Contents

List of tables ............................................................................................................................................................................... vii

List of exhibits ........................................................................................................................................................................... xiii
Abbreviations and acronyms................................................................................................................................................. xix

Chapter –1 ................................................................................................................................................................................... 1
Introduction .................................................................................................................................................................................. 1

Ethiopia’s agriculture & allied sectors – opportunities and challenges ..................................................................... 1

Engagement of consultants ........................................................................................................................................................ 3
Broadened approach ..................................................................................................................................................................... 4
Concept for the logo design ........................................................................................................................................................ 4
Identified development zones ..................................................................................................................................................... 5
Scope of services ............................................................................................................................................................................ 7
Kick-off meeting ............................................................................................................................................................................... 8
Inception report ............................................................................................................................................................................... 9
Field visits, analysis and documentation ................................................................................................................................. 9
Interim report ................................................................................................................................................................................... 9
Draft final report .............................................................................................................................................................................. 9
The structure of the draft final report .................................................................................................................................... 9

Chapter – 2 ...............................................................................................................................................................................15
Detailed activities and approach methodology ................................................................................................................15

Objective of integrated ACPZs and IAIPs ............................................................................................................................ 15

Preparation of feasibility study and business plan to establish integrated ACPZs and IAIPs in Ethiopia –
study coverage .............................................................................................................................................................................. 16
Approach methodology for the study ................................................................................................................................... 17
Work breakdown structure ..................................................................................................................................................... 18

Chapter – 3 ...............................................................................................................................................................................23
Vision and mission ...................................................................................................................................................................23

Development approach.............................................................................................................................................................. 23
Focus area, facilitators, enablers, linkages of the integrated ACPZ and IAIP ....................................................... 24
Key consideration......................................................................................................................................................................... 25
Vision................................................................................................................................................................................................. 27
Mission ............................................................................................................................................................................................. 27

Chapter – 4 ...............................................................................................................................................................................28
Agro and allied sector potential of Ethiopia and Tigray region – an overview .......................................................28

Introduction .................................................................................................................................................................................... 28
Agricultural production system in Ethiopia......................................................................................................................... 28
Cropping seasons ........................................................................................................................................................................ 28
Area and production of major crops .................................................................................................................................... 30

i
 Utilization of crop.......................................................................................................................................................................... 32
Land utilization ............................................................................................................................................................................... 32
Economic importance of livestock in Ethiopia ................................................................................................................... 34
Utilization of livestock products .............................................................................................................................................. 35
Production and supply potential of major Ethiopian water bodies ............................................................................ 35
Demand and consumption of fish .......................................................................................................................................... 37
Domestic investment in the agriculture sector................................................................................................................ 39
Contents

Foreign investment in agriculture and its impacts .......................................................................................................... 39

Crop production ............................................................................................................................................................................ 40
Livestock .......................................................................................................................................................................................... 40

Chapter – 5 ...............................................................................................................................................................................46
Value chain analysis .................................................................................................................................................................46

Methodology................................................................................................................................................................................... 46
Value chain analysis .................................................................................................................................................................... 46

Chapter – 6 ...............................................................................................................................................................................72
Conceptualization and configuration of integrated ACPZ (including RTC) & IAIP .................................................72

Need for the project.................................................................................................................................................................... 72

Integrated ACPZ and IAIP cluster concept ........................................................................................................................ 73
Strategies of integrated ACPZ and IAIP .............................................................................................................................. 77
Objective enablers ....................................................................................................................................................................... 78
Product differentiators .............................................................................................................................................................. 79
RTC – An introduction................................................................................................................................................................ 80
Concept of RTC ............................................................................................................................................................................. 82
Benchmarking of integrated ACPZ and IAIP ..................................................................................................................... 84
Agro industrial growth corridor .............................................................................................................................................. 85
Social inclusion strategy ............................................................................................................................................................ 86

Chapter – 7 ...............................................................................................................................................................................88
Land for IAIP & RTCs ..............................................................................................................................................................88

Location detailing and salient features ................................................................................................................................ 88

General profile of the Tigray region ....................................................................................................................................... 88
Major urban centers in the region ........................................................................................................................................ 89
Demography and socio-economic settings of the region ............................................................................................. 90
Agro – ecological zones and climate .................................................................................................................................... 91
Land use pattern .......................................................................................................................................................................... 92
Development of criteria for selection of land for integrated ACPZ and IAIP......................................................... 95
Site for IAIP ..................................................................................................................................................................................... 96
Composite score of the site .................................................................................................................................................. 100

Chapter – 8 ............................................................................................................................................................................ 114

Zone definition ........................................................................................................................................................................ 114

Methodology................................................................................................................................................................................ 114
Influence zone – key features ............................................................................................................................................... 114
Land use ....................................................................................................................................................................................... 115
Transportation network .......................................................................................................................................................... 117

ii
 Determination of effective zone of procurement of focus crops and other crops .......................................... 120
Demarcation of the RTC and legal definition of the zones ........................................................................................ 124
Demarcation of the IAIP and legal definition of the zones ......................................................................................... 125

Chapter - 9 .............................................................................................................................................................................. 126

Master planning of IAIP & RTC ......................................................................................................................................... 126

Contents
Planning principles .................................................................................................................................................................... 126
Planning concept ....................................................................................................................................................................... 127
IAIP planning considerations ................................................................................................................................................. 127
Zones spotting ........................................................................................................................................................................... 128
Zoning, product mix and facility configuration ................................................................................................................ 129
IAIP land use pattern ............................................................................................................................................................... 132
Sustainability initiatives ........................................................................................................................................................... 134
Master plan components....................................................................................................................................................... 134
RTC master plan ....................................................................................................................................................................... 137
Commodities handled within RTC ....................................................................................................................................... 137
Commodity volume anticipated ............................................................................................................................................ 137
Facility configuration ................................................................................................................................................................ 139
RTC linkage with existing abattoirs .................................................................................................................................... 146

Chapter – 10 .......................................................................................................................................................................... 148

Infrastructure and facilities within IAIP & RTC ............................................................................................................. 148

Coverage areas and objectives............................................................................................................................................ 148

Detailing of IAIP infrastructure............................................................................................................................................. 149
Infrastructure within RTC....................................................................................................................................................... 167

Chapter – 11 .......................................................................................................................................................................... 171

Infrastructure gap analysis – RTC & IAIP off-site, connectivity and linkages ...................................................... 171

Approach ...................................................................................................................................................................................... 171

Production farm linkages to IAIP & RTC .......................................................................................................................... 172
Technology dissemination, CoE and capacity building................................................................................................. 172
Knowledge cell and market information centre ............................................................................................................ 173
Network of collection centres and primary processing hubs .................................................................................. 174
Reefer transportation systems ........................................................................................................................................... 175
Access road to IAIP & RTC ................................................................................................................................................... 175
Power supply to IAIP & RTC .................................................................................................................................................. 175
Water supply to IAIP & RTC.................................................................................................................................................. 176
Port connectivity ........................................................................................................................................................................ 176
Perishable air cargo complex ............................................................................................................................................... 176
Market infrastructure ............................................................................................................................................................. 176
Agri education and knowledge hubs .................................................................................................................................. 177

Chapter 12 .............................................................................................................................................................................. 178

Environmental and social assessment ............................................................................................................................ 178

Objective ....................................................................................................................................................................................... 178

