PROJECT PROPOSAL FOR

APARTMENT DEVELOPMENT

PROJECT TO BE IMPLEMENTED IN AMHARA

REGIONAL STATE BAHIR DAR CITY

PROMOTERS- HEAVEN APARTMENT

JUN, 2022
BAHIR DAR, ETHIOPIA
Table of Contents

HEAVEN APRTEMENT1
Executive Summary.............................................................................................................4
1. INTRODUCTION..........................................................................................................5
1.1. Project Justification...............................................................................................6
1.2. Objective of the Project........................................................................................7
1.3. The Economic Significance of the Project.........................................................8
1.4. Location, Infrastructure and land........................................................................9
1.4.1. Location...........................................................................................................9
1.4.2. Land Use Plan..............................................................................................11
1.5. Location Map of the Area...................................................................................12
2. THE MARKET STUDY..............................................................................................13
2.1. General considerations.......................................................................................13
2.2. Macro Economic Performance and the Contribution of ApartmentSector
to the Ethiopian Economy.............................................................................................14
2.2.1. Macroeconomic Performance....................................................................14
2.2.2. Contribution of the ApartmentSector.........................................................15
2.2.3. The Legal Environment for ApartmentDevelopment..............................15
A. Apartmentas a legal Term and a Concept.......................................................15
B. Regulatory Experience.......................................................................................16
C. The Ethiopian Law...............................................................................................17
2.3. Demand and Supply Analysis............................................................................21
2.3.1. Demand Determination...............................................................................21
2.3.2. Demand and Supply Gap...........................................................................23
2.3.3. Market Prospects.........................................................................................26
2.3.4. Target Customers.........................................................................................26
2.3.5. Marketing Strategy.......................................................................................26
2.4. Pricing...................................................................................................................27
2.4.1. Terms of payment........................................................................................27
3. PROJECT AND TECHNICAL DESCRIPTION......................................................28
3.1. Description of the Project / Product Mix...........................................................28
3.2. Project tasks and Office......................................................................................29
3.3. Construction Work and Technology..................................................................29
3.3.1. Construction Inputs......................................................................................29
3.3.2. Construction Process..................................................................................30
3.3.3. Construction Process Flow.........................................................................30
3.3.4. Machineries and Equipments.....................................................................30
3.4. Utilities...................................................................................................................30
3.5. Project Implementation.......................................................................................31
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4. ORGANIZATIONAL STRUCTURE..........................................................................32
4.1. Organization and Management.........................................................................32
4.2. Man Power...........................................................................................................32
4.3. Organizational Structure.....................................................................................33
5. FINANCIAL REQUIRMENT AND ANALYSIS........................................................35
5.1. Total Investment Cost.........................................................................................35
5.1.1. Land, Building & Construction Cost..........................................................36
5.1.2. Machineries and Equipments.....................................................................37
5.1.3. Vehicles.........................................................................................................37
5.1.4. Office Equipments........................................................................................37
5.1.5. Initial Working Capital..................................................................................37
5.1.6. Pre-service Expenses.................................................................................38
5.2. Operating Expense.............................................................................................38
5.3. Financial Analysis and Statements...................................................................38
5.3.1. Underlying Assumption...............................................................................38
5.3.2. Sources of Fund...........................................................................................39
5.3.3. Bank Loan Repayment Schedule..............................................................39
5.3.4. Depreciation Schedule................................................................................40
5.3.5. Revenue Projection.....................................................................................40
5.3.6. Balance sheet (Beginning of operation)...................................................40
5.3.7. Financial Statement.....................................................................................41
5.3.8. Financial Analysis........................................................................................42
6. ENVIRONMENTAL IMPACT ASSESSMENT........................................................44

1.Executive Summary
1.Project Name Apartment development
2. Nationality Ethiopian
3.Project Owner H HEAVEN APARTMENT

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4.Project location Bahir Dar CITY
5.Project Composition Residential Apartment 8500 m2

6.Primeses Required 8500 m2 Already owned by the promoters.

land
7. Total Investment Cost The total project capital is 100,000,000 Birr from which
30% or 30,000,000 will be covered by the promoter and
the rest 70% or 70,000,000 birr will from financial
institution
8. Employment 70 individuals permanently and 50 labors and contract
workers will be employed on temporary bases.
Opportunity
9. Social and Economic Provide better house, employment opportunities,
Benefit generation of income, stimulates town economy and
benefits local people.

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 2.INTRODUCTION
Broadly defined, Apartment refers to land and everything made permanently a part
thereof, and the nature and extent of one’s interest there in (Encarta Reference
Library, 2006). Apartment may be acquired, owned and conveyed (or transferred)
by any legal entity as determined and defined by law. This entity may take the form
of individuals, businesses and nonprofit corporations.

The Apartment market, on the other hand, is the market that encompasses all
transactions, which involve dealings in rights or interests in land and buildings (UN
ECE REAG, 2000). A dealing here is used to refer to the transfer of a right
temporarily or permanently from one part to another in return for a consideration,
usually money.

As one sub-sector of construction sector, the Apartment sector in Ethiopia

increasing in dynamic rate. However, the sector has many obstacles, including the
high cost of construction materials, the slow and limited supply of serviced plots,
and delays in the implementation of the lease system in plot allocation.

More investment in this area is required to meet the high demand. In this regard, the
Government of Ethiopia has conducive investment policies and regulations to
attract the private sectors involvement in the economic development through the
various investment and business endeavors including Apartment development.

To this effect, the owners of the Apartment Company, HEAVEN APERTMENT

interested to invest in their existing land in, Bahir Dar. This pre-feasibility study
project study is undertaken to check the market, technical and financial feasibility
of this project. The output of the study is very encouraging for the owner to
establish the project in Hidassie kebele area.

The owners of the project have great interest and determination to commence the
project. Hence, they expect to get the necessary support from the regional and town
administration to realize the project.

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1.2.Project Justification

Housing is one of the basic human requirements, as every family needs a roof.
Providing shelter to every family has become a major issue as a result of rapid
urbanization and higher population growth.

In Ethiopia the demand for houses in urban areas especially in Bahir Dar is very
high. As one methods of getting houses, Apartment becomes common in past few
decades.

