Kindergarten School

Investment Proposal for Establishment of Kindergarten and Basic Primary School
PROJECT PROPOSAL FOR ESTABLISHMENT OF

KINDERGARTEN SCHOOL BUILD
PROJECT TO BE IMPLEMENTED IN: -
OROMIA REGIONAL STATE,
EAST SHAWA ZONE , Adama TOWN
PROMOTERS: TesfayeMegersa Tesema.
April , 2021
Addis Ababa, ETHIOPIA
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To be Implemented at Adam City
Contents
1. INTRODUCTION.........................................................................................5
1.1. BACKGROUND.....................................................................................5
1.2. PROJECT JUSTIFICATION....................................................................6
2. THE PROJECT...........................................................................................6
2.1. THE PROJECT AREA............................................................................6
2.1.1. TOPOGRAPHY.................................................................................6
3. ECONOMIC ACTIVITY................................................................................7
4. SERVICE DESCRIPTION............................................................................7
5. OBJECTIVES.............................................................................................9
5.1. GENARAL OBJECTIVE..........................................................................9
5.2. SPECIFIC OBJECTIVES........................................................................9
6. MISSION, VISION AND VALUES.................................................................9
6.1. MISSION:..............................................................................................9
6.2. VISION:.................................................................................................9
6.3. VALUE:.................................................................................................9
7. ECONOMIC & SOCIAL BENEFIT AND JUSTIFICATION............................10
8. MARKET STUDY......................................................................................10
8.1. SUPPLY AND DEMAND OF BASIC PRIMARY SCHOOL........................10
8.2. SUPPLY AND DEMAND OF KINDERGARTEN......................................16
9. ORGANIZATION AND MANAGEMENT.......................................................20
9.1. ORGANIZATION STRUCTURE.............................................................20
9.2. TRAINING REQUIREMENT..................................................................21
10. SERVICE CAPACITY AND PROGRAM.....................................................23
10.1. CAPACITY........................................................................................23
10.2. SERVICE PROGRAM........................................................................24
11. FINANCIAL STUDY................................................................................26
11.1. FIXED INVESTMENT........................................................................26
11.2. WORKING CAPITAL..........................................................................32
11.3. SOURCE OF FINANCE.....................................................................34
11.4. BANK LOAN REPAYMENT................................................................35
11.5. UNDERLYING ASSUMPTIONS..........................................................35
11.6. REVENUE PROJECTION..................................................................36
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11.7. FINANCIAL VIABILITY......................................................................38

11.7.1. INCOME STATEMENT................................................................38
11.7.2. PAYBACK PERIOD.....................................................................40
11.7.3. INTERNAL RATE OF RETURN....................................................40
11.7.4. NET PRESENT VALUE................................................................40
12. ENVIRONMENTAL IMPACT ASSESSMENT.............................................41
13. ACTION PLAN........................................................................................42
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EXCUTIVE SUMMARY
1) Project Kinder School Construction school
promoter
2) Project Type KG School Construction Build
3) Project TasfayeMagarsa Tesema
Promoter
3 Nationality Ethiopian
4) Project Adama
Location
5) Premises 500m2
Required
6) Service The project is expected to thought about 300
Capacity students during its operation.
7) Startup Capital
The total of birr 1,395,000.00 startup capital
is required. From this 30% (Birr 3,,500.00)
will be covered by the promoter, while the rest
70% (Birr 6,500.00) will be covered by bank
loan.
8) Employment
Opportunity The total job opportunity created by the
project will be 34.
9) Benefits
expected  Providing quality educational service
 Stimulating the local economy by adding
value to the sector of the economy.
 It is a source of revenue for government.
 Creating employment opportunity.
 Transferring technology.
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1. INTRODUCTION
1.1. BACKGROUND
Ethiopia is currently on the edge of rapid economic development with
consistent double-digit growth over the last successive years. The trend
in sustainability of economic growth is being witnessed in all the critical
areas of consumption indicators such as; social sectors, power, energy,
construction, manufacturing and others.
Education, as a very important factor to human development, is of a high

priority in the overall development endeavor of the government. One of
the aims of education is to strengthen the individuals and society’s
problem-solving capacity, ability and culture starting from basic
education to all levels with an aim of universal Elementary education by
2015.
Due attention is also given to provision and appropriate usage of

educational facility, technology materials, environment, organization and
management so as to strengthen the teaching-learning process and
expansion of education. Inadequate facilities, insufficient training of
teachers, overcrowded classes, shortage of books and other teaching
materials, are all problems of the Elementary and secondary school
education which are indicators of the low quality of education. Thus, it
requires the concentrated effort of all parties’ government, non-
governmental organizations and communities in supporting increased
access to equitable and quality of education.
There are significant educational challenges in Ethiopia. Although efforts

have tried to universalize access to Elementary education, current
national figures demonstrate that only 60% of children are enrolled, with
a teacher-student ratio of 1 to 72. Improving educational quality is a
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major goal which could depend on the pedagogical approach and

curriculum structure. There is also a widespread lack of access to
resources (including textbooks and extra-curricular learning materials).
From control point of view educational sector is a safe business for

investors as costing and pricing mechanisms are highly transparent and
automated. In addition, an incentive the Ethiopian government has
provided to facilitate a smooth distribution of the products across the
country that’s why the promoters of this project have reached on a
decision to undertake investment on marble production at Addis Ababa.
1.2. PROJECT JUSTIFICATION
Education is the best investment for the people because well educated
people have more opportunities to get a job which gives them
satisfaction. Educated individuals enjoy respect among their colleagues
and they can effectively contribute to the development of their country
and society by inventing new devices and discoveries. Good People
sacrifices their time and money and sometimes even their health to raise
educational level because they realize that education is their passport to
the future and for tomorrow.
Therefore, this project proposal is prepared to fill the gap seen in this
town by building Kindergarten and Primary School that will contain 7
class rooms and other blocks will be used for the purpose of office, class,
pedagogy center, library, and toilet.
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2. THE PROJECT
2.1. THE PROJECT AREA
The project is thought to be planted in Adama town. The zone has an

estimated total area of 500 km2..
2.1.1. TOPOGRAPHY
The project location Adama town is situated in the mid land areas of in
an altitude ranging 2,100-2,200 m A.S.L.
The business activity in the town and other basic environmental factors
in the area has area has given a comparative advantage to select for the
envisaged project.
3. ECONOMIC ACTIVITY
Population of the town is mostly engaged in various business activities.