Location ........................................................................................................................................................................................ 178

iii
 Climate & rainfall ....................................................................................................................................................................... 178
Topography .................................................................................................................................................................................. 178
Soil characteristics ................................................................................................................................................................... 179
Geology .......................................................................................................................................................................................... 179
Hydrology ...................................................................................................................................................................................... 179
Ambient air quality .................................................................................................................................................................... 181
Contents

Noise .............................................................................................................................................................................................. 181

Ecology and biodiversity in the region................................................................................................................................ 181
Socio economic conditions .................................................................................................................................................... 182
Identification of project affected people (PAP), project affected families (PAF), specific compliance to the
resettlement action plan of the FDRE ............................................................................................................................... 183
Environment management plan (EMP) ............................................................................................................................. 183
Compliance to sustainable environmental guidelines ................................................................................................. 195
Inference....................................................................................................................................................................................... 195

Chapter – 13 .......................................................................................................................................................................... 197

Development strategy and project implementation structure ................................................................................ 197

Development approach........................................................................................................................................................... 197

Strategic partners / developers ........................................................................................................................................ 197
IAIP development option and strategy .............................................................................................................................. 197
Strategic partners / developers selection process.................................................................................................... 198
Project structuring and special purpose vehicle - IAIP ............................................................................................... 208
Governance & management structure ............................................................................................................................ 217
Roles and responsibilities of various agencies .............................................................................................................. 222
Activities of the IAIP SPV ........................................................................................................................................................ 224
Formation of various SPVs .................................................................................................................................................... 225
Project and governance structure for RTC .................................................................................................................... 226
Procurement, bidding document and negotiation procedures ............................................................................... 228
Strategic linkages...................................................................................................................................................................... 228
Inclusive and Sustainable Agri Infrastructure & Agro Industrial Development Policy, 2015 ...................... 229
Need for partnership with other countries ..................................................................................................................... 231
Need for host of partnering countries .............................................................................................................................. 232
Likely partnering countries .................................................................................................................................................... 233
MoUs with potential partners and countries ................................................................................................................. 233
Model MoU between EAIAIDCo and resource providers .......................................................................................... 234
Model MoU between EAIAIDCo and international investors .................................................................................... 235
Model MoU between EAIAIDCo and research and innovation partners ............................................................. 236
Model MoU between EAIAIDCo and product marketing support providers ...................................................... 237
Model MoU between agri processing units and farmers.......................................................................................... 237
Opportunities for private sector participation in developing integrated ACPZ and IAIP and for the
occupant units ............................................................................................................................................................................ 237
Opportunities for SME sectors ............................................................................................................................................ 238
Standards, quality control recommendations ................................................................................................................ 239

Chapter – 14 .......................................................................................................................................................................... 240

Project cost – IAIP & RTC .................................................................................................................................................. 240

Approach for project cost estimation – IAIP.................................................................................................................. 240

Details of cost estimates – IAIP .......................................................................................................................................... 242

iv
 Phase wise project cost - IAIP .............................................................................................................................................. 245
Details of cost estimates – RTC ......................................................................................................................................... 247
Phase wise project cost - RTC ............................................................................................................................................. 249
Specialized agri infrastructure cost within ACPZ ......................................................................................................... 250
Summary of project cost for integrated ACPZ and IAIP ............................................................................................ 251

Chapter – 15 .......................................................................................................................................................................... 258

Contents
Revenue drivers – IAIP & RTC ........................................................................................................................................... 258

Revenue streams for IAIP ...................................................................................................................................................... 258

Phase wise revenue generation – IAIP ............................................................................................................................. 259
Revenue streams for RTC ..................................................................................................................................................... 261
Phase wise revenue generation – RTC ............................................................................................................................ 263

Chapter – 16 .......................................................................................................................................................................... 265

Means of finance, financial and investment model analysis ..................................................................................... 265

Model analysis ............................................................................................................................................................................ 265

Selective financial indicators ................................................................................................................................................. 282
Ratio analysis .............................................................................................................................................................................. 283
Sensitivity analysis - IAIP ......................................................................................................................................................... 287
Details of financial analysis of RTC ..................................................................................................................................... 288
Sensitivity analysis - RTC......................................................................................................................................................... 302

Chapter – 17 .......................................................................................................................................................................... 303

Integrated ACPZ and IAIP branding and marketing strategies ............................................................................... 303

Strategies..................................................................................................................................................................................... 303
Micro level sub sector wise project opportunities and project profiles ............................................................... 305
Major marketing programs ................................................................................................................................................... 305
International road shows........................................................................................................................................................ 306
Global ISAI2D forum .................................................................................................................................................................. 306
Strategies for popularizing the integrated ACPZ and IAIP clusters ...................................................................... 308

Chapter – 18 .......................................................................................................................................................................... 309

Implementation schedule and micro level action plan ................................................................................................ 309

Implementation and monitoring mechanism .................................................................................................................. 309

Micro level action plan............................................................................................................................................................. 316
Implementation schedule ....................................................................................................................................................... 321

Chapter – 19 .......................................................................................................................................................................... 322

Risk mapping, analysis and mitigation strategies ........................................................................................................ 322

Generalized approach towards risk management ....................................................................................................... 322

SWOT analysis ........................................................................................................................................................................... 323
SWOT – country specific ....................................................................................................................................................... 323
SWOT – Location specific ..................................................................................................................................................... 326
Critical success factors for integrated ACPZ and IAIP .............................................................................................. 327
Need for multi criteria analysis for risk assessment and risk assessment methodology ............................ 327

v
 Risk assessment, impact analysis and mitigation strategies – approach 1 ...................................................... 328
Development of risk assessment matrix during project implementation stage – approach 2 .................. 334
Development of risk matrix during operation – approach 2 .................................................................................... 336
Risk assessment against the set of given criteria ....................................................................................................... 337
Combined risk assessment score ...................................................................................................................................... 338

Chapter – 20 .......................................................................................................................................................................... 339

Contents

Integrated ACPZ and IAIP benefits and contribution .................................................................................................. 339

Integrated ACPZ and IAIP’s overall objective ................................................................................................................. 339

Analysis of benefits and contribution ................................................................................................................................. 339
Benefits to sector ..................................................................................................................................................................... 340
Benefits to agribusiness contributors............................................................................................................................... 342

vi
 List of tables

Chapter –1
Introduction

Table No. 1.1: Integrated ACPZ and IAIP – potential locations ...................................................................................................... 6
Table No. 1.2: Four IAIPs identified for the study ................................................................................................................................. 6

Chapter –4
Agro and allied sector potential of Ethiopia and Tigray region – an overview

Table No. 4.1: Cropping seasons in Ethiopia....................................................................................................................................... 29

Table No. 4.2: Area and production grain crops for private peasant holding & commercial farms (main season,
2013/14) ........................................................................................................................................................................................................ 30
Table No. 4.3: Area and production grain crops for private peasant holding (belge season, 2013/14) .................. 30
Table No. 4.4: Area and production of crops for private & commercial farms (major season, 2013/14) .............. 31
Table No. 4.5: Area and production of crops for private peasant holding (belge season, 2013/14)......................... 32
Table No. 4.6: Quantity of Milk, Egg and Honey Production (private small holdings, 2013/14) ................................... 34
Table No. 4.7: Livestock populations and regional distribution (in 000 heads) ..................................................................... 35
Table No. 4.8: Major lakes and fish production potentials ............................................................................................................ 36
Table No. 4.9: Major reservoirs and dams .......................................................................................................................................... 36
Table No. 4.10: Small water bodies ....................................................................................................................................................... 37
Table No. 4.11: Summary of Ethiopian water bodies and their fisheries................................................................................. 37
Table No. 4.12: Projected demands for fish ....................................................................................................................................... 37
Table No. 4.13: Agriculture production in Tigray region ................................................................................................................ 44

