BUSINESS PLAN FOR TRADE OF PULSE, OILSEED AND TEFF FLOUR

FINANCER: COMMERCIAL BANK

OWNER: MR. MIFTA HUSSEIN

SEPTEMBER, 2022

ADAMA -ETHIOPIA
Contents
EXECUTIVE SUMMARY ............................................................................................................................................................................... 4

1. INTRODUCTION ....................................................................................................................................................................................... 5

1.2. Mission, Vision, Goal, Objective and Value ............................................................................................................................ 5

1.2. Background of the Project ................................................................................................................................................... 2

1.3. Business Description .......................................................................................................................................................... 6

1.4. The Profile of Promoter ....................................................................................................................................................... 7

1.5. Future Trends ..................................................................................................................................................................... 8

2. MARKET STUDY AND ANALYSIS ......................................................................................................................................................... 10

2.1. Market Size, Growth Rate and Market Share ........................................................................................................................ 10

2.1.1. Market Sizing for pulses............................................................................................................................................. 10

2.3. Targets of Market Opportunities ......................................................................................................................................... 10

2.4. SWOT analysis. ................................................................................................................................................................. 11

2.5. Market Competition and Penetration ................................................................................................................................... 12

2.6. Supply and Demand .......................................................................................................................................................... 14

2.6.1. Top ten Ethiopian Exports in 2021 ................................................................................................................................... 14

2.7. Demand Projection............................................................................................................................................................ 16

2.8. Pricing and Distribution Channels ...................................................................................................................................... 17

3. ORGANIZATION AND MANAGEMENT PLAN......................................................................................................................................... 18

3.1. Ownership........................................................................................................................................................................ 18

3.3. Organization Structure ...................................................................................................................................................... 18

3.4. Business Advisory ............................................................................................................................................................ 18

3.5. Man Power and Management ............................................................................................................................................. 19

4. TECHNICAL STUDY .............................................................................................................................................................................. 20

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4.1. Location of the Business ................................................................................................................................................... 20

4.2. Tradable product types...................................................................................................................................................... 20

4.3. Production Capacity and Programme ................................................................................................................................. 20

4.3.1. Past Trade Volume trend ............................................................................................................................................ 20

4.4. The main long- and short-term goals of the business; .......................................................................................................... 22

5. FINANCIAL STUDY AND ANALYSIS ..................................................................................................................................................... 22

5.1. Underlying Assumption ..................................................................................................................................................... 22

5.2. Working Capital ................................................................................................................................................................ 23

5.3. Depreciation Schedule ...................................................................................................................................................... 23

5.4. Source of Fund Loan Repayment Schedule and Collateral .................................................................................................... 24

5.4.1. Source of Fund ......................................................................................................................................................... 24

5.5.2. Loan Repayment Schedule......................................................................................................................................... 24

5.5.3. Collateral .................................................................................................................................................................. 24

5.7. Expected Financial Results................................................................................................................................................ 24

5.7.1. Profit and Loss Statement .......................................................................................................................................... 24

5.7.2. Projected Flow Statement .......................................................................................................................................... 33

5.7.3. Projected Balance Sheet ............................................................................................................................................ 34

5.8. Financial Analysis and Evaluation ...................................................................................................................................... 36

6. SOCIOECONOMIC BENEFIT OF THE BUSINESS ................................................................................................................................. 39

6.1. Socioeconomic Considerations / Benefits ........................................................................................................................... 39

7. CONCLUSION AND RECOMMENDATION............................................................................................................................................. 39

7.1. Conclusions ..................................................................................................................................................................... 39

7.2. Recommendations ............................................................................................................................................................ 40

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EXECUTIVE SUMMARY
The Business Plan should realistically assess the business’s potential and take into account of both the
positive and negative issues that will impact the business. Ideally, it should be prepared with assistance
from a professional, but the strategies and forecasts that are contained in the Plan, must be those of the
promoters. The primary purpose of a Business Plan should be to identify the strengths and weaknesses of
the business and give a realistic assessment of the most probable performance of the business over the
period for which the Plan is drawn up.
The business Established in 2020, the business was founded by Mr. Mifta Hussien, who has been rich
experience in running diversified business for more than 25 years. Trade is incredibly important to modern
economies because it offer people and business many more markets for their goods. One of the core
functions of diplomacy and foreign policy between governments is to foster economic trade, encouraging
exports and imports for the benefit of all trading parties. The purpose of this business plan is to
demonstrate the overall business performance of Mifta Hussein pulse, oils seed and teff flour trade for the
next five years starting from 2022/23/ to 2026/27.
The total loan required for working capital is Birr 10 million that will be used for trade of pulse, oilseed and
teff flour repaid back within three years after a six months grace period on quarterly repayment schedule
with 12 installments of Birr 833,333.33 that will be borrowed from commercial bank of Ethiopia.
Mifta Hussein is supplying oilseed, pulse and teff flour to exporters and local users by collecting from
different part of the county. Those commodities are Ethiopia’s exportable items which the county is getting
considerable foreign exchange yearly. The main destinations of these agricultural products are India and
china. The establishment of this business is creating an employment opportunity for more than 11
individuals.

The financial statements of the business i.e. balance sheet, income statements and cash flow statements
at the end of the each year show a healthy surplus of revenue over expense and the assed also shows
increase from the 2022/23-2026/27

The NPV is as indicator of how much value an investment or project adds to the capital invested. In
principal a business is accepted if the NPV is non-negative. Accordingly, the net present value of the
business 16% discount rate is found Birr 12 million indicating the viability of the project.

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1. INTRODUCTION

1.2. Mission, Vision, Goal, Objective and Value

i. Vision Statement

To become the best sourcing partner for Pulses and oilseeds for global consumers by collecting and
supplying quality pulses to exporters operate in the county by which they creating value and secure the
supply. The business pursues to embrace the upcoming future dynamic world market. Hence the logo
“Quality Ethiopian Pulses”, come into practice. Show intent to be the first choice quality pulses and oil
seeds supplier to in Ethiopia; furthermore, the business also has a vision to be supplier of quality teff flour
to local and foreign market.

ii. Mission Statement

Boost business sales volume and commodity supply destinations throughout the world. Establish lasting
relationships with customers. Build dynamic management staff always ready to learn new things and bind
up cohesively for realizing business’s objectives and goals.

iii. Values

 Best quality  Ambitious

 Transparency  We care
 Social responsible

iv. Objective and Goal

The objective of the business is to establish highly dedicated management staff that enables it to boosts its
supply sales volume. Miftah Hussein supply quality pulses and teff flour to exporter and public customers.
The business has formed as supplying pulses to exporters and other dealers. It has been in operation since
2020 G.C. The industry has created employment opportunity for unemployed individuals. The project will
expect to create employment opportunity for 8 workers to run operating the project.