Experience shows, various investments undertaken have been attracted
to the area to utilize the available demand potential for marble products,
which is because of the existence of vast construction industry.
Availability of physical and social infrastructure facilities such as; access
of asphalt road, telephone service and others, which are basic to make a
project effective as soon as investment land delivery is secured.
The major activities of the project will be;

 To own the required plots at fair lease cost to support education.
 To build structures like classrooms, workshops, libraries, offices,
laboratories, play grounds, etc.
 To enhance the school and institute up to high school level
 To offer students with complete life changing skills
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 To provide opportunities to them to become self-supporting members of

the society and to make students to become society builders
 To maintain norms and values of the society in the school and among the
students
 Arrange tutorial sessions to children who are performing less in their
academic status to help them improve
 Help students to acquire different vocational skills as per their interest so
that they will be self- supportive and productive
 Monitor and follow up academic status of children/students and take
corrective actions to help them improve their performance.
 To create genuine and creative minded generation
 To introduce modern teaching and learning
 To teach children in their mother tongue
 To maintain the diversity of Ethiopian nations and nationalities in the
school as it is in the real Ethiopia.
To exhaust a benefit that a country should get from youngsters at their school
age through different competitive stages and creativity researcher
 Available demand potential for educational institution which is

because of the existence of large population of school age around
the town.
 High economic growth and investment activities in the town and
surrounding area
 Large population of the town and the surrounding area which is the
potential market for the envisioned project.
 Location importance of the project area to the central part of the
country/region.
 It is among well infrastructure area of the country/region. For
example; the main asphalted road which has been serving to
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connect Finfine to western parts of the country/region passes the

selected project area.
 Conducive investment packages of the Government.
 Abundant and diversified labor force.
4. SERVICE DESCRIPTION
According to the new structure of Ethiopian education system, primary

education lasts for eight years (age group 6-14) and is divided into two
cycles: basic education (Grades I-IV) and general education (Grades V-
VIII). Junior secondary schools no longer exist, as Grades VII and VIII
have become the two upper classes of the second cycle of primary
education. Secondary education is divided into two cycles: the first
(Grades IX and X) or general secondary education, and the second cycle
(Grades XI and XII) or preparatory secondary education. Since the
education reform, completion of Grade X leads to the Ethiopian School
Leaving Certificate Examination (ESLCE). It is used to be at the end of
Grade XII. The second cycle prepares students to continue their studies
at the higher education level or select their profession. It offers a science
option and a social science option. At the end of this cycle, students take
the Ethiopian Higher Education Entrance examination to enter higher
education institutions.
Technical and vocational education and training is institutionally

separate from the regular education system and runs in parallel with it.
The project is planned to establish primary school (Grade 1 – 4, Grade 5

– 8). The project will have a wide range social service provision as it
comprises modern educational services.
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The project will start it’s activates by simple clearing the land,
undertaking construction activities (in addition to the existing building),
furniture and equipment and hiring professionals and semi-skilled
employees from local market.
Finally, it will start its operation with providing a service capacity of 60%,
80% and 100% on the 1st, 2nd and 3rd year respectively.
Based on current price charged by private Kindergarten and Primary

Schools the recommended price for the envisaged school is Birr 400.00 –
600.00 per student/ month.
5. OBJECTIVES
5.1. GENARAL OBJECTIVE
The objective is to construct new Kindergarten and Basic Primary

Schools in order to provide quality educational service and thereby raise
the standard of future national expansion and development of junior
secondary school facilities.
5.2. SPECIFIC OBJECTIVES
 Increasing the Kindergarten and Basic Primary education coverage

 Increasing the school facilities in this school
 To employ properly qualified and skilled teachers to teach
 To educate each child as per his/ her unique needs
 To meet national education standards
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6. MISSION, VISION AND VALUES
6.1. MISSION:
Providing quality education to all children of Adama area.
6.2. VISION:
Producing well educated people from Adama after a decade.
6.3. VALUE:
• Providing quality education,

• Honesty and accountability,
• Effectiveness and efficiency in resource utilization,
• Working by good Partnership with stakeholders,
• Commitment and innovativeness,
• Gender sensitiveness,
• Impartiality, legality,
• Respect for the people and continuous learning
7. ECONOMIC & SOCIAL BENEFIT AND JUSTIFICATION
In general, the envisaged project promotes the socio-economic goals and

objectives stated in the strategic plan of the Oromia National Regional
State. These benefits are listed as follows.
A. Profit Generation
The project is found to be financially viable and earns an average profit of

about Birr 560,038.86 per year within the project life. Such result
induces the project promoter to reinvest the profit which, therefore,
increases the investment magnitude in the region.
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B. Revenue
In the project life under consideration, the region will collect from
corporate tax payment, income tax, sales tax and VAT. It will add income
for the regional government that will be used in expanding social and
other basic services in the region.
C. Employment Opportunity
The proposed project is expected to create employment opportunity to 34

citizens.
8. MARKET STUDY
8.1. SUPPLY AND DEMAND OF BASIC PRIMARY SCHOOL

School-age population and the demand for Primary Education in
Oromia
According to population projection of (SA for 2004 estimated population
of Oromia was 25.1 million (12.5 million male and 12.6 million female).
Out of these children of primary school age (7-14 years) were 5.3 million
(2.7 million males and 2.6 million female). Among these children those of
7 years of age who ought to be new entrants to grade 1 were 744,
585 (375, 380 boys and 369, 205 girls).
According to the statistical data of 2000/01-2004/05 the GER for

primary education was increasing from57.6% to 85.4% with the average
annual growth of 8%. This indicates that although gross enrollment has
been annually increasing, it is discouraging when viewed with fast
increasing number of children of school age. Moreover, the number of
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children during the coming twelve years is estimated to be doubled. And

to meet the goal for universal primary education (UPE), it demands to
work with determination in all aspects.
The Extent of Access to Primary Education in Relation to the