The Apartment sub-sector has made very significant contribution to the Growth of
Domestic Product (GDP) of the country during the ten years. Because of the efforts
made, construction value added has shown growth trends over the last five years.
The construction of residential and non-residential Apartment property grew at an
average rate of 13.6% per annum over the last five years under review. Hence,

construction stimulated economic growth and generated employment opportunities.

The property (residential and commercial) market in Ethiopia remained under

developed for several years but the relatively good performance of the macro-
economy in the last five years has stimulated unprecedented investment growth in
the property sector. Despite, positive track records, the sector are still constrained
by a number of barriers detrimental to its growth.

To meet the gap, residential houses/buildings are under construction both in the
main city of Bahir Dar, surrounding area and regional cities throughout the country,
stimulated by the initiative of the government and the sharp rise in demand and
disposable income of the society.

In addition to the above facts, the following points taken by the owner as a project
justification behind investment for the envisioned Apartment investment;

 High economic growth and Investment activities in Bahir Dar and

surrounding area.

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 High population in Bahir Dar and surrounding area, which is potential
market for the envisioned project.

 Owner interest to invest in the area

 Location importance of the project area to capital city and northern part of
the nation.

 Expansion of infrastructural development in the town

 The government of Ethiopia promising five-year growth and transformation

development plan (2010/11-2014/15), the will bring prosperity to its citizens
with collaboration with private sector investment actions.

 The regional government (Amhara) conducive investment packages for

development and poverty reduction.

1.3. Objective of the Project

The main objective of this project is to construct a high quality and

comfortable residential buildings with are son able price.

In relation to the above main objective, the project has the following
specific objectives;

 To develop the area to be comfortable for residential purpose.

 To create socio-economic benefits for the local community

 To consult the construction sector specially in design and supervision

 The Economic Significance of the Project

The envisaged project deemed to add to the economic development of the

nation in general and district/region/area in specific with following ways:

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  Provide Quality House and Service

By constructing and selling best residential apartment G+8, the project will contribute
for the shortage of homes in the nation. Besides, the consultancy service will provide
quality service to its customers.

 Source of Revenue

As public policy of any nation, the government collects different forms of taxes from
different business organizations and individuals. Among the different forms of taxes,
business income taxes, payroll income tax and VAT are collected from undertaking
business activities. Therefore, the building will serve as sources of revenue for the town as
well as for the region.

 Employment opportunity

One of the problems that our country faced is unemployment. Therefore, the current
objective of the government is working on tackling the problem of unemployment and
fostering the development process either through creating self employment or employment
in other organization. Hence, this Company will hire 70 permanent and temporary people.

Besides, in construction period many jobs will be created for local people.

1. Benefit For The Local Community

As a corporate responsibility the company will engage in different development

activities on the surrounding areas. This will better worth the community and contribute
for the development of the nation.

 Stimulate the Town Economy Activity

The Apartment sector by its nature has multi positive externality in the town. It will
encourage the economic movement of local economy. There will be economic
relationship and transactions among different actors.

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2.Description of Study Area

Location Bahir ar City is located in north western Ethiopia. Astronomically it is located at

the geographic coordinates of 11o 38' North latitudes and 370 15' east longitudes. In relative
terms, Bahir Dar city is found at the distance of 567 km along Addis Ababa - Debre
Markos road and 465 km along Addis -Motta road.

Bahir Dar, the capital city of Amhara National Regional State is located at the
geographical coordinates of 11˚ 38’ north latitudes and 37˚ 15’ east longitudes. The city
has altitude of 1830 meters above sea level and it is characterized by a tropical climate
with an average temperature of 29˚C. It is accessible both by airplane and car from
different directions. It is one of the most tourist destination points of the country, which is
endowed with natural beauty (having the largest lake in the country).i.e. Lake Tana and
Blue Nile fall. The ancient churches and monasteries with the long lived religious and
historic heritages in the island of the lake are worth visiting for many international and
domestic tourists.

The city administration area comprises the city proper three rural kebeles (namely
Zenzenema, Addis Alem, and Woramit and three satellite towns/urban centers namely Tis
Abay, Meshenti and Zegie.)

The core city has an estimated area of 16000 hectares. According to the 1996 Master
Plan, the boundary of the city stretches up on Yibab Eyesus in the west, Abun Hara
Digil in the east (along the lake shore) Igir ber pleatue in the south. Its geographical
location favors the city with many and multi faceted opportunities like water
resources (lake and river), suitable topography and favorable climate to live and to
serve as a political center for the Amhara regional state. For administrative purpose
the city classified in to 17 urban Kebeles (local Administration) with the current
(2004) restructuring it also incorporates six rural kebeles.

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 Figure 3.1 Locational Map of the Study Area

2.1 Physiographic

The city stretches over a predominantly flat land with imperceptible slop change.
However there are also some dames and bridges with relatively higher elevations
that standout in the area, particularly to the north and south of the city and the
elevation variation in the area ranges from 1,786 m.a.s.l near the lakeshore to 1,886
m.a.s.l at Bezawit.

The general slop orientation of the town is slightly towards Abay River, which
crosses the city proper from North West to south east and serves as the only out let
for surface water run off from the town. Although there is no well- defined course of
surface water, the direction of drainage in dominantly towards Abay River
except for some areas, which drain in to Lake Tana. Because of its extreme
flatness, the town has been affected by flood problem. (BMSA, 2001 )

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Geology
The rocks exposed in Bahir Dar area mainly include basaltic lava flows (lava
outpourings and dames) and related spatter cones. The basaltic lava flows basically
comprise periphrastic and aphanites basalts. And the over all exposed thicknesses of
the flows vary from few meters to more than 100 meters at Bezawit. They seem to
occur as alternate flow layers in some places and are often highly weathered
and/ or fractured particularly at depth, as bore hole log date reveals. Generally, the
rocks out cropping in Bahir Dar City Administration can be categorized in to three
main units based on lithology variation. These litologic units are:

 Aphetic Basalt
 Vesicular Basalt, And
 Scoria cereous Basalts/ cinder cones

Aphetic Basalt- has a dark color, fine grains and many composes
olivine, filed spare mineral and the out crops are found at eastern part
of the town .
Vesicular basalt - has light gray color fine to medium grained and it
M/M

is manly composed of pyroxene, Amphibole, olivine and filed spar the

out crops are found in western part of the city along the bank of river
Abay and also along the southern shore of the town.