The project will mainly targeted on earning profit for supplying available Oilseeds/pulses as well as teff flour
with quality and affordable price to the exporters and community. The business will play a vital role in
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provide/ supplying Pulses to exporters which avoid the information lag of exporter to get such product. It
collected the products from all parts of the county and supply it to the few organized and registered
exporters. In addition the purpose of the business include,

 To generate income for the owner of a business

 To serve the customer than competitors
 To create employment opportunity.
 To minimize the foreign exchange problems of the country by supplying quality Pulses

1.2. Background of the Project

The pulses sector in Ethiopia has the potential to be a key accelerator of agricultural development and
growth. It plays a valuable role not only in boosting export earnings but also in enhancing the rural
economy and social development. Pulses are pro-poor crops with a unique combination of benefits
including rich nutritional value, high income-generation potential and the ability to convert atmospheric
nitrogen into a usable form to improve soil fertility. Pulses are strategically important to Ethiopia, as they are
the third agricultural export commodity after coffee and oilseeds, and play a vital role in the country’s
economy.

Globally, the volume of pulse production has increased gradually over the last 25 years, from 56.48 million
tons in 1991 to 81.80 million tons in 2016. The largest markets for food pulses are in India, Bangladesh,
Pakistan and Sri Lanka, while the largest market for animal feed pulses is the European Union. Five
subsectors of pulses (peas, kidney beans, chickpeas, lentils and gram beans) account for four-fifths of the
market share of all traded pulses. In Ethiopia, broad beans account for the greatest portion of production
(32.12%), followed by dry beans (17.7%), chickpeas (16.25%), dry peas/field peas (12.74%), vetches/grass
peas (10.87%) and lentils (6.8%). Most pulse production is concentrated in Amhara and Oromia regions,
which together account for 87% of the production of broad beans, 95% of chickpeas, 77% of common
beans, 78% of field peas and 93% of lentils. Despite being Ethiopia’s third commodity export, there has
been low investment in pulse research compared with that for cereals, both by the Government and donors.
Similarly, pulse initiatives have been given less priority. From a world market point of view, Ethiopia’s pulse
ex-ports represent 3% of world pulse exports.

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According to 2016 data (the most recent available), the most important export destinations for pulses are
Pakistan, India, Indonesia and Viet Nam. Pulses accounted for 6.93% of export earnings in Ethiopia, and
contributed more than US $248 million to the country’s hard currency reserves in 2016. In the last five
years, the growth in exports in value has been 16% annually, with broad beans representing the bulk of this
growth.

At present, pulses account for 13% of the cropped land in Ethiopia. In terms of area, pulses are second in
area coverage and production in Ethiopia after cereals, with over 1.5 million hectares and 2.67 million tons
of production. For the pulses sector to continue to add value and intensify market development, public and
private industry representatives identified the following as the most pressing issues that should be
addressed rapidly:

 Limited use of quality inputs;

 Extension services are not effective;
 Low farm productivity;
 Limited knowledge of value addition practices;
 Technology for mechanization for value addition is either out of date or unknown;
 Poor sourcing practices;
 Postharvest losses and quality degradation during storage and processing;
 Promotion to attract foreign direct investment (FDI) to the sector is limited;
 Implementation of standards and codes of conduct at production and processing levels;
 Limited links between the public and private sectors
According to the most recent available data (2016), the most important export destinations for pulses are
Pakistan, India, Indonesia and Viet Nam, with export values of US $72.98 million, US $ 27.78 million, US
$27.67 million and US $27.37 million respectively. These countries already represent more than half of
Ethiopia’s export destinations in value, which means that market concentrations have improved. Moreover,
the number of markets with sales valued above US $ 1 mil-lion grew from six in 2001 to 24 in 2014. Hence,
Ethiopia has diversified its significant export market in the past few years. A closer look at Ethiopia’s pulses
trade with India reveals that Ethiopia sold 11.17% of its exported pulses to India in 2017, and between 2012
and 2016, pulse exports to India grew with an annual growth in value of 61.3 %.

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Pulses accounted for 6.93% of export earnings in Ethiopia, and contributed more than US $248 million to
the country’s hard currency reserves in 2016. Export earnings from pulses have been growing at an annual
growth rate of 16%. Among the pulse crops, the top exported pulses are common beans, broad beans and
chickpeas.

Table 1.1: Ethiopian export earnings from pulses, 2012–2016 (US $ thousands

Even though Ethiopia is endowed with vast natural resources, due to inappropriate policy of the former
regimes, its economic and social development had remained so low and backward. Moreover, in addition to
the low economic level the pertaining high population growth with other uncontrollable natural hazards like
drought had aggravated the problem in all aspects. Pertinent to this situation the pace of urbanization is
also showing a faster growth in the member of urban inhabitants than the availability and the provision
capacity of basic services and the infrastructures. During the past regimes, the role of private sectors in the
national economic development to struggle our basic enemies such as poverty, draught, has remained
insignificant, but now, the new investment proclamations announced given a new impetus for private
investor.

At Present there is a very critical shortage of standardized, pulse & oilseeds cleaning and processing
factory in Ethiopia that could be put to use for different purposes, which may include all the necessary
accommodation for their customers. It is known that the private sector had been prohibited to invest in any
kinds of business sector, except the state, due to the economic policy. As a result, mainly the state

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monopolized the production and supply of services for business and other commercial activities quite for a
long time. Although no reliable and sufficiently recorded data is available on the current rate of
standardized pulse & oilseeds in cleaning and processing factory and export in the country, it falls being the
demand literally in all major cities of the country, which is also true in Ethiopia. Therefore, the existing trend
of such project requirement for different purposes and particularly for business activities are increase
significantly.

Teff (Eragrostis teff) is an ancient tropical cereal crop that has its center of origin and diversity in the
northern Ethiopian highlands from there it is believed to have been domesticated. In addition; teff is an
untouched cereal crop at worldwide than other cereal crops like maize; wheat; sorghum and barley;
however; it is a staple food grain in Ethiopia mainly used to make injera as a traditional fermented Ethiopian
pancake. In other countries; like Australia; South Africa; and the United States; it is predominantly used as
a forage crop for animal feed

Teff made up 22% of all the cultivated area by private smallholder farmers which estimating about 3 million
hectares and that it was grown by 6.6 million farmers [30]. There is a total of 15.3 million farmers in
Ethiopia; this implies that 43% of all Ethiopian farmers grow teff. Therefore; this sector is the most important
in Ethiopia’s agricultural economy; which accounts for 72% of all cultivated land. If teff consumption is
disaggregated by region (Figure 2); distinctive patterns become apparent. As indicated; the highest teff
consumption appears in Ethiopia’s major cities; with Addis Ababa in the lead (101 kilograms per capita);
followed by Harar (40 kilograms) and Dire Dawa (38 kilograms). The country’s major production zones also
show relatively higher per capita consumption levels; 36 kilograms in Amhara; 35 kilograms in Oromia; and
38 kilograms in Tigray. Consumption levels are relatively low in the southern (a region known for
consumption of root crops) and western parts of the country (a region where maize is commonly
consumed) that is; 19 kilograms in SNNP; 17 kilograms in Gambela; and 3 kilograms in Somali. Injera is
consumed more in urban areas both in relative and absolute terms. Except for Addis Ababa; the Amhara
region is the only region where white teff consumption exceeds 10 kilograms per capita per year.

Teff is the most value-added crops compared to other cereal crops. Following the imposing ban on raw teff
grain export; selling of processed from of teff product is started to rise at national and global level as well as
benefited many stakeholders involved in the process. Currently; Ethiopian pancake (injera) is found for sale
in domestic and international market. It contributes to job creation for many people of the country. Hence,

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with existing high demand for processed teff or teff flour the business man is supply it by milling teff to
different consuming bodies.