Distribution of Primary Schools.
As to the educational data of 2004/05, there were 6,466 primary schools
(5785 rural and 681 urban). This doesn't meet the population organized
at different levels according to the current administration structure to
serve.
When the number of schools is compared with the number of Kebeles as
well as the average distances a child travel it seems quite good. These
figures, however, are misleading because the schools are not evenly
(normally) distributed and as result children are found travel up to
10kms to get primary first cycle school.
Apparent Intake Rate

The apparent intake rate of new entrants to grade one of 2004/05
showed better increment than that of the past three years (2001/02-
2003/04). The apparent intake rate ~ which was 109% in 2000/01 was
increased to 168.4% in 200/05 showing 9.1% average annual growth.
The reason behind this improvement specially was the establishment of
1423 new primary schools in 2004/05 in the region.
Net Intake Rate

When we consider new entrants to grade one who are 7 years of age that
come to school
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every year both number of children and net intake. rate shows steady
growth. Accordingly, NIR which was 25% in· 2000/01 increased to
49.95% in 2004/05 which shows 14.8% average annual growth.
Specially, a remarkable improvement was achieved in I 2004/05 when
compared with that of 2003/04 i.e, NIR was 30.1%.
Table 01: Apparent Intake Rate and Net Intake Rate

Apparent Intake Rate(AIR) Net Intake Rate (NIR)
Femal
Year Male e Total Male Female Total
2000/01 127 92 219 28 22 50
2001/02 118 85 203 28 23 51
2002/03 119 89 208 28 23 51
2003/04 1,267 109 1,376 32 28 60
2004/05 175 162 337 52 48 100
Source: Education Statistic Annual Abstracts
This shows that the effort made in the past years to bring children of 7
years of age to schools in order to improve this condition was not that
much dependable. Therefore, it is
decisive to work with determination so as to bring all 7-year-old children
to schools and realize the goal of UPE.
Gross Enrollment Rate

Primary First cycle (1-4)
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In line with the existing policy primary education is provided in two

cycles. First cycle is grades (1-4) in which children of 7-10 years are
taught basic education. When the number of student enrolled in grade
(1-4) is compared with children of 7-10 years age, the gross 'I enrollment
rate of this level during the past five years 2000/01-2004/05 was
increased from 85% to 111.66%. The annual average growth was nearly
5.5%.
Net Enrollment Rate 1

Primary First Cycle (1-4)
When the number of children age (7-10) years enrolled in primary first
cycle is compared with the school age children of age (7-10) in the region
the progress shows steady growth. The NER was increased from ~8% in
2000/01 to 70.2% in 2004/05 with the annual average growth of 7.8%
The difference between GER and NER at this level which was 37% in
2000/01 was increased to 41%. in 2004/P5. Even though the trend of
NER shows an increment, the gap between GER & NER becomes wider
than the previous years. This in turn indicates that there were overage
children in the system who have to be shown up in the second cycle.
Equity of Access to Education

Equity in this context has three major components, Gender, Equity,
Geographical or Spatial Equity and the woredas equity in the provision of
primary education. The goal UPE could be materialized only when it is
possible to provide equal access of educational opportunity between
sexes, space (urban &rural) and Woredas. However, the existing evidence
shows that this has not yet materialized: in the region. This problem
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arises partly from different reasons to access educational opportunity at

nearest local situation '\ and partly from worsening to use the available
opportunity effectively.
Equity of Access to Educational Opportunity by Sex

The GER for primary which was 73.1% and 41% for boys and girls in
2000/01 respectively was increased to 97% and 73% for boys and girls
respectively in 2004/05. Accordingly, the gender gap in GER at this level
which was 31.2% in 2000/01 was decreased to 25% in 2004/05 showing
improvement during the last five years.
However, a considerable number of girls still have a long road ahead to

have equal educational opportunity with the boys. To achieve gender
equity for access primary education the precondition is that gender
equity should be achieved in grade 1 first and this is what to be
thoroughly considered for it bears a great impact on the success of UPE
goals.
Equity of Access to Educational Opportunity by Geographical

Location
When considering educational opportunity in the region by space the gap
in. GER at primary level which was 167% in urban and 45% in rural by
2000/01 was found to be 160% in urban and 75.1% in rural areas
by2004/05. The gap was decreased from 122% in 2000/01 to 85 by
2004/05 This trend shows there is a progress in GER in the rural area in
contrary to the urban. Further improvement is still expected especially in
rural areas.
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Hence, the strategy formulated to build primary education by mobilizing

community so as to make accessible education at this level in all kebeles
is what to be sustainable in the
future times too.
The number of sections was increased from 27,445 in 2000/01 to 42,832

in 2004/05 with annual average growth of 11%. Enrollment of students
was increased from 2,024,133 in 2000/01 to 3,236,597 in 2004/05.
Hence, pupil to section ratio in 2001 was increased from 74:1 to 76:1 in
2004/05. According to NETP, the standard is 50:1 but what practically
observed is different. Therefore, there should be an adequate system for
determining number of pupil per section.
During the past five years 2000/01-20004/05 the number of teachers

who were teaching in this level was increased from 27587 to 35862.
Similarly, pupil to teacher ratio was increased from 73:1 to 92:1 during
these five years. This indicates growth of number of students and
teachers do not coincide. The number of pupils increased by 9.8%
annually on average while that of teachers increased by 5.3% only.
First Cycle Primary (1-4)

