Shebelle Shopping Mall BP

Project Proposal for the
Development of Shopping Mall
By: Shabelle Mall PLC

[Shabelle Mall]
Presented to: Dire Dawa Administration

Investment Bureau
March 2024
Project Proposal for the Development of a Shopping Mall Dire Dawa, 2022
Contents
0. EXECUTIVE SUMMARY ...................................................................... 5
1. BACKGROUND ................................................................................ 6
1.1. RATIONALE .................................................................................. 7
2. THE PROJECT .................................................................................. 8
2.1. THE GREEN BUILDING APPROACH ................................................ 8
2.2. BASIC INFORMATION ABOUT THE OWNER ..................................... 9
2.2. ORGANIZATIONAL STRUCTURE .................................................. 10
Figure: Organizational Structure.......................................................... 10
3. MARKET ANALYSIS ........................................................................ 10
3.1. MARKETING STRATEGY ............................................................. 11
3.2. MORTGAGE FINANCE ................................................................ 12
Table: Payment Method ..................................................................... 12
3.3. CUSTOMER PROFILE ................................................................. 13
4 GENERAL: THE PROJECT AREA ......................................................... 14
4.1. POPULATION SIZE AND GROWTH ............................................... 14
4.2. POPULATION AND SETTLEMENT PATTERN ................................... 15
4.3. ECONOMIC STRUCTURE AND LIVELIHOOD .................................. 16
4.4. SOCIAL SERVICES ................................................................... 17
4.5. EXISTING MARKET OPPORTUNITIES ........................................... 17
4.6. ENERGY SOURCES AND COVERAGE ............................................ 18
4.7. HISTORICAL, CULTURAL, RELIGIOUS AND ARCHEOLOGICAL

RESOURCES .................................................................................. 19
By: Mrs Chaltu Ahmed Beker 1|Page

4.8. Physical Environment .................................................................. 19
4.8.1. Location, boundary and size ................................................... 19
4.8.2 Land escape and land feature .................................................. 19
4.8.3. Climate ................................................................................ 20
5. PRODUCTS AND DEVELOPMENT SPECIFICATIONS .............................. 21
5.1. SITE AREA DISTRIBUTION ........................................................ 21
Table: Summary of the plan ............................................................... 21
Table: Building Specifications by area .................................................. 21
Table: Building Specifications by floor .................................................. 21
Table: Site Area Distribution ............................................................... 22
Table: Number of Units ...................................................................... 22
6. ECONOMIC AND SOCIAL BENEFITS .................................................. 22
6.1. BENEFITS AND ENHANCEMENT MEASURES..................................... 22
5.1.2. MICROECONOMIC BENEFITS ................................................... 23
5.1.2.1. EMPLOYMENT .................................................................. 23
6.1.2.2. LOCAL LIVELIHOOD IMPROVEMENT .................................... 24
7. FINANCIAL ANALYSIS .................................................................... 24
7.1. PRODUCTION COST.................................................................. 24
7.2. LAND ACQUISITION & PREPARATION ....................................... 25
Table: Land Acquisition ...................................................................... 25
Table: Land Preparation Works ........................................................... 25
7.3. BUILDING MATERIALS PURCHAS ............................................. 25
Table: Building Materials Purchase ....................................................... 26

7.4. BUILDING MATERIALS TRANSPORTATION ................................. 26
Table: Building Materials Transportation ............................................... 26
7.5. INFRASTRUCTURE WORKS ..................................................... 26
7.6. SITE MACHINERY RENTAL ...................................................... 27
Table: Site Machinery Rental .............................................................. 27
7.7. LABOR COST ........................................................................ 28
Table: Labor Cost .............................................................................. 28
7.8. PRODUCTION COST SUMMARY................................................... 28
Table: Production cost -total ............................................................... 29
7.9. CAPITAL EXPENSES .................................................................... 29
Table: Pre-operating Costs ................................................................. 30
Table: Personnel Plan ....................................................................... 30
7.10. OVERHEADS............................................................................. 31
Table: Selling, General & Administrative (SG&A) Expenses ...................... 31
Table: Construction Timeline and Sales Forecast .................................... 32
7.11. START-UP REQUIREMENTS ......................................................... 32
Table: Start-Up Requirements ............................................................. 32
Table: Sources of finance ................................................................... 33
Table: Loan repayment schedule ......................................................... 33
Table: Profit and Loss Statement ......................................................... 34
Table: Cash Flow Statement ............................................................... 34
Table: Balance Sheet Statement ......................................................... 35
8. ENVIRONMENTAL IMPACTS ............................................................. 37

8.1. PROPOSED BUDGETORY PROVISIONS FOR EMP ........................... 37
9. FINANCIAL EVALUATION ................................................................ 38
9.1. PROFITABILITY ........................................................................ 38
9.2. BREAK-EVEN ANALYSIS ............................................................ 38
9.3. PAY BACK PERIOD ................................................................... 39
9.4. INTERNAL RATE OF RETURN AND NET PRESENT VALUE ................. 39

0. EXECUTIVE SUMMARY
This project proposal is prepared with the objective of developing a new G+3
Shopping Mall Building to be owned and operated by Shabelle Mall PLC.
The project idea is conceived by this individual in response to the special

invitation promoted by the Government, as part of the new structural plan of
City Administration that focuses on Old City Redevelopment.
Generally, the plan for this project is to construct a G+3 Shopping Mall
Building on an 10,000 meter square land, located at Kebele 03 (Ashawa,
Selbaj tera area) of Dire Dawa Administration. As such, the Building will
have a unique design incorporating a total of 4 Floors delivering a total of
177 service rooms ready for public use, from which 130 rooms will be
Business units while 47 rooms will be office establishments.
The required initial investment of the project is estimated at ETB

350,000,000.00, from which ETB 105,000,000.00 (30%) shall be
contributed by the owners’ equity while the remaining ETB 245,000,000.00
(70%) is expected to be financed by Bank loan. It is expected that the
project shall create more than 200 temporary jobs during construction and
13 permanent professional jobs during its operation.
The project is financially viable with an internal rate of return (IRR) of 72%
and a net present value (NPV) of ETB 471,902,984.91 discounted at 10%.
The investment cost and income statement projection are used to project
the pay-back period, the project will fully recover the initial investment and
working capital within three years.

