreciation. The depreciation expense is computed for the year 2010/2011 and coming
years using the deprecation rate of Federal Inland Revenue Authority on the book value of
the assets.
11. Interest expense. From the birr 1,425,000 bank loan that the business will request, interest
expense of birr 142,500 in the year 2010/2011, birr 128,250 in the year 2012, birr 98,325 in
the year 2013, birr 66,833 in the year 2014, and birr 35,183 in the year 2015.
12. Income taxes. Since we expect no changes in either tax law or tax position, we will use the
same tax rate as last year; that is income taxes of 30%.
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The Forecasted Income Statement for the five years (2010/2011 to 2015) depending on the
Forecasted revenue/sales and the costs of sales and expenses provided in the earlier parts are
prepared and presented as follows:
Nekemte General Wood and Metal Work

Forecasted Income Statement (in birr)
For the Year Ended December 31, 2010/2011-2015
Revenue: 2010/2011 2012 2013 2014 2015
Sales 1,504,816 1,655,298 1,820,828 2,002,911 2,203,202
Total Revenue 1,504,816 1,655,298 1,820,828 2,002,911 2,203,202
Costs and Expenses:
Material Cost 625,920 638,438 651,207 664,231 677,516
Labor Cost 282,000 287,640 293,393 299,261 305,246
Transportation Cost 5,000 5,100 5,202 5,306 5,412
Repair and Maintenance 2,000 2,040 2,081 2,122 2,165
Utility Expense 25,000 25,500 26,010 26,530 27,061
Advertising and Promotion 2,000 2,040 2,081 2,122 2,165
Insurance Expense 2,000 2,040 2,081 2,122 2,165
Supplies Expense 40,925 41,744 42,578 43,430 44,299
Other costs and Expenses 5,000 5,100 5,202 5,306 5,412
Depreciation Expense 116,000 92,800 74,240 59,392 47,514
Interest Expense 142,500 128,250 98,325 66,833 35,183
Total Costs and Expenses 1,248,345 1,230,692 1,202,400 1,176,656 1,154,137
Income Before Tax 256,471 424,606 618,428 826,255 1,049,065
Less: Profit Tax 76,941 127,382 185,528 247,876 314,719
Net Income 179,530 297,224 432,900 578,378 734,345
6.4 Forecasted Balance Sheet

The Forecasted Balance Sheet for the five years (2010/2011 to 2015) is prepared considering the
management’s expertise, future economic conditions, and the following assumptions:
╬ Cash on hand is taken from Forecasted Cash Flow Statement.
╬ The business will maintain an optimal stock balance of supplies and other items of birr
3,540 at the end of each year.
╬ Assuming that there will be no major fixed asset sales and retirements, the balance of fixed
assets is stated at net book value for the coming years.
╬ The business will buy various items including equipments, office supplies, and other items
on credit and will have Accounts Payable balance of birr 19,748 in the year 2010/2011, birr
43,914 in the year 2012, birr 63,248 in the year 2013, birr 78,714 in the year 2014, and birr
91,087 in the year 2015.
╬ Bank loan balance. It is assumed that, from the loan balance of birr 1,425,000, the business
expects to pay a total of the principal and interest of birr 427,500 in the year 2010/2011, birr
17
413,250 in the year 2012, birr 383,325 in the year 2013, birr 351,833 in the year 2014, and
birr 320,183 in the year 2015. As a result, the outstanding bank loan balance is birr
1,140,000 in the year 2010/2011, birr 855,000 in the year 2012, birr 570,000 in the year
2013, and birr 285,000 in the year 2014.
╬ Paid-up-capital is equal to birr 0 and remain the same in the coming years.
╬ In the year 2010/2011, the estimated retained earning will increase by the net profit and no
dividend will be paid, while in the successive years, the retained earning will increase by
60% and the remaining 40% will be paid as dividend.
Hence, using these assumptions, the Forecasted Balance Sheet for the five years (2010/2011 to
2015) are prepared as shown below:

