Project Proposal for Fish Farming

2024

1. Introduction

In the contemporary global agricultural landscape, fish farming also known as aquaculture-emerges as a
crucial sector, fundamentally shaping food security and economic stability. This industry focuses on
cultivating fish in controlled environments to meet the growing demand for seafood, a demand that has
surged as populations expand and dietary preferences evolve. Governments worldwide, recognizing the
strategic importance of aquaculture, often provide substantial support through subsidies and incentives
to foster commercial fish farming. In Ethiopia, particularly within the Silte Zone, fish farming represents
a burgeoning opportunity to bridge the gap between fish supply and demand while enhancing local and
national economies.

ココ

Ethiopia's aquaculture sector holds significant potential due to its vast water resources and the
increasing domestic demand for fish. Historically, the country has faced challenges in meeting fish
demand through wild capture alone, leading to an over-relliance on imports and unsustainable fishing
practices. Fish farming, therefore, presents a viable solution to these challenges. By developing the
aquaculture industry in the Silte Zone, a region with untapped aquatic resources, Ethiopia can mitigate
the fish suppily deficit, reduce dependency on imports, and provide a sustainable source of protein to its
population. The Silte Zone, situated in the Central Ethiopia Regional State of Ethiopia, offers a promising
environment for aquaculture. The region's diverse water bodies, including rivers, lakes, and reservoirs,
provide a suitable backdrop for establishing fish farms. The zone's economic profile, predominantly
reliant on agriculture, stands to benefit greatly from the integration of fish farming into local economic
activities.
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The proposed fish farming project in Sitte Zone aims to establish a commercial aquaculture operation
that will significantly impact the local and national fish supply chain. The project will focus on breeding
and raising fish in controlled environments,

ensuring a steady and reliable supply of high-quality fish. The project's core objective is to address the
local fish demand-supply gap while fostering economic developmerit in the region. The project will be
spearheaded by an experienced proprietor with a robust background in fish farming and business
management. Having managed various aquaculture ventures abroad, the proprietor brings valuable
expertise and a proven track record to the project. This experience will be instrumental in setting up and
managing the fish farm, ensuring adherence to best practices in fish farming and business operations.

The fish farming venture in Silte Zone is poised to be a lucrative business, driven by the geometric
growth in fish demand. Fish is increasingly recognized for its health benefits. including high protein
content, omega-3 fatty acids, and lower fat compared to other meat sources. As awareness of these
benefits grows, so does the demand for fish, making it a highly desirable commodity. The project's
success will not only fill the local fish supply gap but also contribute to the broader Ethiopian fish
market. By being a pioneer in this locality, the fish farm will flood the market with fresh, high-quality
fish, positioning itself as the leading supplier in the region. This dominance will allow the business to
capture a significant market share, bolstering its profitability and influence in the national fish industry.

The fish farming enterprise will operate as a sole proprietorship, with the proprietor responsible for
capital investment and operational management. The initial capital will cover infrastructure
development, including fish ponds, hatcheries, feed production facilities, and water management
systems. Additionally, the project will seek credit facilities to support its startup and expansion phases.
The purpose of this project proposal is to provide a thorough and independent analysis of the fish
farming venture. This analysis aims to inform government officials, stakeholders, and the public about
the project's socio-economic impacts By presenting a well-researched proposal, the farming venture
aims to become a key player in Ethiopia's aquaculture sector, driving growth, improving food security,
and contributing to the nation's economic development.

4. Market Study and Service Capacity

4.1. Market Study

4.1.1. Past supply and Present demand

Fish farming in Ethiopia has recently gained significant recognition and is becoming an increasingly
attractive business for many farmers. Despite the vast potential of Ethiopia's water bodies, the country's
fishery production capacity is currently estimated at 94,541 tons per year. This figure only meets about
81 percent of the projected demand for fish, indicating a notable shortfall between supply and demand.
Although Ethiopia's annual fish production stands at approximately 51,481 tons, the national per capita
fish consumption is alarmingly low at just 0.5 kilograms per year. This is far below the recommended per
capita fish consumption of 12 to 17 kilograms. Despite having numerous water bodies and a diverse
array of fish species, the country faces challenges with low fish production and marketing.

Population growth is a critical factor influencing the increasing demand for fish. According to the
Ethiopian Central Statistics Service (CSS), the country's population has been steadily increasing over the
years. The following table illustrates the projected population growth:

project seeks to gain support and approval from relevant authorities and attract potential investors and
partners.

The project proposal includes detailed assumptions regarding the size, layout, and design of the fish
farming facilities. It will outline the selection process for operators, ensuring that qualified and
experienced personnel manage the farm's operations. Key considerations include the optimal size of the
fish ponds, water quality management, fish species selection, and feed formulation. The proposed fish
farming project is expected to generate significant socio-economic benefits for the Silte Zone and
beyond. These benefits include job creation, increased local incomes, and enhanced food security. By
providing a reliable source of fresh fish, the project will contribute to better nutrition and health
outcomes for the community. Moreover, the project's success could serve as a model for future
aquaculture ventures across Ethiopia, driving further investments and advancements in the sector.
The fish farming project in Silte Zone represents a critical opportunity for Ethiopia to enhance its
aquaculture industry, address local and national fish supply challenges, and stimulate economic growth.
By leveraging the proprietor's expertise and the region's favorable conditions, the project aims to
become a leading player in the Ethiopian fish market. The comprehensive project proposal will provide
essential insights into the project's feasibility, impact, and potential, paving the way for a successful and
sustainable fish farming enterprise in Ethiopia.

2. Objective of the Project

The main objective of the project proposal is to supply quality and healthy fish that have a high
nutritional value to the society of Silte Zone as well as the country as a whole.

Specific objectives of the project are:

1) To build up a well-organized and leading business in fish farming in the country.

2) To contribute valuable finger prints for the fish farming development in Silte Zone and Ethiopia as
well.

3) To create job opportunities for both skilled and unskilled labor in the Silte Zone and surrounding
areas.

4) To generate a reasonable profit for the owners of the project and at the same time generate revenue
for the government in the form of tax.

5) To improve the lives and livelihoods of the Silte Zone by improving the nutrition culture of society.

6) To sustain the eco-system of the surrounding area through recycling and the use of waste products to
keep the environment well.
7) To make a valuable contribution to research and development in the area of fish farming.

To achieve the above objectives, the investor will concentrate on putting the plan into action within a
pre-specified time and budget.

3. Service Description and Applications

Fishing plays a crucial role in both global and local economies, with its contributions extending far
beyond mere food production. It significantly impacts human nutrition by providing a vital source of
protein and essential nutrients. Moreover, the fishing industry supplies raw materials for various
industrial applications, making it a cornerstone of many economies. In the context of Ethiopia, where
aquaculture has substantial untapped potential, private investment in fish farming could transform the
sector. Currently, the country's aquaculture capabilities are underdeveloped, and there is a compelling
need for strategic investment to catalyze growth in this area. By encouraging private investors to engage
in fish farming. Ethiopia can effectively leverage its abundant aquatic resources, which are critical for
meeting the risingdemand for fish and promoting broader economic growth. Such investments not only
address the pressing domestic need for fish but also foster new opportunities in associated sectors, such
as feed production, equipment manufacturing, and local entrepreneurship.

The proposed fish farming project in Ethiopia aims to harness the benefits of aquaculture through a
well-planned and structured approach. The project will utilize 3 hectares of land to establish a total of 40
concrete ponds. Each pond will be constructed to measure 20 meters in length, 10 meters in breadth,
and 1.5 meters in depth. This design is tailored to suit the local soil and topographical conditions,
ensuring both efficiency and sustainability. The construction of these ponds will be carried out primarily
through manual labor, with minimal reliance on machinery. This method is chosen for its cost-
effectiveness and adaptability to the region's available resources. By using manual labor, the project not
only minimizes initial investment costs but also provides employment opportunities to the local
community, further boosting the project's economic impact.

In the initial phase, each pond will be stocked with up to 3,000 fish. To support the breeding process and
ensure optimal fish health and growth, additional infrastructure will be incorporated. Specifically, fish
breeding sheds or boxes will be established to allow for the breeding of fry in a controlled environment.
These breeding sheds will provide a safe space for young fish, protecting them from potential predation
by adult fish. Once the fry has grown to a sufficient size and strength, they will be moved to larger grow-
out ponds. This phased approach ensures that the fish are provided with the appropriate conditions for
each stage of their development, maximizing their growth potential and overall health.

