Investment Proposal

On Setting Up

Primary and Secondary

School(KG – 12 Grade)

Project to be implemented in: Bishoftu

Town of Oromia Regional State

Promoter: Morka Trading plc

Address: bole Sub city, Finfinne.

Feb 2025

Finfinne, ETHIOPIA

0
EXCUTIVE SUMMARY

1) Project Name Primary and Secondary School

2) Project Type KG, primary and secondary school education

service (KGto 12thgrade)
3) Project Mr. TARIKU HAILU
Promoter
4) Nationality Ethiopian
5) Project Location Adds Ababa City Administration.
6) Premises 48,000 m2
Required
7) Service The project is expected enroll about 1,000 KG
Capacity students; 1,350 primary school and 1,600high
school students during its full capacity
operation.
8) Startup Capital The total capital planned for this project is Birr
60,000000 of which Birr 30,000000 is required
startup capital on first year and Birr 30,000000
will be dispersed on the second year of the
project.
9) Employment The total job opportunity created by the project
Opportunity will be 265 of which 210 permanent employees
and 55 temporary employees.
10) Benefits  Providing quality educational service
expected  Stimulating the local economy by adding
value to the sector of the economy.
 It is a source of revenue for government.
 Creating employment opportunity.

1
1. INTRODUCTION
Ethiopia is currently on the edge of rapid economic development with
consistent double-digit growth over the last successive years. The trend
in sustainability of economic growth is being witnessed in all the critical
areas of consumption indicators such as; social sectors, power, energy,
construction, manufacturing and others.
Education, as a very important factor to human development, is of a
high priority in the overall development endeavor of the government.
One of the aims of education is to strengthen the individuals and
society’s problem-solving capacity, ability and culture starting from
basic education to all levels with an aim of universal Elementary to
higher education by 2022. E.c
Due attention is also given to provision and appropriate usage of
educational facility, technology materials, environment, organization
and management so as to strengthen the teaching-learning process and
expansion of education. Inadequate facilities, insufficient training of
teachers, overcrowded classes, shortage of books and other teaching
materials, are all problems of the lower to higher education which are
indicators of the low quality of education. Thus, it requires the
concentrated effort of all parties’ government, non-governmental
organizations and communities in supporting increased access to
equitable and quality of education.
There are significant educational challenges in Ethiopia. Although efforts
have tried to universalize access to education, current national figures
demonstrate that only 90% of 7 years old children’s are enrolled. By
2022, the literacy rate had increased to 49.1%, still poor compared to
most of the rest of Africa. Improving educational quality is a major goal
which could depend on the pedagogical approach and curriculum
structure. There is also a widespread lack of access to resources
(including textbooks and extra-curricular learning materials). The
number of higher education is less when compared to enrolled students

2
in secondary and preparatory level in our country that need
participation of private sector in providing quality higher education.
In Addis the demand for primary and high school education is increasing
in a fast rate as it gaining government attention. The government tried
to provide primary and secondary school level in the City but there is
still demand and supply gap on quality schools expansion that need
private sector participation. That’s why we want to invest in Addis
Abeba City. From control point of view educational sector is a safe
business for investors as costing and pricing mechanisms are highly
transparent and automated. Therefore, this project will contribute in
meeting school demand in Addis Abeba City.
1.1. PROJECT JUSTIFICATION
Education is the best investment for the people because well educated
people have more opportunities to get a job which gives them
satisfaction. Educated individuals enjoy respect among their colleagues
and they can effectively contribute to the development of their country
and society by inventing new devices and discoveries. Good People
sacrifices their time and money and sometimes even their health to
raise educational level because they realize that education is their
passport to the future and for tomorrow.
Therefore, this project has prepared to fill the primary and secondary
education service gap seen in Addis Abeba by building school that will
contain more than 70 class rooms for KG, Primary and Secondary school
facilities in quality standard education service management purpose by
building office, pedagogy center, library, and toilet.
1.2. Promoter Profile
The promoter of the project Mr. Tariku Hailu is an Ethiopian Diaspora
residing abroad for many years who owned so many companies like
(Keransa Business Group plc), NU UTOPIA S.C. and One Lion
Plcwhich has many successful businesses history abroad. Now he
decided to contribute in his country’s development endeavors by
investing in different business sectors like buying realstat, hotel

3
This time he planned to participate in School investment in Addis Ababa
City. Even though there is so many schools in Addis Ababa there is still
demand and supply gap especially quality school services according to
international standard discipline.
1.3. SERVICE DESCRIPTION
According to the new structure of Ethiopian education system, primary
education lasts for eight years (age group 6-14) and is divided into two
cycles: basic education (Grades I-IV) and general education (Grades V-
VIII). Junior secondary schools no longer exist, as Grades VII and VIII
have become the two upper classes of the second cycle of primary
education. Secondary education is divided into two cycles: the first
(Grades IX and X) or general secondary education, and the second cycle
(Grades XI and XII) or preparatory secondary education. Since the
education reform, completion of Grade X leads to the Ethiopian School
Leaving Certificate Examination (ESLCE). It is used to be at the end of
Grade XII. The second cycle prepares students to continue their studies
at the higher education level or select their profession. It offers a
science option and a social science option. At the end of this cycle,
students take the Ethiopian Higher Education Entrance examination to
enter higher education institutions.
KG education is provided by private schools primary and high school
educations are provided by government schools and private
institutions. They are under the responsibility of the Regional Education
Bureau.
In this project, KG education will be provided for students between 4-6
years age range and high school will be provided for students graduated
from 6th grade as per regional curriculum.
The project will start its activities by simple clearing the land,
undertaking construction activities (in addition to the existing building),
furniture and equipment and hiring professionals and semi-skilled
employees from local market.
Finally, it will start its operation with providing a service capacity of
76%, 80% and 100% on the 1st, 2nd and 3rd year respectively. Pricing will

4
be based on current price charged by the same level of private schools
price for the envisaged project.
1.4. Land Use Plan
The total land area required for this project is 4.8 hectare and the detail
premises development plan is shown in table below;
Table 1.1:- Land use plan
S Description Land
N Requirement(M
2
)
Civil and Electro-mechanical Works
I Kindergarten 3,000
II Primary Education
2. 1st& 2nd cycle (1 – 8) 15,000
1
III Secondary Education
3. Grade 9 – 12 30,000
1
Total 48,000.00
A fundamental space type for this school project includes:
• Regular Classrooms
• Administrative Offices
 Principal
 A/principal
 Reception areas
 Secretary
 Record office
 Department offices
• Technical education rooms
 Computer technology
 Wood work
 Metal work
 Others
• Conference rooms
• Student support offices
 Guidance
 Health Services

5
  Media services
• Staff supports areas
 Group teacher offices
 Lounge
• Common areas/courtyards
• Multipurpose Rooms
• Restrooms
 Staff toilets
 Student toilets
• Science laboratory rooms
 Physical science
 Biology
 Physics
 Chemistry
 Earth science
• Library rooms
• Sport facilities
 Sport fields
 Gymnasium
• Building support rooms
 Mechanical rooms
 Electrical rooms
 Book storage
 General storage
•Circulation areas
 Corridors
 Stairs
• Parking space
Figure 1.1:- Land use plan

6
2. OBJECTIVES
2.1. GENARAL OBJECTIVE
The objective of this project is to construct international standard new
School contains KG to High school level education in Addis Ababa City
Administration in order to provide equality educational service and
thereby raise the standard of future national expansion and
development of education facilities.
2.2. SPECIFIC OBJECTIVES
 Increasing the quality standard School education coverage and
facilities in Addis Ababa.
 To employ properly qualified and skilled teachers and administrative
employees.
 To educate each student as per his/her unique needs.
 To meet national education standards.
3. MISSION, VISION AND VALUES
3.1. MISSION:
Providing quality education from KG to secondary school to all students
in need in Addis Ababa City Administration and surrounding.
3.2. VISION:
Producing well educated people from Addis Ababa City Administration
and surrounding.

7
3.3. VALUE:
• Providing quality education,
• Honesty and accountability,
• Effectiveness and efficiency in resource utilization,
• Working by good Partnership with stakeholders,
• Commitment and innovativeness,
• Gender sensitiveness,
• Impartiality, legality,
• Respect for the people and continuous learning
4. ECONOMIC & SOCIAL BENEFIT
In general, the envisaged project promotes the socio-economic goals
and objectives stated in the strategic plan of the Ethiopian Federal
Democratic Republic of Ethiopia. These benefits are listed as follows.
A. Increasing quality standard school service supply in Addis
Ababa
As there is limited number of private owned Schools in Addis Ababa this
project will contribute its role in meeting the quality education demand.
B. Profit Generation
The project is found to be financially viable and earns good profit within
the project life. Such result induces the project promoter to reinvest the
profit that increases the investment magnitude in the region.
C. Revenue
In the project life under consideration, the region will collect from
corporate tax payment, income tax, sales tax and VAT. It will add
income for the regional government that will be used in expanding
social and other basic services in the region.
D. Employment Opportunity
The proposed project is expected to create employment opportunity to
265 citizens.