3.1.4 Climate

3.1.4.1 Precipitation

The main annual precipitation depth recorded at Bahir Dar Station in

37 years period from 1962 to 1999 is about 1437 mm. There is a
significant seasonal variation in the amount of rain fall. Almost 60.3
% percent of the mean annual rainfall occurs in two raining months
of July and August with maximum mean value of more than 432 mm.

3.1.5 Temperature

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The monthly mean maximum and minimum temperature recodes of
Bahir Dar in the year between 1961 and 2000 ( in the bare blew)
indicates that the highest mean monthly maximum temperature occurs
in the month of April which is about 29.7o c and the lowest is in the
months of July and August which is about 23.3 o . While the mean
monthly minimum temperature ranges for the lowest from 7.1o in
January to the highest 14.2o in the month of May.

3.1.6 Wind Speed and Directions

The maximum wind speed in Bahir Dar is recorded as 1.8 per second,
which is not that much difficult to line and under take any
development activities in and around the city. The wind direction of
Bahir Dar is towards,
3.1.7 Hydrology

3.1.7.1 Rivers
In the Study Area there is one major international river and one largest
highland lake. Respective they are known as river Abbey and Lake
Tana. River Abay is flowing on younger volcanic, which dammed of
the drainage and formed lake Tana in this section, the river flows in a
relatively wide and flat channel, forming a braided pattern as water
swilled around the islands and there after it mainly flows in a deep
and rugged gorge. The discharge data from 1960 to 2001 at Bahir Dar
gauging station indicates the mean annual flow of the river Abay is
about 123.07m3/s.

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 3.1.7.2. Lake

Lake Tana which is the source of the Blue Nile covers more than 3000
km2 of the total drainage area of 15,320 km2 above the out late Lake
Tana stores 29.172*10 9m3 of water. Seasonal stratification is weak
owing to its shallow depth. The lake level data for the last 42 years
(1960-2001) at Bahir Dar gauging station is shown in the table below.

3.1.8. Socio Economic Characteristic of the Study Area

3.1.8.1. Population and Demographic Characteristic of Bahir Dar

The first national population and housing census conducted in 1984
puts the population of Bahir Dar city as 54,766. The second national
population housing census conducted 10 years latter in 1994 shows
that the total population as 94, 235 in the city.
The central Statistical Authority (CSA) in its Annual statistical
Abstract of 2004 projects the total population size of 159,796 (Male
82,498 and female 77,295) for the year 2005.

Infrastructural Assessment
A. Accessibility: - The main asphalted road which has been serving to connect Bahir
Dar to western parts of the nation is bounded with the project.
B. Power and Water Supply: - The town has electric power and water lines have
been extended to the project area with adequate supply capacity. Moreover, there is
ample underground water potential as observed in neighboring villages.
C. Other Socio – economic services: - These include education & health services,
transport facilities, financial institutions government offices etc…. Regarding the
fulfillment of these ones since the area is recently allocated for such a purpose; so
far, these have been developed there.
The main reasons behind the selection of this location are:
 Its proximity and strategically located to the central and largest market of the nation
(Bahir Dar) for residential real estate.

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  Relatively advanced development in infrastructure (Power, Water, Telephone
internet, road etc.
 Accessibility of skilled labor force
 Conducive investment policy and governance
 Environmentally very fit for residential purpose

4.Land Use Plan

The organization has already a land, which is estimated to be a total of 8500 m 2
required to construct residential buildings. Land use plan indicated in table below.

Table Land Utilization Plan

SN Description Measurement Quantity Required Total
Land in m2 Required
Land in m2
1 House A
1.1 Apertment (G+8) M2 8500 850 8500.00
1.2 Service room (Ground) M2 15 100 200.00
1.3 Green area, Spacing and Parking M2 15 120 200.00
Total Building (G+0) Compound area M2 50 400 8100.00
2 House B -
2.1 Apartment M2 15 140
2.2 Apartment M2 15 140
2.3 Service room (Ground) M2 15 30
2.4 Green area, Spacing and Parking M2 15 30
Total Building (G+1) Compound area M2 15 200
5 Village Green area, Guard House, M2
Children, play ground, parking and
Waste Accumulation
6 Village Internal road & spacing M2
+Total 8,500.00

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 4.1.THE MARKET STUDY
The market study for the project has considered major factors that affects
Apartment sector in Ethiopia. Besides, the study compiled primary and secondary
sources studied by different organizations.

4.1.1 General considerations

Investment and property development play an important role in any emerging
markets or economies. Property generally comprises residential houses and
commercial Apartment property developed for rental business and sale. The
property investment market in Ethiopia remained under developed for several
years. As a consequence, the supply of residential houses and non-residential
Apartment that can be used for residence, office space, shopping malls and
catering services in the urban centers of the country is disproportionately low to
cope with the growing demand in the country spinning from the average growth in
GDP of 5.5 percent over the last ten years and population increase. The relatively
good performance of the macro-economy (real growth in GDP, low inflation rate
and growth in investment and export sector) has stimulated unprecedented
investment growth in the property sector over the last five years. The growth of
investment in the property market over the last five years is consistent with the
global experience suggesting that investment in the residential and commercial
property (real estate) is greatly influenced by the performance of the
macroeconomic conditions. In general, a stable macroeconomic condition leads to
economic and business growth and develops investors’ confidence. This certainly
spurs large demand in the property market for office space, shopping malls,
catering services, apartment and residential houses. Following growing demand
trends, and with the expectation of high return on their investment capital, large
number of Land Developers pooled their financial resources and invested in the
property market.

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Looking at the past trends and permits issued by the Government to the
construction of Apartment properties in the major urban areas of the country, one
can easily conclude that the momentum is more likely to continue.

4.2. Macro Economic Performance and the Contribution of

Apartment Sector to the Ethiopian Economy

Macroeconomic Performance
Review of trends in macroeconomic performance over the period covering 1995/96
to 2006/07 depicts that; the country’s economy has registered encouraging results
despite its volatility due to heavy dependence on agricultural sector contribution,
which depends on the vagaries of nature. During the period , real GDP growth
averaged 5.5 percent. This is consistent with the preceding years achievements of
6 percent GDP average growth per annum over the period 1992-2001.The
negative real Gross Domestic Product (GDP) growth rate of 3.3 percent in 2002/03
was followed by a strong positive record of 11.9 percent, 10.6 percent, 9.9 percent
and 10.1percent growth rates in the subsequent four years, 2003/04 to 2006/07,
respectively, due to mainly the good weather condition resulting in pamper
agricultural harvest and improved performance of the industrial and service sectors
of the economy. The stumpy GDP growth of negative 4.2 percent in 1997/97 and
negative 3.3 percent in 2002/03 was mainly caused by the severe drought that
affected agricultural harvest. With agriculture employing more than 85% of the
population and accounting for nearly half of GDP, Ethiopia’s economic
performance is largely determined by what happens in the agricultural sector. Over
the period under review changes in GDP and agricultural output have been closely
linked and erratic. The volatility in GDP growth is a direct result of the economy’s
extreme dependence on rain fed agriculture. GDP growth is highest in years with
good rains (1995/96, 2000/01, 2003/04-2006/07).