After the teacher, the next m6st important input that determines the
quality of education, is textbooks. During 2000/01-2004/05 student to
textbook ratio showed some improvement with reduction from 3:1 to 2:1.
But according to the policy the ratio should be 1: 1. In this view there are
some issues related to text books.
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 As the enrollment annually increases averagely by 5.5%; replacing

damaged text books and provision of revised text books demands
huge resource and as a result ratio can't be reduced to 1: 1.
 There is inaccurate data of text books from schools. Some schools
even didn’t fill on the annual questionnaire.
 In addition to shortage, sharing set of text books among 2 or more
children made text books short lived.
The current system follows very similar school expansion schemes to the
rural areas as the previous 1980s system with an addition of deeper
renationalization giving rural education in their own language starting at
the elementary level. The sequence of general education in Ethiopia is
eight years of primary school, two years of lower secondary school and
two years of higher secondary school.
8.2. SUPPLY AND DEMAND OF KINDERGARTEN

As putted on the Ethiopian constitutions all citizens have equal right to
learn, but the previous government policy and poverty that deep rooted
in the country challenged the implementation and left out many children’
from school. The Millennium Development Goal of Ethiopia, goal 2 is to
achieve universal primary education. Target 2.A: ensure that, by 2020,
children everywhere, boys and girls alike, will be able to complete a full
course of primary schooling as the sub-Saharan Africa and Southern
Asia are home to the vast majority of children out of school.
Current education service providers in the town are many and varied
including government, private sector, local communities, foreign
communities, Non-Governmental Organizations (NOGs), churches,
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mosques, and missionaries. There were 8 Kindergarten school facilities in

the city operated by these providers in 2004/2005.
As can be seen from the table 2 the private sector is the dominant sector
in the ownership of kindergarten schools in the City owning and
operating 70.7% of the number of education facilities in the city at
kindergarten level. Next to the private sector is communities owning and
operating 14.9% and missionaries 7.3%. The role of the government is
extremely limited owning only 1.6% of the school facilities in the town. It
should be noted also that there are no kindergarten schools operated by
foreign communities and mosques.
Table 02: Number of Kindergarten Education Facilities in Special Zone of
Oromia Surrounding Finfinne by Types of Ownership (2004/2005)
Ownership Type Number of Schools
KG % Share
Government 6 1.6
Public(Communities) 55 14.9
Private 26 70.7
0
Missionary 27 7.3
NGO 3 0.8
Church 17 4.6
Mosque 0 0
Foreign community 0 0
Total 368 100.0

Source: Education Statistics Annual Abstract 2004/05
The basic reasons the private sector is dominating in KG are that:
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• The government’s policy that focuses on providing basic education

to all and accordingly the government is not investing in KG,
• Traditionally in the City and in the country as a whole KG is the

domain of the private sector, and
• Compared with primary and secondary schools, investment

required in KG is small, which attracts the private investors with
weak financial capacity.
School enrolment ratio is one vital indicator that measures performance

in education sector. Enrollment at kindergarten level in the city and its
surrounding is still very low (see table below.).
Table 03: School Enrollment Ratio at Kindergarten Level in Special Zone

of Oromia Surrounding Finfinne (2013/20014-2015/2016)
Enrollment Ratio Annual Value in %
2005/ 2007/8 2009/1 2011/12 2013/14

6 0
Gross enrollment at NA NA NA 31.8 40.3

kindergarten level
Net enrollment at NA NA NA 26.3

kindergarten level
Source: Education Statistics Annual Abstract 2004/05, Special
Zone of Oromia Surrounding Finfinne, Bureau of Education.
As can be referred from Table 3., gross enrollment in 2004/5 is 31.8%

and net enrollment 26.3%. Access to education at kindergarten level is
still very limited in the city. From the total eligible children for
kindergarten, about 73.7% (130,415 children) didn't go to school (Table
4). This is the demand gap.
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Table 04: Number of Children with No Access to Education and Number of

School Sections and Teachers Required (2013/14)
Level of Education Number of Children Additional Additional
Numbe Number Number

Number Number
r
Enrolled with No of of
Eligible
Access Sections Teachers
Required 1
Required
Kindergarten 176,954 46,539 130,415 4, 347 4, 347

Source: Education Statistics Annual Abstract 2013/14, Adama town Bureau of
Education.
Based on the standards of the Ministry of Education with respect to

section to student and teacher student ratio it is estimated that 3, 147
additional school sections and 3,347 additional teachers at kindergarten
are required to accommodate the needs of those children who currently
have no access for education.
This does not mean however that the needs of these children would be
addressed through commercial service provision since most of the
children are from poor families who would not be able to afford to pay
school fees and cover other educational expenses for their children. On
the other hand, it is believed that commercial service providers can also
accommodate the partial needs of these children through innovative
service provision.
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Based on the standard parameters acquired from the Adama town

Bureau of Education, it can be concluded that there is a supply gap in
education service facilities supply in the City to provide education at
acceptable level of standard. The supply gap/shortfall is calculated and
given under Table 3.4. The analyses indicate that the supply of education
facility at kindergarten level is short of the demand by 5.2%. In other
words, the city needs additional KG schools that may have 80 sections to
achieve the required education quality standard.
Table 05: Supply Gap in Kindergarten Education Facilities in Adama
Level of Number of School Supply Shortfall

education Sections
At Present Required In In %
Based on the Number
Standard
KG 1,471 1,551 80 5.2