Forecasted Balance Sheet
December 31, 2010/2011 – 2015 (in birr)
ASSETS
Current Assets: 2010/2011 2012 2013 2014 2015
Cash on Hand 853,370 867,344 938,596 1,077,833 1,295,208
Stock 3,540 3,540 3,540 3,540 3,540
Total Current Assets 856,910 870,884 942,136 1,081,373 1,298,748
Fixed Assets:
Building 360,000 288,000 230,400 184,320 147,456
Metal Cutter 16,000 12,800 10,240 8,192 6,554
Welding Machine 25,600 20,480 16,384 13,107 10,486
Electric Drill 8,000 6,400 5,120 4,096 3,277
Bench Saw 54,400 43,520 34,816 27,853 22,282
Other Assets 18,368 14,694 11,756 9,404 7,524
Total Fixed Assets 482,368 385,894 308,716 246,972 197,578
Total Assets 1,339,278 1,256,779 1,250,852 1,328,345 1,496,326
LIABILITIES AND CAPITAL
Liabilities
Accounts Payable 19,748 43,914 63,248 78,714 91,087
Bank Loan 1,140,000 855,000 570,000 285,000 0
Total Liabilities 1,159,748 898,914 633,248 363,714 91,087
Capital:
Paid-up-Capital 0 0 0 0 0
Retained Earning 179,530 357,864 617,604 964,631 1,405,238
Total Capital 179,530 357,864 617,604 964,631 1,405,238
Total Liabilities and Capital 1,339,278 1,256,779 1,250,852 1,328,345 1,496,326
18
6.5 Forecasted Cash-Flow

The cash-flow for the five years (2010/2011 to 2015) has been forecasted based on the Forecasted
Income Statement prepared earlier, other assumptions made in the earlier parts, and using the
following assumption:
╬ The beginning cash balance is zero as of January 1, 2010/2011.
╬ The cash received from sales of shelf, control bife (cupboard), table, chair, door, window,
bed, metal door, metal windows, metal shelf, container, and metal comedino is taken from
the Forecasted Income Statement.
╬ The depreciation tax shield for each year is computed by multiplying the depreciation
expense of each year by a tax rate of 30%.
╬ The cash payments for costs and expenses are taken from the Forecasted Income Statement.
╬ Bank loan repayment. It is assumed that, from the loan balance of birr 1,425,000, the
business expects to pay a total of the principal and interest of birr 427,500 in the year
2010/2011, birr 413,250 in the year 2012, birr 383,325 in the year 2013, birr 351,833 in the
year 2014, and birr 320,183 in the year 2015.
╬ It is assumed that, the business will construct building at a cost of birr 450,000, metal cutter
at a cost of birr 24,000, welding machine at a cost of birr 36,000, electric drill machine at a
cost of birr 12,000, bench saw at a cost of birr 72,000, and other assets at a cost of birr
24,000 on January 1, 2010/2011.
╬ The business will pay no dividend to the owners in the year 2010/2011, while it will pay
40% of net profit as dividend in the successive years.
The Forecasted Cash Flow Statement for the five years (2010/2011 to 2015) is provided as follows:
Forecasted Cash Flow Statement
December 31, 2010/2011 – 2015 (in birr)
Cash Inflows: 2010/2011 2012 2013 2014 2015
Beginning Cash Balance 0 853,370 867,344 938,596 1,077,833
Sales 1,504,816 1,655,298 1,820,828 2,002,911 2,203,202
Depreciation Tax Shield 34,800 27,840 22,272 17,818 14,254
Borrow from Bank 1,425,000 - - - -
Total Cash Inflows 2,964,616 2,536,508 2,710,444 2,959,324 3,295,288
Cash Outflows:
Material cost 625,920 638,438 651,207 664,231 677,516
Labor cost 282,000 287,640 293,393 299,261 305,246
Transportation cost 5,000 5,100 5,202 5,306 5,412
Repair and maintenance 2,000 2,040 2,081 2,122 2,165
Utility expense 25,000 25,500 26,010 26,530 27,061
19
Advertising and promotion 2,000 2,040 2,081 2,122 2,165

Insurance expense 2,000 2,040 2,081 2,122 2,165
Supplies expense 40,925 41,744 42,578 43,430 44,299
Other costs and expenses 5,000 5,100 5,202 5,306 5,412
Bank Loan Principal Repayment 285,000 285,000 285,000 285,000 285,000
Bank Loan Interest Repayment 142,500 128,250 98,325 66,833 35,183
Construction of Building 450,000 - - - -
Acquisition of Metal Cutter 24,000 - - - -
Acquisition of Welding Machine 36,000 - - - -
Acquisition of Electric Drill 12,000 - - - -
Acquisition of Bench Saw 72,000 - - - -
Acquisition of Other Assets 22,960 - - - -
Profit Tax 76,941 127,382 185,528 247,876 314,719
Dividend Payment - 118,890 173,160 231,351 293,738
Total Cash Outflows 2,111,246 1,669,163 1,771,848 1,881,492 2,000,081
Net Cash Balance 853,370 867,344 938,596 1,077,833 1,295,208
6.6 Investment Analysis