The project will also include supplementary activities to enhance its sustainability and productivity.
These activities will encompass animal fattening, production of animalfeed, poultry farming, and
horticultural practices. By integrating these complementary operations, the project aims to create a
more resilient and self-sufficient aquaculture system. For instance, the production of animal feed will
reduce dependency on external feed sources and support the overall health of the fish. Similarly, poultry
farming and horticulture will contribute additional revenue streams and further diversify the project's
outputs. This holistic approach is designed to optimize the use of available resources and enhance the
project's long-term viability.

To ensure the success of the fish farming venture, intensive management practices will be implemented.
Fish will be sourced from local rivers, lakes, and reservoirs, taking advantage of the region's existing
aquatic resources. The project will employ a dedicated team, including pond attendants and a project
manager, who will be responsible for overseeing daily operations. This team will closely monitor water
quality, fish health, and growth rates to ensure that the fish are thriving and that the ponds are
operating efficiently. The feed provided to the fish will be carefully formulated to meet their nutritional
requirements, with a focus on high digestibility and palatability. By maintaining rigorous management
standards and providing high-quality feed, the project aims to promote rapid fish growth, enabling the
fish to reach marketable sizes within six months.

The anticipated yield from each pond, under intensive management and regular harvesting, is
approximately 6 tons of fish per year. This level of productivity will allow the project to cater to both
local and broader markets. Fresh fish will be sold directly to local markets, ensuring that the community
has access to high-quality, locally-produced seafood. In addition, processed fish such as smoked, salted,
or dried varieties will be targeted at more distant markets, potentially including export opportunities.
This dual approach of offering both fresh and processed fish will not only meet local demand but also
expand the project's market reach, thereby enhancing its economic viability and success. Through
careful planning and execution, this fish

Year

Population
2015

100,835,458

2020

114,963,588

2025

129,749,455

2030

144,944,299

2035

160,230,922

F12

This data highlights the significant and ongoing growth in Ethiopia's population, which reflects the
broader trends observed in regions such as the Silte Zone. As the population grows, so does the demand
for fish, creating a valuable market opportunity for fish farming businesses. With a larger population and
increased consumption, the market for fish will expand, offering substantial potential for growth and
development in the aquaculture sector.
In response to this opportunity, our fish farming project aims to achieve a production capacity of 240
tons of catfish per year. To effectively capitalize on this potential, we will target a wide range of buyers,
including households, individuals, hotels, restaurants, fast food establishments, manufacturers, and
agricultural merchants. We also plan to engage with industrial users who utilize fish for products such as
fish meal. Our feasibility analysis has revealed a significant market gap: while large quantities of
tomatoes are discarded at the end of market days, fish remains in high demand and is often
insufficiently supplied. This disparity underscores the high demand for fish and the existing market
opportunity.

Furthermore, the availability of advanced preservation technologies will support our operation by
ensuring that fish can be stored and transported efficiently, thereby extending shelf life and reducing
waste. By addressing both the immediate demand and providing solutions for preservation, our fish
farming project is well-positioned to contribute effectively to the local and national fish supply. Through
careful planning and targeted marketing, we aim to establish a successful fish farming venture that not

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only meets current demand but also enhances the overall fish consumption and market dynamics in
Ethiopia..

4.1.2. Projected Demand

In the realm of fish farming, demand forecasting is an essential tool that helps mitigate risks and
supports informed financial decisions that affect various aspects of the business, including profit
margins, cash flow, resource allocation, expansion opportunities, inventory managernent, operating
costs, staffing, and overall expenditures. By accurately predicting future fish demand, fish farming
operations can strategically plan and manage their resources more effectively. This subsection focuses
on the projected demand for fish and illustrates how these forecasts are critical for shaping operational
and strategic plans.

The projected demand for fish provides a crucial foundation for planning and decision-making in the fish
farming industry. Forecasting demand helps to ensure that fish production aligns with market needs,
thus optimizing profitability and efficiency. For this project, demand forecasting is based on historical
data and projected growth, with initial estimates derived from the demand figures for the years 2003
and 2015. The following table summarizes the projected demand for fish over a 32-year period:From the
table, it is evident that the demand for fish is on a consistent upward trajectory, with an annual increase
in demand ranging from about 1,978 tons in 2004 to approximately 4,876 tons by 2035. This upward
trend highlights a growing gap between supply and demand. The increasing demand underscores the
urgent need for expanded fish farming initiatives to bridge this gap and meet the future consumption
needs.

The limited supply of fish compared to the increasing demand emphasizes the necessity of developing
and investing in fish farming projects. By addressing this supply-demand imbalance, such projects can
play a pivotal role in enhancing fish availability, supporting local markets, and contributing to national
food security. The growing demand provides a compelling case for expanding fish farming operations to
ensure that supply can keep pace with consumption, ultimately benefiting both producers and
consumers..

Effective demand forecasting not only aids in operational planning but also ensures that financial
resources are allocated efficiently, reducing risks and enhancing overall profitability. Strategic
investment in fish farming, supported by robust demand forecasts, will enable stakeholders to capitalize
on market opportunities, optimize production processes, and achieve long-term success in the
aquaculture sector.

4.1.3. Competition

Analyzing competition is a critical component of strategic business planning. particularly in sectors like
fish farming where understanding rivals' services and products can significantly influence growth
strategies. In the fish farming industry. competitors primarily include local fish suppliers and importers.
These players currently dominate the market; however, our business is positioned to leverage several
distinct advantages that set it apart.

One of our key competitive advantages is our profound passion for fish farming. Unlike many
competitors, who may view fish farming as a secondary activity or business, our dedication to the craft
drives us to deliver superior products and services. Our farm's strategic location, situated in close
proximity to market premises, further enhances our competitive edge. This location not only facilitates
easier supervision but also ensures timely and efficient market access, crucial for maintaining product
freshness and optimizing sales.
F1

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The business operates as a sole proprietorship, with the owner possessing specialized skills and
extensive experience in fish farming. This expertise contributes to our ability to manage and innovate
effectively, setting us apart from competitors who may lack such focused knowledge. Moreover, our
operational structure allows us to maintain relatively low overhead costs, aligning expenses with current
production capacity. This cost-efficiency enables us to offer competitive pricing without compromising
on the quality of our products.

Our proposed fish farming project is designed to deliver standardized and high-quality services. We aim
to become the preferred choice for consumers in the Silte Zone and beyond. By prioritizing quality and
reliability, we differentiate ourselves from other local and imported fish suppliers, who may not
consistently meet these standards. Our commitment to excellence and customer satisfaction positions
us as a leader in the market.

Additionally, Ethiopia faces significant challenges related to food security and economic development.
As one of the poorest countries, Ethiopia struggles with self-sufficiency in food production, highlighting a
substantial market opportunity for fish farming. The current market is unable to fully meet the
community's food demand, providing a favorable environment for our project. The lack of strong
competition in the area further supports our initiative, as it allows us to capture market share and
address the unmet demand effectively.

In summary, our fish farming venture benefits from a combination of passion, expertise, strategic
location, and cost efficiency, which collectively provide a competitive edge over local suppliers and
importers. By focusing on high-quality service and tapping into a market with significant demand and
limited competition, we are well-positioned to succeed and become a leading provider in the fish
farming industry.

4.1.4. Pricing
As a new entrant into the fish farming industry, our business will strategically initiate its sales operations
with a focus on our project location. This localized approach ensures that we establish a strong presence
and build relationships within the immediate community. The initial phase will involve direct sales at our
farm and through shops that will be established in Werabe, the nearby town. This geographic focus
allows us to effectively manage and supervise our operations, ensuring that we can maintain high
standards of product quality and customer service from the outset.

Once we have successfully established our base in the local market, we plan to expand our sales efforts
throughout the country. This expansion strategy will involve reaching out to a broader audience beyond
the immediate vicinity of our farm. To facilitate this, we will leverage a combination of marketing
channels and distribution methods. Our

25marketing process will include both direct sales and targeted promotional activities aimed at raising
awareness of our brand and products across different regions.

