PROJECT PROPOSAL

ON THE ESTABLISHMENT OF G+10

GRAND CITY MALL

THE PROJECT TO BE IMPLEMENTED IN OROMIA

REGIONAL STATE, OSPZS GelanTOWN

PROMOTER: MR. MAHAMUD SALIHU

JULY, 2022

FINFINNE,ETHIOPIA

1
Contents
EXECUTIVE SUMMARY.................................................................................................................................4
1. INTRODUCTION...................................................................................................................................5
1.2. General Background.........................................................................................................................5
1.2. Profile of the Promoter.....................................................................................................................6
1.3. Purpose of the Document.................................................................................................................6
1.4. Project Justification..........................................................................................................................7
1.5. Objective of the project....................................................................................................................8
1.6. Description of the Project.................................................................................................................8
1.7. Socio-Economic Advantage...............................................................................................................9
1.8. Location and Premises Required.....................................................................................................11
2. MARKET STUDY AND SERVICE CAPACITY...............................................................................................12
2.1. Market Analysis..............................................................................................................................12
2.2. Demand and Supply Gap................................................................................................................13
2.3. Demand factors for Commercial Complex......................................................................................14
2.3.1. Fast Economy Growth...........................................................................................................14
2.3.2. Population and Population Growth (Demography).................................................................15
2.3.3. Tourism....................................................................................................................................16
2.3.4. Geographical Significance of the Area.....................................................................................16
2.4. Competitors...............................................................................................................................17
2.5. Target Customers.......................................................................................................................17
2.6. Marketing Promotion and strategy.................................................................................................17
2.7. Service Capacity and Service Delivery Program..............................................................................17
2.8. Pricing.............................................................................................................................................19
3. ORGANIZATION AND MANAGEMENT.................................................................................................20
3.1. Organizational structure...............................................................................................................20
4.2. Man Power.....................................................................................................................................23
4. FINANCIAL REQUIRMENT AND ANALYSIS.............................................................................................25
4.1. Fixed Investment............................................................................................................................26
Operating Expenses at Full Capacity......................................................................................................29
4.3. Underlying Assumption..................................................................................................................32
4.4. Source of Capital.............................................................................................................................32

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 4.5. Loan Repayment Schedule..............................................................................................................33
4.6. Depreciation Schedule....................................................................................................................33
4.7. Projected Revenue Schedules.........................................................................................................34
4.8. Financial Analysis............................................................................................................................35
4.9. Pay-Back Period..............................................................................................................................37
5. ECONOMIC, ENVIRONMENTAL AND SOCIAL APPRAISAL.......................................................................37

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 EXECUTIVE SUMMARY
1 Project Owner Mahamud Salihu
2 Nationality Ethiopian
4 Project location Oromia regional stateSPZS Gelantown.

5
Proposed project G+10 Grand City Mall

The project includes Mall, Bar and Restaurant, Cafe,

6 Project Electronics Assembly Hall and shop, Furniture shop,
Composition super Markets, Banking Service, Shops and Offices
Premises
7
5,500 m2
Required
The total project capital is 80,000,000Birr from which 30%
8 Total Initial or 24,000,000 will be covered by the promoter and the rest
Investment Cost 70% or 5,600,000 birr will from financial institutions.
The total manpower required for the plant will be 80
employees at full capacity.

 Permanent workers 40

9  Skilled 20
 Unskilled 20
 Temporary workers 40
Employment  Skilled 10
Opportunity  Unskilled 30

Benefits of the Provide better Bar and Restaurant service, Contribute to

10 project For The Economic development of the Town as well as of the
region Country region.

11 Applicable The promoter will utilize the modern and standardized

Technology service level and Urban Beautification and development.

4
1. INTRODUCTION
1.2. General Background

The present dynamic economic growth of Ethiopia demands the parallel development of
tertiary sectors. These sectors are mainly related to the development of the economy in
general and tourism sector in specific situation and able to provide strong backward and
forward linkages for other sectors of economy. Besides, the growth Commercial sector in
Ethiopia has stimulated increased tourism supply capacity and higher levels of investment
in infrastructure, human capital and technologies to manage and efficiently transact higher
levels of Marketing activity .Hence, investment activities in Commercial Complex include Bar
and Restaurant, Banking Service, raining centers, Cafeteria, Guest house can support and
propel the sector, particularly in developing countries (like Ethiopia) where domestic
resources are limited

Moreover , the current investment flow and market in these areas are very promising that
imitates many investors to engaged in. Furthermore, the government of Ethiopia has
conducive investment polices and regulation that further attract the private sectors
involvement in economic development of the nation through the various investment and
business activities.

In this regard, the promoter of the Commercial Complex Center Mr. Mahamud Salihu is
planned to establish Grand mall market of in OSPZS Gelan Town. The result of the study is
very sound and promising for the owner to start the project in this town.

The promoter is very dedicated to commence the project. Hence, the company expects to
get the necessary support from the regional and local governments for the project
implementation.

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1.2. Profile of the Promoter

The owners of this envisaged project Mr. Mahamud Salihu was set up in Oct. 1992 out of
the common desire of five Ethiopian professionals who were well known in the business
community. The company was formed with the objectives of providing offices, homes,
hotels, hospitals, education institution and the brew industry with imported office
machines, domestic appliance and other products. From inception the founders focused on
the continuity of the enterprise by dubbing its company of generations. Today, the
company’s net assets exceed birr 250 million and it owns a 12 storey hotel and business
center. Based on its diversification strategy, the company has others projects with in the
pipeline.

The promoter’s has the business objective of the leading the sector with quality products,
adequation distribution channels and efficient after sales services. Thus, it is these
experiences which primarily motivated this investor to develop the inception of this
project idea.