1. BACKGROUND
The Ethiopian government has adopted conducive investment environment

to attract and increase the role of domestic and foreign investors in the
economy. As the result Ethiopia is now the highest in receiving foreign direct
investment in the Horn of Africa. The same is true for domestic investors.
The number domestic investors who are investing in the country are
increasing from year to year.
Accordingly, the Ethiopian economy has been witnessing a significant

economic expansion which has resulted in a steady annual growth of the
gross domestic product (GDP), thus enabling the reallocation of substantial
budget to all sectors.
Likewise, the construction industry in Ethiopia has undergone a relative

growth. This growth has been realized mainly in the Capital City where the
population settlements are expanding and where numerous private and
government led infrastructures projects resulted in increase of the demand
for housing units.
In this context, the promoter that has undergone to invest in a Shopping

Mall building project that incorporate compartments of rooms (for Business
and Office units) in order to improve business and family lives with a socially
responsible business approach.
Among a number of investment opportunities which are open for

domestic/foreign investors, shopping mall buildings development is one of
yet untapped investment area in Dire Dawa City. Therefore, by considering
the gap of investment in the sector, the promoter has currently planned to
invest in the Development of a G+3 Shopping Mall Building for sale or rent
to the public.

1.1. RATIONALE
Development of a region and/or any country can be achieved not only by the
effort and investment of Government but also through the collaborative
efforts of both the Government private investors. As such, the role of private
investors is recognized as a corner stone or pillar of development in case of
Ethiopia.
With this notion, the Government has given room to the private investors to
play their role in the country’s economic development by creating and
rendering adequate policies and infrastructure. Thus the major objectives of
the promoter to engage in this project are:
 The currently enabling policy environment that are being pursued by

the Federal Government and the Dire Dawa City Administration which
is encouraging private sector to invest their resources in Dire Dawa
town;
 Competitiveness of the existing financial markets, availability of
private and public banks and by presuming availability of long term
loan at competitive interest rate with comfortable loan condition;
 Believing that the service delivery of different government organs of
the Dire Dawa City Administration are timely responding to land
demand required for the project within reasonable time period without
creating technical bureaucracy;
 By taking the opportunity that the growing demands for standard
building services, to construct and sell standard units at reasonable
and competitive prices.
 To make reasonable profit out of the business

2. THE PROJECT
The proposed project intends to construct all-purpose ground plus four

(G+4) shopping mall building with compartments of rooms (for Business and
office units) on an 10,000 meter square land, located at Genderighe area of
Dire Dawa Administration, by the side of the main asphalt road to Melka
Jebdu kebele.
The mission of this project is to deliver properties primarily to middle and

upper class Ethiopian business people and families while maintaining
competitive market prices in order to increase property ownership in the
prime locations of Dire Dawa.
The proposed Shopping Mall building will have its own standard design,
based on the structural plan of the City Administration. Likewise, it is
intended to serve for different business activities to satisfy the prevailing
shortage of business premises in the town, which is currently, felt the needs
of various government, non-government and private institutions.
The Building will have a unique design incorporating a total of 5 Floors

delivering a total of 77 service rooms ready for public use, from which 30
rooms will be Business units while 47 rooms will be office establishments.
2.1. THE GREEN BUILDING APPROACH

Incorporating the Green building approach the proposed Shopping Mall
Building project shall be designed, constructed, and operated to enhance the
well-being of their occupants and support a healthy community and natural
environment.
In practical terms, the project employs a whole-systems-approach to

building that includes:
 Designing for livable communities

 Using sun and site to the building's advantage for natural heating,
cooling, and daylighting
 Landscaping with native, drought-resistant plants and water-efficient
practices
 Building quality, durable structures
 Reducing and recycling construction and demolition waste
 Insulating well and ventilating appropriately
 Incorporating durable, salvaged, recycled, and sustainably harvested
materials
 Using healthy products and building practices
 Using energy-efficient and water-saving appliances, fixtures and
technologies
When implemented holistically, these strategies serve to preserve our
environment for future generations by conserving natural resources and
protecting air and water quality.
2.2. BASIC INFORMATION ABOUT THE OWNER
Owner Name: Chaltu Ahmed Beker

Address: Dire Dawa City
Shabelle Mall PLC, the owner of the envisaged project, is a pirate limited
company formed by the alliance of well experienced Businessmen who have
got a very good entrepreneurial skills and long years of experience doing
independent businesses in different countries around the world.
Members of the Company are energetic, innovative and dynamic

businesswoman with proven track record, successfully managing highly
commercial operations. They are now prepared to apply their accumulated
knowledge, experiences and wealth by investing on the development of a
new Shopping Mall in their home town of Dire Dawa City.

2.2. ORGANIZATIONAL STRUCTURE
The Project has its own Organizational Structure with the Company
Shareholders at the apex, having different functionally related departments.
Detailed descriptions are found in the following section.
Figure: Organizational Structure
3. MARKET ANALYSIS
Currently, a lot of businesses move from one place to another for several
purposes: need accommodation facilities, food and drink service,
entertainment, etc.
Market center is therefore a critical component in the economic fabric of the

society. However, Dire Dawa City being a center for trade and commerce of
the country, shortage of market center that will be used for various business
activities and related purpose is major problem.
By: Mrs Chaltu Ahmed Beker 10 | P a g e

The shortage as well as the condition of business units in Dire Dawa city has
been deteriorating from period to period. The other problem in the city is
the expansion of informally built houses.
3.1. MARKETING STRATEGY
We intend to maintain an extensive marketing campaign that will ensure

maximum visibility for the completed units in its targeted market.
At the initial stage, we shall dedicate our time in setting up a quality

management and marketing team that has a strong ability to succeed.
We strive to build sound professional partnerships and look for commitment,

synergy, innovation and growth potential in all partners that will lead to
referrals and business success in the long term.
Liaising with marketing agent branches in the France, Canada, the

USA, the UK, and the UAE where most expatriate Ethiopian live
Hiring a wide local network marketing agents and brokers to prospect
potential customers
Setting up a showroom and Customer Center established at our office
which will be located at a convenient location around Kezira area
Creating a website for internet savvy that will allow future clients to
browse and compare different designs on interactive feature to match
the combinations of designs, and to sign in and to make orders of
available properties.
Launching a national advertising campaign via the use of commercial
signboards, local media, and word of mouth.