8
5. MARKET STUDY
5.1. Primary and Secondary Schools Statistics in Ethiopia
The Ministry of Education (MoE) provides some indication of
achievements in the five years from 2008/9 to 2012/13 although
statistics do depend upon the accuracy of data collected. Primary school
enrollment has increased substantially but only about half of those
enrolled manage to complete both cycles. There are a large number of
over-age children enrolling for grade 1 although this has been declining.
This is shown by the difference between gross intake rate (GIR) and net
intake rate (NIR). GIR is the percentage of children enrolled for grade 1,
regardless of age, out of the population of the appropriate age of 7
years. NIR is the percentage of children of appropriate age out of the
population of that age.
In 2008/09, GIR was 162.5% (boys = 169.4%; girls = 144.1%) and NIR
was 82.2% (boys = 84.3; girls = 80.1%).
In 2012/13, GIR was 144.1% (boys = 150.2%; girls = 137.8%) and NIR
was 95.5% (boys = 97.9%; girls = 93.0%).
Problems are indicated by repetition rates, dropout rates and low
completion rates. Repetition rates remained much the same but dropout
rates increased.
In 2007/08, repetition rates for grades 1 to 8 were 6.7% (boys = 7.0%;
girls = 6.3%) and in 2012/13, they were 7.9% (boys = 8.1%; girls =
7.7%). In 2012/13, repetition rates were highest for grades 1, 5 and 8.
In 2007/08, drop out rates from grades 1 to 8 were 14.6% (boys =
15.9%; girls = 13.2%) and in 2012/13, they were 16.1% (boys = 16.2%;
girls = 16.0%).
In 2007/08, the survival rate to grade 5 was 49.2% (boys = 45.8%; girls
= 53.3%) and in 2012/13, it was 50.7% (boys = 49.6%; girls = 39.1%).
Completion rates for grade 5 varied around 70% and 80% but
completion rates for grade 8 have improved from 43.6% to 52.8% with
near parity between boys and girls. There were regional differences in
grade 8 completion rates.

9
In 2012/13, lowest completion rates were in Afar (16.4%) and Somali
(15.9%) followed by Oromiya (43.5%). About 80% of children sitting the
grade 8 exam passed to grade 9.
Most children are not going to secondary school and differences
between gross enrolment ratio (GER) and net enrolment ratio (NER)
indicate that many of these children are over-age. GER is the
percentage of children enrolled out of the population of appropriate age.
NER is the percentage of children of appropriate age out of the
population of that age.
In 2008/09, GER was 38.1% (boys =43.7%; girls = 32.4%) and NER was
13.5% (boys = 15.0%; girls = 11.9%).
In 2012/13, GER was 38.4% (boys = 39.9%; girls = 36.9%) and NER was
19.4% (boys = 18.8%; girls = 20.1%).
From all children registered for the 10th grade exam, the percentage
scoring the pass mark of 2 or more increased from 42.6% in 2008/09 to
70.1% in 2012/13 with girls increasing from 32.2% to 61.9%.
A very small proportion of children attend the second cycle of secondary
school. Between 2008/09 and 2012/13, GER increased from 6.0% to
9.5% with girls increasing from 3.5% to 8.5%. From all children
registered for the grade 12 exam in 2012/13, 91.7% attained the pass
mark of 201 or more but only 1.7% attained 501 or more.
5.2. Access and demand
There have been improvements in access to primary schools while
alternative basic education and innovations such as mobile schools are
helping to reach disadvantaged groups and remote rural areas.Between
2008/09 and 2012/13,the number of primary schools increased from
25,212 to 30,534. More primary schools need to be built to reach the
government target, especially in Somali Region, the Southern Nations,
Nationalities and People's Region (SNNPR), Oromia, Gambela
Region and Benishangul-Gumuz. Between 2008/09 and 2012/13, the
number of secondary schools increased from 1,197 to 1,912 but Harari
Region, Afar Region, and Dire Dawa have very few.[12] The small number

10
of secondary schools means that many children who do complete
primary school have no access to secondary schools.
Not all parents can afford to send their children to school. Parents may
need to pay for clothes, books, transport and school fees. In 1994,
school fees for grades 1 to 10 were officially abolished but hidden costs
remained. Other costs include loss of children's wages or unpaid labour
for agriculture, tending livestock or housework. Whether children work
depends on relative household wealth. Labour-intensive assets such as
farms can hire labour if they generate sufficient profit but poorer
households may need their children to help with these assets. This can
relate to family size, with larger families sending their younger children
to school because older children can help their parents. Attendance is
reduced when children have to travel long distances to school since this
increases personal risk and transport costs. There are also cultural
attitudes against educating girls since education will only benefit her
husband's household.
5.3. Past Supply and Present Demand
As of 2004/2005there were 393 primary and secondary education
facilities in Oromia of which;
 38 are primary(grade 1-4),
 5 are primary (grade 5 -8),
 272 are primary( grade 1-8),
 16 are secondary ( grade 9-10),
 1 is secondary ( grade 11-12),
 9 are secondary ( grade 9 - 12), and
 52 are secondary (grade1-10/12).
School enrolment ratio is one vital indicator that measures
performance in education sector. In this regard there has been a
remarkable improvement in the education statuses of the city during
the past ten years particularly with respect to primary and secondary
education.
As can be observed from Table 5.1 gross primary enrollment (grade
1-8) ratio increased from 100% in 2000/2001 to 116.4% in 2004/2005

11
and net primary enrollment (grade 1-8) ratio increased from 84.1% in
2000/2001 to 95.5% in 2004/2005. Moreover gross secondary
enrollment (grade 8-10) ratio increased from 55.6% in 2001/2002 to
73% in2004/2005 and net secondary enrollment (grade 9-10) ratio
increased from 27.4% in2001/2002 to 39% in 2004/2005. Though
remarkable progress is made at primary level, enrollment at
secondary level is still very low.

12
Table 5.1:- School Enrollment Ratio at Primary And Secondary Level
(2000/2001-2004/2005)
Enrollment Ratio Annual Value in %
2000/ 2001/2 2002/3 2003/4 2004/5
Gross enrollment at kindergarten level NA 1 NA NA NA 31.8
Net enrollment at kindergarten level NA NA NA NA 26.3
Gross enrolment rate at primary (grade 124.4 122. 118. 116. 111.4
1-4) enrolment rate at primary (grade 1- 84.4
Net 882.5 279.7 279.3 77.1
4)
Gross enrolment rate at primary (grade 83.7 91.5 100 109 121.3
5-8)
Net enrolment rate at primary (grade 5- 58.9 63.9 69.1 74.4 81.5
8)
Gross enrolment rate at primary (grade 100.0 104. 110. 112. 116.4
1-8)
Net enrolment rate at primary (grade 1- 84.1 787.4 091.0 492.7 95.5
8)
Gross enrollment at secondary (grade 9- NA 55.6 63.0 68.1 73.0
10)
Net enrolment rate at secondary (grade NA 27.4 31.7 35.4 39.0
9-10)
Source: Education Statistics Annual Abstract 2004/05.
However, access to education at primary and secondary level is still
very limited in the city. It is estimated that in 2004/05 about
139,795 school aged children who are eligible for primary and
secondary level education in the city didn't attend school.
Standards by the Ministry of Education indicates that ratios at
primary education 1st cycle (grade 1-4) level should be one section for
50 students , at primary education 2nd cycle (grade 5-8) one section
for 50 students and at secondary level (grade 9-10) one section for
40 students. Accordingly, Table 5.2 shows number of students
with noaccess and additional sections required to accommodate
them.
Table 5.2:- Number of Children With No Access To Education And
Number of School Sections And Teachers Required (2004/05)
Level of Education Number of Children Additional Number
Number Number Number with of Sections
Eligible Enrolled No Access Required
Primary 1st cycle ( grade 1- 166,048 128,023 38,025 761
4
Primary 2nd cycle (grade 5- 171,034 139,393 31,641 633
8
Secondary level ( grade 9- 114,966 44,839 70,129 1,753
Total 452,048 312,255 139,79 3,147
5
Source: Education Statistics Annual Abstract 2004/05.