Source: Calculated Based on Data Acquired from Ministry of Education and
Bishoftu town , Bureau of Education.
The demand level for schools from KG to primary level for the coming ten
years is estimated based the standard established by the Ministry of
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Education and the City population growth rate. The result is summarized
under table below.
Table 06: Projected Demand for Kindergarten Education facilities in Adama for
the coming ten Years
Year Demand for School
Section in Number
2005/06 1,596
2006/07 1,642
2007/08 1,690
2008/09 1,739
2009/10 1,789
2010/11 1,841
2011/12 1,894
2012/13 1,949
2013/14 2,006
2014/15 2,064
2017/18 2,124
2019/20 2,186
Source: Calculated Based on Data Acquired from Ministry of Education and
Special Zone of Oromia Surrounding Finfinne, Bureau of Education.
As can be referred from table above, the demand for kindergarten school
section will reach 2,186 after ten years. This is a very conservative
estimate given the number of children with no access to school as well as
the planned annual economic growth rate of 10%. With economic growth
and improved in standard of living of the city dwellers the proportion of
families who can afford to send their children to a kindergarten will
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increase which will likely cause an increase in demand for kindergarten

school.
9. USE PLAN
As the intention of this project is to establish standard school up to high school
level and beyond, the plot of land to be offered to the company for this purpose
from the Adama city will be used optimally based on modern design
requirement of school compound. Thus, the project will acquire an area of
1500sq.m of land for a school in one peripheral sub city and preliminary land
use plan has been proposed as follows.
In addition, multi-story buildings, which are going to be constructed in phases,

in their appropriate architectural quality will be will considered for adequacy of
the plot of land up to high school in order to make it enough including sporting
fields, play grounds, greenery and parking lots.
Table 2. Preliminary Land Use Plan

No
. Description Area (m2) %
1 Class Rooms 800 53.3

2 Offices 100 2.7
4 Laboratory & Workshop 100 2.9
Resource center & assembly
5 hall 100 2
6 Guard house 40 0.3
7 Dry latrine 30 0.9
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8 Play field (various) 200 15.3

9 Parking and greenery 100 20
Total 1500 100
Dry Dry
Class rooms Class rooms Class rooms
latrine latrine
Library
Parking & Play field Office
greenery
Resource center
& assembly hall
Office
Laboratory
Guard house
Figure 1. Sketch Map of the Proposed Land Use Plan
10. ORGANIZATION AND MANAGEMENT
10.1. ORGANIZATION STRUCTURE

The project will be managed by a qualified and experienced manpower to
make it successfully perform its purpose.
The total manpower requirement, including skilled and unskilled labor is
34 persons. The corresponding total labor cost, including fringe benefits,
is estimate at Birr 71,50.00.
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Table below shows the list of manpower required and the estimated
annual labor costs.
Table 07: Manpower Requirement and Labor Cost

Required Monthly Annual Salary
S. No. Description Number Salary (Birr) (Birr)
1. Director 1 5,000.00 5,000.00
2. Senior Secretary 1 1,500.00 1,500.00
Planning & Evaluation
3. Officer 1 2,500.00 2,500.00
Public & External
4. Relations Officer 1 2,500.00 2,500.00
5. Instructor 12 3,000.00 36,000.00
6. Registrar 1 2,400.00 2,400.00
Head, finance &
7. administration 1 3,500.00 3,500.00
Computer
8. Administrator 1 3,000.00 3,000.00
Documentation
9. attendant 1 1,300.00 1,300.00
10. Financial clerk 1 1,400.00 1,400.00
11. Librarian 1 1,300.00 1,300.00
12. Electrician 1 1,200.00 1,200.00
13. Cleaner 4 800.00 3,200.00
14. Guard 3 900.00 2,700.00
15. Gardener 1 700.00 700.00
16. Secretary 1 1,000.00 1,000.00
17. Driver 1 950.00 950.00
18. Casher 1 1,000.00 1,000.00
Grand Total 34 71,150.00
10.2. TRAINING REQUIREMENT

Technical staffs should be given 15 to 20 days training. The cost of
training is estimated at Birr 10,000.00.
The organizational setup of the project will be as follows.
Page 26 of 48
Director
Head, Finance
and Senior Secretary
Adminstration
Planning and Public and

Registrar Evaluation External
Officer Relations Officer
Computer
Administrator Documentation
Instructors Financial clerk
attendant
Cleaner, Guard,
Gardener,
Librarian Electrician
Secretary,
Driver, Cashier
Figure 01: Organogram
Page 27 of 48
11. SERVICE CAPACITY AND PROGRAM
11.1. CAPACITY
Taking in to account the market study on existing condition of

Kindergarten and Basic Primary School education related with the
number of enrolment and eligibility and economic level of service
provision, the envisaged school will have a total 7 sections as shown on
the table below.
Table 08: Capacity of Kindergarten and Primary School [Sections]

S. No. Level of Education Number of Sections
1. Kindergarten 3
2. Primary and secondary 4
Total 7
The plant is expected to operate in 2 shifts a day for the basic primary
students (Grade 1 – 4). Its capacity utilization will be 100% starting from
the first year of operation.
Table 09: Service Capacity
S. No. Service Year of Operation
1. Percentage of Service 100%

Provision Capacity
2. Total number sections 7
3. Total number of students in 720
both regular and extension
Page 28 of 48
To be Implemented at Burayou City
11.2. SERVICE PROGRAM

The primary and secondary education service is given to students based
on the rules and regulations set by the Ministry of Education for
accreditation and other related issues. The education service is given at
both regular and extension level. The regular session will be held in
morning and afternoon (8:30 AM-12:30 AM and 01:30PM -03:30PM) from
Monday to Friday. The extension program is given from 6:00 PM -8:00
PM. The level of education, the number of sections, grades and the
corresponding maximum number of students in each section is given on
table below.
Page 29 of 48
Table 10: The level of education, the number of sections, grades and the corresponding maximum
number of students in each section
S. No. Level of Grade Number of Number of Total Shift
Education Section Students Number of Regular Extension
Per Section Students
1. Kindergarten 0 3 40 120 √
2. Primary basic 1 - 4 4 50 200 √ √
education (first
cycle)
Total 7 320
Page 30 of 48
12. FINANCIAL STUDY

The total initial investment capital of the project is estimated to be about
Birr 9,734,801.04, which are constituted of fixed investment cost
Birr 9,734,801.04 and initial working capital Birr 660,198.96.
12.1. FIXED INVESTMENT