1.3. Business Description

Misftah Hussien Pulse seed and teff flour supplying business is a business which collects pulses seeds
from all over the country, by processing/milling teff and supplying to exporter and to the public’s in order to
maximizing owner wealth and generating income. The owner has been in the same business for the past
10 years and has excellent experience in such trade. The following are abling environment for the
business.

 Good experience acquired by the owner in handling customer and providing services,
 Well-handled and applied management system,
 Appropriate location of the project.

Trading Oilseed & pluses seeds have a vital role in introducing products to export market by generating
hard currency from an international market commodity exchanges to the country. The business is designed
to engage in supplying/ trading of pulse & teff flour collecting from local producer and supplier of the
commodity. One of the current smartest features of this business was the reason why this location is
considered:

 The availability of abundant resource

 Availability of deman for those tradable item i.e. pulsed and teff flour.
 The availability of machine operators, and related personnel’s
 The presence of well facilitated infrastructure
 The facility of social services (Telephone, mail and other utility services which are available, there is
also technical advisers when necessary from the nearby firms to be considered in selection of the
location.

The major stakeholder of the business is the following:

 Governmental and Non-Governmental Organizations

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  Private sectors exporters for pulse seeds and Health, customs, Telecom. Postal, Educational and
other Organizations for teff flour.
 Population of the city and its surroundings.
 Small, medium and big whole sellers and retailers) are considered as the key partners and
stakeholders of the project.

1.4. The Profile of Promoter

Mr. Miftah Hussein was born in Oromia regional state since in 1975. He was attaining his education until
completion of preparatory school/ grade twelve. He is a family head; with his spouse. The owner has reach
experience in running diversified businesses for the last more than 15 years basically in pulse trade and
transportation service. He started his business with one Isuzu FSR and developed to owning different
vehicles including Tracker. The he step by step started to trade different cereal crops domestically. Now, he
has started engaging in trade business of pulse like chick peas, soybean, and different types of beans,
Linseed and Niger seed
The business is fully trade oriented, that fully owned by Ethiopian National and entrepreneur, Registered
under Ethiopian Trade low. It was established since 2020, it deciding to operate under any challenges to
sustain the business by working day and night in the already penetrated market.
The business will be well interconnected with companies which export oilseed and pulses to abroad. At this
time some of the exporters are the customers of the business and it has a plan to rich all exporters in order
they bought the product from the business. The business is well positioned in terms of sales volume for
required supply and earn generate revenue. The owner of the business Mr. Mifta Hussien, who is already in
the business and has long year experience in running diversified business especially in trade and service
sector.

1.5. Loan purpose and size

The owner business demands working capital loan for trading the described items. The working capital loan
basically used for: Purchase of pulse and teff for three months, salary and benefit for three months,
general & administrative expense three months, insurance premium for one year, utility expense for three
month, selling and promotion including broker commission six month totally estimated birr 10 million for
working capital for the year, 2022/23.

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The loan will be repaid back within three years on quarterly base after six month grace period in 12 loan-
installment periods.

1.5. Future Trends

In order to analyze the future prospect of the business a numbers of indicators could be considered. The
following are among the major ones:
 The geographic location of Adama has made it very important for the existing and rapidly growing
commercial and business activities:
 The increasing demand of tradable items
 Being an ideal place for export and import activities.
 The presence of the main road and railway which passing to Djibouti
 Its position being nearer to the rail way station and Modijo dry port

The existence of a relatively more developed infrastructure facilities than other similar towns in attracting
more number of business people are some of the aspects which would confirm that Ethiopia has got a
bright and reliable future development prospect in all terms.

The business will expected to produce a multiplying benefit to the owner, the employees, the business
community, the service seekers around the business area and the government at different levels. To
enumerate some of the expected benefits of the project are:-

 The promoter will profit from the capital he employ.

 Employment opportunities to the surrounding people during its expansion and operational period.
 Increase the rendering of oilseeds processing to supply to the market.
 It engages deeply in oilseed/pulse/ teff flour supplying market to generate income.
 It will be considered as additional source of income for the government, especially the city
administration, chamber of commerce and other governmental organizations.

In generally, the rapid growth of Adama and its commercial activity, the geographic location and the
existing future prospect are in all aspects contributed for new business implementations.

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Moreover, the existing favorable business policy to operate the business as well as the increasing demand
for such services as a result of the competitive free market oriented activities of others are also important
factors for the individual to take the initiative in the business.

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2. MARKET STUDY AND ANALYSIS
2.1. Market Size, Growth Rate and Market Share
2.1.1. Market Sizing for pulses
Market or demand analysis is an important dimension of a project business plan because viability of a
business crucially depends on the demand for its outputs or services. Accordingly, so as to make the
business attractive and competitive, it is planned to have all facilities that similar business are supposed to
accommodate. Though the demand for goods and services in general is a function of population, taste,
level of development and income, the demand for exportable agricultural products like Oilseeds and pulse
are arise mainly from the existing and potential business activities. Quite acceptable that demands analysis
requires a wide variety of statistical information, but for the purpose here, simple observations and the
respective forecasts are considered as a sufficient factor for the presence of ample demand in the sector.

The increasing private business activities as a result of the free-market economy policy has also increased
the demand more-over, the ever standing population growth is also another source for increase
corresponding demand. In fact, such product demand is international since the products are consumed
internationally. Ethiopian Export such product due to the existence of high demand for such product at
world level. However it has also huge domestic demand. Actually, there is shortage of such product event
domestically. In this business case the work is just collecting and supplying pulse seeds to exporters found
in the county. Hence, the existence of demand is unquestionable for such product due to high demand
prevailed at international level.

2.3. Targets of Market Opportunities

Ethiopia is likely to be one of the large destination markets for Pulse and oilseeds from different supply
because of its accessibility and the presence of many clearing machineries in the city. This is why the
owner started the business in Adama for easily accessing exportable items to international market. The
geographical location is convenient to the destination market that needs the service from its surrounding
cities and regions. The business is concentrating on target market, offering the service with affluent and
well experienced professional that meets the needs of its clients.
2.1.2. Demand for teff flour
Due to the number of benefits (gluten free and high nutrition values); the demand for Ethiopian teff is
exponentially increased at worldwide; therefore; it is suitable to prepare food products for people who suffer
from celiac disease. Additionally; teff has even been reported by some international newspapers and media

10
as the new super-food like Quinoa. The international market for quinoa is speedy. Quinoa is a gluten-free
cereal crop like teff; which typically produced in Peru and Bolivia the quinoa market has given to attention
for the Ethiopian government to revise the export ban of teff and reopen teff export markets in order to
increasing global market demand.

The exports of injera in 2015 were estimated at around 10 million US dollar. Then main injera international
market outlets were North America; Middle East and Europe. The largest share (approximately 2.5 million
US dollars) of injera exports has gone into North America in the 2015 year. The reason could be driven by
in millions of Ethiopian immigrants’ demand who remain attached to the cooking culture of their homeland.
However; in the future; the demand for injera might be exponentially increased due to its high nutritional
values and gluten free grain crop. Hence sice ijera and same teff pancake is made from teff flour the
business is not expected to face market problem.