13
Accordingly, based on the standard parameters acquired from the Addis
Ababa Bureau of Education, it can be concluded that there is a
supply gap in education service facilities supply in the city to provide
education at acceptable level of standard. The supply gap is given in
Table 5.3.
Table 5.3:- Supply Gap In Basic Education Facilities By Types
And Level Of Education As Of 2004/2005
Level of Number of school Supply Shortfall
education At
sections Required In In %
Present Based on the Numbe
Primary level (1-8) 6,760 7,847
Standard r1,087 13.9
Secondary level ( 9- 1, 388 2,412 1,024 42.5
Total
12) 8,620 11,810 2,191 18.6
As can be seen from the above Table as of 2004/2005 the supply gap of
education facility at primary level is 1,087 sections, and at secondary
level 1,024 sections. In other words, the city needs additional primary
schools with 1,087 sections, and secondary schools with 1,024
sections to achieve the required education quality standard.
Accordingly, assuming that there are no additional schools constructed
since 2004/2005 and demand for primary and secondary school grows at
annual average growth rate2.9% which is equivalent to the growth rate of
population, the present (2008) supply gap of education facility at primary
level is 1,184 sections, and at secondary level 1,116 sections.
5.4. Projected Demand of School
Inprojectingthedemandforprimaryandsecondaryschoolitisassumedthatde
mand
forprimaryandsecondaryschoolincreasesatannualaveragegrowthrate2.9%
which is equivalent to the growth rate of population. Accordingly ,by
taking thepresentestimateddemandasa
baseandapplyinganaveragegrowthrateof2.9%theprojected
demandisshowninTable5.4.

14
 Table 5.4:-
DemandProjectionForPrimaryAndSecondarySchools(In
Section)

Year Primary Secondary

school school
200 1,218 1,14
9
201 1,254 8
1,18
201 1,290 1,21
201 1,327 1,25
201 1,366 1,28
3
201 1,406 7
1,32
201 1,446 1,36
201 1,488 1,40
6
201 1,531 3
1,44
7
201 1,576 3
1,48
8
201 1,622 5
1,52
9
202 1,669 8
1,57
5.5. Overview of Possible Marketing Strategies
5.5.1. Promotion and Advertising
Promotional measures: Quality centered promotion will be conducted. All
promotional efforts will mainly address the ultimate service buyers and the
intermediaries. All designed messages will be compatible with the
addressee. All promotion tactics will ensure quality difference. The Promotion
tactics will be prioritized as per their return.
From the keys to success at this time, for the business, which have
competitors, promotion and advertising takes a great role. To accomplish the
proposed sales plans it’s intended to promote the service by using different
promotional methods from those, trade show or exhibition and to advertise
on the following advertising source: entertainment media, Newspaper,
Personal contacts, Radio and brushers.
In addition, modern management system such as Quality management
system and Automated Management Information system will be
implemented, maintained and continually improved to achieve the most gain

15
from the market and to secure international recognition via service and
system certification.
5.5.2. Pricing & Positioning Strategy
Pricing and positioning strategy will be aligned. We want our school to be
known as the premier brand in our service sector, having too low a price
might dissuade customers from purchasing.
5.6. Prime Markets Targeted
The purpose of segmenting a market by the companies is to narrow down a
large target audience into more narrowly defined target groups. A number of
strategies, including demographics, lifestyles and usage patterns are used to
identify market segments. The process of identifying and targeting distinct
customer segments has significant benefits in advertisings. Developing a
focused marketing approach can increase our company’s revenue and raise
its marketing return on investment. The target groups of the project are:
 Children in Addis Ababa and surrounding, Ethiopia,
 The teachers who instruct the children,
 The supporting administrative and ancillary staff who will facilitate the
operation of the school, and
 Parents and guardians in the Addis Ababa city and surrounding
community who are interested in giving their children the opportunity of
education at our school.
5.7. Service Qualifying Strategy
The business will be committed to serve all primary and secondary school
education services with qualified teachers and easy service delivering
strategy and upgrading quality service persistently, compare with those of
competitors with a more diverse styles, meeting demand of each market
with the assistance to be provided by institutions in areas like service
development, marketing, selection of equipment, skill upgrading and system
development.

16
6. ORGANIZATION AND MANAGEMENT
6.1. ORGANIZATION STRUCTURE
The project will be managed by a qualified and experienced manpower to
make it successfully perform its purpose.
The total manpower requirement, including skilled and unskilled labor is 232
persons. The corresponding total labor cost, including fringe benefits, is
estimate at Birr 5.66 million. Table below shows the list of manpower
required and the estimated annual labor costs.
Table 6.1: Manpower Requirement and Cost
No Description of Requir Total Annual
manpower ed Monthl Monthly Salary(Birr
Numbe y Salary )
r salary (Br.)
30,000. 30,000.0 360,000.00
1 Director 1
00 0
5,000.0 10,000.0 72,000.00
2 Senior Secretary 2
0 0
Planning & Evaluation 12,000. 12,000.0 144,000.00
3 1
Officer 00 0
Public & External 5,000.0 60,000.00
4 1 5,000.00
Relations Officer 0
5,000.0 275,000. 3,300,000.
5 Teachers 55
0 00 00
Kindergarten 9
Grade (1 – 8) 20
Grade 9 – 12 28
6,000.0 72,000.00
6 Registrar 1 6,000.00
0
Head, finance & 14,500. 14,500.0 174,000.00
7 1
administration 00 0
3,400.0 81,600.00
8 Financial clerk 2 6,800.00
0
2,400.0 14,400.0 172,000.00
9 Librarian 6
0 0
2,400.0 28,800.00
10 Electrician 1 2,400.00
0
3,200.0 16,000.0 192,000.00
11 Cleaner 5
0 0
12 Guard 2 2,700.0 5,400.00 64,800.00

17
 0
2,700.0 13,500,.0 162,000.00
13 Gardener 5
0 0
3,000.0 12,000.0 144,000.00
14 Driver 4
0 0
5,000.0 20,000.0 240,000.00
15 Casher 4
0 0
Other temporary 165,000,0 1,9,000,000.
16 55 3,000,00
employee 00 00
5,662,50 41,972,000.
Total 232
0.00 00

6.2. TRAINING REQUIREMENT

Technical staffs should be given 15 to 20 days training. The cost of training is
estimated at Birr 10,000.00. The organizational setup of the school will be as
follows.

18
 Director

Head, Finance and

Senior Secretary
Adminstration

Public and
Registr Planning and
Evaluation External
ar Officer
Relations
Officer

Computer
Administra
Documenta
tion
Instruc Financi
tor attendant
tors al clerk

Libraria Electric Cleaner, Guard,

Gardener,
Secretary,
n ian Driver, Cashier

Figure 6.1: Organizational structure

19
7. SERVICE CAPACITY AND PROGRAM
7.1. CAPACITY
Taking in to account the market study on existing condition of School
education related with the number of enrolment and eligibility and economic
level of service provision, the envisaged school will have total 57 sections as
shown on the table below.
Table 7.1: Capacity of School [Sections]
S.N. Level of Education Number of
Sections
I Kindergarten 9
II Primary Education
1st& 2nd cycle (1 – 8) 20
III Secondary Education
Grade 9 – 12 28
Total 57

The service will be given by one shift regularly for a total of 8 hours per day.
The project requires some years to penetrate in to the market and
capture a significant share.
Itwillstartprovidingservicesat76%and80%ofitsratedcapacityinthefirst
and second year of service provision, respectively. Full service
provision shall
beattainedinthethirdyearandthenafter.Theproposedserviceprovisionpr
ogrammeisshown in Table below.
Table7.2:ServiceProvisionProgramme(Student Enrollment)

S.N Description Project year

1 2 10-Mar
I Kindergarten 1,000.00 1200 1500
II Primary Education
1st& 2nd cycle (1 – 8) 1,350.00 1450 1600
III Secondary Education
Grade 9 – 12 1,600.00 1800 2000
Total 3,950.00 4450 5100