1.3. Purpose of the Document

The objective of this project study is primarily to facilitate potential entrepreneurships in
project identification for investment. The project study may form the basis of an important
investment decision and in order to serve this objective; the document/study covers
various aspects of project concept development, start-up, production, marketing, and
finance and business management. The document also provides pectoral information and
brief on Government policies and international scenario, which have some bearing on the
project itself. This particular project study is regarding the Commercial Building to be
established inSPZS Gelantown.

1.4. Project Justification

Ethiopia is one of the ancient African counties with rich cultural diversity, heritage and
natural tourist attraction areas. Besides, it is the seat for head quarter of Africa union and
other international organizations that based in the capital, Addis Ababa

Currently, the overall Ethiopian economy has been witnessing substantive economic

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growth. Since 2003/04 growth has been sustained, recording more than 11% average
growth. This growth is complemented by a strong performance in the Agriculture, Industry
(construction and manufacturing) and service sectors with an average growth rate of 10%,
10% and 13.2%, respectively.

When there exist rapid economic growth, the demand for of tertiary/service sector is very
high that result from the change of people lifestyle, consumption pattern and income
growth. Hence, the development and market linkage of this sector with other sectors like
agriculture and industry is very vital. Furthermore, the Commercial growth has a potential
to develop the sector more.

As one part of tertiary (service) sector, Commercial centers are generating most of their
business from domestic and local traders, business persons, business men, guests and
leisure travelers etc. The services given by these centers should be better quality and
facilitates to their customers. Beside, the development of Service sector further necessity
the development of the recreation, Hotel and Marketing. Nevertheless, the development of
this sector is not enough compare with the demand and potential of the Country.

In addition to the above facts, the following points taken by the promoters for the project
justifications.

 The government of Ethiopia promising the second five year growth and transformation
development plan (2014/15-2019/2020), that will bring prosperity to its citizens with
collaboration with private sector investment actions
 The regional government conducive investment packages for development and poverty
reduction

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1.5. Objective of the project

The overall objective is to develop a chain of ecologically friendly Commercial world class
building with full fledged facilities to provide all the amenities required for the promotion
of each particular area or locality.

The specific objectives are to:

 Create new Commercial facilities for sustainable trade development

 Protect and conserve the ecology in the proposed project areas

 Attract tourists without affecting the natural resources
 Contribute to the national economy by generating additional foreign currency
earnings and alleviate the poverty of the local people
 Protect the remaining natural forest and work in close cooperation with the
surrounding communities to the mutual benefit of all involved.

With this project, ecologies would like to create a business that reaps benefits to itself. The
immediate culture and society surrounding the Hotel and to the country as a whole As
such, every aspect of this venture will be based on these criteria.

1.6. Description of the Project

Commercial Complex is a relatively not new concept in the Commercial industry. It sets out
to promote a more responsible type of tourism, which conserves the immediate
environment and eco-system and there by insures sustainable Economic development and
growth. The development of this type of Investment is not geared toward attracting visitors
and maximizes revenue only, but also in conserving to accomplish these objectives, the
projects are designed to be located in isolated areas where the foreign Investors will enjoy
the natural beauty of the particular region and its culture, history, flora, fauna, wildlife, etc.

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The Project will be fully equipped with complete accommodation, catering services with
fine cuisine, a restaurant, environmentally friendly power generating systems, potable
water and communication. It is also in the project plan to protect and conserve the flora
and fauna by planting more tress and making the area environmentally attractive. Job
opportunities for the local community will be created. The company intends to recruit
matured consultants in the training of its staff in catering and commercial services.

The design, the services, and the management of the envisaged project will be built to
specific standards. The project will promote its brand internationally and shall be affiliated
to international organizations and associations for booking and interagency affiliations.
The promoter shall promoteSPZS Gelantown through national advertising in newspapers,
magazines, posters, Postcards, books, web sites, presentations to target groups, as well as
through other media.

1.7. Socio-Economic Advantage

One of the most pressing issues of modern time is the deteriorating condition of our
environment. At present, more and more people are concerned about the continuing
pollution of the environment. In the past, the development of tourism was less
concerned on conservation of resources. It has therefore, contributed to the pollution
of the environment and the diluting of culture around the world.

In the last two decades, environmentally conscious tourism has increasingly become
popular by nature enthusiasts and conservationists. In fact, there is a strong
movement ad vocation against insensitive tourism that does not benefit surrounding
communities. To satisfy this demand nature friendly tourism is today being
development even in the most advanced tourism destinations around the world.

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Upon completion, this project is expected to have the following benefits;

 Offer high quality service standard throughout its chain;

 Offer tourists a real life experience of the particular locality though the distinct
architecture displayed in the Hotel
 It offer the comforts and quality of services expected of a first class Huge
Commercial Mall;
 Attract tourists who seek environmentally responsible experiences;
 Conserve and ameliorate the eco-system of project area;
 Contribute to the national economy by generating additional foreign currency;

 And contribute to the region's economy by voluntarily pledging and sharing an

officially declared amount (percentage) from the proceeds of each site towards
social project in that particular locality;

 Create employment opportunities for the surrounding community, which in turn

will improve the quality of life within the host community;
 Transfer of know-how on efficient usage of energy, waste reduction and other
conservation practices;
 Serve as a prototype for future development of eco tourism throughout the country.

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1.8. Location and Premises Required
A. Project Location
The envisioned Commercial building is planned to be constructed in OSPZS Gelan town,

which is located approximately at a distance of 110 km from Capital City to the East

direction. One of the favorable condition of the project area in terms of the topographic

aspect is its' flatness, which in effect, make the construction process easier and cost

effective.

Climate- Ethiopia is situated within the tropics and therefore is subject to comparatively

small seasonal variations in temperature, but experiences considerable during

temperature fluctuation. However, the project area shows great seasonal variation in

rainfall and humidity. Most of the annual rainfall occurs between late June and mid

September. The driest time of the year is usually the months of November to May.