3.2. MORTGAGE FINANCE

The target clients should be capable of buying properties for 100%
cash. However, financial institutions and banks are providing long-
term mortgages financing.
We have approached several financial institutions and banks to provide
long-term financing to clients for the acquisition of their Office unit
provided that the clients hold substantial collaterals.
A 10-20 year mortgage financing will be made available to buyers who
can afford to disburse at least a 20% deposit to the bank. This makes
owning our homes more affordable to those who are not able to make
full payment upfront.
Table: Payment Method

Payment Method Payment (%) Month Completed
Advance 20.00% 0.00
Foundation completed 15.00% 3.00
First Floor concrete work
10.00% 7.00
completed
Third Floor concrete work
10.00% 11.00
completed
Year 1 55.00%
Doors and Windows installed 15.00% 27.00

Buyer receives 15.00% 32.00
Title deeds ready 15.00%
Year 2 45.00%
Total 100.00%

3.3. CUSTOMER PROFILE
Based on the construction plan, the first three floors of the envisaged
Shopping Mall building will have rooms that cater for:
 Banks,
 Supermarkets
 Office rooms
 Café
 Restaurant and
 Other service rooms
It is expected that within a year time the construction works and

procurement of the necessary materials and equipment will be finalized.
Therefore, after one year of construction, the Rooms will commence
operation. Upon finalization, the project will start operation at its full
capacity. As the promoter has already been in the market and has built a
good will, no time will be required for market penetration and customer
attraction.
As the Company intends to operate among several different investment and

operating units, it is hard to characterize any specific tenant that will occupy
the Company’s properties. However, Management will enact strict tenant
quality and credit review procedures to ensure the Company’s revenues will
not be interrupted by tenant default.
The nature of our Shopping Mall colony is more conducive to

 Stat up Businesses and first-time homeowners expected to come
mainly from middle to high-income brackets living in Dire Dawa and
those living abroad (the diaspora)

 Foreign Businesses opening branches in Ethiopia and visitors (such as

neighboring business people) who may opt to own second or holiday
homes in the resort city.
Therefore, the homebuyers that the Company will be serving can be declined
into these 3 groups in line with the below assumed proportions:
 Local Businesses: 85%
 Diaspora: 10%
 Foreign Businesses: 5%
4 GENERAL: THE PROJECT AREA
The project area is located in the Eastern part of the country. It is situated about 505 km
east of the national capital city- Addis Ababa along the main Addis Ababa – Dire Dawa
asphalt road. It is particularly located in the North Western part of Dire Dawa city within
the industrial zone- demarcated to integrate industrial activities of the area. The existing
holding of the project is obtained from the local administration through lease agreement.
The total land area of the project is about 4,000m2.
4.1. POPULATION SIZE AND GROWTH
It is true that the issue of population is very critical to the overall socio-economic
development as well as environment of any country. In addition there are many different
views concerning the impact of rapid population growth on the extent of poverty that
many third world countries faced. The dominant one is that population is the major, if
not the only, factor behind the under development of many countries. There are others,
however, who argue that other socio-economic, environmental, and political problems
are to be blamed for rather that population size as such. Whatever the argument is, the
population of Dire Dawa is increasing at an alarming rate since its date of establishment
and expected to increase in the future, through the rate of population growth declines
slightly from period to period.

Therefore it should be underlined that, leaving alone the arguments on population

issues, the tremendous increase in population size in the town if not accompanied by
efficient and effective utilization of scarce resources, can result in a negative
repercussion effects on the overall socio-economic and environment of the town in
general and the housing development in particular.
Table: Population growth rate of Dire Dawa (Urban)
Years 1995-2000 2000-05 2005-10 2010-15 2015-20 2020-25
Growth rate in 4.80 4.30 4.10 3.70 3.40 3.20

%
Source: CSA, 2007
4.2. POPULATION AND SETTLEMENT PATTERN
Dire Dawa is the second largest city in its population size in the country next from Addis
Ababa. According to the projected population size by CSA, the city has a total
population of 700,000 at present. The population in the surrounding rural parts of the
administration is estimated to be 150,000.
Of the entire population of the administration, 49.7 % are female and 50.3 % are male in
sex. The corresponding percentage share of the female and male population of the city
is about and % consecutively. The annual growth rate of the population in the city
exceeds 4.1 %. In migration is significant in its contribution to the population growth of
the city, which according to CSA accounts about 60 % share in the average annual
growth rate of the city’s population.
In 1950’s and 60’s, the flow of migrants to the city was attributed to the increasing
demand for industrial labor. The rate of migration of people to the city was also
moderate and absorbable by the economy and within the carrying capacity of the
available urban infrastructural facilities and services. However, the trend has totally
been changed to a distressful situation starting from mid 70’s up to the late 80’s. The
migration rate to the city during this period has grown in a multifold manner and
recorded to exceed 7 % per annum. The pull factor for migration was totally contraband
activities that overwhelmingly had controlled the entire business activities carried out in
the city. Recently, the city has exhibited faster population growth both through natural
increase and migration.
Regarding the settlement pattern there is high concentration in the inner city. However,
recently there is high influx of people in different expansion directions including Sabina
where the expansion project is located adjacent. There is no well-established Office
area around the project side, as it is located within the relative center of the industrial
zone of the city.
Regarding the social characteristic of the city, Dire Dawa serves as resident place for
many national groups having different origins of residence across the country.
According to CSA population census report in 1994, the population of the city is a
mixture of numerous ethnic groups. Of these groups, the Amara, Oromo, Southern
nations and nationalities and Somali constitute the larger composition in their population
size.
Despite deferring in cultural set-ups, the people of the city are well-known of peaceful
coexistence. Keeping all its identity (customs, traditions, culture, and multi-lingual
assets) assimilation in the sense that understanding and respecting other’s compatriots
identities are the mysterious source for the development of collaborative/cooperative
culture with social intimacy and mutual assistance among themselves.
4.3. ECONOMIC STRUCTURE AND LIVELIHOOD
Dire Dawa’s strategic geographic location between Addis Ababa and the port of Djibouti
has accorded it various economic and commercial advantages. It serves as transit and
terminal for import and export of commodities and services. Import export trade thus
characterizes the town’s economic structure.
Micro and small scale enterprises are important in forming the livelihood of more than
55 % of the population in the city. MSEs Development is part of government poverty
and unemployment reduction strategy in urban centers. Hence, government sector and
NGOs commenced financial, technical, institutional and infrastructural supports to MSEs
operators reflected maintained in the five years plan of the administration.
4.4. SOCIAL SERVICES