2.4. SWOT analysis.

Under this section the business to keep its strength, improving its weakness, use the favorable condition
and overcoming any challenges that have negative impact on the business will be set. The following
section presents the SWOT analysis of the business.

A. Strengths

 Owner experience in diversified business activities

 High demands in pulses in Export market and teff flour.
 The business is trend setters.
 Employee competency and profession.
 Highly committed to supply/trade quality pulses and teff flour.
 The business is not only satisfy the customers but also build relationship with them in order to get their
loyalty

B. Weaknesses
 Access to capital.
 Lack of awareness to people.
 All the weaknesses of industry are not the weaknesses; actually they are the opportunities for
improvement.

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 C. Opportunities
 Growing market with a significant percentage of target market.
 Government encourage in export market
 Increase in opportunities beyond the target areas
 We can expand business by targeting different surrounding cities and region.
 Loan facility and availability of trained human resource in trade sector

D. Threats
 New Entrance of competitor
 Political instability that may reduce the production of pulse in particular and agricultural product in
general
 Due to the current instability prevailed our county there is a fear that export destination counties for our
product may cut their trade relationship due to sanction.

2.5. Market Competition and Penetration

A. Market Competition
Miftah Hussien main competition comes from normally formed business environment. The majors
competent of the business are found in Ethiopia and the surrounding city. It is somewhat many years in the
operation and existing business and get some experience to compute in the existing environment and to
increase an outreach by using market penetrating, retaining the existing customer by providing different
customer attracting business strategies and by using different tools of Competition and positively working in
the market. In addition, the business location combined with the positive relationships that the business
built within the community will provide an opportunity to build the client base aggressively. The business will
also be competing indirectly with small scale retailer sale of other similar business environment. It can
compete in the market due to:
1. First, the kinds of pulse, oilseed and teff flour we trade/supply are quality which meets the export
standard set by concerned government body.
2. Second, the business is already build good business relationship with giant exporters and consumers in
the business area and in the country in general.

This industry has strong parts that can be considered as competitive advantage and to attain its objectives.
To list important competitive advantages for the business are:-

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  Owner experience in the market
 Owner’s reputation
 Hires skilled and competent man power.
 Managed by successful business person.
 Owner and manager is the sentiment of the owner to implement at time of request
 Clear aim, vision and objectives
 Good segmentation of potential customers.
 Set its prices by analyzing necessary variable which have great relevant.
 Easy accessible location
 Legal license issued by authorities.
 Its role in exploiting foreign exchange.
 Owner’s knowledge about export cereals and pulses resource market.

B. Market Penetration

Miftah Hussien pulse, oil seed and teff flour trade is already in the same business for the past years. Hence
there is no need of setting strategy to penetrate the market. Rather what is expected from the owner is
keeping the sustainability of the business. The business would rather implement different strategies that
help the owner to maintain the sustainably of his business.

C. Competitors’ Strategies
Analysis of competitors shows that currently there are same traders in Adama. However, the industry has
many competitors from the neighbor towns and our capital city, Addis Ababa. These competitor’s build their
own strategies in creating good image and awareness to their clients, strong business network with
businesses and professionals working in governmental agencies, outshining in one service providing
strategies and offering their own price setting method.

D. Marketing Tactics

Management will intend to use a number of strategies to increase the visibility of the trade. The project will
be implemented with full capacity to trade, provide available goods and services for the demand. At the
onset of business running, it will contact different exporters and public consumers in person to distribute
and advertisements of the product. It will also list the local directories and register on the Yellow Books to
ensure that clients can quickly find the contact information for the project and its location. Moreover,
considering the strategies of the competitors challenge and failure in handling their local clients, enable the

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owner to change it to opportunities which strength, thinking ahead and working hard. Finally, the
management team will develop relationships with local ambulatory companies so that the business will be
brought to the facility in the event of distribution of services.

E. Market Barriers
 Barriers to the market, if any;
 Inadequate products of pulses seeds. There is no sufficient production of oilseed and pulses in Ethiopia
 Lack of government clear Export Strategic plan which dire the exporters
 Unreasonably very high domestic price hike that affect the International market competitiveness,
especially in sesame. This may again interconnects with low supply of the product locally
 Inadequate finance supply and the access to credit is difficult due to the reason that financing institution
asks collateral which is difficult for business owner to provide
 Lack of Export promotion center at National level

2.6. Supply and Demand

2.6.1. Top ten Ethiopian Exports in 2021
 Coffee, tea, spices: US$1.2 billion (39.6% of total exports)
 Vegetables: $648.6 million (21.2%)
 Oil seeds: $407.2 million (13.3%)
 Live trees, plants, cut flowers: $290.2 million (9.5%)
 Meat: $94.1 million (3.1%)
 Knit or crochet clothing, accessories: $80.2 million (2.6%)
 Clothing, accessories (not knit or crochet): $62.7 million (2.1%)
 Live animals: $33.6 million (1.1%)
 Raw hides, skins not fur skins, leather: $28.7 million (0.9%)
 Electrical machinery, equipment: $24.5 million (0.8%)

2.6.2. Production of Pulse in Ethiopia

Ethiopia is one of the top ten producers of total pulses in the world, the second largest producer of faba
beans after China, the fifth or sixth largest producer of chickpeas and is the second largest producer of
pulses in the common market for eastern and southern African countries (COMESA region) following
Sudan. Sudan and Ethiopia have 32% and 22% share of the total COMESA pulses production (USAID,

14
2010). In Ethiopia, pulses are the third largest export crop behind coffee and oil seed (Boere et al., 2015).
The pulse industry has developed significantly with little intervention, but there exists a great potential to
increase the production and impact of pulses through proactive and targeted support. Ethiopia could
expand its foreign market presence by at least doubling its current exports through increased production
levels. Smallholder income could also be increased by at least 40-70 percent per hectare of pulses planted
through greater pulse productivity (with better inputs and sound agronomic practices), in other words there
is an opportunity to stabilize and increase supply by improving production up to the full potential which
would meet domestic demands, helping to ensure food security (IFPRI, 2010).
Amhara region constitutes the highest share in both cultivated area and volume of production of pulse in
2008/09 Meher season, followed by Oromia, SNNPR and Tigray regions. The region also leads in terms of
it productivity with an average yield of 13.5 qt/ha. On the other hand, SNNPR registered the least yield of
11.91 in the season where as Benshagul, Afar and Harari regions do not produce broad pulse in significant
volume.(Refer table 2.1)
Table 2.1: Total Broad Pulse Production by Regions in 2008/09 Meher Season Region
Area in Production in Yield Share
Region No. of Holders
hectare Quintal (qt/ha) (%)
Amhara 1,490,763 247,782.80 3,344,003.90 13.5 48.05
Oromia 1,334,59 207,597.10 2,607,452.60 12.56 37.46
Tigray 277,726 22,870.56 286,246.16 12.52 4.11
SNNPR 729,517 59,706.69 710,905.11 11.91 10.21

Source: Ethiopian Statistical Agency, (2008/09 E.C)

Within the regions, there are Zones which are known for their high volume of broad pulse production. All of
them have an average yield which is above the national average. All of these Zones are located in Oromia
and Amhara. (Refer table 2.2)
Table: 2.2: Zones with High Production of Broad Pulse

Area in Production Share Yield

Zones Region No. of Holders
hectare in Quintal (%) (qt/ha)
West Shoa Oromia 195,574 35,622 844,002 12 24
Amhara/
North Shewa 211,278 42,030 567,391 8 14
Oromia
South Wollo Amhara 316,270 41,873 571,102 8 14
East Gojjam Amhara 224,804 36,806 550,692 8 15
Arsi 156,213 27,985 466,068 7 17

15
 West Gojjam Amhara 181,279 30,685 435,236 6 14
East Welllega Oromia 89,528 11,323 164,111 2 14
East Shewa Oromia 69,786 9,068 140,066 2 15
Total (Country level) 3,841,587 538,821 6,959,837 13

Misftah Hussien trade of Pulse and teff flour will collect the items from different local market listed above.