The main justifications behind the selection of this location are:

 Geographical proximity to Addis Ababa and the center for Oromia and South region.
 Relatively advanced development in infrastructure (Power, Water, Telephone road etc.)
 Environmentally favorable for Commercial business.

B. Premises Required

For the proposed set up of the entire Commercial Mall Is, a total of 3,500 square meters
is required.

No Description Land Requirement in M2

The total Construction area Bar, Restaurant & 2,000
1
other related)
2 Outdoor recreation area 100

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7 Security room 100
8 Parking and green area 300
Total 3,0

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2. MARKET STUDY AND SERVICE CAPACITY
2.1. Market Analysis

Ethiopia with its huge potential in the travel and tourism market is now gearing towards a
point where it can make a significant contribution to its economic development. "Ethiopia -
13 months of sunshine" is the most popular tourism slogan that is being used to promote
the sector, which draws lots of tourists to the country every year, thereby, boosting the
hospitality industry of the country.

The beautiful attractions, warm people and the services have also been contributing in
boosting tourist flow to the country. The country's unique culture and history, diverse and
exotic flora and fauna as well as the magnificent scenery and archaeological sites are also
among the major tourist attractions which draw the attention of local and foreign tourists.

This nation has been seen as an important and real destination for a number of visitors. A
rich array of historical and ecological sites set it apart from most of its neighbors. It has
combined spectacular culture, history, ethnic diversity, nature and traditions dating back to
3000 years which are major sources of attraction and income.

Both local and overseas tourists flocking every year to visit the tourist attractions of the
country indisputably deserve the standard services they require. This would have not only
a momentous role in attracting additional tourists to the sites every year but also boost the
country's foreign currency earnings gripping tourists to extend their stay.

Although there were only one thousand Hotel rooms in the whole nation two decades ago,
a remarkable improvement has been witnessed in the sector particularly over the past 15
years. Currently, the number of Hotel rooms has reached above 7000 in Addis Ababa alone.
According to the Ministry of Culture and Tourism, this number would jump to 10,000.

Oromia is endowed with several natural and cultural tourist attraction resources. The
region is bounded with numerous lakes, mountain trekking, Natural Cave, Hot springs and
others. In addition to tourists and guests from other places, there are many residential and

13
other potential customers in the area Including government officials, and NGOs. This makes
the area most suitable site to develop Commercial Mall in order to provide service like,
Hotel café, and restaurant Guest House and other commercial Businesses. The services
including, house hold items bed/accommodation, wedding ceremony, hot drinks, soft
drinks, juice and food services. Also it is important to note that raw materials for cafe and
restaurant services are readily available in the area.

Nowadays, the lodge and recreation demand is very high in the country, the reasons that
the population number has been increasing and the people income level is also improving
as well. So, many people want recreation places and household items need are increasing
day to day.

It is obvious; there are few competitors in the area particularly in Hotel service and Guest
house but which are unable to satisfy the increasing demand. So, this remains in the area
where anybody with some capital can start these services. The added advantage is that the
land for such services is available.

The market demand for commercial service starts with People wants to enjoy outdoor
amenities with their children. Adults want to take different physical exercises and their
children want to play with different playing materials. That is why there are many and
large amusement and recreation resort parks in all cities in developed countries.

2.2. Demand and Supply Gap

Adama town is found at the border of Arsi Regional state and Other South Nation and
nationalities region. The town is situated 130 Km from the capital Addis to the east
direction. The town is also a major business center and commercial route that attracts
thousands of business travelers. These are also the most important groups of potential
customers that include both the local and foreign tourists and the modern business
community who choose services that range from economic to high class standards. These
groups would also choose a healthy comfortable climate that combines a more traditional
type with that of modern bedrooms restaurants and cafeterias. Even though when
compared with similar towns in the region. SPZS Gelanseems to have no developed huge

14
Commercial Complex buildings and the existing supply is far behind the growing demand
for standard service. Hence, the project will solve the serous demand problem in the town.

2.3. Demand factors for Commercial Complex

There exist many demand factors for modern Commercial complex or Marketing Mall in
Oromia as well as inSPZS Gelantown. The main factors are:

 Fast Economic Growth & economic growth/activity of the district

 Population growth and density,
 Tourism
 Geographical significance of the town

2.3.1. Fast Economy Growth

The Ethiopian economy has been experiencing dynamic and double digit growth that
experienced annual average growth of 11.4% in past 8 years. According to Ministry of
Finance and Economic Development (MoFED), the forecasted economic growth the
economic growth (GDP at constant basic price) for 2011/2012 is estimated to be 10.4 %.
As per the estimates, annual growth rates of the major sectors, i.e. Agriculture, industry
and service were 7.6 %, 10.6 % and 13.0 %; respectively and their shares out of the total
GDP were 42%, 13% and 45 %, respectively. This continuous and a-two-digit high growth
would place Ethiopia among the fast growing countries in the world.

As sectors of the economy, the agriculture and construction sector also grows with
double digit with the average annual growth 10.31 % and 12% respectively in the past 8
years. As shown in the table below the growth of the sectors directly related with the
economy as parts of the economy.

15
Major Economic Indicators Trends in Performance of the Economy: Growth Rates (%)
2002/0 2003/0 2004/0 2005/0 2007/0 2008/0 2009/1
Item 2006/07
3 4 5 6 8 9 0
GDP in
1999/00                
Prices -2.1 11.7 12.6 11.5 11.5 11.6 10 10.4
Agriculture -10.5 16.9 13.5 10.9 9.4 7.5 6.4 7.6
Industry 6.5 11.6 9.4 10.2 10.2 10.4    
O/w:
Manufacturing 0.8 6.6 12.8 10.6 8.3 7.1    
Construction 13.6 19.5 7.5 10.5 10.9 11.3 11.7 10.9
Services 6 6.3 12.8 13.3 14.3 17    
O/w: Banking
and Insurance 10.8 19.7 24.2 28.7 15.1 24.9 16.5 13.7
Distributive
services 5.5 6.4 14.7 14.2 16 15.2    
Other services
real GDP PER
CAPITA 6.5 6.1 10.9 12.5 13.1 14.2    
PER capita
GDP -4.6 10.7 9 8 7.5 7.6    

Inflation 15.1 8.6 6.1 10.6 15.8 25.3    

Source: MOFEO & NBE
This fast growth of these sectors resulted from different bodies like government, non
government and private activities in Ethiopia is growing in the fastest rate. Moreover, the
current five years Ethiopian Growth and transformation plan will expand the economic
growth paramount level by harnessing the resource and expanding industrialization.