To further enhance accessibility and convenience for our customers, we will offer a delivery service for
those who request our products. This service will cater to customers who are unable to visit our physical
locations or prefer the convenience of having their purchases delivered directly to their homes or
businesses. By providing this option, we aim to broaden our customer base and accommodate varying
needs, thereby increasing our market reach.

Initially, our sales transactions will primarily be conducted on a cash basis. This approach helps
streamline the sales process and manage cash flow efficiently. However, recognizing that some
customers may require more flexible payment options, we will also consider offering credit terms. These
credit options will be available for both small and large purchases, catering to individuals who wish to
buy fish for personal consumption or for resale purposes. The provision of credit facilities will help to
attract and retain customers, fostering long-term relationships and encouraging repeat business.

In summary, our business will start by focusing on local sales and gradually expand to a national scale.
By establishing a strong presence in our initial location, offering delivery services, and providing flexible
payment options, we aim to build a solid foundation and position ourselves effectively in the market.
This strategic approach will enable us to grow our customer base, increase sales, and achieve our
business objectives over time.

4.2. Capacity and Operation Program

4.2.1. Product Capacity

The envisioned fish farming project will encompass a total area of 3 hectares in the Silte Zone,
strategically selected to optimize the potential for successful fish farming. Within this space, we plan to
construct 40 fishponds, designed to align with the local topography and management preferences. Each
pond will be meticulously planned to ensure optimal conditions for fish growth and production.

The primary species targeted for production in these ponds will be catfish. This choice is driven by
several advantageous attributes of catfish. As a fast-growing tropical freshwater fish, catfish are well-
suited to the climatic conditions of the Silte Zone. Their rapid growth rate makes them an ideal
candidate for achieving substantial yields within a relatively short timeframe. This characteristic not only
enhances the efficiency of our farming operations but also maximizes the return on investment.

The overall production capacity of the fishponds is projected to reach up to 240 tons of fish per year.
This substantial output will be achieved through careful pond management and adherence to best
practices in fish farming. The large number of ponds allows for a diversified and scalable operation,
enabling us to adjust production levels based on market demand and operational efficiency.

The design and construction of the ponds will be tailored to the specific needs of catfish, ensuring that
each pond provides an optimal environment for their growth. Factors such as water quality, depth, and
feeding regimes will be meticulously managed to promote healthy fish development and maximize
production efficiency.

In summary, the planned fish farming project in the Silte Zone is designed to utilize 3 hectares of land to
create 40 specialized ponds for the cultivation of catfish. With a projected annual production capacity of
240 tons, this project aims to leverage the advantages of catfish farming to meet local and national fish
demands effectively.

4.2.2. Production Program

The fish farming project will commence with an initial capacity utilization of 30 percent during the first
year of operation. This phased approach allows for a gradual ramp-up of operations while ensuring that
the infrastructure, management practices, and market strategies are optimized. By the fourth year, the
project is expected to reach its full capacity of 100 percent. The production schedule and capacity
utilization over the first ten years are detailed in the following table:

Table 4-3. Production program

Year

Capacity utilization (%)

30%

50.00%

70.00%

90.00%

5
100.00%

100.00%

100.00%

100.00%

100.00%

10

100.00%

In the initial phase, the focus will be on establishing the pond system and fine-tuning operational
processes. The ponds will be stocked primarily with catfish, selected for their rapid growth and
suitability to the local environment. Initially, catfish will be sourced from nearby rivers, lakes, and
reservoirs, ensuring that the stock is well-adapted to local conditions and ready for cultivation.
Before stocking the ponds, each pond will undergo a thorough inspection by qualified aquaculturists.
This inspection will assess the quality and appropriateness of the pondconditions, including water
quality, depth, and overall suitability for fish farming. Ensuring optimal conditions before introducing
fish is crucial for their healthy growth and the success of the operation.

As the project progresses and capacity utilization increases, the frequency of fishing days will be
adjusted based on market demand. It is anticipated that there will be two to three fishing days per
week, allowing for regular harvesting and efficient management of fish production. Appropriate fishing
nets, such as gill nets and seine nets, will be used for harvesting, ensuring that the process is effective
and minimizes damage to the fish.

By the fifth year, the project is expected to operate at full capacity, achieving an annual production
output of 240 tons of fish. This full-capacity operation will be maintained through the subsequent years,
enabling the project to meet growing market demands and contribute significantly to local and national
fish supply.

In summary, the phased production program for the fish farming project is designed to ensure a gradual
increase in capacity, from 30 percent in the first year to 100 percent by the fifth year. The use of catfish,
careful pond management, and strategic harvesting practices will support the project's success and its
ability to meet market demands effectively.

5. Materials and Inputs

5.1. Raw Material

The successful operation of a fish farming project relies heavily on the procurement and effective use of
various raw materials. These materials are essential for ensuring optimal growth, productivity, and
financial return from the fish ponds. The primary raw material used in fish farming is seed, specifically
fingerlings. High-quality fingerlings are crucial as they influence the growth rate, size of the fish, overall
pond productivity. and ultimately the financial returns. Ensuring the best quality fingerlings is thus a
fundamental aspect of the fish farming operationIn addition to fingerlings, fish in the ponds require
specific feed sources to thrive. Chicken manure and cow dung serve as primary nutritive sources that
support the growth and productivity of the fish. These organic materials provide essential nutrients that
are beneficial for the health and development of the fish. Furthermore, urea is used to enhance water
quality and boost productivity by providing additional nutrients and improving the overall growth
conditions in the pond.

Calcium bicarbonate, commonly known as limestone, plays a significant role in maintaining pond health.
It helps to increase the availability of nutrients, stabilize the pH levels of the water, buffer against daily
pH fluctuations, and sterilize the ponds before stocking the fingerlings. By ensuring that the water
conditions are stable and nutrient-rich, calcium bicarbonate contributes to a healthier and more
productive fish farming environment.

The table below outlines the raw materials required for the fish farming project, their costs, and the
total cost of goods sold (COGS) associated with each:

Table 5-1. Raw materials required for fish farming

No.

Inputs

Cost Per Fish / Year in birr

Number of fish per year

COGS

Seed (Fingerlings)
20

240,000

4,800,000.00

Chicken manure

240,000

1.200.000.00

Cow dung Per Fish/Year

10

240,000

3
2,400,000.00

Urea

1.25

240,000

Calcium Bicarbonate (lime Stone)

240,000

240,000.00

Other costs

Lump sum
TOTAL

9,940,000.00

No.

Inputs

Cost Per Fish / Year in birr

Number of fish per year

COGS

Contingent

994,000.00

TOTAL

10,934,000.00

The total estimated cost required for the fish farming project is Birr 10,934,000.00. This figure includes
not only the costs of raw materials but also a contingent amount to cover any unforeseen expenses that
may arise during the implementation and operation of the project. This comprehensive budget ensures
that all necessary resources are accounted for, providing a solid financial foundation for the successful
establishment and operation of the fish farm.
5.2. Utilities

Utilities are essential for the efficient operation and successful completion of the proposed fish farming
project. They play a critical role in maintaining the day-to-day functionality of the farm, including
powering equipment, facilitating communication, and ensuring that other operational needs are met.
The major utilities required for this project include electricity, telecommunication services, and various
other utilities such as fuel and water. Below is a detailed breakdown of the annual utilities requirements
and their associated costs:

Table 5-2. Annual utilities requirement and cost

Sr. No.

Utility

Unit of Measure

Qty.

Unit price

(Birr) Cost

Electricity
kWh

200,000

1.04

208,000.00

Telecommunication

Voice (2) hour per

Lump sum

21,600.00

Sr. No.

Utility

day)

3
Unit of Measure

Qty.

Unit price

Cost (Birr)

Internet

Lump sum

17,988.00

Other utilities

Lump sum

250,000.00

Total

497,588.00
Annual Utility Requirement:

1) Electricity: The project will require 200,000 kWh of electricity annually, with a unit cost of Birr 1.04
per kWh, totaling Birr 208,000.00. Electricity is crucial for powering various equipment and systems
necessary for the operation of the fish farm, including water pumps, aerators, and lighting.

2) Telecommunication: This includes both voice and internet services. For voice communication, which is
estimated at 2 hours per day, the cost is lump-sum Birr 21,600.00 annually. Internet services are also
required, with a lump-sum cost of Birr 17,988.00. These services are essential for daily communication,
data management, and operational coordination.