Fixed investment costs are expenditures on the required fixed asset. The
major components of fixed cost are constituted of expenditures on
construction of civil works. The rest will go to furniture & equipment and
the acquisition of office facilities. According to estimated made by this
project the total fixed cost will be birr 1,000,000
BUILDING AND CIVIL WORK COSTS OF THE PROJECT

The envisaged KG & Basic Primary School requires a total plot of land of
500 m2 area out of which 2,100 m2 area is the indoor built-up area
which is the building (class rooms (1,200m 2), library(80m2),
administration offices (120m2), toilet(56m2), computer lab (400m2),
lounges (244m2) for others).
The remaining 500 m2 area is the outdoor built-up area which includes
the student cafeteria (150m2), parking lot walk ways (150m2), garden
(100m2) and volley ball courts (500m2), guard room (30m2) etc.
Assuming an indoor construction rate of Birr 2,300.00 per m 2 and Birr

1,500.00 per m2 for the outdoor building and civil works, the total cost of
construction is estimated Birr 7,382,238.00 respectively.
Page 31 of 48
To be Implemented at Adama City
The total building and civil works costs of the envisaged project will be
Birr 10,919,800.00.
According to the Federal Legislation on the Lease Holding of Urban Land

(Proclamation No 272/2002) in principle, urban land permit by lease is
on auction or negotiation basis, however, the time and condition of
applying the proclamation shall be determined by the concerned Oromia
Regional Government depending on the level of development.
Oromia Regional Government, Agency of Urban Land Management and

Development is directly responsible in dealing with matters concerning
land. Accordingly, the initial land lease rate in Oromia Regional State set
by the Authorized Adama Towns’ is as shown in
Table below.
Table 12: Standard of Land Lease
S. Location / Land Initial Land Total Cost (Birr)
No. Town Grade Price Per Required
M2 (Birr) (M2)
1. Adama 1st 18.0 2,70 4,811,400.0
0 0 0
Source: Oromia Urban Land Management and Development Agency
As can be seen from table above the initial land lease rate is Birr 18.00
per m2 for Grade 1 Land.
Currently, most of the educational facilities in Adama are located on the

central business zones of the city. Therefore, expansion zones are
recommended as the best locations for the project. Accordingly, the
Page 32 of 48
average of the land lease rates in the expansion zones which is Birr
18.00 m2 is adopted.
The Federal Legislation on the Lease Holding of Urban Land legislation

has also set the
maximum on lease period and the payment of lease prices (See tables
below).
Table 13: Lease Period

S. No. Service Type Lease Period (Year)
1. Residential area 99
2. Industry 80
3. Education, cultural research health, 99
sport, NGO and religious
4. Trade 70
5. Urban Agriculture 15
6. Other service 70
Table 14: Lease Payment Period

S. No. Service Type Period of Payment
According to the Grade
of Towns
1. Private residential are obtained 50 - 60 years
through tender or negotiation
2. Trade 40 - 50 years
3. Industry 40 - 50 years
4. Real estate 40 years
5. Urban Agriculture 8 - 10 years
6. Trade and social service 40 - 50 years
Page 33 of 48
7. Others 40 years
Moreover, advance payment of lease based on the type of investment

ranges from 5% to 10%. For this project, it will be 10%. For those that
pay the entire amount of the lease will receive 0.5% discount from the
total lease value and those that pay in installments will be charged
interest based on the prevailing interest rate of banks. Moreover, five
years grace period shall also be provided. The lease price is payable after
the grace period annually.
Regarding, the terms and conditions of land lease the Oromia Regional
Government have adopted Article 6 of the Federal Legislation with very
minimal changes. Therefore, for the purpose of this project profile since
the project is engaged in social service, 99 years lease period, 50 years
lease payment completion period, 10% down payment and seven years
grace period is used.
Accordingly, the land lease cost of the project, at rate of Birr 18.00 per
m2 for 99 years of holding is estimated at Birr 4,811,400.00. Assuming
10% of the total cost (Birr 481,140.00) will be paid in advance as down
payment and the remaining Birr 4,330,260.00 will be paid in equal
installments within 50 years, the annual lease payment is estimated at
Birr -86,605.20.
EQUIPMENT AND TOOLS

The list of tools and equipment and other facilities required for provision
of Kindergarten and Basic Primary education service is given in below.
Page 34 of 48
The estimated cost is Birr 794,000.00 which is totally required in local

currency.
Page 35 of 48
Table 15: Equipment and Tools and Cost

Unit of Quanti Unit Cost Total Cost
S. No. Description Measurement ty (Birr) (Birr)
1. Desk top computers Set 10 10,000.00 100,000.00
2. Lap top computers Set 2 15,000.00 30,000.00
3. Scanner Piece 1 7,000.00 7,000.00
4. Digital camera Piece 1 10,000.00 10,000.00
5. Video camera Set 1 20,000.00 20,000.00
6. DVD player Set 1 3,000.00 3,000.00
7. Photo copy machine Piece 1 100,000.00 100,000.00
8. Duplicating machine Piece 1 70,000.00 70,000.00
9. Printer Set 3 8,000.00 24,000.00
10. Fax machine Set 1 20,000.00 20,000.00
11. Satellite TV-set Set 1 10,000.00 10,000.00
12. Cafeteria facilities Set 1 100,000.00 100,000.00
13. Other miscellaneous items 300,000.00 300,000.00
Grand Total 794,000.00
Page 36 of 48
FURNITURE
The list of office furniture and other facilities required for provision of
Kindergarten and Basic Primary education service is given in below. The
estimated cost is Birr 58,563.04 which is totally required in local
currency.
Table 16: Furniture & Costs

Total Cost
S. No. Description Quantity Unit Price (Birr)
1. Office Furniture
2. Managerial Swivel Chair 1 5,000.00 5,000.00
Guest Chair with Arm-
3. rest 5 1,000.00 5,000.00
4. Coffee Table 60x60cm 2 700.00 1,400.00
5. Secretary Table 3 850.00 2,550.00
6. Guest Chair 5 600.00 3,000.00
7. Side Table 2 806.52 1,613.04
8. Room Desk 100 400.00 40,000.00
Grand Total 58,563.04
VEHICLES
Table 17: Vehicle Cost
S. No. Description Qty Unit Price Total Cost/Birr
1 Mini Bus 1 1,500,000.00 1,500,000.00