Table2.3: Sources area of tradable item of the business

Name of commodity Purchase area

Chick peas Oromia
White pea pulse Oromia and Amhara Region
Red kidney pulse s Oromia and Amhara Region
Pinto pulse Oromia
sesame Oromia & Amhara region
Soyabeen Oromia & Amhara region
Linseed Oromia , Amhara region and SRNN
Others oilseed Oromia & Amhara region
Teff Oromia & Amhara region

According the CSA report annual production of the country increasing more than 10% per annum so, for
Misftah Hussiene trade is not an issue of to satisfy the customer demand.

2.7. Demand Projection

Mifta Hussien supply /trades high quality pulse and teff flour product that demanded by its customer. white
and Red Kidney pulse ,white pea pulse, Chick peas, pinto pulse Kabuli chick peas linseed soybean teff
flour are some of the agricultural products the he trades. The main distention’s or customers who take or
buy this product from the business are legally registered exporters and publics found in the business area.
Exporting an agricultural product now a day are the main source of for Ethiopia to keep foreign trade
balance with other nations. The report of Central Statically Authorities (CSA) of Ethiopia show, the county’s
export items are increasing from time to time. Now days, the export of an Agricultural product are increases
due to so many reasons: The country is non oil producing which relay its growth on Agriculture and other
natural resource:

 Most of an export items up to now mainly are an Agricultural product which account the highest GDP
for the nations.
 The export policy of the countries also relay on the Agricultural product.

16
  The farmers of the countries now a day knows the products that they produce are market oriented or
even the government is urging the farmers to focus on producing/engaging in commercial farms.

Therefore, the demand for exportable oilseed and pulse will increase due to increasing interest of foreign
countries to import such product. Internationally, the production of oilseed and pulses are decreasing due
to climate change and instability. Hence, Ethiopian Export market of oilseed and pulses as well as teff flour
to abroad is projected to grow. The families of pulses are: peas (white and Red Kidney pulses of, White
pea pulse, Chick peas, and pinto and pulse Kabuli chick peas.) and oil seeds.

2.8. Pricing and Distribution Channels

Normally the owner of the business Mr. Mifta Hussien is in charge of supervision the staff of Marketing and
Sales as it involves extensive and rich experience of working with exporters. To this end he acquired a very
successful on hand experience during his work. It’s this expertise that enabled the company grow in a short
while and selling at good price, develop many customer base. Accordingly, the selling prices of traded
products are shown in table below.
Table 2.4: Price of traded items
Sr. No Description Unit price Qt
1 Description 4,150.00
2 Teff 5,300.00
3 Wheat 3,650.00
4 Barely 2,550.00
5 Maize 5,100.00
6 Beans 5,150.00
7 Chickpea 5,922.50

17
3. ORGANIZATION AND MANAGEMENT PLAN
3.1. Ownership
Mifta Hussein trade business has been established to trade Pulses, oilseeds and teff flour. It is a sole
proprietor known owned and founded Mr. Miftah, who has reach experience in running diversified business
locally in different business over 20 years.
3.3. Organization Structure
Mifta Hussien business organizational structure of the project is designed by including all the necessary
personnel under the right division. At the top of the organizational structure, there will be manager with the
responsibility of supervising the overall activity of the export business. Depending up on the nature of the
center and the amount of work to be performs; there exist auxiliary units under the general manager.
Employees under each unit will be supervised by the department head that is accountable for the general
manager. General Manager is the owner of the business as showed in figure 3.1 below.

Miftah Hussein is the owner and hires the manager of the organization with the following roles and
responsibilities. Control the daily cash flows, keep accounting records, approve or reject any purchase
which is material to the business, listen customers complain and take corrective action, hire competent
employees and follow up employee’s daily performance, assess the business environment to make the
business sustainable, chair meetings and control the overall activities of the organizations presented in
general in table 3.1 below.
Table 3.1: Responsibility of Management
Sr. No Designation Responsibility in the Business
Owner(Executive The owners have the right to assign manager, executive and advisory committee, chair of
1
Director) the meeting policy and strategies formulate and evaluator for his business.
Dealing with suppliers, decision making, managing inventory, order placement, financial
2 Plant Manager
decisions, manages and supervise employees.
3 Production head Work efficiently with machineries, treating all machines in their timing very carefully,
Help the operators based on the operator’s order and specifications, provide raw materials
4 Supportive staff
to the production and take outputs, etc.
Finance and Admin Recording all expenses and revenues in proper way, prepare financial reports; prepare
5
head monthly payroll and other financial matters.
Sales and Marketing Controlling the supply chain and searching appropriate demand market from abroad and
6
head promoting the business product and service as required,
3.4. Business Advisory
A. Management Advisory
Prior to starting the expanded business, the owner, Mr. Mifta Hussein and the manager select executive
and advisory committees from professionals, staff, and other personnel, all of whom will be invaluable to

18
the new expanded business. These committees develop the long term goals and will develop the mission
statement of the project, advice the management in all matters of the industry.
B. Financial, Legal and Technical Assistance
In order to move hand-in-hand and grow to the level that the business planned, all necessary human
resource will be fulfilled. In this regard the business can contribute to the Nation’s economy, reduce
unemployment and obtain fair market share in trade
3.5. Man Power and Management

The Manager of the business will be responsible to perform the following major duties. collection of client
history, supervise the cleanliness and the overall operation of the business, monitor proper handling of
equipment, facilitate, to perform necessary maintenance and repair activities, control the performance of
other employees and perform other relevant duties related to the business. The man power projected for
the business to run the business is furcated it will have 11 temporary and temporary manpower who
execute the overall activities of the business. The projected annual salary in year 2022/23 estimated birr 1
million details presented in table 3.2.
Table 3.2: Annual Salary Expense
Monthly
Salary
Sr. No Description No Qualification ETB Annual Salary ETB

1 General Manager 1 BA in Sio./Mgt 15,000.00 180,000.00

2 Operation and Logistic Manager 1 BA in Sio./Mgt 10,000.00 120,000.00
3 Finance and Administration head 1 BA in Accounting 10,000.00 120,000.00
4 Purchaser 1 Diploma in Purchaser 3,500.00 42,000.00
6 accountant 1 Level IV complete in Acct 3,500.00 84,000.00
7 Sales 1 BA in marketing 10,000.00 120,000.00
8 Sales and Marketing officer 1 Level IV complete in sales & marketing 3,500.00 84,000.00
9 Casher 1 Level III complete in Accounting 3,000.00 36,000.00
11 Quality Control 1 BA in agronomist 1,800.00 43,200.00
13 Driver 1 10th complete with 5th grade license 6,000.00 144,000.00
14 Guard 1 8th comp. 1,500.00 72,000.00
Total 11 1,045,200.00

19
4. TECHNICAL STUDY
4.1. Location of the Business
The business is already set in Adama city. Adama is a large city located about 60 miles south east of Addis
Ababa, in central part of Ethiopia. The city is pretty large, with the population close to one third of a million
people. The city has importance as a transportation spot, as well as an educational center. Currently the
city is becoming business country’s’ business sector. The business from small scale to large investments
has been operating in and around the city including the recently functionalized Adama industrial park. The
City is also best situated to the nearest modjo dry port which the import and export of the county is done.
Therefore, the location is convenience to trade or supply oilseeds and pulse to exporters situated around
the port.