3) Other Utilities: This category encompasses additional necessary utilities such as fuel and water. The
estimated annual cost for these utilities is Birr 250,000.00. This cost covers a variety of needs, including
fuel for vehicles and machinery, and water for the fish ponds and general farm use.

In total, the annual requirement for utilities for the proposed fish farming project is estimated to be Birr
497,588.00. This amount reflects the comprehensive costs associated with maintaining essential services
and supports the effective operation of the fish farming enterprise. Ensuring that these utility needs are
met is vital for the smooth functioning and success of the project.

6. Technology and Engineering

6.1. Technology

6.1.1. Production Process

Once the construction of the fish ponds is completed, the initial step involves preparing the pond beds
to ensure optimal conditions for fish farming. A layer of hydrated lime, also known as builder's lime, will
be applied to the bottom of each pond. This lime will be spread evenly and left for two weeks before
introducing water into the pond. The application of lime serves multiple purposes: it conditions the
pond soil, helping to neutralize acidity and improve soil quality, and it enhances the effectiveness of
fertilizers that will be used later.
After the lime has been applied and left to condition the soil, the ponds will be filled with water. The
next crucial step is the stocking of the ponds with fish species. For this project, the ponds will be
designated as monoculture ponds, meaning they will contain only one species of fish. The chosen
species is catfish, due to its productivity, rapid growth, and high consumer preference. This selection is
based on the catfish's ability to thrive in the pond environment and meet market demands effectively.

Catfish will be sourced from local rivers, lakes, or reservoirs. To prepare the pond for the introduction of
catfish, it will be fertilized using organic fertilizers one to two weeks prior to stocking. This pre-stocking
fertilization aims to stimulate the growth of microscopic plants, known as phytoplankton, which are
essential for the catfish's diet. Phytoplarikton forms the base of the aquatic food chain and provides a
natural food source for the catfish.

Maintaining high productivity in the pond requires ongoing management. Regular fertilization and
enrichment practices will be employed to sustain the growth ofphytoplankton and ensure a balanced
ecosystem within the pond. Monitoring of fish growth will be conducted regularly, and harvesting will
commence once the fish reach an average weight of 1 to 1.2 kg, which is considered optimal for market
readiness.

For harvesting, appropriate fishing nets such as gill nets will be used. These nets are designed to
effectively capture the grown fish while minimizing damage. The handling of the harvest depends on the
proximity of a dependable market. If a reliable market is available nearby, the fish can be sold fresh,
providing immediate returns. However, if the market is distant or less reliable, the fish can be processed
immediately after harvest. Processing options include drying, smoking, or salting, which help to extend
the fish's shelf life and facilitate transport to distant markets where there is a steady demand.

In summary, the fish farming process involves careful preparation of pond conditions, strategic stocking
of catfish, and regular management to ensure optimal growth and productivity. By using appropriate
practices for pond conditioning, fertilization, and harvesting, the project aims to achieve high-quality fish
production that meets market demands and supports the overall success of the fish farming venture.

6.1.2. Source of fish farm Equipment

The fish farm equipment required by the envisaged project will be acquired from inland and
international markets.

6.2. Engineering

6.2.1. Site Selection

The proposed fish farming project will be situated in the Silte Zone, strategically located near a
community stream. This site was chosen based on several importantcriteria to ensure its suitability for
fish farming. The location is specifically selected to avoid areas prone to flooding and to be situated
away from major rivers, which helps in minimizing risks associated with water management and
potential contamination. Additionally, the chosen site has been assessed for its elevation, which is
important for ease of drying the ponds during the off-season and preventing waterlogging.

The environmental conditions of the site are favorable for fish production. The cool and dense
environment supports optimal fish growth, while the proximity to a main dual carriageway provides
logistical advantages. This access road will help reduce transportation costs and facilitate the efficient
movement of harvested products to target markets. The site's motorable nature ensures that vehicles
can easily reach it, allowing for smooth evacuation of fish farm products.

The site selection process also takes into account several critical factors, such as the presence of china
clay in the soil and a year-round adequate water supply. China clay, or kaolin, is beneficial for soil
composition in fish ponds as it aids in water retention and helps to prevent leaks. Furthermore, the
availability of a reliable water supply is essential for maintaining pond levels and ensuring consistent fish
growth throughout the year.

Proper surveying of the site is essential for successful pond construction and operation.

The slope of the pond bed should be kept minimal to utilize gravity effectively, which facilitates water
flow and enhances natural oxygenation. A slight slope will help water circulate efficiently, reducing the
need for extensive soil excavation and lowering overall operational costs. Water distribution channels
will be placed on top of the pond dikes to ensure efficient water management, and drainage channels
will be positioned at the lowest points of the land to prevent waterlogging.
Soil analysis is another crucial step in preparing the site. Soil samples will be collected from different
depths surface, middle, and deeper layers and subjected tolaboratory tests. Key parameters to be
analyzed include pH, soil composition (ratios of sand, silt, and clay), total dissolved salts, calcium, and
magnesium levels. Clay content is particularly important for water retention in fish ponds. If the soil on
the surface is sandy but contains sufficient clay at a deeper level, the sandy topsoil will be excavated,
and the clay will be utilized to form the final layers of the pond bottom and banks. This approach helps
minimize water loss and ensures the pond's structural integrity.

Overall, the careful selection and preparation of the site will play a pivotal role in the success of the fish
farming project. By considering factors such as location, environmental conditions, soil composition, and
efficient water management, the project aims to create an optimal environment for fish production and
achieve operational efficiency.

6.2.2. Building and Civil Works

The proposed aquaculture development will require a total land area of approximately 3 hectares. This
area is crucial for the construction and operation of the fish farm, which includes both the fishponds and
supporting infrastructure. Of the total land area, about one-third, or 1 hectare, will be allocated to the
construction of 40 fishponds. The remaining two-thirds of the land will be used for various essential
facilities and infrastructure necessary for the successful operation of the fish farm.

The fishponds will be the primary component of the project. They will occupy a substantial portion of
the land, with each pond designed to meet specific production needs. The remaining area will be utilized
for constructing fish breeding sheds. facilities for supplementary activities such as animal fattening and
feed production, poultry farming, and horticultural activities. Additionally, other infrastructure will
include a fish processing house, office, store, guard house, training rooms, laboratories, showrooms,
gerlerator house, and residential quarters.

The site, particularly around the processing area, will be enclosed with a proper fence to ensure security
and protection of the assets. The fencing will be constructed using posts made from local timber and
barbed wire, which will provide a robust and economical solution for site security.

Below is a detailed breakdown of the costs associated with building and civil works required for the fish
farming project:
Table 6-1. Building and civil works and their costs

Building

Unit of Measure

Quantity

Cost/m²

Area in m²

Total Cost

Construction of Ponds

In number

40

3,000.00

200
24,000,000.00

Fish breeding box

Lump sum

Labs

In number

3,000.00 100

1,200,000.00

Ctrl

Fish processing house

In number

3,000.00
150

450,000.00

Store

In number

3,000.00 250

750,000.00

Office Building

In number

3,000.00 200

Training rooms
In number

3,000.00

100

Cafeteria

In number

1,500.00

100

150,000.00

Generator house

In number

1
1,000.00

6,000.00

Residents

In number

25

1,000.00

25

625,000.00

Guard house

In number

4
1,000.00

312,500,00

Ferice

Lump sum

Other buildings

Lump sum

Total

29,013,500.00

Building

Unit of Measure

Quantity

Cost/m²
Area in m²

Total Cost

Contingent

2,901,350.00

Grand Total

31,914,850.00

The overall cost for buildings and construction required for the fish farming project is estimated at Birr
31,914,850.00. This estimate includes a total cost of Birr 29,013,500.00 for various construction
components and an additional contingent amount of Birr 2,901,350.00 to cover any unforeseen
expenses. This comprehensive financial planning ensures that all aspects of the construction are
covered, facilitating a well-organized and efficient setup of the fish farming operation.