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Over the same period, the growth in GDP has resulted in significant improvement
in per capita income. This is more evident by comparing growth rate of GDP with
population growth over same period. When the figure of 5.5 percent average GDP
growth rate achieved is compared with the average population growth rate of 2.75
percent per annum over same period, the recorded growth of real GDP implies an
average annual per capita income growth rate of 2.65 percent per annum.

4.3. Contribution of the Apartment Sector

During the period, the Apartment sub-sector has made very significant contribution
to the Growth of Domestic Product (GDP) of the country. The Apartment industry
contribution to the gross domestic product at constant factor cost averaged 7
percent per annum over the period. The 7 percent average contribution of
Apartment to GDP is very significant and consistent with trends in growth in
investment on Apartment development in the country.

4.3.1 The Legal Environment for Apartment Development

A. Apartments a legal Term and a Concept

Apartments a term originates in the common law, which in broad terms has
a meaning of land and everything made permanently a part thereof and the
nature and extent of one’s interest therein. At common law, if the owner of
the property built on the land does not own the land, the term “real estate” is
legally inapplicable. The Federal Constitution of Ethiopia provides that land,
urban or rural, shall not be subject to sale or other means of
exchange.1Hence there is a constitutional prohibition for private ownership
of urban or rural land, which automatically works against the establishment
of Apartments a legal concept of right in them.

Nevertheless, there are a number of individuals or group engaged in the

business of construction of residential or commercial buildings known by the

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name of or calling themselves “Apartment” firms. Such firms may also
engage in the simple buying and sale of such property without making some
improvement on the property acquired through such transaction. It does not,
however, include those engaged in the Apartment brokerage business,
whatever the size of investment made on land relating to construction of
residential or commercial or commercial buildings,

B. Regulatory Experience

Apartment business in Ethiopia is at a very low level of development

compared to many other countries found at a more or less similar stage of
economic development. In Ethiopia, this mainly owes to the fact that it is a
business with less than a decade history. By the same token, the law
governing the business and its financing aspect are much less
underdeveloped. For instance, in the People’s Republic of China, laws
regulate this sector and directives issued for banks; and no special law is in
place to govern Apartment finance. In practice finance is crucially needed to
finance property development and personal housing consumption. In
countries like China, the growth of property development loans outpaced
the growth of total lending of financial institutions markedly.

Mature Apartment financial market provides various intermediaries financing

products. These include the issuance of public stock, corporate bond, equity
financing and Apartment trust. A mature Apartment finance market is
featured by secondary market of asset securitization. This improves liquidity
of Apartment assets and provides means for stabilizing financing sources
for the Apartment sector.

Underdeveloped Apartment finance market is featured by other than

consumer s’ contribution in the form of advance payment or otherwise, a
very high reliance on the banking finance. Such loan is mainly used for the

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purpose of land acquisition, Apartment property development and house
sales. In such countries commercial banks oversimplify examination
formalities and lose sight of certain risks .As the business has developed for
just few years some problems are prone to be concealed .The difficulty in
obtaining individual credit information has created the problem of monitoring
credit standing and debt servicing capability.

C. The Ethiopian Law

The Ethiopian Law provides no definition for Apartment applicable for all
such business under all circumstances throughout the federal state. It is in
only under one subsidiary legislation, i.e. the Bahir Dar City Government
Regulations Issued to Provide Land For Apartment Regulations No.20/2005.

It is true that a substantial portion of the total Apartment business is situated

in Bahir Dar. However the relevance of this legal definition holds little
relevance for the purpose of the case at hand for the following reasons.
Firstly; it is relevant only for the purpose of providing land to investors in
Bahir Dar and is not applicable to such business in other national states.
Secondly it is only binding in regulating the relationship between the
Administration and the investor and not necessarily binding on other
administrative agencies, such as the monetary regulator (the NBE).

The cited Regulation defines “Apartment Developer” as one who builds 50

houses and above. House is not defined in the Regulation and it is not clear
as to whether small houses irrespective of the amount of capital required
building them.

Legally, the word ‘real- property’ is never used except in connection with
land. In its strict sense, it denotes only a particular class of interest in land,
real is synonymous with free hold property and it does not include leasehold
interest.

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In all types of free hold estates, it is impossible to say in advance at exactly
what moment they will come to an end. 2 The word ‘estate,’ is said to have its
origin in the fact that in feudal times a man status was determined by his
ownership of land; that ownership came to be called his status or estate.
3
Ownership of land, the maximum right of which is exhibited by alienation, is
constitutionally prohibited in Ethiopia. 4 Under no circumstance shall
proprietary right over land shall extend to ownership right in Ethiopia.
Having noted the above, the use of the term ‘real-estate’ to traders engaged
in construction and sale and lease of buildings appears to be legally
inappropriate and a legal misnomer in its strict sense.

Among the numerous credit facilities of banks, there is what is commonly

termed as ‘Apartment credit’, composed of loans secured by land and
buildings. Proc.272/2002 allows a lease holder to subject the lease hold for
a surety.5 Hence, even though the lease holder is a mere possessor by a
lease contract, any financing agreement remains valid as long as;

 The parties are capable of contracting ;

 They give free and sustainable consent;
 The objective of financing is sufficiently defined ;and is
possible and lawful; and
6
 The contract is made in the prescribed form.