There are 75 schools, 11 colleges (private and government) and one University as far
education sector is concerned. According to Education Bureau of the administration,
Primary school enrollment is almost 100% at present in both sexes. There are four
health centers, one public and three private hospitals, several private clinics and many
drug shops in the city.
4.5. EXISTING MARKET OPPORTUNITIES
As observed from the field assessment and information obtained from the concerned
institutions, the project area is accessible to local and international market outlets. Dire
Dawa town is the major market place for local market and export outlet to foreign
markets. There is the Ethio-Djibouti railway and Dire Dawa to Djibouti asphalt road that
opens good opportunity to export the produce to foreign markets. As the information
obtained from Ethiopian customs and revenue authority, Dire Dawa branch office,
indicates the following commodities are exported through Dire Dawa in the last one year
(July 01, 2010 to June 30, 2011 E.C.)
Table: Exported Commodities through Dire Dawa (July 01, 2007 to June 30, 2008 E.C.)
No. Exported Unit Amount Income (USD) Income (Birr)

Commodity
1 Coffee Kg 18,772,562.47 72,293,088.07 1,502,547,044.22
2 Fresh Chat Kg 8,936,056.02 66,669,814.60 1,382,691,703.16
3 Dry Chat Kg 23,651.22 844,731.65 20,209,746.23
4 Fruits Kg 6,599,322.03 1,518,800.39 31,322,076.22
5 Vegetables Kg 36,889,837.92 7,685,960.28 156,980,053.67
6 Live Oxen Number 17,024 10,095,231.44 206,190,430.95

7 Cement Kg 85,769,056.62 8,103,651.16 584,239,568.14
8 Pulses Kg 2,157,172.29 1,884,211.88 38,536,476.28
9 Camels Number 3332.16 2,583,936.35 59,691,164.45
10 Sheep & Number 5225.22 363,790.44 7,433,875.72

Goats
11 Others Kg 1,289,402.74 2,631,551.84 52,793,020.62
Total 174,674,768.09 4,042,635,159.65
Source: Ethiopian customs and revenue authority Dire Dawa branch office 2011
As it can be observed from the above table, coffee stands first followed by chat in export
amount and in generating foreign currency. Even though more research and extension
is not carried out for the production and marketing of chat in the country, it holds great
share in export commodity and foreign currency earnings and plays a great role in the
country’s economy. Therefore, it could be considered as one of the potential crops to be
developed by this project provided that adaptation trials are performed for some period
before large scale production.
Generally, the following major agricultural problems are identified in and around the
project area.
4.6. ENERGY SOURCES AND COVERAGE
According to the IDP report of Dire Dawa Administration ( 2006) the total energy
consumption of the administration during 2002 was about 2924 tera joules (TJ) of which
58 percent comes from biomass fuels (50 percent woody biomass, 4 percent charcoal
and 4 percent agricultural residue), 37 percent from petroleum fuels, and 5 percent from
electricity. Out of this, the urban share is more than 75% from the total urban energy
consumption about 65 is utilized for household purpose.

4.7. HISTORICAL, CULTURAL, RELIGIOUS AND ARCHEOLOGICAL RESOURCES

There is no reported historical or archeological resource in the project area. During the
field visit the Consultant do not encountered site of historical, cultural, religious and
archeological importance located near to the project area. Enquiries to residents in the
area have indicated that there are no known sites of historical or archeological
significance in the vicinity of the proposed project site.
4.8. Physical Environment
4.8.1. Location, boundary and size
Geographically, Dire Dawa administration lies within 9 0 27' and 49 0N latitude and and
41 0 38' and 21 0 19'E longitude. The city of Dire Dawa is at a distance of 501 kms far
from Addis Ababa to the east and 306 kms far from Djibouti to south directions by road.
The proximity to Djibouti made Dire Dawa an outlet for export and inlet to import for the
eastern part of the country. Neighboring regions of Dire Dawa are the Somali region in
the North and West, and Oromyia region in the East and South directions.
The entire boundary area of the administration encompasses about 1977 km2. The
spatial area of the city is about 187 Km2 which makes Dire Dawa the second largest
urban center in the country following Addis Ababa.
4.8.2 Land escape and land feature
Dire Dawa is situated just at the foots of the hills stretching from south-east to west
direction by making a boarder line between the highlands of the previous Hararghe
region and the vast lowlands extending up to the red sea. The distance that the city has
from the highland areas is very close, which provided a livable environment that served
as one major factor for its establishment by the then Franco-Ethiopian and now the
Ethio-Djibouti railway line.
The most northern and western parts of the administration is flat land and the rest areas
are naturally ragged terrain land in topography. The landscape of the south- eastern
and southern parts of the administration is dominated by sharp edged hills