20
 %Capacity Utilization 77.5 87.3 100

The education service is given to students based on the rules and regulations
set by the Regional Education Bureau for accreditation and other related
issues. The education service is given at single shift. The regular session will
be held in morning and afternoon (8:30 AM-12:30 AM and 01:30PM-03:30PM)
from Monday to Friday. In addition the school will have the extension
program evening (5:00 PM-8:30 PM).
7.2. MATERIALSANDUTILITIES
A. MATERIALS
Themainmaterials andinputsrequired fortheprovision
ofeducationserviceatfullcapacityoperationof
thecenteraregivenonTablebelow.
Table7.3: RawMaterialsAndConsumablesRequirementAtFull
Capacity
Sr. Materials Unitof
No. Measure
1 CURRICULUM: Package
• Responsive to individual and social need
• Comprehensive coverage
• Adaptable to changing
2 EDUCATIONAL MATERIALS:
• Quantitatively adequate Lump sum
• User friendly , easily exploitable and
challenging to both instructors and
learners
• A judicious mixo fprint- audio-oral
materials
3 Cleaning materials Lump sum
4 Stationery materials Lump sum
5 Other miscellaneous items
B. UTILITIES
Themajor utilities requiredbythecenter areshown giveninTablebelow.
Table7.4:UtilitiesRequirement
Sr. Descriptio
No.1 nElectricity

21
 2 Water

7.3. TECHNOLOGYANDENGINEERING
A. Service Process
The primary and secondary education service is given to students based
on the rules and regulations set by the Ministry of Education for
accreditation and other related issues. The education service is given at
both regular and extension level. The level of education, the number of
sections, grades and the corresponding maximum number of students in
each section is given on Table 7.5.
The School Senate awards credentials, which is recognized by the
Regional government .The Regional Education Bureau is mandated to
accredit private and public education institutions according to whether they
fulfill the required standards.
Admission to High school-level studies: Name o f school credential
required: Regional 6th grade graduation certificate. For KG birth certificate is
enough.
Examination: Minimum score /requirement: Passes in average score
greater than 50% is needed.
Other admission requirements: Special privileges for female students and
students from disadvantaged/remotekebeles.
Allstudentsmustcovertheirexpensesby theirownmeansoutsidetheenvisaged
schoolcampus.
There are courseswhich have lab sessions together with classroom
instruction and individual and group exercises. Assignment work is given in-
group or individually, as a final exam will be based on the Regional Education
Bureau schedule.
Main promotion systems applied are as follows:
It is out of 100%. The highest score is greater than 80% and the lowest is
less than 50% score. The pass/fail level for high school students is scoring

22
above 50% average and for 10th grade students as per Ministry of Education
ECSLE rule.
Table7.5:-The Level of Education ,The Number Of Sections ,Grades And
The Corresponding Maximum Number Of Students In Each Section
Sr Level of Education Grades Numbe Number Total Shift
of Numbe
. r of Regul Extensi
Students r of
No Section Per Studen ar on
. s Section ts

1 Kindergarten 9 35 1,000. √
00
2 Primary Education - √ √
3 st
1 &2 nd
cycle (1 – 8) 20 45 900,00 √ √
4 Secondary - √ √
Education
5 Grade 9 – 12 28 40 1,120. √ -
00
TOTAL 57 3,020
.00

B. Tools and Equipment

The list of machinery, equipment and other facilities required for
provision of education s e r v i c e is given in Table below.
Table7.6: Equipment & Tools Requirement
Sr. Unit of
Description Qty.
No. Measure
Broadband internet line (Supply & Network
1 set 20
Installation)
Desk top computers networked (Supply &
2 Unit 100
Installation)
3 Lap top computers Unit 35
4 Scanner Pcs 3
5 Digital camera Pcs 5
6 Video camera Pcs 2
7 DVD player Pcs 10
8 Photo copy machine Pcs 2
9 Duplicating machine Pcs 2
10 Generator set 11 KW (supply and installation) Pcs
11 Printer Pcs 50
12 Fax machine Pcs 4
13 Satellite TV-set (Supply & Installation) Set 90
14 Cafeteria facilities Set 1
15 Lawn moan Set 1

23
 Sr. Unit of
Description Qty.
No. Measure
16 Class room equipment (for 90 class rooms) Set 90
Workshops machineries, tools and
equipment(Electrical ,mechanical, wood
lot
Works, automotive, building construction,
machine, Electronics )
Laboratory equipment and facilities lot
17 Transformer Supply and Installation 1

8. FINANCIAL STUDY
The total initial investment capital of the project is estimated to be about
Birr504,658,157.50, which are constituted of fixed investment cost Birr
492,416,500.00and initial working capital Birr11,986,657.50.
Table 8.1: Initial Investment Capital
No Description Total
cost(Birr)

1 Fixed investment
cost
1.1 land lease 2,910,000
.00
1.2 Building & 22,100,000.00
construction
1.3 Machinery and 8,506,500.
equipment 00
1.4 Furniture’s and 410,250
fixtures .00
1.4 Vehicles 5,900,000.
00
sub-total 40,076,00
0.00
2 Pre-investment cost 255,0

24
 00.00
3 Working Capital 19,024,0
00.00
Total project capital 60,000,00
0,00

8.1. FIXED INVESTMENT

Fixed investment costs are expenditures on the required fixed asset. The
major components of fixed cost are constituted of expenditures on
construction of civil works. The rest will go to furniture & equipment and the
acquisition of office facilities. According to estimate made by this project the
total fixed cost will be birr492,416,500.
BUILDING AND CIVIL WORK COSTS OF THE PROJECT
The envisaged School requires a total plot of land of 48,000 m2detail is
shown below;
Table 8.2;- Premises required
S Description Land Cost per Total Cost
N Requirem M2
ent(M2)
Civil and Electro-mechanical Works
I Kindergarten 3,000 8200 24,600,000.00
II Primary Education
2. 1st& 2nd cycle (1 – 8) 15,000 8500 127,500,000.0
1 0
III Secondary Education
3. Grade 9 – 12 30,000 9000 270,000,000.0
1 0
Administrative Offices, Café and other
facilities
Multipurpose Rooms
Science laboratory rooms
Restrooms
Building support rooms
Mechanical rooms
Electrical rooms
Book storage
General storage
Parking, green area, Common
areas/courtyards recreational area and
internal road
Total 48,000.00 422,100,000.
00

25
According to the Legislation on the Lease Holding of Urban Land
(Proclamation No 271/2004) in principle, urban land permit by lease is on
auction or negotiation basis, however, the time and condition of applying the
proclamation shall be determined by the concerned Oromia Regional
Government depending on the level of development. Oromia Regional
Government, Land Management and Development Bureau is directly
responsible in dealing with matters concerning land.
Table 8.3: Lease Period
S. Service Type Lease Period
No. (Year)
1. Residential area 99
2. Industry 80
3. Education, cultural research health, sport, 99
NGO and religious
4. Trade 70
5. Urban Agriculture 15
6. Other service 70
Table 8.4:Lease Payment Period
S. Service Type Period of Payment
No. According to the Grade
of Towns
1. Private residential are obtained 50 - 60 years
through tender or negotiation
2. Trade 40 - 50 years
3. Industry 40 - 50 years
4. Real estate 40 years
5. Urban Agriculture 8 - 10 years
6. Trade and social service 40 - 50 years
7. Others 40 years
Moreover, advance payment of lease based on the type of investment
ranges from 5% to 10%. For this project, it will be 10%. For those that pay
the entire amount of the lease will receive 0.5% discount from the total lease
value and those that pay in installments will be charged interest based on
the prevailing interest rate of banks. Moreover, two years grace period shall
also be provided. The lease price is payable after the grace period annually.
EQUIPMENT AND TOOLS

26
The list of tools and equipment and other facilities required for provision of
education service is given in below. The estimated cost is Birr
45,506,500.00which is totally required in local currency.
Table 8.5: Equipment and tools
Sr. Unit of
Unit Total
No Description Measu Qty.
cost cost
. re
Broadband internet line
50,000. 1,000,000.
1 (Supply & Network set 20
00 00
Installation)
Desk top computers
12,000. 1,200,000.
2 networked (Supply & Unit 100
00 00
Installation)
15,000. 525,000.0
3 Lap top computers Unit 35
00 0
5,000.0
4 Scanner Pcs 3 15,000.00
0
3,500.0
5 Digital camera Pcs 5 17,500.00
0
10,000.
6 Video camera Pcs 2 20,000.00
00
7 DVD player Pcs 10 500 5,000.00
15,000.
8 Photo copy machine Pcs 2 30,000.00
00
12,000.
9 Duplicating machine Pcs 2 24,000.00
00
Generator set 11 KW 1,500,000.
10 Pcs
(supply and installation) 00
11 Printer Pcs 50 600 30,000.00
35,000. 140,000.0
12 Fax machine Pcs 4
00 0
Satellite TV-set (Supply & 50,000. 4,500,000.
13 Set 90
Installation) 00 00
200,000 200,000.0
14 Cafeteria facilities Set 1
.00 0
50,000.
15 Lawn moan Set 1 50,000.00
00
Class room equipment (for 50,000. 4,500,000.
16 Set 90
90 class rooms) 00 00
Workshops machineries,
15,000,00
tools and lot
0.00
equipment(Electrical ,mech