Total 1,500,000.00
Page 37 of 48
12.2. WORKING CAPITAL

Working capital is part of annual operating cost and is required to make the project
operational. Except for some operational costs whose yearly expense were taken as they
are some limited months expenses were taken as forecast the working capital requirement
of the project. According to the forecast made in detail the amount of initial working
capital is estimated to be Birr 660,198.96.
Page 38 of 48
SALARY
Table 18: Manpower Requirement
Required Monthly Salary Annual Salary
S. No. Description Number (Birr) (Birr)
1) Director 1 5,000.00 5,000.00
2) Senior Secretary 1 1,500.00 1,500.00
Planning & Evaluation
3) Officer 1 2,500.00 2,500.00
Public & External Relations
4) Officer 1 2,500.00 2,500.00
5) Instructor 12 3,000.00 36,000.00
6) Registrar 1 2,400.00 2,400.00
Head, finance &
7) administration 1 3,500.00 3,500.00
8) Computer Administrator 1 3,000.00 3,000.00
9) Documentation attendant 1 1,300.00 1,300.00
10) Financial clerk 1 1,400.00 1,400.00
11) Librarian 1 1,300.00 1,300.00
12) Electrician 1 1,200.00 1,200.00
13) Cleaner 4 800.00 3,200.00
14) Guard 3 900.00 2,700.00
15) Gardener 1 700.00 700.00
16) Secretary 1 1,000.00 1,000.00
17) Driver 1 950.00 950.00
18) Casher 1 1,000.00 1,000.00
Grand Total 34 71,150.00
Page 39 of 48
MATERIALS AND INPUTS

The materials and inputs required for the envisaged project is estimated to be bout Birr
433,048.96 per annum.
UTILITIES
The two major utilities required by the project include electric power supply and water
facilities. Electric power is mainly used for the lighting of the entire facility and
consumption of electronics materials while, water is used basic water consumptions. The
annual requirements of these utilities is estimated to be about Birr 16,000.00.
SUMMARY OF WORKING CAPITAL
Table 19_: Summary of Working Capital
S. No. Description Cost (Birr)

1 Salary & Wage Expense 71,150.00
2 Material and Inputs 433,048.96
3 Repair and Maintenance 50,000.00
4 Administrative Expenses 50,000.00
5 Utilities 16,000.00
6 Miscellaneous Expenses 40,000.00
Total 660,198.96
12.3. SOURCE OF FINANCE
The total of birr 10,395,000.00 startup capital is required. From this 30% (Birr
3,118,500.00) will be covered by the promoter, while the rest 70% (Birr 7,276,500.00)
will be covered by bank loan.
12.4. BANK LOAN REPAYMENT
Table 20: Bank Loan Repayment Schedule
Page 40 of 48
Principal Interest Payment Total Annual Outstanding

S. No. Repayment at 10% Payment Balance
0.00 0.00 0.00 7,276,500.00
1 727,650.00 727,650.00 1,455,300.00 5,821,200.00
2 727,650.00 582,120.00 1,309,770.00 4,511,430.00
3 727,650.00 451,143.00 1,178,793.00 3,332,637.00
4 727,650.00 333,263.70 1,060,913.70 2,271,723.30
5 727,650.00 227,172.33 954,822.33 1,316,900.97
6 727,650.00 131,690.10 859,340.10 457,560.87
7 457,560.87 0.00 457,560.87 0.00
12.5. UNDERLYING ASSUMPTIONS
 Operating cost increases by 3% after 3rd year

 Sales revenue increases by 3% after 3rd year
 Bank loan interest is 10%
Page 41 of 48
12.6. REVENUE PROJECTION
The project generates revenue from the service provision for the ultimate consumers
without imposing higher price.
Accordingly, the project owner expects to earn from this business activity total revenue
of Birr 4,200,000.00 to 5,640,000.00 during its operation.
Page 42 of 48
Table 21: Revenue Projection
Number Price Per Year (Birr) Month Annual Revenue(Birr)/Year