(escarpments) with a slope exceeding 45 %. The slope is gentle in other parts of the
administration that goes down to 0 % in the flat areas.
Dire Dawa town is situated in the Awash River Basin, a basement depression being
their sub-drainage. It is located in the eastern lowlands of Ethiopia within latitude 90 34’
to 9o 35’N and longitude 410 50’ to 410 52’E with an elevation ranging from 1130-1335
meters above sea level and mean elevation of 1160m amsl. Hills and steep slopes are
found in the South, moderate and gentle slopes span to the north. Generally the city lies
within the semi-circular ridge of hills to the east, south, and west which provide
surprising natural vitas and delightful views from the center.
4.8.3. Climate
The climatic situation of the Administrative council is categorized mainly by warm and dry
climate with relatively low rainfall and hence categorized as kolla climatic zone. Days are
very hot and the nights are moderate in temperature. The climate is semi-desert during
day and moderate at night. The vegetation around the town is predominantly Acacia-
Savanna. The land immediately surrounding the town is covered with desert cactus.
The mean annual precipitation and the mean annual temperature are about 594mm and
25oc, respectively. As per the hydro-metrological data, Dire Dawa is one of the regions in
the country with potential evaporation exceeding rainfall throughout the year and two
rainfall patterns and characteristics. The short rain season is from March–April and the
long rain season extends from August to mid-September.
Table: Mean monthly climatic values of Dire Dawa town
Climatic Jan. Feb. Mar Apr May June July Aug. Sep Oct Nov Dec Yearly
variable mean
Max. Temp. 28.2 29.9 30.2 31.7 33.6 34.8 33.3 32.6 31.4 32.0 30.2 28.6 31.50c
Min. Temp. 15.3 16.6 19.2 20.5 21.6 22.6 21.1 20.6 20.9 18.9 15.9 15 19.00c
Rel. humidity 39.3 42.5 44.4 47.5 35.2 30.0 41.4 40.8 34.6 27.6 29.6 29.9 41.4%
Sun Shine (hr) 8.8 8.0 7.8 7.4 8.4 8.1 7.5 8.0 7.7 8.3 9.4 9.3
Wind Speed 4.2 3.8 4.4 4.6 4.1 5.5 5.6 5.1 4.2 4.2 4.2 3.6 4.5m/sec
(m/sec)
Rainfall (mm) 20.7 21.6 84.5 68.3 45.3 20.6 91.8 146.0 85.3 32.2 12.9 11.1 640.3

5. PRODUCTS AND DEVELOPMENT SPECIFICATIONS
The Building will have a total of 5 Floors delivering a total of 77 service

rooms ready for public use, from which 30 rooms will be Business units while
47 rooms will be office establishments.
5.1. SITE AREA DISTRIBUTION
Table: Summary of the plan

Description Area (m2)
Total area 10,000
Built up area 7,000
Project: G+3 Shopping Mall Building

Location: Dire Dawa City
Area: Major City Corner
Table: Building Specifications by area

UNITS SPECIFICATIONS PER UNIT
Designation Plot area (m2) Built up area (m2) No. of floors Built-up Area Total m2
G+4 10,000 7,000 5 36,000
Table: Building Specifications by floor

Total number of
Designation
units
Business Units 130
Offices 47
TOTAL 177

Table: Site Area Distribution
Designation Distributed Area m2
Building Space (Plot Area Total) 10,000
Built up space @70% 8000
Allowance for corridors, stairs &

elevators @ 20% of built up 200
area
No. of Business Units 130
No of offices 47
Table: Number of Units

Designation No. of units Area of unit (m2)
90.00
130
Business Units
Housing Units 47 80.00
177
TOTAL
6. ECONOMIC AND SOCIAL BENEFITS

The major benefits of the proposed project are mainly the economic and
social benefits that can be acquired at the national, regional and local level.
6.1. BENEFITS AND ENHANCEMENT MEASURES
The establishment of this project will have a number of positive impacts both
at national regional and local levels. Some of the major positive impacts

include technological capacity building, economic development and creation

of employment. These potential positive impacts, their origin and
characteristics are presented below.
6.1.1. MACROECONOMIC BENEFITS
The implementation of the project has an array of economic benefits. It

generates employment, promotes skill development and disseminates
technological changes especially by employing the Green Building approach.
The project developer will generate financial benefit in the forms profit that
will be used for saving and family consumption when the project gets
operational.
Enhancement Measures: Executing the proposed project in a manner that

benefits the country at large (example: introduction of high technology
products) is the proposed benefit enhancement measure.
5.1.2. MICROECONOMIC BENEFITS

5.1.2.1. EMPLOYMENT
The direct and indirect employment opportunities to be created for citizens

are other economic benefits of the project beyond those economic outputs
discussed above. The project shall create more than 200 temporary jobs
during construction and 13 permanent professional jobs during operation of
the project, most of whom, shall be employed from local people residing
near by the project area and from Dire Dawa town.
Thus, the project will be an opportunity for the town by lightening the brunt
of unemployment in the town to some extent.
Enhancement Measures: Hiring professionals and service providers will be

based on merits and yet on competitive base in order to get quality technical

workers, it will enhance the benefits of project to give especial consideration

for the people residing near by the project site to provide them with job as
priority for those positions not requiring especial skill.
As there will be high demand for daily laborers during construction phase of
the project, it will be twofold advantages to hire laborers from local people.
First, the project promoter will reduce time of searching for laborers and
save his money that is needed for transportation of laborers to project site.
Second, fairly distributing the benefits of the project will enhance project
social acceptability in general.
6.1.2.2. LOCAL LIVELIHOOD IMPROVEMENT

The employment opportunity to be created by the project will have a positive
implication on the improvement of local livelihoods of the community
residing nearby the project site. This local income generation related social
benefit will have long term as well as cumulative benefits.
Enhancement Measures: Utilization of the available labor force in the area

enhances the benefits at local level. Out sourcing commercial activities like
cafeteria services for local competitive service providers maximizes the
social benefit of the project.
7. FINANCIAL ANALYSIS
7.1. PRODUCTION COST
The cost estimates is based on detailed concept and schematic drawings.

The preliminary cost estimate is subject to a number of reviews in the
ongoing process. As stated earlier, at the moment, there cannot be
assurance that the construction cost will not change from concepts
development into final detailed designs and working drawings.