6
Civil Code(1960),Arts.

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As land acquired for the said purpose is said to be under lease Agreement,
it becomes important to have a legal understanding of the various aspects
of lease as a legal term.
Demand For Residence And Non-Residence Housing In Bahir Dar
Demand

A housing survey made by the Bahir Dar City Administration Housing

Agency estimates the current demand for residential housing units in Bahir
Darat 300,000 housing units. The survey reveals that 300,000 dwellers of
the City do not have defined shelter. The demand by the business
community for shopping, office space and other catering businesses is also
very significant with considerable backlog of unmet shop seekers
registration by the Agency for the Administration of Rental houses. The
Agency had registered 13,966 shop space seekers until November 2003.
Total requirement of space was 698,300 square meters.

The City Administration’s study of the housing needs in Bahir Darfurther

elaborates, that it is absolutely necessary to construct 468,668 houses over
six years (2004-2009) to cope with the demand for housing. This indicates
that it is necessary to construct 78, 000 houses per annum over the plan
period. This presents enormous opportunities to Apartment developers who
invest on residential and non-residential building construction in Bahir Dar.+

The market survey made by the consultants of the proposed shows that
there is wide opportunity for investment in Apartment in Bahir Dar. The
findings are consistent with the Bahir Dar City Administration housing
survey studies. Several factors can be cited for this optimism in Apartment
development, the following are however very important:

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  Persistent growth in GDP and stable macroeconomic environment,
which stimulates demand for Apartment property (office space,
shopping mall and catering services);

 Expansion of the existing banking and insurance industry with

opening of new Branches at different locations of the city;

 Emerging new Banks in the pipeline that have acquired licenses and
those that are under the process to acquire;

 Proliferation of private colleges, primary and secondary schools;

 Increase in the number of foreign investors starting business in

Ethiopia; and

 Improved performance registered in the tourism sector in terms of

annual increase in the number of tourists that arrive in the country for
leisure

5.Demand and Supply Analysis

5.1.Demand Determination7
The demand is determined based on the Space Absorption (SA) model. The
SA Index is defined as a measure of the intensity of the absorption or take
up of all the available property stock in a market at a point in time. The total
available stock is defined as the sum of vacant stocks (in the previous
period) with the new stocks ( in the current period). The formula given below
measures the net absorption or demand for space.

7
Ethiopian Banker Association, Real Estate Development in Ethiopia and role of Banks,
July 2007

HEAVEN APRTEMENT22
Although the above model is widely used in many countries to forecast
demand for Apartment property, it has been found difficult to apply it to
forecast the demand for housing in Bahir Dardue to absence of data. There
is no systematic compilation of data on housing supply, demand and
construction of new houses, demographic factors. Hence the application of
the model to forecast the demand is constrained by the absence of data.

Apartment development lending banks can use this model to determine the
demand for space at any point in time to assess the commercial viability of
lending to the property sector. However, the outcome of the analysis using
this model depends on the reliability of the data used to determine demand
for space at any geographical location. Therefore, the user should make
sure that the input data is reliable and accurate.

Therefore, the demand for housing in Bahir Dar has been forecasted on the
basis of past studies and trends in the country’s GDP. Generally growth in
the economy leads to high demand for Apartment property in any country.
GDP growth rate over the last three years averages 10% per annum in
Ethiopia, and the Government is committed to sustain the growth rate. A
growth rate of such magnitude would result in high demand for the property
market due to the fact that economic growth and demand for space have a
strong linkage. Thus a 10% annual growth rate in the demand for residential
and commercial Apartment space is anticipated. The Bahir Dar Housing
Administration Agency estimates a backlog of demand for residential and
non-residential housing units at 300,000 units and other studies at 468,668
units from 2004 - 2009. The Agency estimates the construction of 78, 000
units per annum to meet backlog of demand. There is a considerable
disparity between the two estimates. But the later appears more realistic
estimate, as it is very recent study based on the demographic factors,
existing housing stock and anticipated growth in the country’s GDP.

HEAVEN APRTEMENT23
Experience on the other hand shows that there is a strong linkage between
GDP growth and demand for space (Residential and non-residential real
estate). The Ethiopian Government targets 10% annual GDP growth rate to
raise the country to middle income countries over 20years period. Annual
GDP growth rate of 10%, stimulates the demand for residential and non-
residential property space in the country and provides impetus to the growth
of investment in the housing sector. Conversely, a greater demand for
housing provides a very large economic stimulus to the broader economy.
Given its linkage to many sectors in the economy- including land markets,
construction and labour markets-housing finance is also key to economic
growth. The availability of mortgage financing also stimulates the
construction of new houses and property. Housing construction is labour
intensive and thus provides significant employment opportunities. The
demand for residential and non-residential Apartment property is therefore
expected to grow at 10% per annum, consistently with GDP annual growth
rate. Considering the annual housing need estimates of 78,000 units by the
City Administration, to provide for the City’s population growth, relief of
overcrowding, replacement of dilapidated houses and space for office,
shopping etc, a 10% growth rate in the demand for residential and non-
residential housing units is anticipated that spin off from economic growth.
Therefore, the demand for housing (residential and non-residential) in Bahir
Daris projected as follows:

Table-Demand for housing units (residential and non-residential) in Bahir Dar

Year Housing units

2007(backlog) 468.668
2008 85,800
2009 94,380
2010 103,818

HEAVEN APRTEMENT24
 2011 114,200

5.2.Demand and Supply Gap

The demand for housing is expected to grow from 85,800 units by 2008
fiscal year to 114,200 in 2011. Against this growth in housing demand, the
City Administration planned to construct 35,000 units every year to partially
meet the demands. According to Bahir Dar Housing Administration Agency,
the number of housing units to be constructed by the Bahir
DarAdministration is as follows:
Table-Plan for condominium construction
Year Housing units
2006/07 33,000
2007/08 35,000
2008/09 35000
2009/10 35,000
Source: housing Administration Agency

Comparison of demand and supply of housing shows that despite the fact that the
Government is investing on condominium construction to provide shelter to middle
and low income urban population, there is still a large gap that must be filled by the
private sector such as land developers who are investing on commercial property
for profit. The table shows the excess demand that must be bridged by land
developers and individuals and institutions.

Table-Demand and Supply for housing units (residential and non-residential) in

Addis Ababa

Year Demand (Housing Supply Housing units Excess Demand

units) to be const. By City that must be filled

Admin. by private sector

2007 468.668(backlog) 33,000 435,668
2008 85,800 35,000 50,800

HEAVEN APRTEMENT25
 2009 94,380 35000 59,380
2010 103,818 35,000 68,818
2011 114,200 35,000 79,200

As can be observed, there is a considerable gap that needs private sector

involvement to invest on Apartment properties to cope with the demand for
residential and non-residential buildings in Bahir Dar.