6.2.3. Farm Machinery and Equipment

To ensure the successful implementation and operation of the proposed fish farming project, various
types of machinery, equipment, and tools are required. The table below provides a comprehensive
breakdown of these necessities, including their quantities and associated costs:

Table 6-2. Required equipment and cost

Cr
Description

Unit of Measure

Quantity

Unit Price

Total Price

Tube well

In number

289,320.00

289,320.00

Transformer

In number

1
120,550.00

120,550.00

Water Pump

In number

12,000.00

48,000.00

Net

In number

40

10,500.00

420,000.00
Filters

In number

10,500.00

42,000.00

Description

Unit of Measure

Quantity

Unit Price

Total Price

Generator

In number

1,500,000.00
1,500,000.00

F10

Total

2,419,870.00

Contingent

241,987.00

Bac

Grand Total

2,661,857.00

The total estimated expenditure for the required machinery and equipment amounts to Birr
2,661,857.00. This figure includes a core cost of Birr 2,419,870.00 and an additional contingency fund of
Birr 241,987.00 to accommodate unforeseen expenses or additional needs that may arise.

Enter

Ct
Here is an overview of the critical equipment and their respective functions within the project:

Tube Well: This equipment, costing Birr 289,320.00, is vital for extracting groundwater, which will supply
water to the fish ponds. It ensures a steady and reliable water source essential for fish health and
growth.

Transformer: Priced at Birr 120,550.00, the transformer is necessary to stabilize and provide adequate
power to all electrical systems on the farm, ensuring continuous operation and reducing the risk of
power-related disruptions.

Water Pumps: Four water pumps, each costing Birr 12,000.00 and totaling Birr 48,000.00, will be used
for managing water circulation and flow within the ponds, which is crucial for maintaining optimal water
conditions for fish.

Nets: The project will require 40 nets for various pond management tasks such as harvesting and
handling fish. The total cost for these nets is Birr 420,000.00.

Filters: Four filters, each costing Birr 10,500.00 and totaling Birr 42,000.00, will be used to maintain high
water quality by removing impurities and ensuring a clean environment for the fish.

Generator: The generator, which costs Birr 1,500,000.00, provides essential backup power to ensure the
farm's operations continue smoothly even during power outages.

F10

The detailed breakdown of costs ensures that all necessary equipment is accounted for, facilitating the
efficient and effective operation of the fish farming project.

6.2.4. Office Furniture

Effective office furniture is essential for creating a productive work environment, which in turn enhances
employee efficiency. The proposed fish farming project requires a range of office furniture to support its
administrative and operational functions. The total estimated cost for office furniture is Birr
1,500,000.00.

Table 6-3. Office Furniture

Description

Unit of Measure

Total Cost

Office Furniture

Lump sum

1,500,000.00

This budget will cover the purchase of desks, chairs, filing cabinets, and other necessary office
equipment to ensure a well-organized and functional workspace for the project team.

6.2.5. Vehicle Requirement

Vehicles are crucial for facilitating various operational tasks, including transportation of goods, staff, and
equipment. The following table outlines the required vehicles for the proposed fish farming project,
detailing their types, quantities, unit prices, and total costs:

Table 6-4. Required vehicles and cost

Sr. No.

Vehicle

Unit of Measure

Qty.

Unit price

Cost (Birr)

F10

Refrigerator truck

In number

2,800,000.00
5,600,000.00

Service car

In number

2,400,000.00

2,400,000.00

Motorbikes

In number

120,000.00

360,000.00
4

Managerial Car

In number

2,800,000.00

2,800,000.00

Tractor

In number

1 3,000,000.00
7

Excavator

In number

Other truck

In number

2,400,000.00

2,400,000.00

Total

18,560,000.00

The total estimated cost for the necessary vehicles amounts to Birr 18,560,000.00. Each vehicle type
plays a specific role in supporting the farm's operations, from transporting goods and staff to managing
logistics and equipment maintenance.

The Refrigerator Trucks will be used to transport fish to markets while maintaining freshness. The
Service Car and Managerial Car will facilitate daily operations and executive travel. Motorbikes will be
used for quick local transportation, while the Tractor and Excavator are essential for farm maintenance
and land preparation. The Other Truck will be used for general transportation needs across the farm.

Investing in the right furniture and vehicles ensures that the fish farming project operates smoothly and
efficiently, supporting its overall success and sustainability.

7. Manpower and Training Requirement

7.1. Manpower Requirement

The successful operation of the envisaged fish farming project relies heavily on a dedicated and skilled
workforce. To achieve its goals and ensure efficient management and productivity, the project requires
a total of 96 employees. The breakdown of

manpower requirements and the associated annual labor costs, including benefits, are outlined below.

Table 7-1. Manpower requirement and labour cost

Sr. No.

Description

Req. No.

Monthly Salary (Birr)

Annual Salary (Birr)

1

Farm manager

12,000.00

144,000.00

Fish and animal farm expert

10

9,500.00

1,140,000.00

Plant expert

5
9,500.00

570,000.00

Human resource officers

9,000.00

216,000.00

Finance officers

9,000.00

216,000.00
6

Purchasing officers

9,000.00

216,000.00

IT technicians

8,000.00

192,000.00

General technicians

2
8,000.00

192,000.00

9 Cleaners

40

3,000.00

1,440,000.00

10

Driver

10

4,000.00

480,000.00

11
Guards

12

3,000.00

432,000.00

12

Cafeteria officers

3,000.00

288,000.00

Sub-Total

96

5,526,000.00

Employees benefits 10% of basis salary

552,600.00

Total

96

6,078,600.00

At full capacity, the total annual labor cost for the fish farming project, including salaries and employee
benefits, is estimated to be Birr 6,078,600.00. This comprehensive investment in human resources
ensures that the project will be staffed with qualified personnel across various roles, from management
to operational and support staff

Details on Manpower Requirements;

1) Farm Manager: Responsible for overseeing all farm operations, including fish health, pond
management, and overall farm productivity.

F10

2) Fish and Animal Farm Experts: Specialized in managing fish breeding, health, and growth, as well as
animal care if integrated with other farm activities.

3) Plant Experts: Focus on managing and optimizing the growth of aquatic plants essential for
maintaining water quality and fish health.

4) Human Resource Officers: Handle recruitment, training, and employee welfare. ensuring that the
workforce is motivated and well-managed.
5) Finance Officers: Manage financial records, budgeting, and financial reporting to ensure the project
remains financially viable.

6) Purchasing Officers: Responsible for procuring necessary supplies and raw materials for the farm.

En

33

7) IT Technicians: Maintain and support technology systems used in farm operations.

8) General Technicians: Address technical issues and ensure machinery and equipment are in good
working order.

9) Cleaners: Ensure cleanliness and hygiene of the farm facilities, which is crucial for fish health and
safety.

10) Drivers: Transport goods, staff, and materials efficiently to and from the farm.

11) Guards: Provide security for the farm premises, safeguarding both the assets and staff.

12) Cafeteria Officers: Manage the food services for employees, ensuring they have access to meals and
refreshments.

Investing in a well-rounded and skilled team is essential for the successful execution and management of
the fish farming project. The allocated budget for manpower reflects the commitment to building a
capable team that will drive the project towards achieving its goals.
7.2. Training Requirement

Effective training and development are critical components of a successful fish farming project. They
play a pivotal role in ensuring that the staff is well-equipped with the necessary skills and knowledge to
perform their duties efficiently. Training not only enhances individual competencies but also fosters
team unity and a shared sense of purpose, which are essential for achieving the project's objectives.

For the envisaged fish farming project, continuous training is required to keep the personnel updated
with the latest aquaculture practices, operational procedures, and safety protocols. The training
program will be designed to address various aspects of fish farming, including fish health management,
pond maintenance, equipment handling, and financial management.

The cost for training the entire staff is estimated to be 10% of the total annual salary expenditure. Given
the total annual salary and benefits for all staff amount to Birr 6,078,600.00, the training budget is
calculated as follows:

Table 7-2. Training Costs

Description

Training Cost

Percentage of Annual Salary and Benefits

10%

Total Cost (Birr)

607,860.00
This investment in training ensures that employees remain knowledgeable about best practices and new
developments in aquaculture. It also contributes to increased productivity, improved job satisfaction,
and reduced turnover, all of which are essential for the long-term success and sustainability of the
project.

Overall, the allocated training budget of Birr 607,860.00 underscores the project's commitment to
building a well-trained, motivated, and cohesive team capable of driving the fish farming operation to its
full potential.