Unit of
S. No. Description of
Measurement
Student Y1 Y2 Y3 Y1 Y2 Y3
Number of
1. Kindergarten Student 120 500.00 600.00 700.00 10 600,000.00 720,000.00 840,000.00
Primary Basic Number of
2. School Student 600 600.00 700.00 800.00 10 3,600,000.00 4,200,000.00 4,800,000.00
Total 720 4,200,000.00 4,920,000.00 5,640,000.00
Page 43 of 48
12.7. FINANCIAL VIABILITY
As it is a private (PLC) firm established with the primary objectives of generating profit
and providing social service, the project should be financially viable for the promoter and
the lending institution. To this end, some financial statements were selected to compare
project costs and benefits throughout the project life. Income statement and cash flow
analysis are selected for this study as financial measures.
12.7.1.INCOME STATEMENT
Here, project revenue and service costs; operating and service are listed and compared to
see whether the project generate profit or loss. According to the forecasted income
statement tales the project is found profitable through its life.
Page 44 of 48
Table 22: Forecast of Profit/or Loss (Birr)
Project Years
Description Y1 Y2 Y3
Gross sales 4,200,000.00 4,920,000.00 5,640,000.00
Less Operating costs 660,198.96 660,198.96 660,198.96
Profit before depreciation 3,539,801.04 3,539,801.04 3,539,801.04
Less Interest 1,455,300.00 1,309,770.00 1,178,793.00
Profit before tax 2,084,501.04 2,230,031.04 2,361,008.04
Less tax (30%) 625,350.31 669,009.31 708,302.41
Net Income 1,459,150.73 1,561,021.73 1,652,705.63
Page 45 of 48
12.7.2.PAYBACK PERIOD
The payback period, also called pay – off period, is defined as the period required
recovering the original investment outlay through the accumulated net cash flows earned
by the project. Accordingly, based on the projected cash flow it is estimated that the
project’s initial investment will be fully recovered within 5th year.
12.7.3.INTERNAL RATE OF RETURN
Net present value (NPV) is defined as the total present (discounted) value of a time series
of cash flows. NPV aggregates cash flows that occur during different periods of time
during the life of a project in to a common measuring unit i.e. present value. It is a
standard method for using the time value of money to appraise long-term projects. NPV
is an indicator of how much value an investment or project adds to the capital invested. In
principal, a project is accepted if the NPV is non-negative.
Accordingly, the net present value of the project at 5.50% discount rate, which is
acceptable.
It is a ratio of net profit and interest to total capital invested for a single year at full
capacity utilization. Thus, the simple rate of return of the project is about 15.40%.
12.7.4.NET PRESENT VALUE
The internal rate of return (IRR) is the annualized effective compounded return rate that
can be earned on the invested capital, i.e., the yield on the investment. Put another way,
the internal rate of return for an investment is the discount rate that makes the net present
value of the investment's income stream total to zero. It is an indicator of the efficiency or
quality of an investment. A project is a good investment proposition if its IRR is greater
than the rate of return that could be earned by alternate investments or putting the money
70-21 in a bank account. Accordingly, the IRR of this project is computed to be 16.65 %
indicating the viability of the project.
Page 46 of 48
Base on the cash fallow statement, the project is anticipated to have a net present value of
Birr 907 thousand when discounted at 12.00% discounting factor where as its IRR is
17.60%.
13. ENVIRONMENTAL IMPACT ASSESSMENT
Traditionally, school sub-sector is considered to be environmentally friendly venture. But

unfortunately, there is no activity/ business free from environmental pollutions as their
establishment pollutes the environment during its construction and implementation
phases.
A. Pre-construction phase: -In this phase most of the time the environmental and
social issues of the surround environs are not taken into considerations. And as a
result, the probable pollutions of the surrounding surface and ground waters,
vegetation, soils and impacts on societal livelihoods are immense and unavoidable.
B. During construction phase: -In this phase the major part of the environmental
disturbances occurs while excavations and construction of hotel structures. Dust
emissions, water and soils pollutions are the major and unavoidable activities
where the incumbent investor would exercise maximum efforts to minimize
negative environmental and social impacts.
C. During operation phase: -This phase is the phase at which the project starts
production. In providing such a like products, the major polluting factors are the
improper disposal of solid wastes, sound/noise pollution to some extent.
Page 47 of 48
14. ACTION PLAN
Table 23: Time Schedule
S. No. Activities Time Frame
2021/2022 2022
August Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr.
1. Preliminary Tasks
2. Building and Construction
3. Procurement of Tools, Materials and Equipment
4. Starting Operation
Page 48 of 48

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Investment Proposal for Establishment of Kindergarten and Basic Primary School

PROJECT PROPOSAL FOR ESTABLISHMENT OF

PROJECT TO BE IMPLEMENTED IN: -

OROMIA REGIONAL STATE,

EAST SHAWA ZONE , Adama TOWN

PROMOTERS: TesfayeMegersa Tesema.

Addis Ababa, ETHIOPIA

11.7. FINANCIAL VIABILITY......................................................................38

Education, as a very important factor to human development, is of a high

Due attention is also given to provision and appropriate usage of

There are significant educational challenges in Ethiopia. Although efforts

major goal which could depend on the pedagogical approach and

From control point of view educational sector is a safe business for

1.2. PROJECT JUSTIFICATION

2.1. THE PROJECT AREA

The project is thought to be planted in Adama town. The zone has an

Population of the town is mostly engaged in various business activities.

The major activities of the project will be;

 To provide opportunities to them to become self-supporting members of

 Available demand potential for educational institution which is

connect Finfine to western parts of the country/region passes the

According to the new structure of Ethiopian education system, primary

Technical and vocational education and training is institutionally

The project is planned to establish primary school (Grade 1 – 4, Grade 5

Based on current price charged by private Kindergarten and Primary

5.1. GENARAL OBJECTIVE

The objective is to construct new Kindergarten and Basic Primary

5.2. SPECIFIC OBJECTIVES

 Increasing the Kindergarten and Basic Primary education coverage

6. MISSION, VISION AND VALUES

Providing quality education to all children of Adama area.

Producing well educated people from Adama after a decade.

• Providing quality education,

7. ECONOMIC & SOCIAL BENEFIT AND JUSTIFICATION

In general, the envisaged project promotes the socio-economic goals and

The project is found to be financially viable and earns an average profit of

The proposed project is expected to create employment opportunity to 34

8.1. SUPPLY AND DEMAND OF BASIC PRIMARY SCHOOL

According to the statistical data of 2000/01-2004/05 the GER for

children during the coming twelve years is estimated to be doubled. And

The Extent of Access to Primary Education in Relation to the

Apparent Intake Rate

Net Intake Rate

Table 01: Apparent Intake Rate and Net Intake Rate

Gross Enrollment Rate

In line with the existing policy primary education is provided in two

Net Enrollment Rate 1

Equity of Access to Education

arises partly from different reasons to access educational opportunity at

Equity of Access to Educational Opportunity by Sex

However, a considerable number of girls still have a long road ahead to

Equity of Access to Educational Opportunity by Geographical

Hence, the strategy formulated to build primary education by mobilizing

The number of sections was increased from 27,445 in 2000/01 to 42,832

During the past five years 2000/01-20004/05 the number of teachers

First Cycle Primary (1-4)

 As the enrollment annually increases averagely by 5.5%; replacing

8.2. SUPPLY AND DEMAND OF KINDERGARTEN

mosques, and missionaries. There were 8 Kindergarten school facilities in

Ownership Type Number of Schools

Total 368 100.0

The basic reasons the private sector is dominating in KG are that:

• The government’s policy that focuses on providing basic education