2.3.2. Population and Population Growth (Demography)

The rate of urban population growth is increasing from year to year. The latest report of
the population estimation revealed that Ethiopia’s population has reached 100 million,
which puts Ethiopia as the second most populous country in Africa. According to the
Central Statistics Authority (CSA), current population growth is estimated to be 2.8% per
annum, and the growth rate is expected to remain above 2% for the next 20 years. Rural
population is growing at about 3.0% while the urban population is growing at about 4.3%.
Total population is projected to reach 129 million by 2030. In Ethiopia, of the total
population, about 16.0% is estimated to reside in the urban areas. The trend suggests that
the size of urban population is likely to continue to grow at a high speed in the future. The
share of urban population will rise from 16.0% in 2005 to about 23% by 2030. Nearly 33

16
million of the total 129 million will live in cities and towns by 2030. In this regard Addis
Ababa has the largest population in the nation (which is estimated to be more than 3.5
million).

In general having a huge population is a potential for business especially for Hotel business
since people naturally demands for cafe, restaurant, bar bed rooms and recreational center
services.

2.3.3. Tourism

Ethiopia is a land of wonder and enchantment, a country with one of the richest histories
on the African continent, a land of contrasts and surprises, of remote and wild places, home
to cultured and friendly people who are descended from some of the world's oldest
civilizations. The country is endowed with unique combination of natural and cultural
heritage, impressive scenery, suitable climate, rich flora and fauna and recognized
archaeological sites. There exists many kinds of flora and wild life and more than 800
species of birds reside in Ethiopia of which 23 are endemic to the country.

There are more than 100 mammals species, of which seven of the big mammals are unique
to Ethiopia. Ethiopia's many national parks enable the visitor to enjoy the country's
scenery and its wildlife, conserved in natural habitats, and offer opportunities for travel
adventure unparalleled in Africa.

All these could be enough to make Ethiopia fascinating place to visit and travel through, but
Ethiopia has so much to offer. Generally speaking, the improved political, social and
economic climate observed in recent years has created favorable conditions for
development of tourism in the country. This can be evident from the trend that tourist
arrived for different purposes has shown an increment over recent years.

2.3.4. Geographical Significance of the Area

The project area has adjacent to Bishoftu and Harare town which encourages people to
visit the town in weekends and holidays that creates a demand for the envisioned
Commercial Mall.

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2.4. Competitors
The envisioned Marketing Mall will have a competition from few commercial centers and
recreational centers developed in the town. However, the project will have its own
marketing strategy and utilize its competitive advantages to be successful.

2.5. Target Customers

The target customers for the envisioned project will be new visitors travelling to the area
local or foreigner, local community, middle and upper income bracket, returning visitors
to the area, business needing to hold small overnight planning, strategy sessions, wedding
parties/couples.

2.6. Marketing Promotion and strategy

To reach customers different marketing ways will be used. Among the different marketing
strategies and tools for promotion controlling the market:

 Printed and non printed forms of advertising, Electronic etc

 Sponsorship of key government activities and public support mechanism.
 Seasonal discount pricing for bed rooms and different other customer centric marketing
strategies will be used by the promoter.
The project under discussion will have diversified marketing strategies that could enable
it come up with the different competitors in the market. Moreover, best quality and
customer satisfaction will be the key marketing strategy of the project.

2.7. Service Capacity and Service Delivery Program

The program is scheduled based on the consideration that the envisaged Mall will give
service 360 days that means the non-operational days are for maintenance only. During
the first year of operation the project will operate at 60 percent capacity and then it grows
to 80 percent in the 2nd year.

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Service capacity of the Mall at full capacity in third year of operation
SN Description Measurem Daily Monthly Annual
ent Service Service Services
Capacity Capacity
1.       Hotel Service        
1.1 Coffee & Sypris Cup 300 9000 108,000

1.2 Tea Cup Cup 350 10500

1.3 Milk Cup Cup 300 9000
1.4 Macchiato Cup 300 9000 108000
1.5 Soft Drink Bottle Bottle 400
1.6 Juices Cup Cup 200 6000
1.7 Cake No. No. 200 6000
1.8 Different Food Items No. 400 12000
1.9 Fast Food No. 300 9000
2 Bar Service
2.1 Beer & Beverage Bottle 600 18,000.00
2.2 Different Alcoholic Drink Bottle 20 2,000.00
3 Assembly Hall service
Assembly Hall service1
3.1 Day/Seat 1/2000 1/1000 1/1000
3.2 Assembly Hall service2 Day/Seat 1/1500 1/500 1/500
4 Gymnasium & Fitness Person/ 100 100 100
center month
5 Children Game Game 300 9000 108,000
Spa, Massage, Sauna &
6 Beauty Salon Person - 20 600 7200
7 Tennis or Basket court Game - 100 360

The capacity will grow to 100 percent starting from the 3 rd year that is the full capacity of
the Mall. This consideration is developed based on the assumption that market and
logistics barriers would be eliminated gradually within the first two years of operation.