27
 Sr. Unit of
Unit Total
No Description Measu Qty.
cost cost
. re
anical, wood Works,
automotive, building
construction, machine,
Electronics )
Laboratory equipment and 12,000,00
lot
facilities 0.00
Transformer Supply and 750,000.0
17 1 750,000
Installation 0
Lump 400,000 4,000,000.
18 Other miscellaneous items
sum .00 00
45,506,5
Total
00.00
FURNITURE
The list of office furniture and other facilities required for provision of
Kindergarten and Basic Primary education service is given in below. The
estimated cost is Birr410,250.00 which is totally required in local currency.
Table 8.6: Furniture Costs
SN Description Qty Unit cost in Total cost in
Br. Br.
1 Managerial Tables with chair 2 3000 6,000
2 Secretarial chairs 2 1200 2,400
3 Office tables 4 1000 4,000
4 Office Chairs 25 800 20,000
5 Computer with its printer 5 10,000 50,000
6 Shelf 1 3500 3,500
7 Telephone and fax machine 2 1700 3,400
8 Filing Cabinets 2 1900 3,800
9 Decoration(Curtain, Sofa LS 100,000
&Carpet)
10 Assembly set 1 55,000
11 Others 162,150
Total 410,250

VEHICLES
Table 8.7: Vehicle Cost
No. Type of Purpose Qty Unit Price
Vehicle

28
 1 pickup Manager service 2 1,450,000.00
2 Bus Staff and students
5 2,600,000.00
transportation service
Total 15,900,000.0
0

8.2. WORKING CAPITAL

Working capital is part of annual operating cost and is required to make the
project operational. Except for some operational costs whose yearly expense
were taken as they are some limited months expenses were taken as
forecast the working capital requirement of the project. According to the
forecast made in detail the amount of initial working capital is estimated to
be Birr11,986,657.50.
MATERIALS AND INPUTS
The materials and inputs required for the envisaged project is estimated to
be about Birr 575,375.00 per month.
Sr.N Unit of Total
Description
o. Measure cost
I CURRICULUM: Package
Responsive to individual and social need
Comprehensive coverage
Adaptable to changing
Lump 500,375.0
II EDUCATIONAL MATERIALS:
sum 0
On-line library e-books and other useful
information
Quantitatively adequate
User friendly, easily exploitable and
challenging to both instructors and learners
A judicious mix of print- audio-oral materials
Closely related to the goals of the curriculum
III Other miscellaneous items 75,000.00
575,375.
Total
00

SUMMARY OF OPRATING EXPENSES

29
The two major utilities required by the project include electric power supply
and water facilities. Electric power is mainly used for the lighting of the
entire facility and consumption of electronics materials while; water is used
basic water consumptions. The requirements of these utilities and other
operating cost are estimated to be about Birr 11.89 million.

30
 Table 8.10: other operating costs
S.N Description Covera Project year
ge
1 2 3 4 5 6 7 8 9 10
1 Pre investment Once 255,0 - - - -
cost 00.00
2 Salaries and 1 5,662, 5,832,375. 6,007,346. 6,187,566. 6,373,193.6 6,564,389. 6,761,321 6,964,160 7,173,085 7,388,278
wages month 500.0 00 25 64 4 45 .13 .76 .59 .15
0
3 Salary and 1 1,132, 1,166,475. 1,201,469. 1,237,513. 1,274,638.7 1,312,877. 1,352,264 1,392,832 1,434,617 1,477,655
related benefits month 500.0 00 25 33 3 89 .23 .15 .12 .63
(20% of total
0
salary and
wage)
4 Raw Material 3 575,3 592,636.25 610,415.3 628,727.8 647,589.63 667,017.32 687,027.8 707,638.6 728,867.8 750,733.8
month 75.00 4 0 4 8 4 7
5 General and
Administrative
cost
5.1 Property 1 year 2,462, 2,535,944. 2,612,023. 2,690,384. 2,771,095.5 2,854,228. 2,939,855 3,028,050 3,118,892 3,212,459
Insurance 082.5 98 32 02 4 41 .26 .92 .45 .22
0
5.2 Audit & Legal 1 year 24,00 24,000.00 24,000.00 24,000.00 24,000.00 24,000.00 24,000.00 24,000.00 24,000.00 24,000.00
Fee 0.00
5.4 Telephone, fax 1 1,200. 1,236.00 1,273.08 1,311.27 1,350.61 1,391.13 1,432.86 1,475.85 1,520.12 1,565.73
and postal month 00
5.5 Cleaning and 1 5,000. 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00 5,000.00
sanitation month 00
5.6 Yearly land 1 year 1,603, 1,603,800. 1,603,800. 1,603,800. 4,378,374.0 4,378,374. 4,378,374 4,378,374 4,378,374 4,378,374
lease cost 800.0 00 00 00 0 00 .00 .00 .00 .00
including
0
interest
5.7 Advertising and 1 year 20,00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00
promotion 0.00
5.8 Utilities 1 140,0 140,000.00 140,000.0 140,000.0 140,000.00 140,000.00 140,000.0 140,000.0 140,000.0 140,000.0
month 00.00 0 0 0 0 0 0
5.9 Stationary and 1 10,00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00 10,000.00
office supplies month 0.00
5.1 License and 1 year 200.0 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00 200.00
0. registration fee 0
5.1 Fuel, Oil and 1 20,00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00 20,000.00
2 lubricant month 0.00
5.1 Training and 1 year 50,00 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00
3 tuition fee 0.00
5.1 Miscellaneous 1 25,00 25,000.00 25,000.00 25,000.00 25,000.00 25,000.00 25,000.00 25,000.00 25,000.00 25,000.00
4 Expense month 0.00
Total 11,98 12,026,66 12,330,5 12,643,5 15,740,44 16,072,47 16,414,4 16,766,7 17,129,5 17,503,2
6,657 7.23 27.24 03.06 2.15 8.20 75.32 32.36 57.11 66.60
.50

31
8.3. SOURCE OF FINANCE
The total of birr504,658,157.50 startup capital is required. From this 30%
(Birr 151,397,447.25) will be covered by the promoter, while the rest 70%
(Birr 353,260,710.25)will be covered by bank loan.
S.N Source Share (%) Total
151,397,447.
1 Owner equity 30% 25
353,260,710.
2 Bank loan 70% 25
504,658,15
Total 100% 7.50

8.4. BANK LOAN REPAYMENT

Table 8.11: Bank Loan Repayment Schedule
Principal Interest Total Annual Remainin
Year g
Payment (10%) Payment in br.
0 Balance
0 0 0
1 35,326,071.03 34,442,919.25 69,768,990.27 353,260,710.25
317,934,639.23
2 35,326,071.03 30,998,627.32 66,324,698.35 282,608,568.20
3 35,326,071.03 27,554,335.40 62,880,406.42 247,282,497.18
4 35,326,071.03 24,110,043.47 59,436,114.50 211,956,426.15
5 35,326,071.03 20,665,751.55 55,991,822.57 176,630,355.13
6 35,326,071.03 17,221,459.62 52,547,530.65 141,304,284.10
7 35,326,071.03 13,777,167.70 49,103,238.72 105,978,213.08
8 35,326,071.03 10,332,875.77 45,658,946.80 70,652,142.05
9 35,326,071.03 6,888,583.85 42,214,654.87 35,326,071.03
10 35,326,071.03 3,444,291.92 38,770,362.95 0.00

8.5. UNDERLYING ASSUMPTIONS

 Operating cost increases by 3% after 3rd year
 Sales revenue increases by 3% after 3rd year
 Bank loan interest is 10%

8.6. REVENUE PROJECTION

The project generates revenue from the service provision for the ultimate
consumers without imposing higher price .Accordingly, the project owner

32
expects to earn from this business activity total revenue of Birr 127.7
millionon first years of operation and 169.7when operate at full capacity.
Table 8.12:- revenue projection from regular and extension shift
Regular
S.N Description Project year
1 2 10-Mar
I Kindergarten 1,000.00 1,200.00 1,500.00
Revenue (average annual cost per 30,000,000.00 36,000,000.00 45,000,000.00
student will be 12,000)
II Primary Education
1st& 2nd cycle (1 – 8) 1,350.00 1,450.00 1,600.00

Revenue (average annual cost per 33,750,000.00 36,250,000.00 40,000,000.00

student will be 12,000)
III Secondary Education
Grade 9 – 12 1,600.00 1,800.00 2,000.00
Revenue (average annual cost per 32,000,000.00 36,000,000.00 40,000,000.00
student will be 12,000)
Total Revenue 95,750,000.0 108,250,000. 125,000,000.
0 00 00

Extension
S.N Description Project year
1 2 10-Mar
1 Primary basic education (first cycle) - - -
- - -
2 Primary general education (second 1,350.00 1,450.00 1,600.00
cycle)
16,200,000.00 17,400,000.00 19,200,000.00
Revenue (average annual cost per
student will be 12,000)
3 Secondary general education (first - - -
cycle)
- - -
Total Revenue 16,200,000.0 17,400,000.0 19,200,000.0
0 0 0
Total Revenue tuition (Regular + 111,950,000. 125,650,000. 144,200,000.
Extension) 00 00 00
Registration fee revenue(R+E) 15,800,000.0 22,250,000.0 25,500,000.0
(2,500 Birr/head) 0 0 0

Total Revenue(Tuition + 127,750,000. 147,900,000. 169,700,000.