Chapter - 5
Value chain analysis

Table No. 5.1: Summary of constraints, opportunities and strategic interventions – honey value chain ................... 49
Table No. 5.2: Summary of constraints, opportunities and proposed interventions – dairy value chain .................... 53
Table No. 5.3: Summary of constraints, opportunities and proposed interventions – meat & live animal value
chain ................................................................................................................................................................................................................... 58
Table No. 5.4: Summary of constraints, opportunities and proposed interventions – poultry value chain ................ 62
Table No. 5.5: Summary of constraints, opportunities and proposed interventions – sesame value chain .............. 66
Table No. 5.6: Summary of constraints, opportunities and proposed interventions – sorghum value chain............ 70

Chapter - 6
Conceptualization and configuration of integrated ACPZ (including RTC) & IAIP

Table No. 6.1: Strategies for rural community engagement ........................................................................................................ 87

vii
 Chapter – 7
Land for IAIP & RTCs

Table No. 7.1: Population details of major urban centres ............................................................................................................. 89

Table No. 7.2: Agro-ecological zone classification and their area coverage ........................................................................... 91
List of tables

Table No. 7.3: Land use – Tigray (in percentage) ............................................................................................................................. 92

Table No. 7.4: Zonal land use pattern in Tigray (in ha) .................................................................................................................... 92
Table No. 7.5: Assessment criteria for land selection .................................................................................................................... 95
Table No. 7.6: Composite score of the site ...................................................................................................................................... 100
Table No. 7.7: Shortlisted locations for RTC .................................................................................................................................... 103
Table No. 7.8: Summary of RTC location attributes...................................................................................................................... 106

Chapter – 8
Zone definition

Table No. 8.1: Land use pattern in the adjoining area – 5 kms radius.................................................................................. 115
Table No. 8.2: Land use pattern in the influence zone – 30 kms radius .............................................................................. 116
Table No. 8.3: Raw materials required for the IAIP....................................................................................................................... 121
Table No. 8.4: Road network for raw material movement ......................................................................................................... 121
Table No. 8.5: Transportation cost ...................................................................................................................................................... 122
Table No. 8.6: Average landed cost of raw material from various zones ............................................................................. 122
Table No. 8.7: Production area requirements................................................................................................................................. 123

Chapter - 9
Master planning of IAIP & RTC

Table No. 9.1: Summary of net marketable surplus ..................................................................................................................... 128

Table No. 9.2: Land use pattern for the proposed IAIP ............................................................................................................... 132
Table No. 9.3: RTC raw materials inflow scenario ......................................................................................................................... 138
Table No. 9.4: Infrastructure and support facilities available at RTC locations .................................................................. 139
Table No. 9.5: Proposed infrastructure and support facilities for each RTC location ..................................................... 141
Table No. 9.6: General details of the master plan ......................................................................................................................... 144
Table No. 9.7: Land use pattern - RTC ............................................................................................................................................... 144
Table No. 9.8: Existing abattoirs ........................................................................................................................................................... 147

Chapter – 10
Infrastructure and facilities within IAIP & RTC

Table No. 10.1: Hierarchy of roads ..................................................................................................................................................... 157

Table No. 10.2: Composition of flexible pavement structure .................................................................................................... 158
Table No. 10.3: Water demand estimation norms ....................................................................................................................... 158
Table No. 10.4: Water consumption pattern .................................................................................................................................. 158

viii
Table No. 10.5: Water demand ............................................................................................................................................................ 159
Table No. 10.6: Estimation of average daily water demand....................................................................................................... 159
Table No. 10.7: Underground sump storage capacity ................................................................................................................. 160
Table No. 10.8: Overhead tank storage capacity ........................................................................................................................... 160
Table No. 10.9: Pipe sizing for processing area ............................................................................................................................. 160

List of tables
Table No. 10.10: Pipe sizing for non-processing area ................................................................................................................. 161
Table No. 10.11: Pump capacity .......................................................................................................................................................... 161
Table No. 10.12: Wastewater generation pattern ....................................................................................................................... 161
Table No. 10.13: Sewage and sullage generation pattern......................................................................................................... 161
Table No. 10.14: Sewage & sullage generation estimation ...................................................................................................... 162
Table No. 10.15: Pipe size – sewerage network ........................................................................................................................... 163
Table No. 10.16: Sewage quality .......................................................................................................................................................... 163
Table No. 10.17: STP – process and components ....................................................................................................................... 163
Table No. 10.18: Estimation of MSW generation ......................................................................................................................... 165
Table No. 10.19: Estimation of power demand .............................................................................................................................. 166

Chapter – 11
Infrastructure gap analysis – RTC & IAIP off-site, connectivity and linkages

Table No. 11.1: Production farm linkages - key interventions ................................................................................................... 172

Chapter - 12
Environmental and social assessment

Table No. 12.1: Chemical characteristics of Surface water quality of Tekeze basin ....................................................... 180
Table No. 12.2: Limit values for discharges of water ................................................................................................................... 180
Table No. 12.3: Limit values for emissions to air ........................................................................................................................... 181
Table No. 12.4: Limit values for noise limits in dB (A) Leq.......................................................................................................... 181
Table No. 12.5: Population distribution – Humera site, W.Tigray ........................................................................................... 183
Table No. 12.6: Emergency possibilities and measures ............................................................................................................. 190
Table No. 12.7: Accident investigation guideline............................................................................................................................ 191

Chapter – 13
Development strategy and project implementation structure

Table No. 13.1: Developer selection – approach A ...................................................................................................................... 199

Table No. 13.2: Factors for experience across categories ....................................................................................................... 201
Table No. 13.3: Developer selection – approach B technical evaluation ............................................................................. 202
Table No. 13.4: Developer selection – approach B financial evaluation ............................................................................... 207
Table No. 13.5: Developer selection – approach B - QCBS evaluation ................................................................................. 208
Table No. 13.6: Project structuring options .................................................................................................................................... 209
Table No. 13.7: Legal framework for integrated ACPZ and IAIP ............................................................................................. 217

ix
 Table No. 13.8: Activities of IAIP SPV ................................................................................................................................................. 224
Table No. 13.9: RTC development and governance structure ................................................................................................. 226
Table No. 13.10: Model MoUs .............................................................................................................................................................. 234
Table No. 13.11: Possible cooperation areas with the private sector .................................................................................. 238
List of tables

Chapter – 14
Project cost – IAIP & RTC

Table No. 14.1: Project cost – IAIP phase I development .......................................................................................................... 242
Table No. 14.2: Project cost details of IAIP phase I development ........................................................................................... 243
Table No. 14.3: Project cost estimates - IAIP, phase wise, ETB in million ............................................................................ 245
Table No. 14.4: Project cost – RTC phase I development ......................................................................................................... 247
Table No. 14.5: Project cost estimates - RTC, phase wise, ETB in million ........................................................................... 249
Table No. 14.6: Cost of specialized agri infrastructure within ACPZ ..................................................................................... 250
Table No. 14.7: Cost of external connectivity and offsite infrastructure .............................................................................. 251
Table No. 14.8: Summary of integrated ACPZ and IAIP project cost estimates and mode of development ......... 251
Table No. 14.9: Agency wise investment .......................................................................................................................................... 254