Attempt is also made to convert the excess housing demand in Bahir Darthat may
be met by the private sector (residential and commercial property developers) in to
monetary terms. For this exercise certain assumptions have been made as follows:

 Current Average construction cost (villa and High rise buildings) is Birr
3,800 per m2; ; and
 Average area of single housing unit is 60 m2.
Using this assumption, the monetary value and debt finance requirement is
estimated as follows.

Table -Demand for housing units (residential and non-residential) in Bahir Dar and
Financial investment requirement

Year Demand for Area in Construction Monetary Debt Finance

Housing units square cost/m2 (Birr) value (in requirement (in

that is to be filled meter billion billion Birr)

by private sector Birr)

2008 50,800 3,048,000 3800 11.6 8.1
2009 59,380 3,562,800 3800 13.5 9.5
2010 68,818 4,129,080 3800 15.7 11.0
2011 79,200 4,752,000 3800 18.1 12.7

The demand for housing converted in to monetary value is estimated at Birr 11.6
billion, and this rises to Birr 18.1 billion in 2011. This doesn’t include housing units
to be constructed by the government, as the financial outlay would obviously come
from government sources and beneficiaries from the scheme. What is depicted in
HEAVEN APRTEMENT26
table 18, is that, only housing units that may be developed by land developers and
private sector. Assuming that, 30% of the investment outlay would be covered from
equity sources contributed by owners and 70% to be covered from long-term bank
credit facilities, the amount of loan that may be required from banks over the
period ranges from Birr 8.1 Billion to Birr 12.7 billion.

1.1.1.Market Prospects
Based on market study, the demand of residential Apartment in Bahir Dar and
surrounding area is very high. Therefore, the envisioned project will be successful
by entering in to this market in the town.

5.3.Target Customers
The target customers of the project are higher income and middle income earner
since the payment is finished with in long term time (10 years). Besides, for the
commercial centers different business community around area are taken as a
target market.

5.4.Marketing 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,

 Sponsorship of key government activities and public support mechanism.
 Commissioning
 Long term payment mood

The project under discussion has diversified marketing strategies that could enable
it come up with the different competitors in the market. Moreover, customer
satisfaction at reasonable payment mood will be the key marketing strategy of the
house.

HEAVEN APRTEMENT27
 5.5.Pricing
Based on the market price8 of similar residential Apartment around Bahir Darand
surround area, the envisioned project set the price for its services as indicated below;
Product UOM Average price in Price of the
Bahir Darin Birr company in Birr
House A Unit 2,800,000.00 2,650,000.00
House B Unit 4,950,000.00 4,850,000.00
Commercial Center M2 11,000 10,500.00

Terms of payment
The mode of the payment of the project will be 20% initially and within 10 years the
rest of payment without interest rate.

6.PROJECT AND TECHNICAL DESCRIPTION

6.1.Description of the Project / Product Mix

The project under consideration will be for construction of residential houses and
consulting in construction sector particularly in the area of design and supervision.

The project will have four types of residential houses, i.e, House A, House B, as
described as follow;

i. House A
In this product mix there will be a total of 15houses with a total area of 100 m 2 will
be constructed on the proposed project area. It consists of apartment (180 m 2),
Ground Service rooms (50 m2) and Green area, Spacing and Parking (170 m 2).

ii. House B

8
Before of VAT

HEAVEN APRTEMENT28
In this product mix there will be a total of 20 houses with a total area of 200 m 2 will
be constructed on the proposed project area. It consists of apartment (140 m 2),
Ground Service rooms (30 m2) and Green area, Spacing and Parking (30 m 2).

The company also provides consultancy service for different customers mainly in
the area of design and supervision Besides, It will rent its construction machines
and equipments for business when the construction finished.

6.2.Project tasks and Office

The Project will design, construct and supervise by its staffs on separate
department. It will sub contracts works like Electrification, Sanitation, Paint,
Carpenter, Guard, Glass Work etc

The company will rent an office in Bahir Dar and will have one satellite office on the
project site.

6.3.Construction Work and Technology

Construction Inputs
The project will use the following inputs:
 Bricks/ Steel Doors and Grills
 Sand Wood
 Crush Win board
 Steel Chipboard
 Mud Glass
 Cement Varnish
 Floor Tiles Paints
 Bath Room Fittings Hardware
 Cupboards Wires
 Lighting accessories Misc. electrification equipment
 Sewerage and Water Supply Pipes PVC Pipes

HEAVEN APRTEMENT29
  Dadex Pipe

6.4.Construction Process
This section will include the production details of the project, which includes the
raw material required, product mix, production capacity, production proportion of
each product etc.

6.5.Construction Process Flow

The production process includes the following steps.

 Approval of Land
 Architecture Design
 Materials Procurement
 Erection of Foundations
 Construction of Structure
 Installation of Electrical Wire Pipes
 Construction of roof.
 Plaster of cement
 Sewerage and water pipe installation
 Construction of floors and bathrooms
 Paints and electrification
 Requirement and cash flow forecast.

6.6.Machineries and Equipments

Most required machinery and equipments for the project will be rented. Basic
machinery and equipments will be purchased.

6.7.Utilities
A number of utilities would be put in place in order to ensure smooth functioning
of the project. These utilities include:

HEAVEN APRTEMENT30
  Water Supply,
 Supplementary Electricity supply,
 Telephone line
 Fuel , oil and lubricant
 Paved Road Transportation,
 Drainage Facility

7.Project Implementation
The project's implementation is expected to take 30 months. The major activities
include Bank loan processing, construction of the building, cleaning the area
around the building, procurement of equipments and start rendering services.

HEAVEN APRTEMENT31
 8.ORGANIZATIONAL STRUCTURE

8.1.Organization and Management

The organizational structure should be in a way that the company able to achieve
its objectives as well as the satisfaction of standard requirement.