Registration) 00 00 00

8.7. FINANCIAL VIABILITY

As it is a private firm established with the primary objectives of generating
profit and providing social service, the project should be financially viable for
the promoter and the lending institution. To this end, some financial

33
statements were selected to compare project costs and benefits throughout
the project life. Income statement and cash flow analysis are selected for this
study as financial measures.
8.7.1. INCOME STATEMENT
Here, project revenue and service costs; operating and service are listed and
compared to see whether the project generate profit or loss. According to the
forecasted income statement shows the project is found profitable through
its life.

34
Table 8.13: Forecast of Profit/or Loss (Birr)

Particulars(
1 2 3 4 5 6 7 8 9 10
Year)
Gross 127,750,0 147,900,0 169,700,0 178,185,0 187,094,2 196,448,9 206,271,4 216,584,9 227,414,2 238,784,9
revenue 00.00 00.00 00.00 00.00 50.00 62.50 10.63 81.16 30.21 41.72
Less
90,670,98 93,391,11 98,060,66 102,963,7 108,111,8 113,517,4 119,193,3 125,153,0 131,410,6 137,981,2
operating 2.50 1.98 7.57 00.95 86.00 80.30 54.32 22.03 73.13 06.79
costs
Operating 37,079,0 54,508,8 71,639,3 75,221,2 78,982,3 82,931,4 87,078,0 91,431,9 96,003,5 100,803,
profit 17.50 88.03 32.43 99.05 64.00 82.20 56.31 59.13 57.08 734.94
Less 8,127,350. 8,533,717. 8,960,403. 9,408,423. 9,878,844. 10,372,78 10,891,42 11,435,99 12,007,79
depreciation 00 50 38 54 72 6.96 6.30 7.62 7.50
Less bank 34,442,91 30,998,62 27,554,33 24,110,04 20,665,75 17,221,45 13,777,16 10,332,87 6,888,583. 3,444,291.
interest 9.25 7.32 5.40 3.47 1.55 9.62 7.70 5.77 85 92
Profit before 2,636,09 15,382,9 35,551,2 42,150,8 48,908,1 55,831,1 62,928,1 70,207,6 77,678,9 85,351,6
tax 8.25 10.70 79.53 52.20 88.91 77.85 01.65 57.05 75.61 45.51
Less profit 790,829.4 4,614,873. 10,665,38 12,645,25 14,672,45 16,749,35 18,878,43 21,062,29 23,303,69 25,605,49
tax (30%) 8 21 3.86 5.66 6.67 3.36 0.50 7.11 2.68 3.65
1,845,26 10,768,0 24,885,8 29,505,5 34,235,7 39,081,8 44,049,6 49,145,3 54,375,2 59,746,1
Net Profit 8.78 37.49 95.67 96.54 32.23 24.50 71.16 59.93 82.93 51.86

35
Table 8.14:- Cash flow table

Project Years
Description 0 1 2 3 4 5 6 7 8 9 10
Cash Inflows
151,39
Owner's Equity 7,447
353,26
Loan 0,710
1,845,2 10,768,03 24,885,89 29,505,59 34,235,73 39,081,82 44,049,67 49,145,35 54,375,28 59,746,15
Net Profit 69 7.49 5.67 6.54 2.23 4.50 1.16 9.93 2.93 1.86
Depreciation & 8,127,3 10,295,48 10,604,34
8,371,171 8,622,306 8,880,975 9,147,404 9,421,826 9,704,481 9,995,615
Amort 50 4 8
Total Cash 504,6 9,972,6 19,139,2 33,508,2 38,386,5 43,383,1 48,503,6 53,754,1 59,140,9 64,670,7 70,350,5
Inflows 58,158 19 08 01 71 36 51 52 75 67 00

Cash out Flows

492,41
Fixed assets 6,500
11,986
Working capital ,658
Increase In
359,600 370,388 381,499 392,944 404,733 416,875 429,381 442,262 455,530
working Capital
Pre-Operating 255,
Costs 000
Pre-Operating
-
Interest
35,326, 35,326,07 35,326,07 35,326,07 35,326,07
Loan Repayment 071 1 1 1 1 35,326,071 35,326,071 35,326,071 35,326,071 35,326,071
Dividend/
Withdrawal
Replacement
Total Cash 504,658 35,326, 35,685,6 35,696,4 35,707,5 35,719,0 35,730,8 35,742,9 35,755,4 35,768,3 35,781,6
Outflows ,158 071 71 59 70 15 04 46 52 33 01
- -
12,772,84 18,011,20 23,385,52 28,902,43 34,568,89
Net Cash Flow 0 25,353, 16,546,46 -2,188,257 2,679,001 7,664,121
7 6 3 3 9
452 3
- - - - - - -
Cumulative Cash 20,424,5 49,326,9 83,895,8
25,353, 41,899,9 44,088,1 41,409,1 33,745,0 20,972,2 2,960,99
Balance 452 15 72 72 51 04 7
26 60 59

36
 Table 8.15:- Project balance sheet
S. Descriptio Project year
N n
0 1 2 3 4 5 6 7 8 9 10

I Assets

1. Current
1 Assets
Cash - 11,986,657. 12,026,667. 12,330,527. 12,643,503. 15,740,442. 16,072,478. 16,414,475. 16,766,732. 17,129,557. 17,503,266.
50 23 24 06 15 20 32 36 11 60
Stock
Other
Current
Assets
Total - 11,986,657 12,026,667 12,330,527 12,643,503 15,740,442 16,072,478 16,414,475 16,766,732 17,129,557 17,503,266
Current .50 .23 .24 .06 .15 .20 .32 .36 .11 .60
Assets
1. Fixed
2 Assets
land lease 8,910,000.00 1,603,800.0 1,156,050.0 1,156,050.0 1,156,050.0 1,156,050.0 1,156,050.0 1,156,050.0 1,156,050.0 1,156,050.0 1,156,050.0
0 0 0 0 0 0 0 0 0 0
Building & 422,100,000.0 20,600,000. 20,600,000. 20,600,000. 20,600,000. 20,600,000. 20,600,000. 20,600,000. 20,600,000. 20,600,000. 20,600,000.
construction 0 00 00 00 00 00 00 00 00 00 00
Machinery 45,506,500.00 9,804,524.4 9,804,524.4 9,804,524.4 9,804,524.4 9,804,524.4 9,804,524.4 9,804,524.4 9,804,524.4 9,804,524.4 9,804,524.4
and 0 0 0 0 0 0 0 0 0 0
equipment
Vehicles 15,900,000.00 6,330,000.0 6,330,000.0 6,330,000.0 6,330,000.0 6,330,000.0 6,330,000.0 6,330,000.0 6,330,000.0 6,330,000.0 6,330,000.0
0 0 0 0 0 0 0 0 0 0
Pre- 255,000.00 - - - - - - - - - -
investment
cost
Total Fixed 483,761,500 36,734,524 36,734,524 36,734,524 36,734,524 36,734,524 36,734,524 36,734,524 36,734,524 36,734,524 36,734,524
Assets .00 .40 .40 .40 .40 .40 .40 .40 .40 .40 .40
II Liabilities
and Capital
2. Liabilities
1 (current/fix
ed)
Bank loan 353,260,710.2 317,934,639 282,608,568 247,282,497 211,956,426 176,630,355 141,304,284 105,978,213 70,652,142. 35,326,071. -
5 .23 .20 .18 .15 .13 .10 .08 05 03
Total 353,260,710.2 317,934,639 282,608,568 247,282,497 211,956,426 176,630,355 141,304,284 105,978,213 70,652,142. 35,326,071. -
liability 5 .23 .20 .18 .15 .13 .10 .08 05 03
2. Capital
2
Equity 151,397,447.2 151,397,447 151,397,447 151,397,447 151,397,447 151,397,447 151,397,447 151,397,447 151,397,447 151,397,447 151,397,447
5 .25 .25 .25 .25 .25 .25 .25 .25 .25 .25
Earnings 1,845,268.7 10,768,037. 24,885,895. 29,505,596. 34,235,732. 39,081,824. 44,049,671. 49,145,359. 54,375,282. 59,746,151.
8 49 67 54 23 50 16 93 93 86
Total 151,397,447 153,242,71 162,165,48 176,283,34 180,903,04 185,633,17 190,479,27 195,447,11 200,542,80 205,772,73 211,143,59
Capital .25 6.03 4.74 2.92 3.79 9.48 1.75 8.41 7.18 0.18 9.11