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2.8. Pricing

Based on the market price of similar project in OSPZS Gelan town, the envisioned
commercial set the following fair price for its services as indicated below;
SN Description Measurement Unit Price in Br.
With VAT
1. Hotel Service
1.1 coffee Cup 20
1.2 Tea Cup 10
1.3 Milk Cup 20
1.4 Macchiato Cup 17
1.5 Soft Drink Bottle 20
1.6 Juices Cup 40
1.7 Cake No. 36
1.8 Different Food Items No. 140
1.9 Fast Food No. 50
2 Bar Service
2.1 Beer & Beverage Bottle 30
2.2 Different Alcoholic Drink Bottle 2100
3 Assembly Hall service
3.1 Assembly Hall 1 Day/Seat 5000
3.2 Assembly Hall 2 Day/Seat 1500
3.3 Assembly Hall 3 Day/Seat 2,200
4 Gymnasium ^ Fitness center Person /month 1,000
Children Game Game 20
Spa, Massage, Sauna & Beauty Salon Person 300
Swimming Service Person 50
Weeding Ceremony Wedding 2500

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 3. ORGANIZATION AND MANAGEMENT
3.1. Organizational structure

An organization is an entity established to organize activities, resources and manpower so

as to achieve the intended objectives in a given time. Organizational structure is a tool
designed to allocate the planned activities, responsibilities and accountabilities to man
power of the organization based on their qualification and experiences. Hence the
following organization structure is designed for the proposed project management
depending up on services in Commercial and main section in Marketing industry.

General Manager

As General Manager

Room division Dep’t Supportive Dep’t Food & Beverage Dep’t

Front Office House Keeping Security Personnel Food & Beverage Food & Beverage
section section marketing production service
 Support Dept includes sectionMarketing
security, &sales, engineering & Hotel
Maintenance, finance and accounts, purchase and general store and
personnel sections

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A. The General Manager's

Duties and Responsibilities

 He/she will plan, organize, direct and control the overall activities of the Hotel.
 He/she will devise policies and strategies that will enable the Hotel to be profitable.
 He/she will incorporate modern technological innovation that will facilitate the service
delivery of the restaurant and bars, bed rooms, assembly hall and gymnasium services
that will increase customer's satisfaction.
 He/she will plan, organize, direct and control the human and non-human resources of
the Hotel so as to achieve the short and long run objectives of the organization.

B .Assistant G. Manager

 He represents the General Manager.

 He leads the technical department.
 He leads supportive Department.
 He operates Additional work from G. Manager.
 Submit reports to G. manager.

c. Finance & accounts section manager

The Admin & Finance Department of the Hotel IS responsible for undertaking the following
activities:

 Will manage non human resources of the Mall, which include: effective handling of the
different inventories of the Hotel, and devise strategies of controlling against fraud and
damage.

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

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

 Accountant and cashers that will collect money from the customers.
 Will develop sound financial control system by developing modern financial control
systems.

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

D. Food and beverages Service Manager

 Coordinate Food & beverage service sections (Bars, restaurants, banquets, room
service, garden or roof top restaurants).
 Evaluate and support food and beverage operation
 Plan & implement to bring superior customer service
 Submit operational report for Ass. General manager

E. Food and Beverage production section manager (Executive Chef)

 Coordinate food and beverage production sections

 Support and control food and beverage operation
 Plan and implement for quality operation of food & beverages
 Submit on time request about inputs for production
 Provide on job Training staffs for better performance

F. The Marketing and sales section manager

 Will handle the overall marketing activities of the organization which include planning,
organizing, directing, and controlling.
 Will develop the marketing strategies.
 Will develop effective customer handling strategies
 Plan and execute the promotion mix

G. House Keeping section Manager (Executive house keeper)

 Coordinate all housekeeping operation.

 Support and control on site housekeeping operation
 Plan and implement strategies for better housekeeping performance.
 Submit input request on time for housekeeping operation

23
 Submit report for top leader

4.2. Man Power

The total manpower required for the plant will be 80 employees at full capacity.

 Permanent workers 40
 Skilled 20
 Unskilled 20
 Temporary workers 40
 Skilled 10
 Unskilled 30

Sr. No of Monthly
Job Title Qualification Job Annual Salary
No salary
titles
A Permanent      
Employees
1 General Manager  
1 22,000 264,000
1.1 Secretary BA in secretary
Since/Office Mgt 1 3,000 36,000
2 As General Manager MA. In Marketing Mgt
1 18,000 216,000
3 Room division Dep’t BA/MA in marketing
Mgt 1 13,000 156,000
3.1 BA/MA in Bus. Mgt
Front Office section 6 10,000 720,000
3.2 House Keeping BA/MA in Hotel Mgt
section 2 10,000 240,000
4 Supportive Dep’t BA/MA in Hotel Mgt
1 15,000 180,000
4.1 security Military science
training 5 3,000 180,000
4.2 Marketing &sales BA. In Marketing
&sales Mgt 6 10,000 720,000
4.3 Engineering & Hotel BSC/MSC in Civil
Maintenance Engineering 4 15,000 720,000
4.3.1 Sanitary technician level III in sanitary
3 8,000 288,000
4.3.2 Electrician level III in electricity
3 8,000 288,000
4.3.3 carpentry level III in carpentry
3 8,000 288,000
4.3.4 construction level III in construction 2 192,000

24
Sr. No of Monthly
Job Title Qualification Job Annual Salary
No salary
titles
technician 8,000
4.4 finance and accounts BA/MA in finance and
accounting
4 10,000 480,000
4.5 purchase and general BA/MA in Supplies Mgt
store 4 10,000 480,000
4.6 personnel sections BA/MA in HRM
6 10,000 720,000
5 Food & Beverage BSC in Food &
Dep’t Beverage preparation
1 15,000 180,000
5.1 Food & Beverage level III in Food &
production Beverage preparation 8 10,000 960,000
5.2 Food & Beverage level III in Hotel
service service 18 10,000 2,160,000
     