8. Financial Analysis

8.1. Key Assumptions

The financial analysis for the proposed fish farming project is conducted based on a range of key
assumptions and data. This analysis evaluates the project's feasibility. profitability, and financial health.
Below are the key assumptions and their implications for the project:

Table 8-1. Key assumptions of the project

Category

Basic Assumptions

(Fish) Production capacity per year

240-ton fish

Number of catfish per meter cube

10 catfish

Production Related Assumptions

Sale price per fish

Financing Assumptions

170 birr

utilization in first year Production capacity

30%

Maximum production capacity utilization

100%

Project will start

July/2023

Equity
40%

Loan

60%

Interest rate on long term debt

14%

Discount cash flow

8.50%

Expense Assumptions

Insurance

1% of vehicle cost

Depreciation Rates

Depreciation Rates Depreciation method

5%
Straight line

Repair and maintenance of

1%

Category

Basic Assumptions

Cash Flow

fixed cost

6,284,047

Assumptions

Initial cash on hand

Pre-Operating Cost

607,860
These assumptions form the basis for the financial modeling and projection of the fish farming project.
They help determine the project's financial viability, including its ability to generate sufficient returns on
investment, manage costs, and achieve profitability.

8.2. Total Initial Investment Cost

The comprehensive investment required for the fish farming project encompasses both capital
expenditures and working capital. This investment is crucial for establishing the farm, equipping it with
necessary machinery, and covering initial operational costs. The total investment cost is estimated at
Birr 65,302,578.25. Below is a detailed breakdown of the initial investment costs:

Table 8-2. Initial investment cost

Sr. No.

Cost Items

Total Cost

Capital Investment

1.1

Building/Infrastructure
31,914,850.00

1.2

Equipment/ Machinery

2,661,857.00

1.3

Office Furniture

1,500,000.00

14

Vehicles

18,560,000.00

1.5

Pre-operating Cost

607,860.00
Total Capital Costs

36

55,244,567,00

Sr. No.

Cost Items

Total Cost

Working Capital

2.1

Equipment spare part

inventory

1,040,464.25

2.2
Raw material inventory

2,733,500.00

2.3

Cash

6,284,047.00

Total Working Capital

10,058,011.25

Total Investment

65,302,578.25

Note: The pre-operating expenditure includes the cost of training during the construction phase, which
amounts to Birr 607,860.00. This also covers the costs associated with registration, licensing, legal fees,
and commissioning expenses.

This investment plan is designed to ensure the successful setup and operational efficiency of the fish
farming project, aiming for long-term sustainability and profitability.

8.3. Capital structure

Capital structure plays a critical role in determining how a project is financed by balancing between debt
and equity. For the proposed fish farming project, which requires a total investment of Birr
65,302,578.25, the financing will be structured with 40% equity and 60% debt. This means that out of
the total investment, Birr 26,121,031 30 will be provided through equity, while Birr 39,181,546.95 will
be covered by debt

Table 8-3. Capital structure

Initial Financing

Capital structure in birr

Debt

39,181,546.95

Equity

26,121,031.30

65,302,578.25

Total Investment

The debt component, constituting 60% of the total investment, amounts to Birr 39,181,546.95. This
financing will be obtained through loans or other forms of debt instruments. Debt financing is
characterized by the obligation to make regular interest payments and repay the principal amount over
time. The long-term debt is expected to incur an interest rate of 14%, which will impact the project's
financial obligations and cash flow management. Leveraging debt can enhance the project's returns but
also introduces additional financial risk due to the necessity of meeting these periodic payments.

In contrast, equity financing makes up 40% of the total investment, totaling Birr 26,121,031.30. Equity
financing involves raising capital from investors who provide funds in exchange for ownership stakes in
the project. Unlike debt, equity financing does not require periodic repayment, which provides the
project with financial flexibility. However, equity investors may expect a share of the project's profits or
dividends and potentially have a say in its management. This form of financing aligns investors' interests
with the project's success but involves sharing returns with the equity holders.

Overall, the capital structure of the fish farming project, with its mix of 60% debt and 40% equity,
reflects a strategy that aims to leverage the benefits of both financing sources while balancing financial
risk. The high proportion of debt introduces potential for higher returns but also requires careful
management of debt servicing costs. Equity financing provides stability and supports long-term growth
without the burden of repayment obligations. This structure is designed to ensure effective funding of
the project while managing associated financial risks.

8.4. Production Cost

Operating costs are crucial for determining the financial feasibility and sustainability of a project. These
costs encompass both the direct expenses associated with producing goods, known as the Cost of Goods
Sold (COGS), and other recurring operational expenses. For the proposed fish farming project, the
annual production cost at full capacity is projected to be Birr 28,196,395.48. This total cost is comp 'ised
of various components, each contributing differently to the overall expenditure.

Table 8-4. Annual production cost at full capacity

Items

Cost

%
Operating cost

10,934,000.00

38.78%

Utilities

Raw materials

497,588.00

1.76%

Maintenance and repair

546,367.07

1.94%

Manpower

6,078,600.00
21.56%

Training cost

607,860.00

2.16%

Administration Costs

933,220.75

3.31%

Insurance

185,600.00

0.66%

Total Operating Costs

19,783,235.82

70.16%
Depreciation

2,731,835.35

9.69%

Cost of Finance

5,681,324.31

20.15%

Total Service Cost

28,196,395.48

100.00%

The most significant portion of the operating costs is allocated to raw materials, amounting to Birr
10,934,000.00. This represents 38.78% of the total operating expenses. Raw materials include essential
inputs such as fingerlings, chicken manure. cow dung, urea, and calcium bicarbonate, which are critical
for fish growth and pond productivity.

Utilities, another key component, account for Birr 497,588.00, or 1.76% of the total operating costs. This
covers the costs of electricity, telecommunication, and other essential services required to maintain the
farm's operations.
Maintenance and repair costs, essential for keeping equipment and infrastructure in good working
condition, are estimated at Birr 546,367.07, which is 1.94% of the total operating costs. Regular
maintenance helps prevent breakdowns and ensures smooth operation of the fish farming facilities.

Manpower is a significant expense, with an annual cost of Birr 6,078,600.00, or 21.56% of the total. This
includes salaries and benefits for the workers required for various roles, such as farm managers, fish
experts, and support staff.

Training costs, crucial for ensuring that employees are well-equipped with the necessary skills, amount
to Birr 607,860.00, making up 2.16% of the total operating costs. This investment in training helps
improve employee efficiency and aligns their skills with the project's goals.

Administrative costs, covering expenses related to the management and operations of the farm, are
estimated at Birr 933,220.75, or 3.31% of the total. These costs include office supplies, utilities, and
other administrative necessities.

Insurance, which protects the project against potential risks, costs Birr 185,600.00, accounting for 0.66%
of the total operating costs. This expenditure ensures financial protection against unforeseen events.

Additionally, depreciation, representing the reduction in value of the fixed assets over time, is projected
at Birr 2,731,835.35, which constitutes 9.69% of the total service costs. Depreciation accounts for the
wear and tear of buildings, equipment, and other assets used in the fish farming operations.

The cost of finance, including interest on loans and other financial obligations, amounts to Birr
5,681,324.31, or 20.15% of the total service costs. This expense reflects the financial charges associated
with the project's debt.

In summary, the total operating costs of Birr 28,196,395.48 are comprised of raw materials, utilities,
maintenance and repair, manpower, training, administration, insurance, depreciation, and cost of
finance. These costs are crucial for budgeting and financial planning, ensuring that the fish farming
project operates efficiently and remains economically viable.

8.5. Estimated Revenue

The financial outlook for the proposed fish farming project includes a detailed estimation of potential
revenues, based on the current understanding of the market and project capabilities. These projections
provide a comprehensive view of the expected income streams and are essential for assessing the
viability and profitability of the project. The financial forecast is subject to external factors, such as
economic conditions, which may significantly affect the actual performance. Nevertheless, the
estimated revenues reflect the anticipated benefits derived from fish farming and associated activities.

The projected revenue is derived from multiple sources associated with the fish farming project. The key
revenue streams and their estimated contributions are summarized in the table below:

Table 8-5. Estimated revenue

Service

Unit of measure

Number of services

Unit price

Total revenue

Revenue from fish

Fish

240,000
170.00

40,800,000.00

41

Service

Unit of measure

of services Number

Unit price

Total revenue

farming

Revenue from Vegetables and fruits

Lump Sum

Revenue from Animal farming

Lump Sum
3,600,000.00

Other revenue (training, cafeteria...)