The investment analysis using the payback period, net present value, internal rate of return, and the
benefit/cost ratio are provided in the parts that follow in order to confirm the feasibility of the
business investment. For the computation of the payback period, net present value, internal rate of
return, and the benefit/cost ratio, the concept of relevant cash flow or incremental cash flow is
determined, which is central to the investment analysis. Note that, relevant or incremental cash
flow for project evaluation consists of any and all changes in the firm’s future cash flows that are a
direct consequence of taking the project. Considering this definition, the relevant cash flow or
incremental cash flow for the purpose of the computation of the payback period, net present value,
internal rate of return, and the benefit/cost ratio is provided in Table 5 below:
Table 5 Relevant Cash Flow Statement

Years 0 2010/2011 2012 2013 2014 2015
Income Before Tax 256,471 424,606 618,428 826,255 1,049,065
Add: Depreciation 116,000 92,800 74,240 59,392 47,514
Less: Income Tax (30%) 76,941 127,382 185,528 247,876 314,719
Capital Spending (1,425,000) 0 0 0 0 140,000
Total Incremental Cash Flow (1,425,000) 295,530 390,024 507,140 637,770 921,859
Moreover, note that, the business is expected to operate for five years and that the business
assumed a 15% rate of return to evaluate the business investment. Hence, the payback period, net
present value, internal rate of return, and the benefit/cost ratio are calculated using the Forecasted
Cash Flow Statement provided in the prior parts as follows:
20
1. The payback period was estimated at three years and four months, which is shorter than the
five years that the business will operates, indicating that the business will return its
investments in the shorter period.
2. The net present value at discount factor of 15% was estimated to be a positive value of birr
246,368.20. The birr 246,368.20 net present value is positive; therefore based on the net
present value rule; we should accept the business investment.
3. The internal rate of return reached about 21.6616%. The internal rate of return of 21.6616%
is far greater than the prevailing market rate of return of 15%, again implying that, it is
advisable to undertake the business investment.
4. The benefit/cost ratio at discount factor of 15% was estimated to be 1.173. Since the
benefit/cost ratio of 1.173 is greater than one, we can argue that the business investment is
estimated to provide a positive net return implying that the business investment is attractive
to undertake.
If we looked at the four criterions: the payback period, net present value, internal rate of return, and
the benefit/cost ratio, all confirms the feasibility of the business investment and the results indicate
a promising investment opportunity, and such business investment could be a great success if well
managed.
Moreover, according to the Forecasted Income Statement, the Nekemte General Wood and Metal
Work investment will start generating profit in the first year of operation. Important ratios such as
profit margin (net profit to total sales), net profit to equity (return on equity), and net profit to total
assets or investment (return on total investment) show an increasing trend during the life-time of
the project. In general, the Forecasted Income Statement and the other indicators of profitability
show that the investment is viable.
7. Sensitivity Analysis
Risk and uncertainty are the most common features of business activities. These features make it
difficult to know exactly what will be the wood and metal work production, its costs, and returns
levels, even in the near future. There are risks and uncertainties about the wood and metal work
production the business is planning to operate due to many factors such as unexpected changes in
cost of input, input availability and quality, national and international economic crisis, climate
change risks and climate variability, electric power blackouts, the level of commitment of the
government, political stability of the country, and others.
21
Moreover, the business may face other risks while striving to achieve its objectives including the
injury/damage due to fire or accident and unexpected raise in price of inputs/raw materials. There
are also risks and uncertainties related to prices due to an unexpected increase in overall supply or
decrease in product quality. Technology changes may represent another form of risk and
uncertainty; such changes could affect costs or returns. All of these risks and uncertainties and
others could affect the business profitability. If the changes in business profit are positive, as a
result of the risks and uncertainties, then there is no need to recalculate the feasibility measures, but
if they are negative, business investment feasibility must be retested, and this is the role of the
sensitivity analysis. Hence, to conduct the sensitivity analysis of the business investment, three
scenarios are taken into consideration to test business profitability: the increase of total revenue by
7.5% rather than a 10% increase assumed earlier, the increase of costs and expenses by 3% rather
than a 2% increase assumed earlier, and both occurring together.
Scenario 1. Total Revenue increase by 7.5% from year 2012 up to 2015