B Casual Employees     -
Architecture BSC/MSC in
Architectural
7 Engineering 1 10,000 120,000
Civil Engineer BSC/MSC in Civil
8 Engineering 1 10,000 120,000
Construction BSC/MSC in
Management Construction
9 Management 1 10,000 120,000
Electrical Engineer BSC/MSC in Electrical
10 Engineering 1 10,000 120,000
Sanitary Engineer BSC/MSC in Sanitary
11 Engineering 2 12,000 288,000
Land Scape Engineer BSC/MSC in Land
12 Scape Engineering 2 12,000 288,000
laborers
13   32 3,000 1,152,000
  Grand Total   80   3,300,000
11,676,000

25
4. FINANCIAL REQUIRMENT AND ANALYSIS

The Financial analysis include insight to the total capital outlay required for the project
which would consist of total fixed investment cost, and pre- production costs; the source of
finance for the total planned initial investment cost requirement and other parameter of
feasibility analysis including projection of profit/loss statement, cash flow statement and
payback analysis. Hence, the total initial investment cost for implementing this project is
estimated at ETB 80,000,000. Out of the total budget of the project 30% or ETB
24,000,000will be covered by the owner equity; while the rest 70% Eth birr 5,600,000will
be covered by financial institutions.

Table Summary of Total initial Investment cost

No Description Cost  
1 Fixed Investment    
1.1 Land, Building and Construction 22,400,000 0.00
1.2 Machines and Equipment’s 17,600,000 0.00
1.3 Vehicles and Motors 2,400,000 0.00
1.4 Office Furniture and Equipment 1,600,000 0.00
Total Fixed Investment Cost 44,000,000 0.00
2 Operating Expense   0.00
2.1 Raw Materials Purchase and Products 16,000,000 0.00
2.2 Salary Expense 8,000,000 0.00
2.3 Other Operating Expense 2,400,000 0.00
2.4 Pre-operating Expense 1,600,000 0.00
Total Operating Expense 28,000,000 0.00
  Contingency (Lump sum) 10% 8,000,000  
Total Investment Cost 80,000,000 0.00

4.1. Fixed Investment

The fixed investment cost of the project consists of land acquisition and development,
construction costs of building and civil works, costs for purchase of plant machinery and
equipment, cost of purchase of vehicles, purchase of other fixed asset and other pre
production capital expenditure. Accordingly the fixed investment cost constitutes the
resource required for land acquisition, site preparation and development, design and

26
engineering cost, building construction cost, civil works (service facilities), purchase of
Hotel machinery and equipment, purchase of transportation vehicles, purchase of office
furniture and equipment and capital costs required for other fixed assets.

A. Building & Construction

No Description Land Total cost in br.
1 Production Hall Requirement(M2) 2,300 67,200,000
2 Warehouse, raw material and input 100 44,800,000
3 Office Building, and finished 30 22,400,000
4 productAccumulation area
Waste 20 4,480,000
5 Green area, buffer and parking 50 6,720,000
6 Shops & Showrooms   11,200,000
7 Site Development   22,400,000
8 Design and supervision   22,400,000
9 Land lease initial   22,400,000
  Total 3,500 224,000,000

B. Machinery and equipment’s

Unit Price Total Price in
SN Description Measurement Qty
in Br Br
  Hotel Service Machineries        
equipment
1 Laundry Machine with all No 5,00
100,000
accessories 5 0,000
2 Bar table No 25
5,000
50 0,000
3 Bar chare No 1 31
2,500
25 2,500
4 Dining Tables No 1 55
4,400
25 0,000
5 Dining Chairs No 1 27
2,230
25 8,750
6 Coffee Tables with chairs Set 2 50
2,500
00 0,000
7 Bed with all accessories for No 300,
30,000
Family Room 10 000
8 Bed with all accessories for No 250,0
25,000
Double Room 10 00
9 Bed with all accessories for No 43
17,500
Suit Room 25 7,500
10 Beds with all accessories for No 75
15,000
Single room 50 0,000
11 Comfort Chair(sofa) for No 25,000 6

27
 reception 3 2,500
12 LCD 32” TV for Bed room Unit 93
15,000
63 7,500
13 LCD 60” TV for Restaurant Unit 22
30,000
café and Bar 8 5,000
14 Kitchen Equipments LS
   
-
15 Refrigerator No 25
20,500
13 6,250
16 Balcony & alcohol display Set 62
50,000
13 5,000
17 Satellite Dish No 4
9,250
5 6,250
18 Satellite Receiver No 1 25,
2,500
Equipment /Decoder 00 000
19 Public addressing system of Unit 41
55,000
auditoria type 8 2,500
20 Different Machineries
materials 168,760,000
  Grand Total   176,0
   
00,000

A. Vehicles
Total
Unit Price
  Description Qty Price in Remark
in br.
br.
1 Sino truck , 1 14,464,865 14,464,865 Duty free
2 Service 1 2,854,054 2,854,054 Duty free
3 pick up 1 4,086,486 4,086,486 Duty free
4 Forklift 1 2,594,595 2,594,595 Duty free
Total     24,000,000  

28
E. Office Equipment
Unit cost Total cost
No Description Qty
in Br. in Br.
1 Managerial Tables 50 3,243 162,162
2 Secretarial chairs with table 50 1,622 81,081
3 Managerial Chairs 50 973 48,649
3 Computer and Printer 150 649 97,297
4 Shelf 200 324 64,865
5 Filing Cabinets 300 162 48,649
6 Customer Chair 100 81 8,108
7 Television 15 486 7,297
8 Waiting Room with sofa   16,216 16,216
9 others related service   57,568 57,568
10 Assembly chair and table(set)   8,108 8,108
Total   89,432 600,000

29
 4.2. Initial Working Capital
The initial working capital is estimated to be birr. 280,000,000.00

Operating Expenses at Full Capacity

1. Raw materials

Total Annual cost

SN Description Measurement
Br.

