MAKERER UNIVERSITY

FACULTY OF ARTS
HISTORY DEPARTMENT

COURSE: DVS

COURSE UNIT: PROJECT PLANNING &

MGT
LECTURER: Mr. KAGARURA WILLY

DATE: 5TH JUNE 2008

NAMES:
1. NATTIBE PHIONA 06/U/8134/EVE
2. L.MUWONGE STEPHANO 06/U/8064/EVE
3. NAMAZZI MADIINAH 06/U/7596/EVE
4. NKUNZIRE ANNET 05/U/15476/EVE
5. NAGAWA DAPHINE 06/U/8110/EVE
6. MBAWADDE ROSETTE 06/U/7593/PS
7. NANTONGO SALMAH 06/U/8130/EVE
8. NAMUKISA AGNES 06/U/8125/EVE
9. NAZZIWA ESTHER 06/U/8136/EVE
10. BIIRA JULIA 06/U/8087/EVE
THE TITTLE
QUALITY FOOD SUPPLIES LIMITED

AREA: KAZO, KAWEMPE DIVISION, KAMPALA

STAKEHOLDERS: QUALITY FOOD ASSOCIETIES

COST : Ushs. 15 millions

FUNDING AGENCY: SHARE CAPITAL

DURATION: TWO YEARS

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Introduction

This report is a result of the feasibility study that was carried out to determine the

Viability of a Maize mill project intended by the stake holders to be established at

Kazo.Kawempe a suburb of Kampala.

The stake older and beneficiaries after realizing that there is an unfulfilled demand for

various food supply and other rations, they decided to engage in the production and

Supply of maize flour.

The quality food associates currently has membership of 10 potential investors who have

provided initial subscription (share capital) .how ever there are some other areas targeted

for meeting the financial demand of the project like acquiring bank loans

The targeted areas/markets for out put are secondary and primary schools with in the

Proximity of the project. In feature the project intends to expand its

Production and market in to supplying urban population with in and outside Kampala.

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Back ground

The vision for the project was born by one of the members after realizing the growing

Urban Population, centers and unfulfilled demand for food supply in boarding schools

Currently the population of Kampala stands at more than 3million people and it is

Projected to double with in the next five years, there fore this makes food supply project

a wise and viable idea.

The bearer of the vision/idea after sharing with other potential entrepreneur, they

Agreed to start quality food suppliers and then made an estimate of how much will be

Required as initial investment for the Project, how it will benefit them, will the

Community feels its impact in terms of employment, what will be the externalities

Linkages among others.

Kawempe (kazoo angola) was indentified as the area that would be satisfy the needs for

Production and low and affordable cost mainly because of it nearness to kawempe

Industrial centre, which is supplied with a network of roads, hydroelectric power lines

, piped water, and others. Then the stakeholders’ recommended for feasibility stud to be

conducted to collect data which would help the to determine viability of the project.

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TABLE OF CONTENT

(i) The main objectives

Demand and markets 6
Prices at which to sell
Market growth 7
2 Location 8

3 Technical Analysis 9
Inputs/raw material
Technology

Advantages of Technology chosen 10

4 Administrative , management and institutional arrangement 11

5 Financial Analysis 13

6 Economic Analysis 15

7 Social Analysis 15

8 Environmental Analysis 16

Table 1
Table 2Project initial Capital Investiment
Table 3\Project Operational Costs
Table 4Administrative roles and expenditure on salaries/wages

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The main objectives

The stakeholders intend to achieve a wide range of objectives which would to

Individual, Group and social benefits to the community and they include the following.

(i) To generate profit/profit maximization

(ii) To certify the unfulfilled demand and supply of food rations
(iii) To maintain food security which is with in government policy
(iv) To provide, jobs, employment opportunities to the local community
(v) To supply animal and poultry feeds.

DEMAND AND MARKET

The projects stake holders target is to establish a maize mill factory which will be able to

produce maize products like maize flour (of various grades), poultry and animal feeds.

There is demand for services and commodities intended to be produced when the project

Become operational

Among the potential consumers for maize flour will be the primary and secondary

Schools and currently five have been identified that is, two primary schools and three

Secondary schools, these schools have each population ranging from 300-500 students

and they are both day and boarding schools in nature.

However there are other schools with in the area and the local population which in

Feature might become consumers of products produced by quality food suppliers.

Therefore this indicates that the possibility of market growth and expansion exists and

With proper planning together with constant supply of resources both physical and

Human Capital, targets set will be achieved.