Figure 4.1 Google Map of Adama City. Snapshoot date 18/09/2022

4.2. Tradable product types

The owner of the business is currently trading oilseeds, pulses and teff flour to exporters and local users.
Oilseeds like linseed Niger seed, Soya been and pulses like red peas while peas, beans and the like as
well as teff flour are among the traded agricultural products by the business owner. Due to best business
performance he has registered in the past year, now he has planned to increase its sales volume.

4.3. Production Capacity and Programme

4.3.1. Past Trade Volume trend

According to Audited financial report presented by the owner, the business has registered profit for

20
continuous three consequentive years. When we look at its sale volume, it has also increasing trend from
the year 2020 to 2022. Both the asset and transition/cash flow activity of the business is also showed
advancing trend. Hence, the business has good growth trend.

4.3.2. Purchase and sales program

The all the items are purchased from local market from highly productive area like: Showa, Gojjam, Bale,
SNNP, West Arsi, ECX and cooperative union and others region where the production is very high.
According to this the annual purchase plan summarized in table 4.2 below.
Table 4.2. Annual Purchase plan in quantity and Birr

Sr. Unit of Scheduled Quantity Purchased

No Description meas. % Total 2022/23 2023/24 2024/25
Capacity
Utilization 100% 70% 85% 100%
1 red peas Qt. 2% 150 105 127.5 150
2 white peas Qt. 5% 350 245 297.5 350
3 bean Qt. 11% 690 483 586.5 690
4 Niger Qt. 10% 550 385 467.5 550
5 linseed Qt. 6% 400 280 340 400
6 soyabean Qt. 5% 450 315 382.5 450
7 Teff Qt. 60% 3880 2716 3298 3880
Total 100% 6470 4529 5499.5 6470
As clearly indicated in the above table, the business is trading the above listed agricultural products namely
processed teff, pulse seeds like red peas white peas, beans, oil sees like Niger seed, Lin seed Soya been
and other. According to the plan the share of these tradable items are 2% per red peas, 5% for white peas,
9% for beans, 10% for Niger seed, 5% for linseed, 5% for soybean and 60% for teff flour totally 100%. The
annual traded agricultural item will be seven thousand four hundred forty Quintals of the listed items.

Table 4.3 Annual Purchase plan in quantity and Birr

21
 Total Schedued Purchased in Amount (Birr)
Unit of 2022/23 2023/24 2024/25 2025/26
Sr. No Description meas. unit price Base Year CGS 70% 85% 100% 100%
1 red peas Qt. 5,000 750,000 525,000 637,500 750,000 768,750
2 white peas Qt. 5,200 1,820,000 1,274,000 1,547,000 1,820,000 1,865,500
3 bean Qt. 4,700 3,243,000 2,270,100 2,756,550 3,243,000 3,324,075
4 Niger Qt. 5,800 3,190,000 2,233,000 2,711,500 3,190,000 3,269,750
5 linseed Qt. 5,700 2,280,000 1,596,000 1,938,000 2,280,000 2,337,000
soyabean Qt. 7,000 3,150,000 2,205,000 2,677,500 3,150,000 3,150,000
6 Teff Qt. 5,300 20,564,000 14,394,800 17,479,400 20,564,000 21,078,100
Total 34,997,000 24,497,900 29,747,450 34,997,000 35,793,175

The above table also shows that the business sales will grow to 28M in the year 20252/2023 due to
injection of additional fund to the business. The trend clearly showed that the volume of sales increase as it
got further fund. According to the audited financial statement of the business for the year 2021 the sale
value of the business was Birr 19M. Now the forecasted sales volume of the business grows up to Birr 24
after 10M commercial loan is considered. It also grows to Birr 29M, 34, 435M for the year 2023/2024,
2024/2025 and 2025/2026 respectively.

4.4. The main long- and short-term goals of the business;

The goal of the business is to be dynamic and renowned quality exporter and processor of highly
mechanized organic farm commodity; mainly pulses & oil seeds as per the needs of dynamic world market
speculation.

4.5. Inventory Management

The business use FIFO methods of management and the ending inventory valued and projected at 10%
and Inventory reorder point reaching the stock balance at 35%.

5. FINANCIAL STUDY AND ANALYSIS

5.1. Underlying Assumption
It is assumed that the Mr. Mifta Hussien established to trade pulse and oilseed and teff flour to exporters
and local users. The financial study and analysis is done based on the following assumption.

22
  Bank commission 7% of profit
 Cost of Raw Material four months
 Salary Expense Six months
 Administrative & selling expense Six months
 Pre- paid insurance One year
 Utility expense six month
 Selling expenses four month

5.2. Working Capital

The total working capital required for exporting pulse and oilseed birr 30.7 million determined by the above
assumption underlined in section 5.1 above and the detail calculation is presented in table 5.1 below.
Table: 5.1. Working capital required for the year, 2022/23

1 Raw material Purchase 4.00 33.3% 29,747,450.00 9,915,816.67

2 Salary and Benefit 6.00 50.0% 136,800.00 68,400.00

3 Administrative Expense 6.00 50.0% 864,000.00 432,000.00

4 Insurance 12.00 100.0% 16,800.00 16,800.00

Total 30,748,250.00 10,433,016.67

The total working capital demanded by the business is Birr 10.4M of which Birr 10million will be financed by
Commercial Bank of Ethiopia and the rest is covered by the owner.

5.3. Depreciation Schedule

The business use straight line methods of depreciation and the annual depreciation estimated to birr 1.7
million showed tables 5.2 below.
Table 5.2. Depreciation schedule

4,600,000.00
1 Tracker 20% 920,000.00
1,200,000.00
2 FSR 20% 240,000.00
11,000,000.00
3 Residential house 5% 550,000.00
16,800,000.00
Total 1,710,000.00

23
5.4. Source of Fund Loan Repayment Schedule and Collateral
5.4.1. Source of Fund
The working capital demanded by the business will be financed by Commercial Bank of Ethiopia.

5.5.2. Loan Repayment Schedule

The loan will be repaid with three years on quarterly base and it will be completed within twelve installment
periods within three years. The loan is interest free loan provided by commercial bank of Ethiopia on the
bases of commission fee. The following table clearly indicates the repayment of the loan
Table 5.3: Loan Repayment Schedule for 3 years and within 12 installments on quarterly bases

Loan 10,000,000.00
loan repayment years 3
instalment 12
payment per instalment 833,333.33

5.5.3. Collateral
The total collateral values that has owned by owner which have an estimated market value of 15 million to
secure the loan proceeding i.e. G+2 residential building. The building is found in Adama Goro Kebele.