Chapter – 15
Revenue drivers

Table No. 15.1: Details of IAIP revenue stream ............................................................................................................................. 258

Table No. 15.2: Total phase wise revenue – IAIP .......................................................................................................................... 260
Table No. 15.3: Details of RTC revenue stream ............................................................................................................................. 262
Table No. 15.4: Total phase wise revenue - RTC ............................................................................................................................ 263

Chapter – 16
Means of finance, financial and investment model analysis

Table No. 16.1: Details of financial analysis of IAIP ....................................................................................................................... 266

Table No. 16.2: Means of finance - IAIP ............................................................................................................................................. 268
Table No. 16.3: Cost of operation - IAIP .............................................................................................................................................. 269
Table No. 16.4: Profit & loss statement - IAIP ................................................................................................................................ 272
Table No. 16.5: Summary of cash flow statement - IAIP ............................................................................................................. 275
Table No. 16.6: Cash flow statement - IAIP ...................................................................................................................................... 276
Table No. 16.7: Balance sheet - IAIP ................................................................................................................................................... 281
Table No. 16.8: Selective financial indicators - IAIP ....................................................................................................................... 282
Table No. 16.9: Ratio analysis ............................................................................................................................................................... 283
Table No. 16.10: Result of ratio analysis - IAIP ............................................................................................................................... 283
Table No. 16.11: Sensitivity analysis – IAIP...................................................................................................................................... 287
Table No. 16.12: Means of finance – RTC ....................................................................................................................................... 288
Table No. 16.13: Cost of operation - RTC .......................................................................................................................................... 289

x
Table No. 16.14: Profit & loss statement - RTC............................................................................................................................. 291
Table No. 16.15: Summary of cash flow statement - RTC ......................................................................................................... 295
Table No. 16.16: Cash flow statement - RTC .................................................................................................................................. 296
Table No. 16.17: Balance sheet - RTC ............................................................................................................................................... 300
Table No. 16.18: Sensitivity analysis – RTC ..................................................................................................................................... 302

List of tables
Chapter – 17
Integrated ACPZ and IAIP branding and marketing strategies

Table No. 17.1: Strategies and action plan ...................................................................................................................................... 303

Table No. 17.2: Target group and core theme ............................................................................................................................... 304
Table No. 17.3: Preparation of micro level sub sector wise project opportunities .......................................................... 305
Table No. 17.4: Strategies for popularizing the integrated ACPZ and IAIP clusters ....................................................... 308

Chapter – 18
Implementation schedule and micro level action plan

Table No. 18.1: Project cost deployment .......................................................................................................................................... 312

Table No. 18.2: Micro level activities .................................................................................................................................................. 316

Chapter – 19
Risk mapping, analysis and mitigation strategies

Table No. 19.1: IAIP location specific SWOT analysis .................................................................................................................. 326
Table No. 19.2: Risk matrix .................................................................................................................................................................... 328
Table No. 19.3: Risk assessment, analysis and mitigation strategies - volume ................................................................. 328
Table No. 19.4: Risk assessment, analysis and mitigation strategies – value ................................................................... 329
Table No. 19.5: Risk assessment, analysis and mitigation strategies - cost ....................................................................... 330
Table No. 19.6: Risk assessment, analysis and mitigation strategies - growth ................................................................. 331
Table No. 19.7: Risk assessment, analysis and mitigation strategies - governance ........................................................ 332
Table No. 19.8: Risk assessment, analysis and mitigation strategies - brand at risk ...................................................... 333
Table No. 19.9: Indicators, sub indicators and weightage assigned – project implementation .................................. 334
Table No. 19.10: Assigned weightage for sub indicators ........................................................................................................... 335
Table No. 19.11: Composite risk assessment score during implementation stage ........................................................ 335
Table No. 19.12: Indicators and sub indicators – project operation ..................................................................................... 336
Table No. 19.13: Assigned rating for risk ......................................................................................................................................... 337
Table No. 19.14: Composite risk assessment score during operation stage .................................................................... 337
Table No. 19.15: Combined risk assessment score .................................................................................................................... 338

xi
 Chapter – 20
Integrated ACPZ and IAIP benefits and contribution

Table No. 20.1: Integrated ACPZ and IAIP – sector benefits and contribution ................................................................. 340
Table No. 20.2: Integrated ACPZ & IAIP - benefits to agribusiness contributors ............................................................. 342
List of tables

Table No. 20.3: Quantity assessment of benefits .......................................................................................................................... 343

Table No. 20.4: Longterm employment generation ...................................................................................................................... 343

xii
 List of exhibits

Chapter –1
Introduction

Exhibit No. 1.1: Branding of ACPZ & IAIP initiative .............................................................................................................................. 4

Exhibit No. 1.2: Methodology for short listing zones ........................................................................................................................... 5
Exhibit No. 1.3: Potential agro zones in Ethiopia .................................................................................................................................. 5
Exhibit No. 1.4: Four IAIPs identified for present study ...................................................................................................................... 7
Exhibit No. 1.5: Project objectives and intentions ................................................................................................................................ 7

Chapter – 2
Detailed activities and approach methodology

Exhibit No. 2.1: Integrated ACPZ and IAIP basic definition ............................................................................................................ 15
Exhibit No. 2.2: Objectives of integrated ACPZ and IAIP ................................................................................................................ 16
Exhibit No. 2.3: Study coverage................................................................................................................................................................ 17
Exhibit No. 2.4: Approach methodology ................................................................................................................................................ 18
Exhibit No. 2.5: Stage wise activities ...................................................................................................................................................... 19

Chapter – 3
Vision and mission

Exhibit No. 3.1: Sustainable inclusive growth development........................................................................................................... 23

Exhibit No. 3.2: Production to market linkage – end to end approach ..................................................................................... 24
Exhibit No. 3.3: Focus area, facilitators, enablers, linkages of the integrated ACPZ and IAIP ......................................... 25
Exhibit No. 3.4: Key considerations – vision and mission .............................................................................................................. 26
Exhibit No. 3.5: Specific issues considered – vision and mission ............................................................................................... 27

Chapter – 4
Agro and allied sector potential of Ethiopia and Tigray region – an overview

Exhibit No. 4.1: Crop yield for selected major grain crops (private small holdings & commercial farms, main
season, 2013/14) ....................................................................................................................................................................................... 31
Exhibit No. 4.2: Total land use area disaggregated by land use types for private peasant holding, 2013/14 ........ 32
Exhibit No. 4.3: Percentage share of land use by types, Private peasant holdings 2013/14 ....................................... 32
Exhibit No. 4.4: Average holding size per households & holder, 2013/14 production year .......................................... 33
Exhibit No. 4.5: Total number of cattle, sheep and goat ................................................................................................................. 33
Exhibit No. 4.6: Estimated number of livestock by type................................................................................................................... 33
Exhibit No. 4.7: Estimated number of poultry and Beehives (Private peasant holdings, 2013/14) ............................ 34
Exhibit No. 4.8: Real GDP growth rate (in Percent) ......................................................................................................................... 40

xiii
 Chapter – 5
Value chain analysis

Exhibit No. 5.1: Honey market channel and interventions ............................................................................................................. 48

Exhibit No. 5.2: Dairy product value chain ............................................................................................................................................ 53
List of exhibits