The results of the investment feasibility under this assumption are still positive where:
1. The payback period is three years and seven months; therefore based on the payback period;
we should accept the investment.
2. The net present value is a positive value of birr 91,271.07; therefore based on the net
present value rule; we should accept the investment.
3. The internal rate of return reached about 17.6024%, which is far greater than the prevailing
market rate of return of 15%, again implying that, it is advisable to undertake the
investment.
4. The benefit/cost ratio is 1.064, which is greater than one that indicates that the business
investment is estimated to provide a positive net return and that the investment is attractive
to undertake.
Scenario 2. All costs and expenses increase by 3%

1. The payback period is three years and five months; therefore based on the payback period;
22
investment.
to undertake.
Scenario 3. Sales increase by 7.5% and all costs and expenses increase by 3%
1. The payback period is three years and eight months; therefore based on the payback period;
investment.
to undertake.
8. Socio-Economic and Political Analysis

As a socio-economic benefit the investment can create employment for 110 unemployed youths
and women vulnerable groups in the year 2010/2011 and the job opportunities for our citizens will
increase in the successive years mainly addressing the pro-poor and vulnerable part of the society.
As well, as a result of the Nekemte General Wood and Metal Work investment, the living standards
of target groups will be improved. Moreover, 220 families of youths and women vulnerable groups,
communities at large, and others will be the beneficiaries. In addition to supply of the domestic
needs, the investment will generate birr 952,447 in terms of tax revenue to the government in the
five years.
Furthermore, if the Nekemte General Wood and Metal Work investment takes place, it is expected
to result in decrease in unemployment, increase the purchasing power of target groups, increase the
inward investment to the town, increased contribution of the private sector to the municipal budget
and local economy, and improved business enabling environment (favorable to new investments).
23
In short, the business is expected to have a positive impact on the lives of the target group, families
of thereof and on the community at large by making the household furniture available at the local
level at low price.
Specifically, the investment in the Wood and Metal Work will result in an increased income of the
partners resulting from the sales of wood and metal works that will ultimately result in increased
purchasing power of the households. Moreover, the proposal enhances and promotes peace,
harmonies and good team spirit and relationship between the partners and other indirect
beneficiaries. In addition, it encourage other private enterprises which are currently involved in
wood and metal works to go for producing quality products as they will be in competition with the
newly established enterprise. Success of this project will encourage other unemployed individuals
for establishing new enterprise. Also, the business has little or no negative effect on environment.
Finally, the business investment will enhance trust and confidence between the local authorities and
communities. In a nutshell, the project is with far reaching implications to the success of the
country’s/region’s five year GTP by way of meaningfully contributing towards reducing
unemployment and poverty as well as through generating growth at various levels.
9. Conclusions and Recommendations