5.7. Expected Financial Results

This section defines certain key financial accounts used by this proposal from the standard. The definitions
are provided in two main sections, (1) those found on the income statement; and (2) those found on a
balance sheet. There is additional cash flow statement which used to measure the business liquidity
position.

5.7.1. Profit and Loss Statement

The income statement is also known as the profit and loss statement. It is a flow statement that
summarizes all financial activity during a stated period of time, usually a month, quarter or year. It displays
all revenues and expenses for a stated over three years. The bottom line of an income statement is the net
income (or net profit or surplus) for the period.

Mifta Hussien Pulse, Oil seed and teff flour trade expects to make a reasonable after- tax profit of birr 2.2
Million to Birr 17.4 million form year 2022/23 & 2026/27 respectively. This is before the owner’s drawings.

24
Any owner’s drawings will be contain Mifta expects on performance being better that expected in the plan
and expected to earn monthly income in the form of owner drawing account.

25
 Miftah Hussien Pulse, Oilseed and Teff flour Trade
Projected Profit and Loss Statement
For the Period of 2022/23-2026/27

Projected Operational years

Description 2022/23 2023/24 2024/25 2025/2026 2026/27
Revenue
Revenue from Sales 29,091,256.25 35,325,096.88 41,558,937.50 43,636,884.38 45,818,728.59
Income from other source 2,160,000.00 2,268,000.00 2,268,000.00 2,381,400.00 2,500,470.00
Total Revenue 31,251,256.25 37,593,096.88 43,826,937.50 46,018,284.38 48,319,198.59
Cost ff Goods Sold
Beginning Inventory 1,188,171.89 1,284,303.59 1,551,587.68 1,827,429.38 1,881,030.22
Purchase 24,497,900.00 29,747,450.00 34,997,000.00 35,793,175.00 37,582,833.75
Goods Available for sales 25,686,071.89 31,031,753.59 36,548,587.68 37,620,604.38 39,463,863.97
Less: Ending Inventory 1,284,303.59 1,551,587.68 1,827,429.38 1,881,030.22 1,973,193.20
Cost of Goods Sold 24,401,768.30 29,480,165.91 34,721,158.30 35,739,574.16 37,490,670.77
Gross Margin 6,849,487.95 8,112,930.96 9,105,779.20 10,278,710.21 10,828,527.82
General and administrative Expense

Depreciation 1,710,000.00 1,710,000.00 1,710,000.00 1,710,000.00 1,710,000.00

Salary, wage & employee Benefit 125,000.00 136,800.00 143,640.00 150,822.00 158,363.10
Repair and maintenance 840,000.00 754,500.00 669,000.00 702,450.00 737,572.50
Utility Expense 6,000.00 6,300.00 6,615.00 6,945.75 7,293.04
Miscellaneous Expense 18,000.00 18,900.00 19,845.00 20,837.25 21,879.11
Total Expense 2,699,000.00 2,626,500.00 2,549,100.00 2,591,055.00 2,635,107.75
Income before Finance Charge 4,150,487.95 5,486,430.96 6,556,679.20 7,687,655.21 8,193,420.07
Finance Commission charge 290,534.16 384,050.17 458,967.54 538,135.86 573,539.41
Income before Profit Tax 3,859,953.80 5,102,380.79 6,097,711.66 7,149,519.35 7,619,880.67
Profit Tax 1,350,983.83 1,785,833.28 2,134,199.08 2,502,331.77 2,666,958.23
Net Income/Loss 2,508,969.97 3,316,547.52 3,963,512.58 4,647,187.57 4,952,922.43

withdrawal 10% 250,897.00 331,654.75 396,351.26 464,718.76 495,292.24

Retained earnings 90% 2,258,072.97 2,984,892.76 3,567,161.32 4,182,468.82 4,457,630.19
Cumulative retaining earning 2,258,072.97 5,242,965.73 8,810,127.06 12,992,595.87 17,450,226.06

32
5.7.2. Projected Flow Statement
The cash flow projections for the year show that a positive cumulative cash flow for year-end in 202223- 2026/27 birr 2.5million to Birr 30 million
respectively, after the owner has forecasting additional loan financing of birr 10 million that will be repaid within three years. Therefore, he cash flow
forecast clearly indicated that the business will generate sufficient cash to cover all it business operating cost and loan with commission that will be
borrowed from commercial bank of Ethiopia
Miftah Hussien Pulse, Oilseed and Teff flour Trade
Projected Cash Flow Statement
For the Period of 2021-2027

Base Year Projected operational years

Description
2021/22 2022/23 2023/24 2024/25 2025/26 2026/27

Cash Inflow
Income before tax 3,122,016.03 3,859,953.80 5,102,380.79 6,097,711.66 7,149,519.35 7,619,880.67
Depreciation 132,056.00 1,710,000.00 1,710,000.00 1,710,000.00 1,710,000.00 1,710,000.00

Inventory 210,570.60 1,284,303.59 1,551,587.68 1,827,429.38 1,881,030.22 1,973,193.20

Account Receivable 606,067.84 735,939.52 865,811.20 909,101.76 954,556.85
Loan 10,000,000.00 0

Total Inflow 3,464,642.63 17,460,325.23 9,099,907.99 10,500,952.24 11,649,651.32 12,257,630.71

Outflow
cash for purchase 2,600,000.00 10,433,016.67
Employee Benefit 18,750.00 20,520.00 21,546.00 22,623.30 23,754.47
Profit Tax Payable 864,487.24 1,350,983.83 1,785,833.28 2,134,199.08 2,502,331.77 2,666,958.23

Loan Repayment 3,333,333 3,333,333 3,333,333 0

withdrawal 10% of profit - 250,897 331,655 396,351 464,719 495,292

Total Outflow 3,464,487.24 15,136,083.83 5,139,686.61 5,489,078.41 2,524,955.07 2,690,712.70
Cash Surplus/ Deficit 155.39 2,324,241.40 3,960,221.38 5,011,873.83 9,124,696.25 9,566,918.01
Beginning Cash Balance 199,900.60 200,055.99 2,524,297.39 6,484,518.77 11,496,392.60 20,621,088.85
Ending Cash Balance 200,055.99 2,524,297.39 6,484,518.77 11,496,392.60 20,621,088.85 30,188,006.86

33
5.7.3. Projected Balance Sheet
Miftah Hussien Pulse, Oilseed and Teff flour Trade
Projected Balance Sheet
As at June 30, each year from2021-2027