Exhibit No. 5.3: Meat & live animal value chain .................................................................................................................................. 57
Exhibit No. 5.4: Poultry meat value chain ............................................................................................................................................. 62
Exhibit No. 5.5: Sesame value chain ....................................................................................................................................................... 66
Exhibit No. 5.6: Sorghum value chain..................................................................................................................................................... 70

Chapter – 6
Conceptualization and configuration of integrated ACPZ (including RTC) & IAIP

Exhibit No. 6.1: Constraints in agribusiness in Ethiopia .................................................................................................................. 72

Exhibit No. 6.2: Project related significant factors for investment decision ........................................................................... 74
Exhibit No. 6.3: Integrated ACPZ and IAIP encompasses agri and allied sectors in a holistic manner ....................... 75
Exhibit No. 6.4: Integrated ACPZ and IAIP concept plan ................................................................................................................ 75
Exhibit No. 6.5: Integrated end to end approach for sustainable agribusiness ..................................................................... 76
Exhibit No. 6.6: Strategies of integrated ACPZ and IAIP' ............................................................................................................... 78
Exhibit No. 6.7: Integrated ACPZ and IAIP objective enablers ..................................................................................................... 78
Exhibit No. 6.8: Product differentiators................................................................................................................................................. 80
Exhibit No. 6.9: Inclusive rural development ........................................................................................................................................ 81
Exhibit No. 6.10: Schematic overview of RTC..................................................................................................................................... 83
Exhibit No. 6.11: Integrated approach – product movement and value addition ................................................................. 84
Exhibit No. 6.12: Key inferences from benchmarking exercise ................................................................................................... 85
Exhibit No. 6.13: Integrated development of AIGC, ACPZ & IAIP ................................................................................................ 86
Exhibit No. 6.14: Rural community and social inclusion ................................................................................................................. 86

Chapter – 7
Land for IAIP & RTCs

Exhibit No. 7.1: Tigray region - geographical position ...................................................................................................................... 88

Exhibit No. 7.2: Tigray region – Administrative zones ..................................................................................................................... 89
Exhibit No. 7.3: Population density in Tigray region .......................................................................................................................... 90
Exhibit No. 7.4: Topography & site analysis map............................................................................................................................... 97
Exhibit No. 7.5: Seismic hazard distribution map of Ethiopia........................................................................................................ 98
Exhibit No. 7.6: Site features ..................................................................................................................................................................... 98
Exhibit No. 7.7: Water source – Samina River .................................................................................................................................. 99
Exhibit No. 7.8: Site photos ..................................................................................................................................................................... 102
Exhibit No. 7.9: Spatial location of proposed RTC site at Adi Goshu - Western Tigray ................................................... 110
Exhibit No. 7.10: Spatial location of proposed RTC site at Adi Hirdi - Western Tigray.................................................... 110
Exhibit No. 7.11: Spatial location of proposed RTC site at Dansheha - Western Tigray ................................................ 111
Exhibit No. 7.12: Spatial location of proposed RTC site at Humera - Western Tigray .................................................... 111

xiv
Exhibit No. 7.13: Spatial location of proposed RTC site at May Gaba - Western Tigray ................................................ 112
Exhibit No. 7.14: Spatial location of proposed RTC site at Maykadra - Western Tigray ................................................. 112
Exhibit No. 7.15: Spatial location of proposed RTC site at Shire Indaselassie - Western Tigray ................................ 113
Exhibit No. 7.16: RTC site photos ........................................................................................................................................................ 113

List of exhibits
Chapter –8
Zone definition

Exhibit No. 8.1: Influence zone – key features ................................................................................................................................. 115

Exhibit No. 8.2: Land use pattern – 5kms influence zone .......................................................................................................... 116
Exhibit No. 8.3: Land use pattern – 30 kms influence zone ...................................................................................................... 117
Exhibit No. 8.4: Transportation network – 10 kms radius ......................................................................................................... 118
Exhibit No. 8.5: Transportation network – 20 kms radius ......................................................................................................... 118
Exhibit No. 8.6: Transportation network and spider diagram – 30 km radius ................................................................... 119
Exhibit No. 8.7: Contour map (10 km radius at 10m contour intervals) .............................................................................. 119
Exhibit No. 8.8: Contour map (30 km radius at 25 m contour intervals) ............................................................................. 120

Chapter - 9
Master planning of IAIP & RTC

Exhibit No. 9.1: Planning principles and objectives ........................................................................................................................ 126

Exhibit No. 9.2: IAIP planning concepts .............................................................................................................................................. 127
Exhibit No. 9.3: Zoning, product mix and facility configuration .................................................................................................. 129
Exhibit No. 9.4: Description of IAIP zones, product mix and facility configuration ............................................................. 129
Exhibit No. 9.5: Master planning considerations ............................................................................................................................ 130
Exhibit No. 9.6: Zoning plan of IAIP ...................................................................................................................................................... 131
Exhibit No. 9.7: Parcellation plan of IAIP ............................................................................................................................................ 132
Exhibit No. 9.8: Sustainability initiatives .............................................................................................................................................. 134
Exhibit No. 9.9: Master plan ................................................................................................................................................................... 135
Exhibit No. 9.10: Internal road network ............................................................................................................................................. 136
Exhibit No. 9.11: Bird’s eye view of IAIP ............................................................................................................................................. 137
Exhibit No. 9.12: Zoning plan of RTC (typical) .................................................................................................................................. 143
Exhibit No. 9.13: Master plan for RTC (typical) ............................................................................................................................... 144
Exhibit No. 9.14: Land use pattern of RTC ....................................................................................................................................... 145
Exhibit No. 9.15: Bird’s eye view of RTC ............................................................................................................................................ 146

Chapter - 10
Infrastructure and facilities within IAIP & RTC

Exhibit No. 10.1: Integrated ACPZ and IAIP infrastructure objectives .................................................................................. 148
Exhibit No. 10.2: Schematic description of the IAIP land use format and infrastructure .............................................. 149
Exhibit No. 10.3: Detailing of IAIP infrastructure ............................................................................................................................ 150
Exhibit No. 10.4: STP process flow diagram (SBR technology) ................................................................................................ 164
xv
 Exhibit No. 10.5: Waste reduction by integrated SWM.............................................................................................................. 164
Exhibit No. 10.6: Infrastructure components of RTC ................................................................................................................... 167
Exhibit No. 10.7: Agribusiness infrastructure ................................................................................................................................. 168
Exhibit No. 10.8: Social infrastructure ............................................................................................................................................... 168
Exhibit No. 10.9: Commercial infrastructure ................................................................................................................................... 169
List of exhibits

Exhibit No. 10.10: Environmental sustainability .............................................................................................................................. 170

Chapter – 11
Infrastructure gap analysis – RTC & IAIP off-site, connectivity and linkages

Exhibit No. 11.1: Specialised agri infrastructure within ACPZ, offsite infrastructure and connectivity to IAIP & RTC
and forward linkages ................................................................................................................................................................................. 171
Exhibit No. 11.2: Activities of knowledge cell (as a part of RTC) .............................................................................................. 173
Exhibit No. 11.3: Information provided in the market cell (as a part of RTCs) .................................................................... 174
Exhibit No. 11.4: Post harvest network proposed (as a part of RTC) .................................................................................... 174
Exhibit No. 11.5: Network of collection centres and primary processing hubs ................................................................. 175
Exhibit No. 11.6: Schematic diagram ................................................................................................................................................. 176
Exhibit No. 11.7: Agri education and knowledge hubs ................................................................................................................. 177