8.2.Man Power
The total manpower required for the company will be 130 persons. The manpower
list and the corresponding salary expense are shown in the table below.;
Table- Man power list, qualification and salary expenses
SN Position No Qualification Monthly Annual
salary in Salary in Br
Br
1 General Manager 1 MSC/Construction management 8000 96,000
2 Operational Manager 1 BSC in Mechanical/Industrial Engineering 4000 48,000
3 Civil engineer 2 BSC in civil Engineering 3500 7,000
4 Senior engineer 1 BSC in civil Engineering with extensive 4500 54,000
exp
5 Architect 2 BSC in Architecture 3500 84,000
6 Senior architect 1 BSC in Architecture with extensive exp 4500 54,000
7 Drafting 5 Diploma in drafting 1800 108,000
8 Human resource manager 1 BA in Management/Administration 3000 36,000
9 Forman 4 Diploma in Construction 1800 86,400
11 Head, Administration & 1 BA in Mgt/Acct 3000 36,000
Finance Dept.
12 Personnel 1 BA in HRM 1800 21,600
13 Marketing/promotion 1 BA in Marketing 2500 30,000
expert
14 Sales 6 Diploma in Sales Mgt 1500 108,000
15 Accountant 2 BA In Accounting 2500 60,000
16 Cashier 3 10+2 in Bookkeeping 900 32,400
17 Secretary 2 Diploma in Secretarial science 900 21,600
18 Office assistant 3 10+2 /active assistant 950 34,200
19 Store keeper 3 Diploma in logistic mgt 1000 36,000
20 Purchaser 1 Diploma in supp. & Put. Mgt 1000 12,000

32
 21 Guard/Security 4 Basic 500 24,000
22 Janitor 2 Unskilled 450 10,800
23 Driver 3 10 completed + certification 850 30,600
24 Machine operator 4 10 completed + certification 900 43,200
25 Daily Labor 70 Basic 161,070
Total 54 1,073,800
Grand Total 1,234,870

8.3.Organizational Structure
The organizational structure of the project is designed by including all the
necessary personnel under the right division. At the top of the organizational
structure, there will be General Manager with the responsibility of supervising the
overall activity of the plant. Depending up on the nature of the center and the
amount of work to be performs; there exist auxiliary units under the general
manager.
Employees under each unit will be supervised by the department head that is
accountable for the general manager. General Manager is appointed by owners.

33
Fig Organization Structure of the Project

34
 9FINANCIAL REQUIRMENT AND ANALYSIS

9.1.Total Investment Cost

The total amount of money that is required to establish the envisaged Apartment Project
is estimated to be birr 100,000,000.00

9.3.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 100,000,000. Out of the total budget of the project 30% or ETB
30,000,000 will be covered by the owner equity; while the rest 70% Eth birr 70,000,000
will be covered by financial institutions.

Table Summary of Total initial Investment cost

No Description Cost
1 Fixed Investment

1.1 Land, Building and Construction 28,000,000 0.00

1.2 Machines and Equipment’s 22,000,000 0.00

1.3 Vehicles and Motors 3,000,000 0.00

1.4 Office Furniture and Equipment 2,000,000 0.00

Total Fixed Investment Cost 55,000,000 0.00

2 Operating Expense 0.00

2.1 Raw Materials Purchase and Products 20,000,000 0.00

35
2.2 Salary Expense 10,000,000 0.00

2.3 Other Operating Expense 3,000,000 0.00

2.4 Pre-operating Expense 2,000,000 0.00

Total Operating Expense 35,000,000 0.00

10,000,000
Contingency (Lump sum) 10%
Total Investment Cost 100,000,000 0.00

9.3.1. 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
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

SN DESCRIPTION Total Cost in Br

8,400,000
Hotel Building (bed rooms, bar , restaurant ,
1 cafeteria and gym, assembly halls)
5,600,000
2 Wedding Shade & Gardening
2,800,000
3 Generator House
560,000
4 Parking & green area
840,000
5 Open recreation area
1,400,000
6 Children Play Ground
2,800,000
7 Design and Supervision

36
 5,600,000
8 Reserved
28,000,000
Total

BVehicles
Total Price
SN Description Qty Unit Price Remark
in Br
1 Double pickup for 1 2,200,00 2,200,00 Duty free
department heads/manager 0 0
2 Min Bus Van 1 800,000 800,000 Duty free
Total 3,000,000

D. Office Equipment

Unit cost Total cost

No Description Qty
in Br. in Br.
1 Managerial Tables 50 10,811 540,541
2 Secretarial chairs with table 50 5,405 270,270
3 Managerial Chairs 50 3,243 162,162
3 Computer and Printer 150 2,162 324,324
4 Shelf 200 1,081 216,216
5 Filing Cabinets 300 541 162,162
6 Customer Chair 100 270 27,027
7 Television 15 1,622 24,324
8 Waiting Room with sofa 1,000,000 54,054
9 others related service 3,550,000 191,892
500,
10 Assembly chair and table(set) 27,027
000
Total 2,000,000

9.3.2. Initial Working Capital

The initial working capital is estimated to be birr. 35,000,000.00

37
Operating Expenses at Full Capacity

1. Raw materials

Cost per Total Annual cost

SN Description Measurement
Month in Br Br.

Raw Materials for restaurant 765,171 9,182,0

1 and Cafe LS 48
606,913 7,28
2 Raw materials for Bar LS 2,953

294,583 3,535,0
3 Other raw materials & inputs LS 00
1,666,667 20,000,0
Total 00

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 50,000 600,000
manager

Production
2 1 BSC in Industrial Engineering 37,500 450,000
Head

Production
3 5 Degree in production technology 125,000 1,500,000
supervisor

Draftsman
4 1 Diploma in draft technology 7,500 90,000
Designer

38
 Admin and
16 Finance 1 BA in Management/Accounting 11,250 135,000
Head

17 Accountant 5 Diploma in accounting 37,500 450,000

18 Electrician 2 10+2 in general electricity 14,000 168,000

19 Secretary 3 Diploma in secretariat science 19,500 234,000

20 Clerk 2 10 completed 12,500 150,000

Store 10+2 in store and logistics

21 2 12,500 150,000
keeper management

22 Driver 3 10 completed 18,750 225,000

23 Cashier 3 10+2 in Bookkeeping 18,750 225,000

Office
24 3 10 completed 18,750 225,000
boy/girl
General
25 2 Diploma in management 12,500 150,000
service
26 Security 3 Unskilled 18,750 225,000
27 Gardener 3 Unskilled 18,375 220,500
28 Cleaner 5 Unskilled 25,000 300,000
Other
75 375,000 4,500,000
workers
Grand 10,000,00
120
Total 0

3. Other Operating Expenses

SN Description Annual Cost br. Assumption Used

39
 1 Property Insurance 251,475 1 % of fixed Investment Cost
2 Audit & Legal Fee 135,000 3000 per month
3 Uniforms 150,000 200*300 br.
4 Telephone, fax and postal 67,045 2000 per month
5 Cleaning goods supplies 150,000 5000 per month
6 Repair and maintenance 492,953 2 % of the Fixed Cost
7 Advertisement 250,000 % of sales
8 Stationery and supplies 45,000 1000 per month
9 Electricity 235,000 0.47 br*200,000KWh per year
10 Water 125,000 3*10,000 M3 per year
11 Fuel 644,000 14000 lit*18.4 br
12 Oil and lubricant 214,400 10% of fuel cost per year
13 Miscellaneous Expense 360,000 12,000 per month
Total 3,000,000

E. Pre – Service Expense

SN Description Cost in Br.