The Production cost is the overall direct cost for completing the building. It
takes into account the costs implied by the following processes:
7.2. LAND ACQUISITION & PREPARATION
They include costs of land lease payments and expenses for land leveling
and foundations works. They will be executed by specialized subcontractors.
Table: Land Acquisition

Land Cost Lease Cost Advance Cost
Quantity
Acquisition Allocation Basis, ETB/M2 @10% ETB
G+3 Total 800 1650 825,000
Distributed
TOTAL 800 825,000
Area m2
Table: Land Preparation Works

Land Preparation Cost Cost Basis Total Cost
Quantity
Works Allocation ETB ETB
Total
G+4 Distributed 800 9000 45,000,000
Area m2
TOTAL 12,000 45,000,000
7.3. BUILDING MATERIALS PURCHAS
The principal raw materials required for the construction of the building are
cement, sand, hollow blocks selected material, gravel, bricks, reinforced
structural steels, PVC pipes, timber, gypsum, play wood, corrugated sheet
metal, EGA sheets, nail, window glass, sheet metal, door and window frames
(profiles), paints, galvanized pipe, angle iron, pipes and fitting for kitchen
batch room and toilet, kitchen wares, bath room wares and toilet wares, etc.

Table: Building Materials Purchase

Building Materials Cost Cost Basis Total Cost
Quantity
Purchase Allocation ETB ETB
Total Built-up
G+4 11,215.90 10000 112,159,000
Area m2
TOTAL 11,215.90 10,000 112,159,000
7.4. BUILDING MATERIALS TRANSPORTATION
It includes the shipping cost of imported equipment, their port charges and
the in-land transportation cost up to the delivery on site of all building
materials, including handling charges (for loading and unloading).
Table: Building Materials Transportation

House Materials Cost Basis Total Cost
Cost Allocation Quantity
Transportation ETB ETB
% of Total Built-up
G+4 25.00% 3,000 27,000,000
Area
TOTAL 3,000 27,000,000
7.5. INFRASTRUCTURE WORKS
Infrastructure works primarily focus on the building of a Recreational area,

and other Public Service facilities that include:
 Roads, sideways and drains

 Electricity supply and distribution
 Water supply, treatment and distribution network
 Telecommunications network
 Green spaces or kids corners, and a
 Sewage treatment plant or alternative disposal system.

Roads or paved ways and sewage treatment infrastructures will be hand

over to qualified subcontractors while all the rest shall be provided by the
relevant government companies.
It must be made sufficient provision of the infrastructure items listed above

to support the housing scheme of the whole site.
Table: Infrastructure Works
Infrastructure Cost Plot Area Per Cost Basis Total Cost

Works Allocation Unit m2 ETB ETB
Total
G+4 Distributed 800 15,000 75,000,000
Area m2
TOTAL 12,000 15,000 75,000,000
7.6. SITE MACHINERY RENTAL
A concrete making machine and a crane will be rent during at the final step
of construction. Cement machine is needed for the construction of the party
walls whereas the crane is made necessary to lift up and erect structures.
Table: Site Machinery Rental

Site Machinery Cost Built up area Cost Basis Total Cost
Rental Allocation (m2) ETB ETB
Total
G+4 Distributed 3000 12,000 36,000,000
Area m2
TOTAL 3000 12,000 36,000,000

7.7. LABOR COST
It includes all the costs of the operational workforce maintained by the

promoter on site. Such costs are incurred by:
 the Site Management:

 the Security:
 the Masonry/bricklaying of cinderblock party walls:
 the Storage Management:
 the Mounting & Assembling:
Table: Labor Cost

Cost per Nb. Of Nb. Of Mnths
Labor Cost Item Total ETB
Head ETB Workers / Days
Site Management -
20,000 2 12 480,000
Monthly
Security -Monthly 10000 6 12 720,000
Masonry -Monthly 18000 8 9 1,296,000
Storage -Monthly 20000 4 9 720,000
Mounting &
3000 24 25 1,800,000
Assembling -Daily
TOTAL 25 5,016,000
7.8. PRODUCTION COST SUMMARY
Cost estimates are based on cost structures in comparable projects in the

country. Likewise, in determining the cost of construction, comparable
projects were assessed.

Table: Production cost -total

PRODUCTION COST -TOTAL
Designation Total ETB
Land Acquisition 825,000.00
Land Preparation Works 45,000,000
House Materials Purchase 12,159,000
House Materials Transportation 27,000,000
Infrastructure Works 75,000,000

Site Machinery Rental 36,000,000
Labor 5,016,000
TOTAL 201,000,000
Table: Sales -Unit Prices Determination

Designation No. of units Area of housing Sale Price Total Sales
(pieces) unit (m2) Per m2 ETB
30 80.00 35,000 252,000,000
Business Units
Offices 47 90.00 45,000 756,000,000

TOTAL 77 1,008,000,000
7.9. CAPITAL EXPENSES
The Company will invest in the following capital expenses:

- The purchase of 3 Vehicles (a minivan for site visitations and 2
vehicles for the staff)
- Office Improvements by the renovation of its Customer Center, and
- The development of an ERP-based Information System including a
dynamic front-end website.
Such fixed assets that have been be assessed as follows:

Table: Capital Expenses
Vehicles 3,812,209
Office Furniture &
1,000,000
equipment
Information System 500,000
TOTAL 5,312,209
Table: Pre-operating Costs

Description Total Cost ETB
Legal 30,000.00
Transport 43,000.00
Office 18,000.00
Advert 90,000.00
Professional Fees 36,000.00
Allowances 51,000.00
Case killer 30,000.00
Website & internet marketing 120,000.00
Fuel 40,000.00
Recruiting & Consulting 60,000.00
Overhead @ 5% 20,900.00
Total Pre-Operating Costs 538,900.00
Table: Personnel Plan

Description Qty Salary monthly Annual
General Manager 1 30,000.00 360,000.00
Finance, Secretary & Cashier 1 16,000.00 192,000.00
Marketing and Design 1 14,000.00 168,000.00