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The prices at which to sell

The Current market prices for products like maize flour are Ushs 1,200/= , animal feeds

(maize brand) is at Ushs 600/=, our price projection depends on market prices but since

We Shall be new competitors, we intend to offer relatively low prices which will be

Attractive to the consumers. We shall charge for maize flour a kilogram Ushs.

1000/=, maize brand a kilograme at Ushs. 400/=

This is the best option we can offer to be competitive in the market and to compete with

the already established producers like Maganjo grain millers , Double power maize mill

Kyagulanyi maize mill and others.

The above maintained posses a large market shares but our projected prices will be to

competitive enough challenge their current market dominancy.

MARKET GROWTH.

The schools to be supplied by quality food suppliers are still growing in terms of

Population and our plan also is to expand operations in feature to meet demand and the

Food needs for local domestic consumers and other schools.

The schools to be supplied have an estimated population of more than 2000 students and

General supplies to all schools enlisted with quality food supply’s , will be 70 bags

of 100 kilograms each per month.

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Table 1 showing schools to be supplied by quality food supply’s.

Schools Population Amount consumed Price in shs

per month ( )

New Horizon SS 400 15 1,500,000

A PTA High School 350 12 1,200,000

Kawempe H.S 500 15 1,500,000

Kalumba P.S 400 15 1,500,000

Christ the King P.S 470 12 1,200,000

Total 2120 69 7,000,000

LOCATION:

The suitable place identified for the project is Kawempe/Kazo, Angola. The main

Consideration for choosing this location are mainly:

1. It’s nearness to the market for example the schools and the urban population
2. There is availability of power/electricity which is necessary for running machines.
3. The place is supplied with a net work of roads which link to the targeted markets
4. There is a net work of piped water
5. The place is industrial in nature
6. There is availability of cheap/unskilled labor from among the local population.
7. There is easy access to raw materials from Luwero, Masindi and Bombo.

The idea of establishing a maize mill is politically attractive and acceptable to the local

Leaders ,since it will provide employment opportunities to the local youth hence boosting

Popularity of local politicians, who have been under pressure to find employment

Opportunities for their young people

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TECHNICAL ANALYSIS:

Project in puts/raw material supply procurement plan:

The project will need quality materials and potential supply sources, identified are maize

producers from Luwero and Masindi

Inputs / raw material

Projected total input of maize supply’s required at the initial production stage will be 60

Sacks/ bags of maize. Currently a kilo of dry raw maize cost Ushs. 500/= therefore one

Sack of 100 kilogram will cost 50,000/= and the total among required for the

procurement of 50 bags will be 3,500,000/=

Technology

The technology available and used by producers are the locally made milling machines

Which are operated with motors and ran by hydro electric power. These machines are

affordable to The local producers and have various advantages in terms of spare parts and

Repair, suitable for use by the new and young producers with in the sector. The y are

made from Katwe and wont need a lot resource in transport costs.

Other types of technology are the imported milling machines which are very expensive to

Acquire and operate .these are currently used by large grain milling companies in the

Country which have access to huge resources.

Katwe made milling machines, a unit cost between 4-5 million shillings and a single unit

Can produce more than 15 bags of 100 kilograme per day. And this is confirmed by

Operators and grain millers

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The survey also gathered data about costs of other requirements for the project for
example
• Rent for factory premises will cost Ushs 100,000/= per month.
• Power/electricity Ushs 150,000/= per month
• Water Ushs 30,000/=
• Pick up/ Track (reconditioned) Ushs 4 million/=

Advantages of technology chosen.

• Technology is locally available

• Spare parts and repairers can easily be accessed
• Moderate consumption for power
• It does not require skilled labor
• It is relatively cheap as compared to the imported machines
• It is durable
• The machines can be fitted in a relatively small place 10 by 30 feet

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Administrative, management and institutional arrangement:

Table 2 Projected Initial capital investment

Required inputs Costs (Ushs)

1. Milling machine 4,500,000/=
2. Rent for factory premises 100,000/=
3. Pick up/ Truck 4,000,000/=
4. Machine/electron installation 200,000/=
5. Water 30,000/=
Total 8,830,000/=

Table 3 projected operational costs per month

Required inputs Cost per month(Ushs)

1. Salaries of Top managers 900,000/=
2. Trading License 70,000/=
3. Raw material 60 bags of maize
@100kg 3,500,000/=
4. Electricity 150,000/=
5. Salaries of causal laborer per month 120,000/=
Total 4,740,000/=

Initial cost for requirements before the project become operational will be Ushs

8,830,000/= at the operational stage it will cost Ushs 4,740,000 per months including

salaries of top management and causal laborers.