Chapter - 12
Environmental and social assessment

Exhibit No. 12.1: Precipitation & temperature graph of Humera (°C) .................................................................................. 178
Exhibit No. 12.2: Topography of the site area around 30km radius....................................................................................... 179
Exhibit No. 12.3: Map showing the ground water availability in Ethiopia............................................................................... 181
Exhibit No. 12.4: Map showing the ecological sensitive areas of the site area around 30km ..................................... 182

Chapter – 13
Development strategy and project implementation structure

Exhibit No. 13.1: IAIP development options ...................................................................................................................................... 198

Exhibit No. 13.2: Project structure under option 1 - 100 % owned and managed by GoE or regional government
through designated nodal agency ........................................................................................................................................................ 214
Exhibit No. 13.3: Developer consortium under option 2 - PPP structure with GoE and regional government with
26% equity participation .......................................................................................................................................................................... 214
Exhibit No. 13.4: Project structure under option 2 - PPP structure with GoE and regional government with 26%
equity participation ..................................................................................................................................................................................... 215
Exhibit No. 13.5: Project structure under option 3 - Involvement of GoE, regional government, financial institution
& banks, consortium of private investors - EPC and O&M through professional agencies ........................................... 215
Exhibit No. 13.6: Developer consortium under option 4 - 100 % under private sector ................................................. 216
Exhibit No. 13.7: Project structure under option 4 - 100 % under private sector........................................................... 216
Exhibit No. 13 8: Contractual structure of IAIP & RTC ................................................................................................................ 217

xvi
Exhibit No. 13.9: Activities and responsibilities between GoE and the IAIP development agency ............................... 223
Exhibit No. 13.10: IAIP – roles and linkages .................................................................................................................................... 223
Exhibit No. 13.11: Various SPV options............................................................................................................................................. 225
Exhibit No. 13.12: Strategic linkages and social inclusion.......................................................................................................... 229
Exhibit No. 13.13: Framework for development of ISAI2D policy, 2015 ............................................................................... 230

List of exhibits
Exhibit No. 13.14: First of its kind policy for holistic development of inclusive and sustainable agri infrastructure &
agro industrialization ................................................................................................................................................................................. 231
Exhibit No. 13.15: Cooperation strategies leveraging synergy................................................................................................. 232
Exhibit No. 13.16: A list of potential shortlisted countries ......................................................................................................... 233
Exhibit No. 13.17: Project investment opportunities for SME sector ................................................................................... 239

Chapter – 14
Project cost – IAIP & RTC

Exhibit No. 14.1: Computation of project cost – IAIP ................................................................................................................... 241

Exhibit No. 14.2: Cost of IAIP build up pattern for phase I development............................................................................... 243
Exhibit No. 14.3: Cost of RTC build up pattern for phase I development .............................................................................. 248

Chapter – 15
Revenue drivers

Exhibit No. 15.1: Revenue sources - IAIP .......................................................................................................................................... 259

Exhibit No. 15.2: Total revenue – IAIP ................................................................................................................................................ 261
Exhibit No. 15.3: Revenue sources – RTC ........................................................................................................................................ 262
Exhibit No. 15.4: Total revenue - RTC ................................................................................................................................................. 264

Chapter – 16
Means of finance, financial and investment model analysis

Exhibit No. 16.1: Financial and investment model analysis – IAIP ........................................................................................... 265
Exhibit No. 16.2: Means of finance - IAIP........................................................................................................................................... 269
Exhibit No. 16.3: Cost of operation - IAIP .......................................................................................................................................... 271
Exhibit No. 16.4: Profit & loss results - IAIP ..................................................................................................................................... 274
Exhibit No. 16.5: Means of finance – RTC ........................................................................................................................................ 289
Exhibit No. 16.6: Cost of operation - RTC .......................................................................................................................................... 291
Exhibit No. 16.7: Profit & loss results - RTC .................................................................................................................................... 294

Chapter – 17
Integrated ACPZ and IAIP branding and marketing strategies

Exhibit No. 17.1: International road shows ....................................................................................................................................... 306

Exhibit No. 17.2: Flyers for Global ISAI2D forum............................................................................................................................ 307

xvii
 Exhibit No. 17.3: Global ISAI2D forum – Confluence of interested players .......................................................................... 307

Chapter – 18
Implementation schedule and micro level action plan
List of exhibits

Exhibit No. 18.1: Action plan .................................................................................................................................................................. 310

Exhibit No. 18.2: Micro level action plan ............................................................................................................................................ 321

Chapter – 19
Risk mapping, analysis and mitigation strategies

Exhibit No. 19.1: Risk and mitigation strategies ............................................................................................................................. 322

Exhibit No. 19.2: Integrated ACPZ and IAIP – critical success factors ................................................................................. 327
Exhibit No. 19.3: Integrated ACPZ and IAIP risk assessment matrix during implementation in a 1 to 5 band ..... 336
Exhibit No. 19.4: Integrated ACPZ and IAIP risk assessment matrix during operation in A to E band ..................... 338

Chapter – 20
Integrated ACPZ and IAIP benefits and contribution

Exhibit No. 20.1: Analysis of benefits and contribution ................................................................................................................ 340

xviii
Abbreviations and acronyms

ACPZ - Agro Commodities Procurement Zone

ADLI - Agricultural Development Led Industrialization
ADSCR - Annual Debt Service Coverage Ratio
AGP - Agricultural Growth Program
AGSS - Agricultural Sample Survey
AI - Artificial insemination
AIGC - Agro Industry Growth Corridor
AMS - Agricultural Marketing Strategies
ATA - Agricultural Transformation Agenda
ATM - Automated teller machine
ATVET Agricultural, Technical and Vocational Education and Training
B2B - Business to business
BCR - Benefit cost ratio
BoARD - Bureau of Agriculture and Rural Development
BOD - Biological Oxygen Demand
BOLT - Build Operate Lease Transfer
BOO - Build Own Operate
BOOT - Build Operate Own Transfer
BoQ - Bill of Quantities
BOT - Build Operate Transfer
BPO - Business Processing & Outsourcing
BUA - Built-up Area
CBR - California Bearing Ratio
CEC - Cation Exchange Capacity
CETP - Common Effluent Treatment Plant
CoE - Centre of Excellence
COMESA - Common Market for Eastern and Southern Africa
CPC - Centralised Processing Centre
CPP - Captive Power Producer
CSA - Central Statistical Agency
CSF - Critical Success Factors
CSR - Corporate Social Responsibility
CSR - Capital Structure Ratio
DBM - Dense Bituminous Macadam
DA - Development Agents
DBFOT Design – Build – Finance – Operate – Transfer
DI - Ductile Iron
Dia - Diameter
DMP - Disaster Management Plan
DO - Dissolved Oxygen
DSCR - Debt Service Coverage Ratio
EA - Enumeration Area
EAIAIDCo - Ethiopian Agri Infrastructure and Agro Industry Development Corporation
EBIT - Earnings Before Interest and Taxes
EBITDA - Earnings Before Interest, Taxes, Depreciation and Amortization

xix
 EBT - Earnings Before Taxes
EC - Ethiopian Calendar
ECX - Ethiopia Commodity Exchange
EHDA - Ethiopian Horticulture Development Agency
EIA - Environmental Impact Assessment
Abbreviations and acronyms