Engineer 1 24,000.00 288,000.00

ICT Guy 1 15,000.00 180,000.00
Sales 5 11,000.00 660,000.00
Legal 1 12,000.00 144,000.00
General services 1 16,000.00 192,000.00
Business Development 1 24,000.00 288,000.00
Total People 13
Subtotal 2,472,000.00
20% employee benefits 494,400.00
Grand Total 2,966,400.00
7.10. OVERHEADS
Overhead expenses during the first year are mainly affected by the cost of
selling expenses which include lobbying, sales commissions and advertising
expenses. It is assumed that they will represent up to 1% of the sales. The
other major costs are the professional fees entitled to the team of experts in
charge of the project management.
Table: Selling, General & Administrative (SG&A) Expenses

Designation Annual
Selling Expenses @ 1% of Sales 5,544,000.00
Salary 2,966,400.00
Travel & Invitations 72,000.00
Rent, Office 252,000.00
Marketing/Promotion 200,000.00
Fuel 90,000.00
Miscellaneous 5% 456,220.00
TOTAL 9,580,620.00

Table: Construction Timeline and Sales Forecast

Designation Year 1 Year 2 Year 3 Total
%age 55% 30.00% 15.00%
completed
cost of sales 301,862,550.00 164,652,300.00 82,326,150.00 548,841,000.00
Payment 554,400,000.00 302,400,000.00 151,200,000.00 1,008,000,000.00
received
Gross Profit 252,537,450 137,747,700 68,873,850 459,159,000
7.11. START-UP REQUIREMENTS
The Promoter is currently seeking seeding funds in order to secure enough

liquidity in support of the following budgeted expenditure. The required
initial investment of the project is estimated at ETB 350,000,000.00, from
which ETB 105,000,000.00 (30%) shall be contributed by the owners’ equity
while the remaining ETB 245,000,000.00 (70%) is expected to be financed
by Bank loan.
Table: Start-Up Requirements

Land Acquisition 825,000.00
Land Preparation Works 45,000,000
House Materials Purchase 12,159,000
House Materials Transportation 27,000,000
Infrastructure Works 75,000,000
Site Machinery Rental 36,000,000
Labor 5,016,000
Subtotal Development Expenses 201,000,000.00
Capital Expenses 5,312,209

Pre-operating Costs 538,900
SG&A Expenses for 3 months 2,395,155
TOTAL FUNDING REQUIREMENTS 350,000,000.00
Table: Sources of finance
No. Description Total Costs Amount % Amount %
Development
1.0 201,000,000.00
164,652,300.00
30% 384,188,700.00 70%
Expenses
2.0 Capital Expenses 5,312,209.17 1,593,662.75 30% 3,718,546.42 70%
Pre-operating
3.0 538,900.00
161,670.00
30% 377,230.00 70%
Costs
SG&A Expenses
4.0 2,395,155.00
718,546.50
30% 1,676,608.50 70%
for 3 months
Grand Total
350,000,000.00.17 105,000,000.25 30% 245,000,000.92 70%
(1+2+3+4)
Table: Loan repayment schedule
Quarter Loan Repayment Interest (11.5%) Outstanding Balance
0 245,000,000.92
1 129,987,028 44,845,525 99,974,057
2 129,987,028 29,897,017 49,987,028
3 129,987,028 14,948,508 0

Table: Profit and Loss Statement

Description Project Years
Year 1 Year 2 Year 3
Sales
554,400,000 302,400,000 151,200,000
costs of sales
301,862,550 164,652,300 82,326,150
Gross Profit
252,537,450 137,747,700 68,873,850
Gross margin(%)
45.55% 45.55% 45.55%
Operational expense
9,580,620 10,538,682 11,592,550
Profit before tax and interest

242,956,830 127,209,018 57,281,300
Depreciation
1,770,559 1,770,559 1,770,559
EBITDA (Earning before tax,

244,727,389 128,979,577 59,051,859
interest and depreciation)
Interest expense
44,845,525 29,897,017 14,948,508
Profit tax (35%)

0 0
Net profit
198,111,305 97,312,001 42,332,792
NPM
36% 32% 28%
Table: Cash Flow Statement
Description Production Year
Cash in flow 0 Year 1 Year 2 Year 3
Owners' equity 105,000,000.25

Bank Loan 245,000,000.92
Net Profit 0 198,111,305 97,312,001 42,332,792
Depreciation 1,770,559 1,770,559 1,770,559
Total Cash in flow 350,000,000.00 199,881,865 99,082,561 44,103,351
Cash out flow
loan repayment 129,987,028 129,987,028 129,987,028 129,987,028
Capital Expenditure 5,312,209 - - -
Working Capital 2,395,155
Existing SG&A Expenses 0
Pre-operating expenses 538,900
Total Cash out flow 138,233,292 129,987,028 129,987,028 129,987,028
Net Cash Flow 418,853,972 69,894,836 -30,904,468 -85,883,677
Cash balance 72,289,991 41,385,524 -44,498,154
Table: Balance Sheet Statement
Description Investment Production Year
ASSETS 0 Year 1 Year 2 Year 3
Current Assets
Cash 2,395,155 72,289,991 41,385,524 -44,498,154
Inventory 201,000,000 301,000,000 301,000,000 301,000,000
Total Current 451,236,155 621,130,991 590,226,524 504,342,846

Assets
Fixed Asset
Vehicles 3,812,209.17 2,541,600 1,270,991 381
Office Furniture &

1,000,000.00 666,700 333,400 100
equipment
Information
500,000.00 333,350 166,700
System
Total Fixed Asset 5,312,209 3,541,650 1,771,091 481
Total Asset 456,548,364 624,672,641 591,997,614 504,343,328
LIABILITIES
Long term liability

389,961,085 259,974,057 129,987,028 0
(Bank Loan)
Sub Total 289,961,085 259,974,057 129,987,028 0
CAPITAL
Owner's Equity 167,126,179 167,126,179 167,126,179 167,126,179
Retained Earnings -538,900 197,572,405 294,884,407 337,217,198
Investor 0 0 0 0
Earnings 198,111,305 97,312,001 42,332,792
Sub Total 166,587,279 364,698,584 462,010,586 504,343,378
Total Liability &

456,548,364 624,672,641 591,997,614 504,343,378
Capital
Net Worth 166,587,279 364,698,584 462,010,586 504,343,328