Overall, the assessment results provided adequate evidences on the viability of the project as
viewed from the financial, technical, economic, socio-political, and environmental dimensions of
feasibility. The fact that the project is labor intensive and encourages the involvement of women
and unemployed youth groups also demonstrated its strong linkage to the growth and poverty
reduction goal stipulated in the locality’s LED strategy of. Most importantly, financial and
economic feasibility indicators showed that the project is rewarding and with meaningful
contributions towards stimulating economic growth.
The business investment is financially viable with an internal rate of return of 21.6616%, net
present value of birr 246,368.20 discounted at 15%, benefit/cost ratio of 1.173, and payback period
of three years and four months. These financial analysis criterions, all confirms the feasibility of the
business investment and their results indicate a promising investment opportunity. As an economic
benefit the investment can create employment for 110 Ethiopian in the year 2010/2011 and the job
opportunities for our citizens and will increase in the successive years. In addition to supply of the
domestic needs, the investment will generate birr 952,447 in terms of tax revenue to the
government.
24
Making the most out of the recently active business and other factors, Nekemte General Wood and
Metal Work will achieve the estimated revenue as well as the profit. As well, by enhancing the
potential to increase productivity and, managing or minimizing the various costs such as material
cost, labor cost, supplies expense, and others, the business will implement its investment profitably.
In addition, the business recognizes the fact that by differentiating its products, it can strongly
compete with established industry players and will be successful if it pursues the proposed
investment.
Considering the earlier conclusions and others, the following sets of recommendations should be
taken into considerations:
1. The management and employees should exert its efforts in various risk management
strategies to lower down or prevent the occurrence of unexpected and forecasted risks by
establishing an employee safety program to encourage employees awareness of safety for
careful operation; by purchasing and using proper safety equipment from hand guards on
machinery to goggles and safety shoes for individuals to minimize risk of injury and
damage; and by utilizing systematic and balanced price increment strategy that should be
used to minimize the risk rising from sudden rise in price of raw materials and inputs.
2. The cost of the business should properly be identified and managed as the excess or
uncontrolled costs result in failing to achieve the proposed investment. Specifically, the
material cost, labor cost, supplies expense, and others with large amount should be managed
and controlled to achieve the proposed investment.
3. A statistical system for business data used in the feasibility study should be designed and
implemented for monitoring, evaluation, and planning purposes. More attention should be
paid to accurate economic data collection, preparation, and analysis.
4. Integrated, customized, and quality products that will satisfy business’s customers at
competitive prices should be considered and pursued.
5. Maintaining open communication between Nekemte General Wood and Metal Work and its
customers as well as employees and other stakeholders in order to ensure the highest level
of customer satisfaction and long lasting reputation within the community.
6. To continue to expand the volume of wood and metal products and packages, while also
increasing the level of profits for Nekemte General Wood and Metal Work as well as the
owner.
25
7. Since, the waste management in the town is very poor, this problem should be curbed, in
order to minimize or avoid its interference with the successful accomplishment of the
activities. Hence, the solid waste management project activities should be done with all
concerted efforts to minimize the risk of failure in the integrated business project.
8. Last but not least, the business management must ensure the risk management by taking a
proactive approach to identifying possible risks, weighing up the costs and benefits of
different actions and developing a range of adaptation and responses.
26
Annex
NEKEMTE LED PROJECT SUMMARY _2010

No. Project Title UNDP Local Total Number of Beneficiaries
contribution Government Budget (Birr)
(Birr) Contribution

Male Female Total

1. Garment and Tailoring
738,000 117,000 855,000 20 30 50
2. Wood and Metal Work
1,425,000 120,000 1,545,000 90 20 110
3. Food Processing
1,370,000 180,000 1,550,000 30 110 140
4. Integrated Waste Disposal
and Management
2,700,00
0 553,000 3,253,000 110 210 320
5. Poultry Farming
820,000 111,000 931,000 20 30 50
6. Integrated Tourism Services
651,000 130,000 781,000 8 12 20
7. Developing the Capacity of
All LED Actors in Nekemte
855,781 130,000 985,781 -
8. Establish BDRC
1,235,380 247,245 1,482,625 -
Total
9,795,161 1,588,245 11,383,406 278 412 690
27
Project Action Plan of Nekemte Town _2010