37
S. Descriptio Project year
N n
0 1 2 3 4 5 6 7 8 9 10

Total 504,658,157 471,177,35 444,774,05 423,565,84 392,859,46 362,263,53 331,783,55 301,425,33 271,194,94 241,098,80 211,143,59
Liabilities .50 5.25 2.94 0.09 9.94 4.61 5.85 1.48 9.23 1.20 9.11
and Capital

Table 8.16:- Sensitivity Analysis

Calculation of Financial Internal Rate of Return

Yea Fixed Asset Total Operating Net Benefit Net Benefit

Revenue Initial Inv't. Total Income Tax Total Cost
r Recovery Benefits Costs After Tax Before Tax

151,397,44 151,397,44 - -
0 151,397,447
7 0 7 151,397,447 151,397,447
11123705.2
1 127,750,000 127,750,000 90,670,983 90,670,983 90,670,983 25,955,312 37,079,018
5
16352666.4
2 147,900,000 147,900,000 93,391,112 93,391,112 93,391,112 38,156,222 54,508,888
1
21491799.7
3 169,700,000 169,700,000 98,060,668 98,060,668 98,060,668 50,147,533 71,639,332
3
102,963,70 102,963,70 22566389.7 102,963,70
4 178,185,000 178,185,000 52,654,909 75,221,299
1 1 1 1
108,111,88 108,111,88 108,111,88
5 187,094,250 187,094,250 23694709.2 55,287,655 78,982,364
6 6 6
113,517,48 113,517,48 24879444.6 113,517,48
6 196,448,963 196,448,963 58,052,038 82,931,482
0 0 6 0
119,193,35 119,193,35 26123416.8 119,193,35
7 206,271,411 206,271,411 60,954,639 87,078,056
4 4 9 4
125,153,02 125,153,02 27429587.7 125,153,02
8 216,584,981 216,584,981 64,002,371 91,431,959
2 2 4 2
131,410,67 131,410,67 28801067.1 131,410,67
9 227,414,230 227,414,230 67,202,490 96,003,557
3 3 2 3
137,981,20 137,981,20 30241120.4 137,981,20
10 238,784,942 - 238,784,942 70,562,614 100,803,735
7 7 8 7

IRR 28%
NPV at Birr
10% 146,648,549.42

38
 Sensitivity Analysis
IRR If Unit Price decrease by 10%

Yea Fixed Asset Total Operating Net Benefit Net Benefit

Revenue Initial Inv't. Total Income Tax Total Cost
r Recovery Benefits Costs After Tax Before Tax

151,397,44 151,397,44 - -
0 151,397,447
7 0 7 151,397,447 151,397,447
1 114,975,000 114,975,000 90,670,983 90,670,983 7291205.25 90,670,983 17,012,812 24,304,018
11915666.4
2 133,110,000 133,110,000 93,391,112 93,391,112 93,391,112 27,803,222 39,718,888
1
16400799.7
3 152,730,000 152,730,000 98,060,668 98,060,668 98,060,668 38,268,533 54,669,332
3
102,963,70 102,963,70 17220839.7 102,963,70
4 160,366,500 160,366,500 40,181,959 57,402,799
1 1 1 1
108,111,88 108,111,88 108,111,88
5 168,384,825 168,384,825 18081881.7 42,191,057 60,272,939
6 6 6
113,517,48 113,517,48 18985975.7 113,517,48
6 176,804,066 176,804,066 44,300,610 63,286,586
0 0 8 0
119,193,35 119,193,35 19935274.5 119,193,35
7 185,644,270 185,644,270 46,515,641 66,450,915
4 4 7 4
125,153,02 125,153,02 125,153,02
8 194,926,483 194,926,483 20932038.3 48,841,423 69,773,461
2 2 2
131,410,67 131,410,67 21978640.2 131,410,67
9 204,672,807 204,672,807 51,283,494 73,262,134
3 3 2 3
137,981,20 137,981,20 23077572.2 137,981,20
10 214,906,448 - 214,906,448 53,847,669 76,925,241
7 7 3 7

IRR 20%
NPV at
10% Birr 76,010,539.10

39
 Sensitivity Analysis
IRR If Operating costs increase By 10%

Yea Fixed Asset Total Operating Net Benefit Net Benefit

Revenue Initial Inv't. Total Income Tax Total Cost
r Recovery Benefits Costs After Tax Before Tax

151,397,44 151,397,44 - -
0 151,397,447
7 7 151,397,447 151,397,447
8403575.77
1 127,750,000 127,750,000 99,738,081 99,738,081 99,738,081 19,608,343 28,011,919
5
102,730,22 102,730,22 13550933.0 102,730,22
2 147,900,000 147,900,000 31,618,844 45,169,777
3 3 5 3
107,866,73 107,866,73 107,866,73
3 169,700,000 169,700,000 18549979.7 43,283,286 61,833,266
4 4 4
113,260,07 113,260,07 19477478.6 113,260,07
4 178,185,000 178,185,000 45,447,450 64,924,929
1 1 9 1
118,923,07 118,923,07 20451352.6 118,923,07
5 187,094,250 187,094,250 47,719,823 68,171,175
5 5 2 5
124,869,22 124,869,22 21473920.2 124,869,22
6 196,448,963 196,448,963 50,105,814 71,579,734
8 8 5 8
131,112,69 131,112,69 22547616.2 131,112,69
7 206,271,411 206,271,411 52,611,105 75,158,721
0 0 6 0
137,668,32 137,668,32 23674997.0 137,668,32
8 216,584,981 216,584,981 55,241,660 78,916,657
4 4 8 4
144,551,74 144,551,74 24858746.9 144,551,74
9 227,414,230 227,414,230 58,003,743 82,862,490
0 0 3 0
151,779,32 151,779,32 26101684.2 151,779,32
10 238,784,942 238,784,942 60,903,930 87,005,614
7 7 8 7

IRR 23%

40
 NPV at
10% Birr 104,438,798.34

Sensitivity Analysis
IRR If Investment Cost Increase By 10%

Yea Fixed Asset Total Operating Income Total Net Benefit Net Benefit
Revenue Initial Inv't. Total
r Recovery Benefits Costs Tax Cost After Tax Before Tax

166,537,19 166,537,19 - -
0 166,537,192
2 2 166,537,192 166,537,192
11123705.2
1 127,750,000 127,750,000 90,670,983 90,670,983 90,670,983 25,955,312 37,079,018
5
16352666.4
2 147,900,000 147,900,000 93,391,112 93,391,112 93,391,112 38,156,222 54,508,888
1
21491799.7
3 169,700,000 169,700,000 98,060,668 98,060,668 98,060,668 50,147,533 71,639,332
3
102,963,70 102,963,70 22566389.7 102,963,70
4 178,185,000 178,185,000 52,654,909 75,221,299
1 1 1 1
108,111,88 108,111,88 108,111,88
5 187,094,250 187,094,250 23694709.2 55,287,655 78,982,364
6 6 6
113,517,48 113,517,48 24879444.6 113,517,48
6 196,448,963 196,448,963 58,052,038 82,931,482
0 0 6 0
119,193,35 119,193,35 26123416.8 119,193,35
7 206,271,411 206,271,411 60,954,639 87,078,056
4 4 9 4
125,153,02 125,153,02 27429587.7 125,153,02
8 216,584,981 216,584,981 64,002,371 91,431,959
2 2 4 2
131,410,67 131,410,67 28801067.1 131,410,67
9 227,414,230 227,414,230 67,202,490 96,003,557
3 3 2 3
137,981,20 137,981,20 30241120.4 137,981,20
10 238,784,942 - 238,784,942 70,562,614 100,803,735
7 7 8 7