Raw Materials for restaurant and 6,000,000

1 Cafe LS
5,000,000
2 Raw materials for Bar LS

5,000,000
3 Other raw materials & inputs LS
16,000,000
  Total  

NB. The cost of raw material is revolving budget throughout the year. Thus we fill the
monthly and annual budget the same figure.

2. Salary Expense

Monthl
Annual
Descriptio y
No. No. Qualification Salary in
n Salary
br
in br
General
1 1 BA in Business Management 10,000 120,000
manager

Production
2 1 BSC in Industrial Engineering 5,000 60,000
Head

30
 Production
3 5 Degree in production technology 5,000 60,000
supervisor

Draftsman
4 1 Diploma in draft technology 5,000 60,000
Designer

Admin and
16 Finance 1 BA in Management/Accounting 5,000 60,000
Head

17 Accountant 5 Diploma in accounting 5,000 60,000

18 Electrician 2 10+2 in general electricity 3,500 42,000

19 Secretary 3 Diploma in secretariat science 3,500 42,000

20 Clerk 2 10 completed 3,500 42,000

Store 10+2 in store and logistics

21 2 3,500 42,000
keeper management

22 Driver 3 10 completed 3,500 42,000

23 Cashier 3 10+2 in Bookkeeping 3,500 42,000

Office
24 3 10 completed 3,500 42,000
boy/girl
General
25 2 Diploma in management 3,500 42,000
service
26 Security 3 Unskilled 2,500 30,000
27 Gardener 3 Unskilled 2,500 30,000
28 Cleaner 5 Unskilled 2,500 30,000
Other 30,000,00
  35  
workers 0
Grand 80,000,00
  80    
Total 0

31
 3. Other Operating Expenses

SN Description Annual Cost br. Assumption Used

1 Property Insurance 5,251,475 1 % of fixed Investment Cost

2 Audit & Legal Fee 1,135,000 3000 per month

3 Uniforms 1,150,000 200*300 br.

4 Telephone, fax and postal 1 67,045 2000 per month

5 Cleaning goods supplies 1,150,000 5000 per month

6 Repair and maintenance 1,251,953 2 % of the Fixed Cost

7 Advertisement 8,250,000 % of sales

8 Stationery and supplies 145,000 1000 per month

9 Electricity 1,235,000 0.47 br*200,000KWh per year

10 Water 1,125,000 3*10,000 M3 per year

11 Fuel 9,250,000 14000 lit*18.4 br

12 Oil and lubricant 9,214,400 10% of fuel cost per year

13 Miscellaneous Expense 1,150,000 12,000 per month

  Total 24,000,000  

F. Pre – Service Expense

SN Description Cost in Br.

1 Project proposal 20,000

2 Licensing fee and others 5,000,000
3 Environmental Assessment Impact 50,000
4 Staff Capacity Building 5,000,500
5 Advertising 5,500,000
Total 15570500

32
4.3. Underlying Assumption

The financial analysis of the envisioned Project is based on the data provided in the
Preceding sections and the following assumptions.

The total initial investment cost for implementing this project is estimated at ETB
80,000,000. Out of the total budget of the project 30% or ETB 24,000,000will be covered
by the owner equity; while the rest 70% Eth birr 5,600,000will be covered by financial
institutions.
A. Construction and Finance
Construction period 2 years

Source of finance 30% equity and 70% loan

Bank interest rate 10%

Operation Costs and raw materials increase by 5% after year 3

Salary and wages increase by 5% after year 3
Annual Sales revenue increased by 5% after year 3

B. Working Capital
Accounts receivable 30 days

Work in progress 5 days

Cash in hand 5 days
Account payable 30 days

4.4. Source of Capital

SN Description % Share Amount (in Birr)

1 Owners Share 30 24,000,000

2 Bank Loan 70 5,600,000

Total 100 80,000,000

33
4.5. Loan Repayment Schedule
Yea Principal Interest Total Annual Remaining
r Payment (10%) Payment Balance
0 0 0 0 56,000,000
1 5,600,000 5,600,000 112,000,000 50,400,000
2 5,600,000 5,040,000 106,400,000 44,800,000
3 5,600,000 4,480,000 100,800,000 39,200,000
4 5,600,000 39,200,000 95,200,000 33,600,000
5 5,600,000 33,600,000 89,600,000 2,800,000
6 5,600,000 28,000,000 84,000,000 22,400,000
7 5,600,000 22,400,000 78,400,000 16,800,000
8 5,600,000 16,800,000 72,800,000 11,200,000
9 5,600,000 11,200,000 67,200,000 5,600,000
10 5,600,000 5,600,000 61,600,000 0

4.6. Depreciation Schedule

S Original Value Depreciation Depreciation Per
Description
N In Birr rate in % year
Construction and
1 224,000,000 5 11,200,000
Civil Work
Machines &
2 176,000,000 15 26,400,000
Equipment’s
3 Vehicles 24,000,000 20 4,800,000
4 Office Equipment 16,000,000 15 2,400,000
  Total 440,000,000   44,800,000

34
4.7. Projected Revenue Schedules

Based on the production capacity of the envisioned Commercial Complex center

indicated in previous chapter, the total revenue of the project is projected as
indicated in the table below;