WOOD AND METAL WORKS
Project: # 2 Program Type(s): Level Two

WOOD AND METAL WORKS SUPPLYING DIFFERENT WOOD AND METAL
PRODUCTS
Short Description of the Project:
The expansion of the construction industry in Nekemte (especially the beginning of Nekemte Stadium) in
general and in Western Wolega in particular is demanding the supply of different metal and wood products. The
micro project is metal and woodwork. The total number of cooperatives expected to engage in this types of
business can be more than two. The total number of members’ one cooperative is 70. Their main business is
production of wood and metal products. Some of the products are: Windows, doors, cupboard, shelf, and other
household furniture. The owners of the projects are expected to produce different wood and metal products to
the construction industry in general and the private sector in particular. Not only the construction industry but
also government and the public in general considered to be the consumers of wood and metal products.
Begin a new project involving 110 individuals (90 male &20 females), un employed youths purposely selected
by the Kebele administrators and other responsible partners based on the predetermined selection criteria. The
services to be provided by the enterprise include office and house furniture’s, different wood and metal
designs, windows, doors and frames. The project is expected to be self sustained in terms of finance with the
payment they obtain from their clients back from the product they sell. Over all the activities of the project will
grow from time to time and finally will be one of the medium size industries in the country through expanding
Their business from time to time.
Expected Results:
 Job opportunity for 110 youths/ Decrease in
unemployment Target Group(s):
 Change in life standards of their family members
 Increased contributions of the enterprise to the  90 male and 20 females
municipal budget and local economy  The project will directly focus on unemployed
 Increased in the supply of different wood and poor male and female youths
metal works
 Improved quality of wood and metal works in the
town
 Contribution to poverty reduction
Possible Stakeholders:
 Local government agencies Possible Contributions to the Project
 Non government organizations:  Potential supporter of the project
 Micro and small enterprise agencies  Material donation: equipment and/or finance
 The public  Offer of direct support: location, other and
 International organizations government support
 Wollega University  supports planned by labor & social
 Banks affairs, women and children affairs, youth
 Nekemte TVET College and sport affairs Financial support
Prerequisites:
 An organization exists to take management of the
project Risk factors
 Available raw materials to be used as input  Possibility Injury/damage due to fire or accident
 Available location and tools  Possibility of loss
 Available financial resources  Theft/robbery
 Unexpected raise in price of inputs/raw
28
Estimated Costs: materials(inflation)

 Limited financial and other resources
UNDP : Birr 1,425,000  Problem which my raise from the implementing
Locality : Birr 120,000 partner
Total : 1,545,000
 Frequent price escalations of goods and services
 Low commitment of the targets beneficiaries

 High competitiveness of the surrounding market
 Willingness and readiness of line departments to
give support
 Funds from the external sources might have their
Time for Implementation:  own conditions which may affect the implantation
Minimum duration at least 5 years within which the of projects.
enterprise grow up to industry
Start-up in less than 3 months(September 20-december
20)
Outputs:
 Employment opportunity for 110 youth which
include 90 male& 20 females
 Increased in the income level of the youths and
their family
 70 unemployed individuals to generate their own
income through creating an enterprise
Time to Impact: Time for Implementation:
 First evaluation after 6 months of operations  Minimum duration at least 5 years within which
 Each six month results will be monitored against the enterprise grow up to industry
their business plan  Start-up in less than 3 months(September 20-
december 20)
29

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Feasibility

[ INTEGRATED WASTE DISPOSAL AND

1. Description of the Business......................................................................................................................6

5. Management and Personnel..................................................................................................................13

6. Financial Feasibility Study......................................................................................................................14

6.1 Capital Investment...............................................................................................................................15

6.2 Financing Plan......................................................................................................................................16

6.3 Forecasted Income Statement.............................................................................................................16

6.4 Forecasted Balance Sheet....................................................................................................................19

6.5 Forecasted Cash-Flow..........................................................................................................................20

6.6 Investment Analysis.............................................................................................................................22

8. Socio-Economic and Political Analysis....................................................................................................25

9. Conclusions and Recommendations......................................................................................................26

Annex: Action Plan and Project Summary Sheet

1. Description of the Business

Inputs/Processes (results relating to provision of resources and processes)

 Financial support in the form of loan with minimum interest rate

Outcomes (results relating to intermediate change and effects sought)

 Increased household income/ living standard of beneficiaries and their dependants

 Reduction in poverty and unemployment /generation of growth

Table 1 Production Cost Plan for the Year 2010/2011

5. Management and Personnel

6. Financial Feasibility Study

6.1 Capital Investment

Table 4 Capital Investment Cost

6.2 Financing Plan

6.3 Forecasted Income Statement

No Products Qty Unit Price Total Sales

Nekemte General Wood and Metal Work

6.4 Forecasted Balance Sheet

Nekemte General Wood and Metal Work

6.5 Forecasted Cash-Flow

Advertising and promotion 2,000 2,040 2,081 2,122 2,165

6.6 Investment Analysis

Table 5 Relevant Cash Flow Statement

Scenario 1. Total Revenue increase by 7.5% from year 2012 up to 2015

Scenario 2. All costs and expenses increase by 3%

8. Socio-Economic and Political Analysis

9. Conclusions and Recommendations

NEKEMTE LED PROJECT SUMMARY _2010

Male Female Total

Project Action Plan of Nekemte Town _2010

Project: # 2 Program Type(s): Level Two

Estimated Costs: materials(inflation)

 Low commitment of the targets beneficiaries

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