8. ENVIRONMENTAL IMPACTS
The proposed project has some associated environmental aspects that might cause
adverse impacts. However most of these environmental effects can be reduced to
acceptable levels with implementation of pollution prevention and control techniques,
and integration of restoration and other mitigation measures proposed in this EIA report.
Therefore, it can be concluded that there will be no severe or irreversible adverse

impacts that will prevent the implementation of the proposed shopping mall
development project.
To have minimal and acceptable residual environmental impacts, it is recommended

that a full EIA Study should be conducted on areas surrounding the project site. A close
follow up of the effectiveness of the implemented measures is recommended since a
well-planned monitoring program is critically important. In general, the Consultant
perceived that there are no insurmountable environmental difficulties for the
implementation of the proposed shopping mall development Project.
8.1. PROPOSED BUDGETORY PROVISIONS FOR EMP

Adequate budgetary provisions will be made by management for execution of
environmental management plans. The details of total capital and recurring costs (per
annum) for environmental pollution control measures are given in following table.
Table: Total Capital and Recurring Cost for EMP

NO ITEM COST
CAPITAL EXPENDITURE PER ANNUM
1. Emission Monitoring equipment 74,800.00
2. Health and Safety measures 22,100.00
Total Capital Expenditure 213,180.00

RECURRING EXPENDITURE PER ANNUM

4. Greenery Expenses
37,400.00
5. Salary of the environment & safety officer 112,200.00
4. Periodic training & awareness program for the employee 37,400.00
6. Environmental monitoring and reporting 18,700.00
205,700.00
Total Recurring Expenditure
418,880.00
Total COST FOR EMP
9. FINANCIAL EVALUATION
9.1. PROFITABILITY
According to the projected income statement, the project will start

generating profit in the first 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 life of the project. Further, the income statement
and other indicators of profitability show that the project is viable.
9.2. BREAK-EVEN ANALYSIS
The break-even point of the project including cost of finance when it starts
to operate at full capacity (year 3) is estimated by using income statement
projection.
Fixed Cost
BE = = 41 %
Sales – Variable
Cost

9.3. 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 3 years.
9.4. INTERNAL RATE OF RETURN AND NET PRESENT VALUE
Based on the cash flow statement, the calculated IRR of the project is 72 %
and the net present value at 10% discount rate is ETB 471,902,984.91.

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Project Proposal for the

Development of Shopping Mall

By: Shabelle Mall PLC

Presented to: Dire Dawa Administration

0. EXECUTIVE SUMMARY ...................................................................... 5

1.1. RATIONALE .................................................................................. 7

2. THE PROJECT .................................................................................. 8

2.1. THE GREEN BUILDING APPROACH ................................................ 8

2.2. BASIC INFORMATION ABOUT THE OWNER ..................................... 9

2.2. ORGANIZATIONAL STRUCTURE .................................................. 10

Figure: Organizational Structure.......................................................... 10

3. MARKET ANALYSIS ........................................................................ 10

3.1. MARKETING STRATEGY ............................................................. 11

3.2. MORTGAGE FINANCE ................................................................ 12

Table: Payment Method ..................................................................... 12

3.3. CUSTOMER PROFILE ................................................................. 13

4 GENERAL: THE PROJECT AREA ......................................................... 14

4.1. POPULATION SIZE AND GROWTH ............................................... 14

4.2. POPULATION AND SETTLEMENT PATTERN ................................... 15

4.3. ECONOMIC STRUCTURE AND LIVELIHOOD .................................. 16

4.4. SOCIAL SERVICES ................................................................... 17

4.5. EXISTING MARKET OPPORTUNITIES ........................................... 17

4.6. ENERGY SOURCES AND COVERAGE ............................................ 18

4.7. HISTORICAL, CULTURAL, RELIGIOUS AND ARCHEOLOGICAL

By: Mrs Chaltu Ahmed Beker 1|Page

4.8. Physical Environment .................................................................. 19

4.8.1. Location, boundary and size ................................................... 19

4.8.2 Land escape and land feature .................................................. 19

4.8.3. Climate ................................................................................ 20

5. PRODUCTS AND DEVELOPMENT SPECIFICATIONS .............................. 21

5.1. SITE AREA DISTRIBUTION ........................................................ 21

Table: Summary of the plan ............................................................... 21

Table: Building Specifications by area .................................................. 21

Table: Building Specifications by floor .................................................. 21

Table: Site Area Distribution ............................................................... 22

Table: Number of Units ...................................................................... 22

6. ECONOMIC AND SOCIAL BENEFITS .................................................. 22

6.1. BENEFITS AND ENHANCEMENT MEASURES..................................... 22

5.1.2. MICROECONOMIC BENEFITS ................................................... 23

5.1.2.1. EMPLOYMENT .................................................................. 23

6.1.2.2. LOCAL LIVELIHOOD IMPROVEMENT .................................... 24

7. FINANCIAL ANALYSIS .................................................................... 24

7.1. PRODUCTION COST.................................................................. 24

7.2. LAND ACQUISITION & PREPARATION ....................................... 25

Table: Land Acquisition ...................................................................... 25

Table: Land Preparation Works ........................................................... 25

7.3. BUILDING MATERIALS PURCHAS ............................................. 25

Table: Building Materials Purchase ....................................................... 26

By: Mrs Chaltu Ahmed Beker 2|Page

7.4. BUILDING MATERIALS TRANSPORTATION ................................. 26

Table: Building Materials Transportation ............................................... 26

7.5. INFRASTRUCTURE WORKS ..................................................... 26

7.6. SITE MACHINERY RENTAL ...................................................... 27

Table: Site Machinery Rental .............................................................. 27

7.7. LABOR COST ........................................................................ 28

Table: Labor Cost .............................................................................. 28

7.8. PRODUCTION COST SUMMARY................................................... 28

Table: Production cost -total ............................................................... 29

7.9. CAPITAL EXPENSES .................................................................... 29

Table: Pre-operating Costs ................................................................. 30

Table: Personnel Plan ....................................................................... 30

Table: Selling, General & Administrative (SG&A) Expenses ...................... 31

Table: Construction Timeline and Sales Forecast .................................... 32

7.11. START-UP REQUIREMENTS ......................................................... 32