The projected capital is Ushs 15 million shillings which has been contributed by stake

holders. The requirements for the project fit with in the capital frame

Also The project will need the following category of manpower that is administrative and

production staff and these will include the manager at the top, production and marketing

manager, foreman/supervisor, casual laborers.

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The above mentioned categories are available in the market and the roles of production

and marketing manager will be combined and handled by one manager for purposes of

reducing costs.

Table. 4 administrative roles and expenditure on salaries/ wages

Category of Roles No employed Amount to be paid

employment

Executive managers • Planning 1 300,000/=

• Over see the
activities of the
firm
Production and • Implimanting 1 250,000/=
Marketing managers plans for
production
• Acquiring R/M
• Hire labourers
• Purchasing
• Marketing
• Securring
markets
• Establishing new
markets
Accountant • Book keeping 1 200,000/=
• Rocess invoice
• Banking and
with draws
Foreman/supervisor • Over seeing 1 150,000/=
operations
• Packing and
storing 1
Causal Laborers • Operating 10 Weekly basis @
• Packing 3000/= per day
• Storing
• Lifting the
products

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FINANCIAL ANALYSIS:

The proposed equity for investment are 15 million shillings which have been subscribed

as share capital .the project stake holders do not intend to acquire any loan at this initial

stage. The total cost for initial requirement of the project before it became operational

and when it commences will be 13,570,000/=. There are 10 stake holders and each has

contribute to capital pull ushs 1.5 million which total up to 15 million shilling as an

initial capital.

Net present value

The project worth therefore can be determined by calculating the Net Present Value

(NPV) of the project. That is the present worth of the incremental Net benefits or

Incremental cash flow stream of the project.

The NPV may also be calculated by finding the difference between the present value of

the Net benefit stream. Less the present value of the cost stream.

The project duration is two years it is projected to make revenue of 84million. In the first

year and 96millions in the second year as the market will be expanding to include a

fraction of domestic consumers and sales from. Animals and poultry feeds.

We assume a discounted rate of 10%

Table showing benefits and costs for two years

Y0 Y1 Y2
B ----------- 84,000,000 96,000,000
C 8,830,000 56,880,000 60,000,000
-8,830,000 27,120,000 46,000,000

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Net benefit = benefits - costs

Y0 = -8,830,000

Y1 =c = 27,120,000 = 27,129,000
(1+ r)1 (1+ 0.1) 1 1.1

= 24,654,545

Y 2 = C2

46,000,000 = 46,000,000
(1+0.1)2 1.21

= 38,016,528

NPV = Y0+Y1+Y2

= -8,830,000 + 24,654,545+38,016,528

= 53,841,073

Therefore the criteria for the NPV of the project is to accept all independent projects with

zero or greater NPV. When this counted at the opportunity cost of capital.

So the calculated figure is positive indicating that the project is attractive and can be

taken by the stakeholder.

The estimated annual revenue will be enough to meet the requirement for paying the

Dividends of share holders and also it is attractive for potential investors and banks for

The acquisition of loans if need arises.

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ECONOMIC ANALYSIS:

The maize mill project will have variety of benefit to both local population and others for

Instance raw material producers and suppliers, and to the local population it will have the

following externalities :
1. Provision of employment opportunities
2. Boost food supply
3. Provision of animal and poultry feed
4. It will act as market for other small producer like those selling cooked food and
running kiosks
5. It will also contribute to national income through paying taxes to government in
form of trading licenses

the project has linkages like provision of market for producers of Agricultural producers

especially maize. Both externalities and linkages associated with the project would led to

generation of income

The project is advantaged in terms of man power supply there is availability of cheap and

unskilled labor with in the area

There is demand for the products intended to be produced, low costs for rent and other

inputs can easily be acquired locally, though there are quite a number of competitors in

the industry demand has not been satisfied also it is important to note that maize flour is

among the basic food consumed and affordable to the local population, schools. therefore

this is an assurance for market and one can conclude that the project is economically
viable.

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SOCIAL ANALYSIS

The project is socially acceptable by the local community it does not have not any

negative effects on customs, traditions in terms of distribution of resources it will be a

source

of employment and income to especially the unskilled and an employed youth.

How ever there are some things that might be disliked by the project existence in the area

Like noise.

ENVIRONMENTAL ANALYSIS

The project will have the following effects on the environment.

1. Noise pollution to the neighborhood
2. The dust generated in the production process has negative effects on lives of the
employees for example affecting their lungs
3. There is a possibility of poor waste disposal management which might led to
water logging and condition necessary for Mosquito breeding

How ever other requirements will have no impact on the environment for example the

location for the factory

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