1 Project proposal 17,500

2 Licensing fee and others 125,000
3 Environmental Assessment Impact 125,000
4 Staff Capacity Building 462,500
5 Advertising 1,450,000
Total 2,000,000

40
 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
100,000,000. Out of the total budget of the project 30% or ETB 30,000,000 will be
covered by the owner equity; while the rest 70% Eth birr 70,000,000 will 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

A. 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 30,000,000

2 Bank Loan 70 70,000,000

Total 100 100,000,000

41
4.5. Loan Repayment Schedule
Principal Total Annual
Year Interest (10%) Remaining Balance
Payment Payment
0 0 0 0
70,000,000
1 7,000,000 7,000,000 14,000,000 63,000,000

2 7,000,000 6,300,000 13,300,000 56,000,000

3 7,000,000 5,600,000 12,600,000 49,000,000

4 7,000,000 4,900,000 11,900,000 42,000,000

5 7,000,000 4,200,000 11,200,000 35,000,000

6 7,000,000 3,500,000 10,500,000 28,000,000

7 7,000,000 2,800,000 9,800,000 21,000,000

8 7,000,000 2,100,000 9,100,000 14,000,000

9 7,000,000 1,400,000 8,400,000 7,000,000

10 7,000,000 700,000 7,700,000 0

4.6. Depreciation Schedule

Original Value Depreciation Depreciation Per
SN Description
In Birr rate in % year
Construction and Civil
1 28,000,000 5 1,400,000
Work
2 Machines & Equipment’s 22,000,000 15 3,300,000
3 Vehicles 3,000,000 20 600,000
4 Office Equipment 2,000,000 15 300,000
Total 55,000,000 5,600,000

42
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
1,00
5 Gymnasium Person/mont 100 0 100,000

43
 Annual
Unit Price Total price
SN Description UOM Service
in Sr.
Capacity
Fitness center h
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 1st 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
Asset
Current Asset
Cash 15,000,000
Inventory of raw materials and inputs 20,000,000

Total Current Asset 35,000,000

Fixed Asset
Land, Building and Construction 28,000,000
Machineries and Equipment’s 22,000,000
Office Equipment 2,000,000
Vehicles 3,000,000
Total fixed Asset 55,000,000
Total Asset
Liability
Account payable 70,000,000
Owners Equity 30,000,000
Capital

44
Total Liability & Owners’ Equity 100,000,000

B. Income Loss Statement

Income Loss Statement
Revenue Year 1 Year 2 Year 3-10
Sales 21,329,200 31,329,200 51,329,200
Sales expenses (5%)* 1,066,460 1,566,460 2,566,460
Purchase of Raw Material 20,000,000 265,075,095 265,075,095
Gross profit 1,329,200 -233,745,895 -213,745,895
Expenses
Salary Expense 10,000,000 10,500,000 11,025,000
Operating Expenses 3,000,000 3,150,000 3,307,500
Pre-operating Expense 2,000,000 2,100,000 2,205,000
Deprecation Building 1,400,000 1,400,000 1,400,000
Deprecation machine 3,300,000 3,300,000 3,300,000
Deprecation Vehicles 600,000 600,000 600,000
Deprecation office Equip 300,000 300,000 300,000
Lease Expense 16,340,000 16,340,000 16,340,000
Interest Expense 7,000,000 6,300,000 700,000
Total Expense 43,940,000 43,990,000 39,177,500
Profit Before Tax 21,329,200 31,329,200 51,329,200
Tax(30% ) 6,398,760 9,398,760 15,398,760
Net Profit 14,930,440 21,930,440 35,930,440
C. Cash Flow Statement

Particulars Year0 Year I Year II Year III-XI

A. Cash Inflow 0
· Own equity 30,000,000
· Bank loan 70,000,000
· Depreciation 0 5,600,000 5,600,000 5,600,000
· Net profit 0 14,930,440 21,930,440 35,930,440
Total inflow 100,000,000 20,530,440 27,530,440 41,530,440
B. Cash outflow 0
· Fixed capital 55,000,000
· Working capital 35,000,000
. Contingency (Lump sum) 10,000,000
10%
· Loan repayment 7,000,000 6,300,000 700,000
Total outflow 100,000,000 7,000,000 6,300,000 700,000

45
Net inflow (A-B) 0 13,530,440 21,230,440 40,830,440
Cumulative balance 0 13,530,440 21,230,440 40,830,440

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 undertakings 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 120 individuals get hired. The training of workers and skill up
grading programs will enable the local people fit or efficient performance in their

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activities.
The Marketing Mall component is a new, exciting and potentially successful method of
generating funds for conservation and community development. The project will
promote the outstanding natural beauty of the area and encourage further investment
in projects of a similar nature around Amhara. 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 Amhara'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

2. ENVIRONMENTAL IMPACT ASSESSMENT

All projects in environmentally sensitive areas should be treated as equivalent

activities irrespective of the nature of the project.

The Apartments provided with a drainage system that carries all waste water to a
central point. The mitigation of the effects of the waste begins by bringing it to a
central point and collecting it in a pit of sufficient size to handle the amount of
waste generated. Such a pit should be lined appropriately to render it impervious
so that no used water escapes to the environment.

Generally, the Apartment operation including any other tourist network industries
are environmental friendly. As to Apartment service, due to the very nature of the
operation, the business itself requires keeping the environment tidy and beautiful.
Therefore, due to their vested interest Apartment operation has to keep the
environment friendly and attractive. The service is not going to have any danger to
resident of nearby and to the overall environment.

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