Projected operational years

Description 2022/23 2023/24 2024/25 2025/26 75.03703704
Asset
Current Asset
Cash 2,524,297.39 6,484,518.77 11,496,392.60 20,621,088.85 30,188,006.86
Inventory 1,284,303.59 1,551,587.68 1,827,429.38 1,881,030.22 1,973,193.20
Account Receivable 606,067.84 735,939.52 865,811.20 909,101.76 954,556.85
Total Current Asset 4,414,668.82 8,772,045.97 14,189,633.18 23,411,220.83 33,115,756.91
Fixed Asset
G+2 res building 10,450,000.00 9,900,000.00 9,350,000.00 8,800,000.00 8,250,000.00
Vehicles 4,640,000.00 3,480,000.00 2,320,000.00 1,160,000.00 5,800,000.00
Total Fixed Asset 15,090,000.00 13,380,000.00 11,670,000.00 9,960,000.00 14,050,000.00
Total Asset 19,504,669 22,152,046 25,859,633 33,371,221 47,165,757
Liability and Capital
Current Liability
Employee Benefit 18,750.00 20,520.00 21,546.00 22,623.30 23,754.47
Account Payable 125,000.00 131,250.00 137,812.50 144,703.13 151,938.28
Profit Tax Payable 1,350,983.83 1,785,833.28 2,134,199.08 2,502,331.77 2,666,958.23
Total Current Liability 1,494,733.83 1,937,603.28 2,293,557.58 2,669,658.20 2,842,650.98
Loan 6,666,666.67 3,333,333.33 -
Total Liability 8,161,400.50 5,270,936.61 2,293,557.58 2,669,658.20 2,842,650.98
Equity
Miftah Hussien, Capital 50,000.00 50,000.00 50,000.00 50,000.00 50,000.00
Owners equity 11,293,268.33 16,831,109.00 23,516,076.00 30,651,563.00 44,273,106.00
Total Owner Equity 11,343,268.33 16,881,109.00 23,566,076.00 30,701,563.00 44,323,106.00
Total Liability and Equity 19,504,669 22,152,046 25,859,634 33,371,221 47,165,757

34
The balance sheet of the business shows what the asset liabilities and owner’s capital for specific date
especially end of the year, because the business fiscal year runs from 2022/23- 206/27 each year shows
balance sheet projections of Mifta Hussein pulse, oil seed and teff flour trade. Accordingly, the asset the
owner is expected to grow from Birr 19.5Million to Birr 47.1 Million.

5.8. Financial Analysis and Evaluation

A. Profitability

Based on the projected profit and loss statement, the business will be generating a profit of Br. 19.3 million
within the operation of five; moreover, the businesses would have an accumulated cash flow Birr. 47 million
at the end of projected five year as showed in projected cash flow statement.
B. Financial Ratios
A financial ratio shows the business strength in viability, sustainability, profitability, and other parameter to
know the business efficiency and effectiveness. Ratio analysis is a technique that involves computing some
common ratios. These ratios involve comparisons of certain numbers contained in the financial statements/
a financial ratio shows the business strength in viability, sustainability, profitability, and other parameter to
know the business efficiency and effectiveness. Certain analysts are partial to certain ratios. While there
are thousands of possible ratios, there is a core group of common ratios.

These are divided into three groups: liquidity ratios, efficiency ratios, and profitability ratios. When two
companies are compared, it will often happen that some ratios will favor one company and other ratios will
favor the other. You have to take all the ratios together, see how much difference there is, and weigh which
ones you will rely on. The choice is largely a matter of personal preference. The following are the most
common liquidity ratios:

I. Liquidity Ratios: Liquidity ratios measure the ability of a company to generate cash and to pay its
obligations when they come due.

II. Efficiency Ratios: Efficiency ratios provide an indication of how well a company is managing its
resources. The common efficiency ratios are:

Table 5.8: Major financial ratio result in percentage at the end of third year.

36
 Sr. No Description Formula Result %

1 Current Ratio Current assets/Current Liabilities 4.53 453%

2 Quick Ratio (Cash +A/R + Marketable /Sect)/C Liabilities 3.35 335%

3 Asset Turnover (Net Income/Average Total Assets 0.15 15%

4 Debt to Equity Total Liabilities/Total Equity 0.60 60%

Break-Even Analysis
The break-even analysis establishes a relationship between operation costs and revenues. It indicates the
level at which costs and revenue are in equilibrium. To this end, the break-even point of the project
including commission of finance when it starts to operate at full capacity (year 3) is estimated by using
income statement projection.

D. Payback Period
The payback period, also called 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 was fully covered at the end of 2st
yare operation at earlier.

E. 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 principal a project is accepted if the NPV is non-negative. Accordingly, the net present
value of the project at 16% discount rate is Birr 12.2 million which is acceptable.

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6. SOCIOECONOMIC BENEFIT OF THE BUSINESS
6.1. Socioeconomic Considerations / Benefits
A. Employment Opportunity:

One of the problems that our country faced is unemployment. Therefore, current objective of the
government is working on tackling the problem of unemployment and fostering the development process
either through creating self-employment or employment in other organization. In this regard, business will
hire about permanent employees and create many employment opportunity for day laborers who will
participate on works like loading and unloading of tradable items.

B. Benefit for Local Community:

Apart from employment opportunity for local community, as a corporate responsibility the business has
been engaged in different development activities. This will better worth the community in particular and
contribute for the development of the nation as a whole.

C. Stimulate the Local Economy:

Trade is an important part of the global economy, helping to provide businesses with new markets spurring
growth and increasing resilience. According to the World Bank, economies that trade more generally grow
faster, are more productive, more innovative and have higher incomes. Additionally, trade usually benefits
lower-income households by increasing competition in the market and helping to keep prices lower.

Trade also provides widespread social benefits, ranging from increased social opportunity due to the
economic benefits of trade, to increased product variety in the market. Additionally, trade can help facilitate
cultural exchange between nations around the world by bringing products from one corner of the globe to
another. The trade business will increase economic relationship and transactions among different actors in
the local economy, in this regard the business will create income for government in the form of income tax.

7. CONCLUSION AND RECOMMENDATION

7.1. Conclusions
The future prospect of exporting agricultural products of Ethiopia is bright since the entry of private firms in the in
clearing and exporting businesses will have a significant development indicating the profitability. Investing in
exporting oilseed & pulse the second and third exportable agricultural commodity which generating foregone
currency for the nation and introducing these products to the international market. Investing on exporting oilseed and

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pulse exporting is a profitable business since financially viable with having a high internal rate of return. Clearing,
processing and exporting oilseed and pulse investments could increase capacity in dairy generating foreign currency
and motivating producer in producing in international standard quality with quantity and maximizing the wealth of the
promoter. Specifically, the project has an importance of satisfying the both domestic and international demand of
oilseed and pulse, generating additional income for owner and creating permanent and temporary employment
opportunity for skilled, semi-skilled as well as unskilled workers directly as well as indirectly. The project can also
contribute for government income through tax and opportunity of transferring technology for the country.

7.2. Recommendations
 Ethiopia has the untapped resource potential producer of oilseed and pulse and supplying to local and
international market i.e., its population, the market is tremendous and overwhelming in the years ahead.
Thus, investing on production, trade and exporting oilseed and pulse Ethiopia is a profitable business.
 Private investment in the agricultural sector has an opportunity of high volumes oilseed and pulse as
raw material, available in central highland regions.
Generally, as it is known Ethiopia has huge investment potentials for Agricultural subsector, and the
climatic condition is favorable for agro agriculture which is an excellent source of large variety of oilseed,
cereals and pulse in the country. The financial analysis of this oilseed, pulses and teff flour trade study
shows that the business is worth profitable and acceptable as the discounted measures of the business
worth shows positive trend. It is therefore recommendable that the business should get active support from
all stakeholders like financers and government offices to get all legal recognition and capital budgeting.

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