Ethiopia is one of the most conducive investment destinations in the world. Investing in manufacturing, agriculture, agro processing, hospitality, mining or any other..all sectors can bring you significant investment and financial returns

Project Overview ===

This article presents to you ‘snap-shot’ of feasibility study which I have conducted to my client for the purpose to establish edible oil extraction and refrying plant, in Ethiopia. My client is very young; age 27.

Being attracted by the existing high demand of cooking oil, he become highly initiated to establish a new multi-seed oil extraction and refrying plant in Hawassa; one of the beautiful and industrial cities of Ethiopia with a total paid up capital of Birr 116,629,914.20

![oil (https://5.imimg.com/data5/YY/PU/SR/SELLER-13554974/t1-oil-a-dsc-0452-500x500.JPG) Summary of Investment ===

The initial investment covers wide rages of costs. These include procurement of machinery and equipment, construction of shade, and also to finance working capital requirements. Out of the total investment cost, Birr 43,012,320.00 (36.8%) will be financed by long term bank loan in the form of lease financing scheme for procurement and installation of machinery while the remaining equivalent amount (63.2%) will be financed by owner’s equity.

Why investing in Edible oil Extraction and Refining is Feasible in Ethiopia? ===

Edible oil is of our everyday food expenditure. However, refined edible oil industry in Ethiopia is overwhelmed by a paradox. Ethiopia’s potential to grow oil bearing crops is enormous unlike its capacity to process and produce edible oil was very limited so that only 40 percent of the total demand is being covered by local oil producers, while the remaining bulk amount need is being satisfied from import paying its hard earned foreign currency. Therefore, investment in edible oil extraction and refining has significant contribution in bridging the demand and supply gap for cooking oil.

The technology and Plant Capacity ===

The project shall install the latest technology for edible oil extraction and refining industry. To this ends, 20 TPD MULTI SEED processing plant and 6 TPD REFINERY / OIL PACKAGING LINE will be installed to produce refined oil and supply in the domestic market. We expect the plant to start its operation beginning from first quarter of 2024, with 60% machine efficiency. Efficiency utilization then increases annually by 10% until it reaches full production capacity on year five and onwards. In this regards, the annual volume of production of all types of products increases from 778 tons in the first year to 1,945 tons by end of year ten

Capacity to generate revenue ===

Primarily the project intends to produces Soybean seed oil and Niger seed oil for sales in the domestic market. In addition, it has also other saleable items which come out as a byproduct from oil extraction. These by products are commonly known as oil Cake (Meal) is high in its protein content and demanded supplement animal feed. Therefore, results of analysis depicts that the project has the capacity to generate an average sales of Birr 35,707,649 annually

Economic and Financial Analysis ===

A lot of techniques can be applied to justify whether a project is financially viable or not. However, in the case this project I just only want to show and share with you only few of them as follows

Profitability ===

Based on the projected profit & loss statement, the project is expected to generate annual net profit ranging from birr 17,828,646 in the first year to 54,481,813by year ten.

*Payback Period* ===

The forecasted cash flow statement indicates, cumulative cash flow of the project first becomes positive after year two and before end of year five. More specifically, the project has a potential to recover investment at 4.3 years.

*Viability* ==

Viability test, which is commonly known as Internal Rate of Return (IRR) disclosed, the financial rate of return at 11.5% interest rate, the project after tax results in 40% of return. This implies that over the total cost of capital, the project has a potential to generate high return, which justifies that the scheme is financially viable.

Come and invest in Ethiopia