EIA - Ethiopian Investment Agency

EIAR - Ethiopian Institute of Agricultural Research
ELSR - Elevated-level Service Reservoir
EMDIDI - Ethiopian Meat & Dairy Industry Development Institute
EMDTI - Ethiopian Meat and Dairy Technology Institute
EMP - Environment Management Plan
EoI - Expression of Interest
EPA - Environmental Protection Authority
EPC - Engineering, Procurement and Construction
ET - Entry Tax
ETB - Ethiopian Birr
ETHIOSIS - Ethiopian Soil Information System
ETP - Effluent Treatment Plant
EU - European Union
FAO - Food and Agriculture Organization
FAQ - Frequently Asked Questions
FBPIDI - Food, Beverages & Pharmaceutical Industries Development Institute
FDA - Food and Drug Administration
FDI - Foreign Direct Investment
FDRE - Federal Democratic Republic of Ethiopia
FPO - Fruit Product Order
FRDC - Food Development and Research Centre
FSI - Floor space Index
FSS - Food Security Strategy
FTC - Farmer Training Centre
GDP - Gross Domestic Product
GFA - Gross Fixed Asset
GIS - Geographic Information System
GoE - Government of Ethiopia
GTP - Growth and Transformation Plan
Ha - Hectare
HACCP - Hazard Analysis and Critical Control Points
HDI - Human Development Index
HDPE - High-density Poly Ethylene
HP - Horse Power
HR - Human Resources
HVAC - Heating, Ventilation and Air – Conditioning
Hz Hertz
IAIP - Integrated Agro Industrial Park
ICT - Information & Communication Technology
IDC - Italian Development Co-operation

xx
ILRI - International Livestock Research Institute
IPP - Independent Power Producer
IPR - Intellectual Property at Rights
IQF - Individually Quick Frozen
IRR - Internal Rate of Return

Abbreviations and acronyms

ISAI2D - Inclusive and sustainable Agri infrastructure and agro industrial development
ISID - Inclusive and Sustainable Industrial Development
ISO - International Standards Organization
IT - Information Technology
Kg - Kilo gram
KHB - Knowledge Hub
KL - Kilo Litre
Km - Kilo Metre
KV - Kilo Volts
KVA - Kilo Volt Ampere
KW - Kilo Watt
KWp - Kilo Watt Peak
LMD - Livestock Marketing Development
LPM - Litres per Minute
m - Metre
M³ - Cubic Metre
MACE - Mahindra Consulting Engineers Limited
MBR - Membrane Bio Reactor
MDA - Ministries, Departments and Agencies
MENA - Middle East North Africa
MEP - Mechanical, Electrical, Plumbing
MFI - Micro Finance Institutions
MIS - Management Information System
MLD - Million Litres per Day
mm - Millimetre
MNC - Multinational Corporation
MoA - Ministry of Agriculture
MoARD - Ministry of Agricultural and Rural Development
MoI - Ministry of Industry
MoT - Ministry of Trade
MoTI - Ministry of Trade and Industry
MoU - Memorandum of Understanding
MSA - Million Standard Axles
MSL - Mean Sea Level
MSME - Micro, Small and Medium Enterprises
MSW - Municipal Solid Waste
MT - Metric Tonnes
MTPA - Metric Tonnes Per Annum
MVA - Megavolt Ampere
MW - Mega Watt
MWp - Mega Watt Peak

xxi
 N - Nitrogen
NGL - Natural Ground Level
NGO - Non Governmental Organization
NIT - Notice Inviting Tender
NPVDCR - Net Present Value Debt Cover Ratio
Abbreviations and acronyms

NVI - National Veterinary Institute

NW - Net Worth
O&M - Operation & Maintenance
OECD - Organisation for Economic Co-operation and Development
OHT - Over Head Storage Tank.
P - Phosphorous
PADETES Participatory Demonstration Extension and Technical Education System
PAF - Project Affected Family
PAP - Project Affected People
PAT - Profit After Tax
PASDEP - Plan for Accelerated and Sustainable Development to End Poverty
PBT - Profit Before Tax
PCC - Plain Cement Concrete
PESTEL - Political, Economic, Social, Technological, Environmental & Legal
PHI - Post Harvest Infrastructure
PIM - Project Information Memorandum
PPM - Parts Per Million
PPP - Public Private Partnership
PRSP - Poverty Reduction Strategy Paper
PSC - Project Steering Committee
PV - Photovoltaic
PVC - Poly Vinyl Chloride
QA - Quality Assurance
QC - Quality Control
QCBS - Quality and Cost Based Selection
R&D - Research & Development
R&M - Repair and Maintenance
RAP - Resettlement Action Plan
RBC - Rotating Biological Contactors
RCC - Reinforced Cement Concrete
RFP - Request for Proposal
RFQ - Request for Qualification
ROCE - Return on Capital Employee
RoE - Return on Equity
RoI - Return on Investment
RTC - Rural transformation Centre
RW - Rain Water
SBR - Sequencing Batch Reactor Technology
SDPRP - Sustainable Development and Poverty Reduction Program
SME - Small and Medium Enterprises
SNNP - Southern Nations, Nationalities, and Peoples’ Region

xxii
SPV Special Purpose Vehicle
Sq.km - Square Kilo Metres
STP - Sewage Treatment Plan
SW - Solid waste
SWM - Solid Waste Management

Abbreviations and acronyms

SWOT - Strength, Weakness, Opportunity, Threat
T&V - Training and Visit
T/cum - Tonnes per Cubic Metre
TD - Total Debt
TDS - Total Dissolved Solids
TPD - Tonnes per Day
TQM - Total Quality Management
TR - Total Return
UASB - Up-flow Anaerobic Sludge Blanket
UHT - Ultra High Temperature
UNDP - United Nations Development Programme
UNECA - United Nations Economic Commission for Africa
UNEP - United Nations Environment Programme
UNIDO - United Nations Industrial Development Organization
UOM - Unit of Measurement
US - United States
USAID - U.S. Agency for International Development
USD - United States Dollar
UVR - Ultra Violet Radiation
VFD - Variable Frequency Drive
WMM - Wet Mix Macadam
WTP - Water Treatment Plant