Lump Sum

1,800,000.00

At full capacity, the total estimated annual revenue from the project is anticipated to be Birr
49,200,000.00. This revenue projection is primarily driven by the sale of fish, which contributes
significantly to the total revenue. Specifically, the revenue from fish, calculated at 240,000 fish priced at
Birr 170 each, amounts to Birr 40,800,000.00. This substantial income reflects the core activity of the
project and highlights its potential profitability.

Additional revenues are expected from other components of the project, including chicken farming,
vegetables and fruits, and animal farming. Each of these revenue streams contributes additional income,
with chicken farming generating Birr 2,000,000.00, vegetables and fruits yielding Birr 1,000,000.00, and
animal farming adding Birr 3,600,000.00. Furthermore, other revenue sources, such as training
programs and cafeteria services, are projected to contribute Birr 1,800,000.00.

These revenue estimates are based on current assumptions and market conditions. While the
projections offer a promising outlook for the fish farming project, it is important to remain aware of
external factors that could influence financial performance. Adjustments may be necessary as market
dynamics and economic conditions evolve.

In summary, the estimated revenue of Birr 49,200,000.00 reflects a well-rounded forecast of the
project's financial potential, encompassing various income streams and highlighting the core role of fish
sales in achieving profitability.

9. Financial Evaluation
9.1. Profitability

The financial analysis of the proposed fish farming project indicates a positive and robust financial
outlook over its operational life. The project is expected to generate consistent profits throughout its
lifespan, reflecting its viability and economic potential.

According to the projected profit and loss statement, the project will yield a growing net profit after tax
each year. In the initial year of operation, the net profit is estimated at Birr 38,618.24. This figure is
relatively modest, reflecting the early stages of the project when costs are still high, and production is
ramping up. However, as the project progresses and achieves higher production capacity, the net profit
will increase significantly.

By the end of the project's life, the net profit after tax is projected to rise substantially to Birr
11,657,244.64. This growth demonstrates the scalability of the project and its ability to generate
substantial returns as it reaches full capacity and operational efficiency. The increase in net profit is
attributed to the higher production levels. optimized operational processes, and increased revenue from
fish sales and other related activities.

In addition to the impressive profit margins, the project's cash flow performance is also strong. By the
end of the project's lifecycle, the accumulated cash flow is anticipated to reach Birr 63,379.314.66. This
substantial cash accumulation reflects the project's ability to generate excess cash beyond its
operational and financial obligations. The positive cash flow is indicative of the project's financial health
and its capacity to

sustain and expand its operations, invest in further growth, and provide returns to stakeholders.

In summary, the fish farming project is projected to deliver increasing net profits over its operational
life, with the annual net profit after tax growing from Birr 38,618.24 to Birr 11,657,244.64. The
accumulated cash flow by the project's end is expected to be Birr 63,379,314.66, underscoring the
project's profitability and strong financial performance. These projections highlight the project's
potential to be a successful and profitable venture, with substantial returns and financial stability
throughout its lifecycle.
9.2. Payback Period

The payback period, also known as the pay-off period, is a crucial metric for evaluating the financial
viability of an investment. It represents the duration required to recoup the initial capital expenditure
through the net cash inflows generated by the project. For the proposed fish farming project, this period
is a key indicator of how quickly the investment will start yielding returns.

Based on the projected cash flow estimates, the initial investment for the fish farming project, which
amounts to Birr 65,302,578.25, is expected to be fully recovered after a period of 6 years and 10
months. This timeline reflects the duration needed for the accumulated net cash flows to match the
original investment outlay.

This payback period is relatively moderate, suggesting that the project will begin generating returns
within a reasonable timeframe. The 6-year and 10-month period indicates a balanced recovery period,
where the project's cash inflows will gradually offset the initial capital investment. After this period, the
project is anticipated to continue generating positive net cash flows and profits, enhancing its financial
attractiveness and sustainability

9.3. Net Present Value

Net Present Value (NPV) is a fundamental financial metric used to assess the value of an investment or
project by considering the time value of money. It represents the total present value of a series of cash
flows, both incoming and outgoing, adjusted for the time value of money using a specific discount rate.
NPV consolidates cash flows occurring at different times into a single metric, allowing for a standardized
comparison of value across periods.

The NPV calculation involves discounting future cash flows to their present value using a predetermined
discount rate. This rate reflects the opportunity cost of capital and the risk associated with the project.
By summing these discounted cash flows and subtracting the initial investment, NPV provides a measure
of how much value is added or subtracted by undertaking the project.

A positive NPV indicates that the project is expected to generate more value than the cost of the capital
invested, suggesting that it is financially viable and worthwhile. Conversely, a negative NPV would imply
that the project's returns are insufficient to cover the cost of the investment, signaling that it may not be
a favorable undertaking.

For the proposed fish farming project, the NPV has been calculated at an 8.5% discount rate. The result
is a positive NPV of Birr 9,353,771.88. This positive value signifies that the project is expected to create
value beyond the initial investment cost, making it a financially acceptable and promising investment.
The positive NPV underscores the project's potential for profitability and its ability to generate returns
that exceed the cost of capital

9.4. Internal Rate of Return

The Internal Rate of Return (IRR) is a crucial financial metric that reflects the annualized effective
compounded return rate on an investment. It represents the

discount rate at which the Net Present Value (NPV) of all future cash flows from the investment equals
zero. Essentially, the IRR indicates the yield or profitability of the investment, showing how efficiently
the capital is employed.

To compute IRR, the present value of future cash flows is calculated using different discount rates until
the NPV of these cash flows equals zero. This rate signifies the maximum discount rate at which an
investment remains profitable. In other words, the IRR is the rate of return at which the investment
breaks even in terms of NPV.

A project or investment is considered favorable if its IRR exceeds the required rate of return or the
returns from alternative investments. If the IRR is higher than the cost of capital or the return rate of
comparable investments, it implies that the project is generating sufficient returns to justify the
investment.

For the proposed fish farming project, the IRR has been calculated to be 10.83%. This rate of return is
higher than the discount rate of 8.5%, indicating that the project is expected to generate a return
greater than the cost of capital. Therefore, the positive IRR of 10.83% confirms the viability and
attractiveness of the project, suggesting that it is a sound investment with a favorable return on
investment.
10. External Impact of Proposed Fish Farming

This section will further examine the proposed fish farming's economic, social, political, and
environmental impacts.

10.1. Economic Benefit

The fish farming project is poised to deliver significant economic benefits, primarily through job creation
and tax revenue generation. Upon full implementation, the project will provide stable employment for
96 individuals, covering a range of roles necessary for the daily operations and management of the fish
farm. These positions will includespecialized roles such as farm managers, fish and animal farm experts,
and support staff like cleaners and drivers, contributing to a diverse workforce.

In addition to permanent employment, the project will also generate temporary job opportunities
during its construction phase. The establishment of the fish ponds will require substantial manual labor,
with local workers engaged in digging and preparing the pond sites. This process, while supported by
minimal machinery, will predominantly rely on human effort, creating employment for over 150
temporary workers. This aspect of the project not only supports the local economy but also provides
short-term job opportunities to the community.

Furthermore, the project is expected to significantly contribute to government revenues through tax
payments. It is projected to generate approximately Birr 43,779,899.78 in tax revenue. This substantial
contribution will aid in funding public services and infrastructure, enhancing the overall economic health
of the region.

The project is not only a source of employment and tax revenue but also has a positive impact on the
local community's work culture. By introducing modern fish farming practices and creating a structured
work environment, the project will foster improvements in local working standards and practices. This
cultural shift is expected to benefit the community by setting new benchmarks for efficiency and
productivity in local enterprises.
In summary, the fish farming project stands to make a meaningful impact on the local economy by
providing employment, generating tax revenue, and fostering a positive change in the local work
culture.

10.2. Social Impacts

The fish farming project is set to significantly benefit local communities through various avenues. One of
the primary advantages is the provision of a high-protein food source. Fish is an essential dietary
component that offers numerous health benefits, and by making it readily available, the project will
contribute to improved nutrition and overall well-being in the surrounding areas.