41
IRR 25%
NPV at
10% Birr 132,885,145.12

42
8.8. Sensitivity Analysis
The assumptions used in the financial analysis are conservative and the
actual feasibility of the project is believed not to deviate much from the
projected one. However, the project may face some unforeseen risks/shocks.
The most likely shocks are decrease in sales revenue (which may happen
due to decrease in prices and/or decrease in sales), increase in operating
costs (for example, due to increase in global price of raw materials) and
increase in investment cost. The project’s sensitivity to absorb the above
adverse shocks is tested by altering each variable at a time: decrease in
sales revenue; increase in operating cost and increase in investment cost
each by 10%.
The NPV 146.7 million declines to Birr 76.01 million, 104.43 million and
132.88 million with 10% changes in revenue, operating cost and investment
cost respectively; the NPV value in all cases remains far above zero.
Similarly, the FIRR 28% decreases to 20% with decrease in sales revenue, to
23% with increase in operating cost and to 25% with an increase in the
investment cost; all of the FIRRs are above the expected lending rates. The
result shows the viability of the project under the different risk scenarios.
Table 8.17:- Summary of IRR
Increase in
Decrease in Price by Increase in Operating
Descripti Investment Cost by
10% Cost by 10%
on 10%
Original New Original New Original New
76,010,53
NPV 146,648,549 146,648,549 104,438,798 146,648,549 132,885,145
9
FIRR 28% 20% 28% 23% 28% 25%
8.9. Financial evaluations of the project
8.9.1. Profitability
Based on the projected profit and loss statement, the project will generate a
profit starting from the first of operation. Annual net profit after tax will grow
from Birr 127.7million on first year of operation to Birr 169.7 million during
the life of the project.

43
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.
8.9.2. Ratios
In financial analysis financial ratios and efficiency ratios are used as an index
or yardstick for evaluating the financial position of a firm. It is also an
indicator for the strength and weakness of the firm or a project. Using the
year-end balance sheet figures and other relevant data, the most important
ratios such as return on sales which is computed by dividing net income by
revenue, return on assets (operating income divided by assets), return on
equity (net profit divided by equity) and return on total investment (net profit
plus interest divided by total investment) has been carried out over the
period of the project life and all the results are found to be satisfactory.
8.9.3. Pay-Back Period
The payback period, also called pay–off period is defined as the period
required recovering the original investment outlay through the accumulated
net cash flows earned by the project. Accordingly, based on the projected
cash flow it is estimated that the project’s initial investment will be fully
recovered within 5 years.
8.9.4. Internal Rate of Return
The internal rate of return (IRR) is the annualized effective compounded
return rate that can be earned on the invested capital, i.e., the yield on the
investment. Put another way, the internal rate of return for an investment is
the discount rate that makes the net present value of the investment's
income stream total to zero. It is an indicator of the efficiency or quality of an
investment. A project is a good investment proposition if its IRR is greater
than the rate of return that could be earned by alternate investments or
putting the money in a bank account. Accordingly, the IRR of this project is
computed to be 28 % indicating the viability of the project.

44
8.9.5. Net Present Value
Net present value (NPV) is defined as the total present (discounted) value of
a time series of cash flows. NPV aggregates cash flows that occur during
different periods of time during the life of a project in to a common
measuring unit i.e. present value. It is a standard method for using the time
value of money to appraise long-term projects. NPV is an indicator of how
much value an investment or project adds to the capital invested. In
principle, a project is accepted if the NPV is non-negative. Accordingly, the
net present value of the project at 10% discount rate is found to be Birr
146.65 million which is acceptable. For detail see table 8.16.
NB:_-The NPV and FIRR are high mainly due to the low initial fixed
investment and the attractive incentives
9. ENVIRONMENTAL IMPACT OF THE PROJECT
Traditionally, service sector is considered to be environmentally friendly
venture. But during establishment pollutes the environment during its
construction and implementation phases.
A. Preconstruction Phase:- In this phase most of the time the
environmental and social issues of the surround environs are not taken
into considerations. And as a result the probable pollutions of the
surrounding surface and ground waters, vegetation, soils and impacts on
societal livelihoods are immense and unavoidable.
B. During Construction Phase:- In this phase the major part of the
environmental disturbances occur while excavations and construction of
school structures. Dust emissions, water and soil pollutions are the major
and unavoidable activities where the incumbent investor would exercise
maximum efforts to minimize negative environmental and social impacts.
C. During Operation Phase:- This phase is the phase at which the school
started providing the intended education services. In providing primary
and secondary school services, the major polluting factors are the
improper disposal of liquid and solid wastes, depletion of water, sound
pollution and others. Hence, the planned project should consider the

45
 proper drainage systems that have alignment with the surrounding major
drainage systems and minimize the sound pollutions through construction
of sound proofing structures for building and partitions of building. In
doing so such standardized school would make immense contributions for
the country’s education development in general.
10. FUTURE DEVELOPMENT
Every business under takings be it large or small should have to have future
development plan. It is a plain fact that business activities are undertook in a
dynamic and turbulent environment. Hence, to overcome or minimize the
risks of uncertain future, businesses should devise effective strategies that
enable them to be successful in their operation. Likewise, the project center
has devised strategies to overcome the future risk of operation. The first
strategy is diversification of its activities to different other business forms.
The second future development plan of the project is expanding its branches
in many other parts of the region. The third strategy of the center is making
a joint venture with other similar business undertakings either in the
domestic country or from abroad.

11. ACTION PLAN

Description Year
S.N 1 2 3 4-10
1 Construction and civil work
Purchasing equipment, machineries
2 and vehicles
3 Equipment and electrical installation
4 Starting operation

46
 TABLE OF CONTENTS
CONTENTS
PAGE No.
1.INTRODUCTION.............................................................................................2
1.1.PROJECT JUSTIFICATION..........................................................................3
1.2.Promoter Profile......................................................................................3
1.3.SERVICE DESCRIPTION...........................................................................4
1.4.Land Use Plan.........................................................................................5
2.OBJECTIVES...................................................................................................8
2.1.GENARAL OBJECTIVE..............................................................................8
2.2.SPECIFIC OBJECTIVES..............................................................................8
3.MISSION, VISION AND VALUES......................................................................8
3.1.MISSION:.................................................................................................8
3.2.VISION:...................................................................................................8
3.3.VALUE:....................................................................................................8
4.ECONOMIC & SOCIAL BENEFIT......................................................................9
5.MARKET STUDY.............................................................................................9
5.1.Primary and Secondary Schools Statistics in Ethiopia............................9
5.2.Access and demand..............................................................................11
5.3.PastSupplyandPresentDemand in Addis Ababa..............................12
5.4.ProjectedDemand of School In Addis Ababa................................14
5.5.Overview of Possible Marketing Strategies...........................................15
5.5.1.Promotion and Advertising.............................................................15
5.5.2.Pricing & Positioning Strategy........................................................16
5.6.Prime Markets Targeted.......................................................................16
5.7.Service Qualifying Strategy..................................................................16
6.ORGANIZATION AND MANAGEMENT...........................................................17
6.1.ORGANIZATION STRUCTURE.................................................................17
6.2.TRAINING REQUIREMENT......................................................................18
7.SERVICE CAPACITY AND PROGRAM.............................................................19
7.1.CAPACITY..............................................................................................19
7.2.MATERIALSANDUTILITIES...................................................................20
7.3.TECHNOLOGYANDENGINEERING.......................................................20
8.FINANCIAL STUDY.......................................................................................23

47
 8.1.FIXED INVESTMENT...............................................................................23
8.2.WORKING CAPITAL................................................................................27
8.3.SOURCE OF FINANCE............................................................................30
8.4.BANK LOAN REPAYMENT.......................................................................30
8.5.UNDERLYING ASSUMPTIONS.................................................................30
8.6.REVENUE PROJECTION..........................................................................30
8.7.FINANCIAL VIABILITY.............................................................................31
8.7.1.INCOME STATEMENT......................................................................32
8.8.Sensitivity Analysis...............................................................................40
8.9.Financial evaluations of the project......................................................40
9.ENVIRONMENTAL IMPACT OF THE PROJECT................................................42
10.FUTURE DEVELOPMENT............................................................................43
11.ACTION PLAN............................................................................................43

48