Annual
Unit Price Total price
SN Description UOM Service
in Sr.
Capacity
in Sr.
1 Hotel Service        
1.1 Coffee Cup 10,800 25 270,000
1.2 Tea Cup 12,600 15 189,000
1.3 Milk Cup 10,800 25 270,000
1.4 Macchiato Cup 10,800 20 216,000
1.5 Soft Drink Bottle 14,400 30 432,000
1.6 Juices Cup 7,200 40 288,000
1.7 Cake No. 7,200 36 259,200
1.8 Food No. 14,400 200 2,880,000
1.9 Fast Food No. 10,800 50 540,000
  Sub Total       5,344,200
2 Bar Service        
2.1 Beer Bottle 1,800 50 90,000
  Beverage       -
2.2 Alcoholic Drink Bottle 200 2500 500,000
  Sub Total       590,000
3 Bed Service       -
3.1 Single Bed Bed 2,800 800 2240000
3.2 Double Bed Bed 1,800 1500 2700000
3.3 Suit Bed Bed 2,160 1000 2160000
3.4 Family Bed Bed 1,080 1500 1620000
  Sub Total       8,720,000
4 Assembly        
  service        
4.1 Assembly Hall 1 Day/Seat 360/100 5,00 500,000
4.2 Assembly Hall 2 Day/Seat 360/150 0
3,50 525,000
4.3 Assembly Hall 3 Day/Seat 1/500 0
2,20 330,000
  Sub Total       0 1,355,000
Person/ 1,00
5 Gymnasium mont 100 0 100,000
  Fitness center h      

35
 Annual
Unit Price Total price
SN Description UOM Service
in Sr.
Capacity
6 Weeding Wedding 360/52 2,50 900,000
  Ceremony       0  
  Total       5,320,000
Ground Total 21,329,200

According to the projected income statement, the Mall will start generating profit in the 1 st
year of operation. Important ratios such as profit to total sales, net profit to equity.
Return on equity) and net profit plus interest on total investment (return on total
investment) show an increasing trend during the lifetime of the project.

The income statement and the other indicators of profitability show that the project is
viable.

4.8. Financial Analysis

A. Balance Sheet
Balance Sheet
Asset
Current Asset  
Cash 120,000,000
Inventory of raw materials and inputs 160,000,000
Total Current Asset 280,000,000
Fixed Asset  
Land, Building and Construction 224,000,000
Machineries and Equipment’s 176,000,000
Office Equipment 16,000,000
Vehicles 24,000,000
Total fixed Asset 440,000,000
Total Asset  
Liability  
Account payable 56,000,000
Owners Equity 240,000,000
Capital  
Total Liability & Owners’ Equity 80,000,000

36
 B. Income Loss Statement
Income Loss Statement
Revenue Year 1 Year 2 Year 3-10
Sales 35,623,000 39,185,300 43,103,830
Sales expenses (5%)* 1,781,150 1,959,265 2,155,192
Purchase of Raw Material 160,000,000 265,075,095 265,075,095
- -
Gross profit -124,377,000
225,889,795 221,971,265
Expenses    
Salary Expense 80,000,000 84,000,000 88,200,000
Operating Expenses 24,000,000 25,200,000 26,460,000
Pre-operating Expense 16,000,000 16,800,000 17,640,000
Deprecation Building 11,200,000 11,200,000 11,200,000
Deprecation machine 26,400,000 26,400,000 26,400,000
Deprecation Vehicles 4,800,000 4,800,000 4,800,000
Deprecation office Equip 2,400,000 2,400,000 2,400,000
Lease Expense 1,000 1,000 1,000
Interest Expense 5,600,000 50,400,000 5,600,000
Total Expense  220,801,000 221,201,000 182,701,000
Profit Before Tax 35,623,000 39,185,300 43,103,830
Tax(30% ) 10,686,900 11,755,590 12,931,149
Net Profit 24,936,100 27,429,710 30,172,681

C. Cash Flow Statement

     
Particulars Year0 Year I Year II
A. Cash Iflow 0    
·  Own equity 240,000,000    
·  Bank loan 56,000,000    
·  Depreciation 0 44,800,000 44
·  Net profit 0 24,936,100 27
Total inflow 80,000,000 69,736,100 72
B.  Cash outflow 0    
·   Fixed capital 440,000,000    
·  Working capital 280,000,000    
. Contingency (Lump sum) 10% 80,000,000    
·  Loan repayment   5,600,000 50
Total outflow 80,000,000 5,600,000 50
Net inflow (A-B) 0 13,736,100 21
Cumulative balance 0 13,736,100 21

37
4.9. Pay-Back Period

The investment cost and income statement projection are used to project the pay-
back period. The project's initial investment will be fully recovered within eight
years after the time of operation.
Every business undertaking be it large or small should have future development
plan. It is a plain fact that business activities are undertook in a dynamic business
nature and different environment. Therefore, the project will have an expansion
phase to include Cinema, and other additional services in the future.

5. ECONOMIC, ENVIRONMENTAL AND SOCIAL APPRAISAL

Economic: the potential source of revenue generated from commercial sector will
appear extremely attractive to local communities. It is hoped that the ecotourism
project will raise sufficient funds to convince local communities to protect the
reserve and that the funds will act as suitable compensation.
Environment: The project plays important roles in terms of the environmental
service that it provides. The conservation value and the area as enormous due to its
ability to stabilize the ecosystem, control soil erosion (by making terraces) and
water dynamics and provide vital resources. The owners will preserve the
remaining natural plants and provides refuge and breeding grounds for creatures
that encourage seed dispersal, pollination and control plant and animal. The control
of local climate condition is another important service that would be lost through
the destruction of the ecosystem.
Social: the project will ensure social development though employment and job
creation which is about 80 individuals get hired. The training of workers and skill
up grading programs will enable the local people fit or efficient performance in their
activities.
The Marketing Mall component is a new, exciting and potentially successful method
of generating funds for conservation and community development. The project will

38
promote the outstanding natural beauty of the area and encourage further
investment in projects of a similar nature around Oromia. The pilot phase will allow
us to draw up clear guiding principles for marketing business development which
can be applied widely elsewhere in order to take advantage of Ethiopia's in
particular Oromia's enormous tourism potential. Hence, the Commercial Complex
center opens new ground in pioneering the establishment of a fully environmentally
friendly project in the area.

39