In addition to addressing nutritional needs, the project will create numerous job opportunities,
particularly for women and youth. By focusing on inclusive employment practices, the project aims to
engage these demographic groups, thus fostering economic empowerment and skill development
among underrepresented segments of the population. This approach not only supports individual
livelihoods but also strengthens the community's economic fabric.

The project is committed to adhering to principles of corporate social responsibility (CSR). This
commitment entails providing services to the community at equitable prices and, when possible,
offering assistance to marginalized groups at no cost. By prioritizing fairness and accessibility, the
project ensures that its benefits extend to all segments of society, particularly those who may otherwise
be excluded from accessing quality fish and related services.

Moreover, the fish farming project is instrumental in driving changes in local consumption patterns. By
introducing high-quality fish products and promoting their benefits, the project encourages healthier
dietary choices and supports a shift towards more nutritious food options within the community. This
influence on consumption patterns not only enhances public health but also fosters a culture of wellness
and informed eating habits.

In summary, the fish farming project is designed to create substantial positive impacts source, job
creation, on local development. Through the provision of a valuable food sou adherence to CSR
principles, and the promotion of healthier consumption patterns, the project demonstrates a strong
commitment to enhancing the quality of life for the community and driving meaningful social change.

10.3. Environmental Impacts Assessment

The fish farming project is designed with several key environmental benefits in mind, distinguishing it
positively from other forms of livestock farming. One of the primary advantages is its reduced carbon
footprint. Fish farming typically generates fewer greenhouse gas emissions compared to traditional
livestock farming methods, which involve higher levels of methane production and land use. By
minimizing its carbon footprint, the project aligns with broader environmental goals of sustainability and
reduced climate impact.

During the construction phase, the project adopts rigorous measures to manage environmental
concerns effectively. Construction materials, waste, and flammable substances will be handled
scientifically and systematically to minimize potential hazards and environmental contamination.
Furthermore, the project will actively manage noise and dust, ensuring that these disturbances are kept
within acceptable limits and do not negatively impact the surrounding area.

The design of the fish farming facility includes a well-planned drainage system, crucial for environmental
protection. This system is engineered to efficiently manage surface runoff, prevent local flooding, and
facilitate proper discharge of water. By controlling runoff and mitigating flood risks, the project reduces
its potential impact on the local environment and helps maintain ecological balance.

Upon completion of the construction, the project will undertake a reforestation initiative by planting
trees on the site. This action will compensate for any negative impacts resulting from the removal of
existing trees during construction. Reforestation will contribute to enhancing local biodiversity,
improving air quality, and providing habitat for wildlife.

Moreover, the project is designed to ensure that water resources are used efficiently. After being
employed for fish farming, water will be repurposed for horticulture and afforestation activities. This
approach not only conserves water but also supports environmental sustainability by integrating
aquaculture with other green initiatives.

Overall, the fish farming project incorporates environmentally responsible practices and demonstrates a
commitment to minimizing ecological impact. By reducing its carbon footprint, managing construction
impacts effectively, implementing a robust drainage system, and repurposing water resources, the
project contributes to environmental preservation and sustainability.

11. Tentative Implementation Plan

The fish farming project is structured with a detailed timeline to ensure systematic progress from
inception to full operational status. Below is the schedule outlining the expected commencement and
completion dates for each key phase of the project:

Table 11-1. Commencement and completion date of the project

Sr. No.

Activities

Date

Commencement

Completion

Project development and feasibility study

Sep. 1/2024

Nov. 30/2024

2
Land acquisition

April. 1/2025

June 30/2025

Land preparation and construction of

July 1/2025

Dec. 31/2025

Sr. No.

Activities

Date

Commencement

Completion

4
buildings (civil works)

Public utility acquisition

Oct. 1/2025

Dec. 31/2025

Procurement of machinery and equipment

Jan 1/2026

March 31 /2026

Machinery and equipment installation

Feb. 1/2026

April 30 /2026
9

Preparation of raw material (order, purchase, import)

March 31/2026

May 31/2026

Testing of machinery and equipment

Feb. 1/2026

May 31/2026

Project commissioning

April 1/2026

June 30/2026
10

Getting in to full operation

Starting from July 1/2026

Project Commissioning refers to the comprehensive process of planning, documenting. scheduling,

testing, adjusting, verifying, and training required to ensure that the facility operates as a fully functional
system according to the Owner's Project Requirements. This crucial phase ensures that all components
of the project are properly integrated and functional before the facility begins full-scale operations.

Appendis

Appendix I. Loan Repayment

Year

Principal Repayment

Interest Payment

Year Ending Balance

39 181.546.95
3.918.154.70

5.681.324.31

35.263.392.25

3.918.154.70

5.113.191.88

31.345.237.56

3.918.154.70

4,545,059.45

27.427.082.87

3.918.154.70

3.976.977.02

23.508.928.17

3.918.154.70
3,408,794 58

19,590.773.48

3.918.154.70

2.840.662.15

15.672.618.78

3.838.154.70

2.272.529.72

11.754.464.09

3.918.154.70

1.704.397.29

7.836.309.39

3.928 154 70
1.136.264.86

3.918. 154 69

3.918.154.70

568,132:43

(0.00)

Appendix II. Income Statement

Calendar year

Capacity utilization (%)

Revenue

Cost of goods sold

Gross Profit

Year 1

30%
Year 2

50.00%

Year 3

Year 4

Year S

70.00%

Year

2024

Year 7

Year 8

100%

Year 9

100%
Year 10

90.00%

100.00%

100.00%

100%

100%

34,760,000.00

24,600,000.00

34,440,000.00 44,280,000.00

49,200,000.00

49,200,000.00

49,200,000.00
49,200,000.00

49,200,000.00

49,200,000.00

3,280,200.00

5,467,000.00

7,653.800.00 9,840,600.00

10,934,000.00

10,934,000.00

10,934,000.00 10,934,000.00

10,934,000.00

10,934,000.00

11,479,800.00

19,133,000.00
26,786,200.00

34,439,400.00 38,266,000,00

38,266,000.00

38,266,000.00

38,266,000.00

38,256,000.00

38,256,000.00

Operating expense

5,934.970.75

9.891,617.91

13.848,265.08

17,804,912.24
19,783,235.82

19,783,235.82

19,783,235.82

19,782.235.82

19,783,235.82

19,783,236.82

Earnings Before Interest and (EBIT)

Interest

Tax 5,544,829.25

9,241,382.09

12.937.834.52

16,634,487,76

18,482,764.18
18,482,764.18

18,482,764:18

18,482,784.18

18,482,764.18

18,482,764.18

Earning Before Tas (EBT)

Tax (25%)

Earning After To (EAT)

5,485.416.57

4.936.874.92

4.388,333.26

3,839,791.60
3.291,249.94

2,742,708.29

2,154,166.63

1,645,624.97

1,097,083.31

548.541.66

50,412.68

4,304,507.17

8.549,601.07

12,794,696.16

15.191.514.23

15.740.055.89

16,288,597.56
16,837,139.20

17,185.680.88

17,034,222.52

20,794.44

1,506,577.51

2,992,360.58

4,478,142.66

5,317,029.90

5.509,019.56

5,701,009.14

5,882,990.72

6,064,988.30
6.276,977.88

38516.24

2,797,928.66

5,557,241.06

8,316,552.50

9,874,484.25

10,231,036.33

10,587,588.41

10,944,140.48

11.300,692.56

11,657,244.64

Appendix III. Cash Flow

Operating activities
Year 1

Year 2

Year 3

Year 4

Year 5

Year

Year 7

Year B

Year 9

Year 10

Net Income

Depreciation

38,618.24
2,797,929.60

5,557,241.06

8,316,552 50

9.874,404.25

10,231,036.33

10,587,588.43

10,944,140.48

11,300,692.56

11,557,244.64

Investment Activities

2,731.835.35

2,731.835.35
2,731.835.35

2.731.835.35

2,731,835.35

2.731,835.35

2,731,835.35

2.731,835.35

2,731,835.35

2.731.835.35

10.058.011

Initial Investment

Salvage

-65.302.578.25

Working capital
Net Cath flow

85.302.578.25

2.770.453.50

5.529,765.01

8.289.076.43

11.048,387.85

12.606.319.00

12,962,871 68

13,319,423.76

13.675.975.83

14.032.527.91

34,447,091.24