xxiii
 Chapter –1
Introduction
Ethiopia’s agriculture & allied sectors – continent, and it is unlikely that public expenditures can
opportunities and challenges
Agriculture is a key driver of Ethiopia’s long-
term growth and food security. Agriculture directly
supports 85% of the population, constitutes 46% of
Gross Domestic Product (GDP) and 90% of export
value. Within agriculture sector, crop production
accounts for 29% of GDP, livestock 12% followed by
forestry sector with 4% contribution. The sector also
drives aggregate employment figures with 83% of the
population dependent on agriculture for their
livelihoods (with many more dependent on agriculture-
related cottage industries such as textiles).
Nearly 16% of Government of Ethiopia’s (GoE)
public expenditures are committed to the sector. Due
to investments by the GoE and its development
partners, the agriculture sector has witnessed
consistent growth of over 8 to 10 % per annum over
the past decade. Ethiopia has the potential of adding
up additional GDP, establishing food security, and
targeting to reach middle-income country status by
2025. However, achieving such results will require
consistent, accelerated growth in the agriculture
sector and a higher productivity in the use of all inputs
and resources.
Ethiopia is abundantly endowed with the
natural resources required to stimulate agricultural
commercialization and rural development. Good
climate, abundant arable land and labour, adequate
rainfall and a range of agro-ecological zones; all these
contribute to the wide diversity of commodities which
can be produced, making agricultural
commercialization a very attractive proposition. About
13.5 million hectares are presently cultivated in the
country. The cropping sector, however, remains low-
input, low-value added and subsistence-oriented, with
productivity levels that are low and subject to frequent
climatic shocks.
The agriculture sector, however, has the
influence of external and inherent constraints which
have hindered the growth of the sector to its potential.
Public expenditures on agriculture and rural
development already account for 16 % of public
spending, among the highest rates of spending on the
sustain additional commitments. Large current
account deficits of close to USD 2 billion limit the
import of key development inputs such as fuel, fertilizer,
and capital goods, while domestic purchasing power
remains low limiting the extent of domestic demand for
higher value agricultural produce. There are also
important physical constraints. Ethiopia is landlocked
and mountainous and many agricultural production
areas are remote, resulting in high transport costs.
This limits the competitiveness of exports of high-value
crops. Soil degradation is also a physical constraint
and majority of Ethiopia’s soil is moderately to severely
degraded, impairing yields on cultivated land. This
degree of environmental damage is already rendering
some land unusable.
The Ethiopian agro-industry has many
potential advantages including low labour cost, very
high potential for increased supply of raw materials at
low cost and proximity to European and Middle East
markets. Government policies have focused on
improving the business environment, which has had a
positive impact on the facilitation of agro-industry
investments and improved economic performance.
Agro - industrial development in Ethiopia, however, is
still very much in its infancy, and the majority of the
food processors operate well below design capacity
(mostly less than 60%), and their products have
difficulties in complying with international quality
standards. The trade balance for processed food
products remains substantially negative, an indication
of the very high, unexploited domestic market potential
for agro-industry development.
In spite of consistent growth in the
agricultural sector in recent years, it is not yet
performing to its optimum in terms of productivity,
wealth creation, foreign exchange generation and food
security. The agricultural sector has been constrained
by various challenges that have impeded the
development of the sector. These challenges need to
be addressed in order to sustain and even surpass the
current agricultural growth rate. Some of the issues
facing the sector are supply chain management issues,
technological constraints and constraints for exports.
1

Ethiopia has vast opportunities for agricultural
1 development which can be utilized in line with global
best practices to address and overcome the lingering
global food crisis. Such identified potentials include
arable land, a vast human population which guarantees
food market; suitable agro climatic conditions for
sustained year round agricultural production and
Introduction
availability of export market.
Ethiopian agriculture is characterized by
considerable regional and crop diversity and has a high
potential for increased growth, but this potential is not
being leveraged.
Since agriculture forms the resource base for
a number of agro-based industries and agro-services,
it would be more meaningful to view agriculture not as
farming alone but as a holistic value chain, which
includes farming, wholesaling, warehousing (including
logistics), processing and retailing.
Growth with inclusiveness can be achieved
only when agriculture growth accelerates. The benefits
are widely shared by the rural agrarian population.
While increased productivity is an essential
component of a vibrant agricultural sector, improved
post-harvest handling and processing is essential to
ensure high-quality products reach the markets. Too
often, even when the yields are high, producers lose
income due to poor post-harvest practices. Agro and
food processing offers an opportunity for the creation
of sustainable livelihoods and economic development
for rural communities.
The ever changing lifestyles, food habits and
tastes of customers globally have altered the dynamics
of the industry. The world food production and
consumption patterns are evolving with a change in
the needs of the customer. Increasing demand for
ethnic and different foods from customers across the
world has redefined the market canvas for food
processors across the world. With these changes,
producers, processors, retailers and suppliers of food,
world over, are reorienting their business plans to
meet the new demands of the customers. With a vast
land and resource availability, Ethiopia can aim to
become one of the leading food suppliers to the world
while at the same time serving the vast growing
domestic market. Ethiopia’s large market size with
growing incomes and changing life styles also creates
incredible market opportunities for food producers,
2
Ethiopian agriculture is
characterized by considerable
regional and crop diversity and has
a high potential for increased
growth
food processors, machinery makers, food
technologists and service providers in this sector.
Needless to mention, the future growth of
agriculture and allied sectors will largely depend on
new and globally competitive technologies. Exciting new
technologies have brought great improvements in the
lives of farmers in advanced economies. Developed
nations and some developing economies have adopted
these technologies and have reaped results in terms
of sustained growth in the agriculture sector.
It is increasingly becoming evident that only a
vibrant agribusiness sector can lead to increase in
farm gate price and thus increase the income levels of
farmers, reduce wastage, ensure food security and
increase employment opportunities.
To address these issues, agriculture sector
would require substantial changes in terms of
technology, markets, institutions and policy. A
transition is needed from a supply driven to a demand
driven system. In this transition, all parts of the chain
will be transformed, from primary production through
the various stages of transportation and processing,
to final delivery to wholesale and consumer markets, at
first nearby, but increasingly also reaching out to a
national and even a global level. Such a transformation
holds the promise of a vast increase of profits to all
the participants, such as farmers, intermediate
traders, processing industries, wholesale and retail
organizations, exporters, service providers and
financial institutions. New and appropriate technology
will directly help in improving productivity both at
cultivation & post-harvest stages and result in better
value addition. Competitive and efficient marketing
arrangements would lead to higher value realization.
Appropriate institutional arrangements would enable
improving productivity, better value realization as well
as better value addition possibilities.
The agriculture sector calls for major reforms,
from production to marketing to investment in new
technologies, land markets and creation of efficient
value chains.
In essence, all these factors lead to a
conclusion that agriculture and allied sectors have to
be kept at the centre of any reform agenda or planning
process, in order to make a significant dent on poverty
and malnutrition, and to ensure long-term food security
for the people.
 IAIP is conceived as a platform to
overcome the sector weaknesses
and to ensure self – sufficiency in
food production
For Ethiopia to make substantial inroads
against food insecurity, concerted and strategic
investment and strategic choices in the agricultural
sector are vital. Concentrations of food insecurity and
malnutrition are endemic in rural areas, with a
population of six to seven million chronically food
insecure, and up to 13 million seasonally food
insecure. Over 90 % of agricultural output is driven by
smallholder farmers. Without expanding cultivated
land, and given forecast population growth, the
average land holding size in highland areas will be
reduced placing further pressure on rural incomes and
food security.
Ethiopia could increase agricultural GDP
through a new trajectory of growth, by: (a) improving
crop productivity by 80 to 90 % (through improved
inputs, practices, and mechanization), (b) sustainably
converting land to new cultivation, (c) increasing land
under irrigation (d) increasing export focus in niche
commodities, (e) developing downstream trading and
processing industries, like canning, and (f) combining
these efforts with intensive capacity building in both
the public and private sector.
In this regard, Ethiopian Government to
overcome the sector weaknesses and to
commercialize the agriculture and boost the agro
industry sector, has proposed to establish an
appropriate platform such as an “Integrated Agro
Industrial Park (IAIP)”. The idea of IAIP is to integrate
various value chain components via the cluster
approach. Fresh farm feed and agricultural produce
from Rural Transformation Centers (RTC) will be
transported to IAIP where the processing,
management, and distributing (including export)
activities will take place. This would not only serve to
provide the appropriate raw material, but it would also
integrate with the demand side of the food chain in an
efficient manner. Food parks also help in lowering the
costs by reducing post harvest losses, transportation
costs and energy costs. These food parks also ensure
higher returns due to high quality output, off season
availability, better traceability and through enhanced
productivity. Successful replication of such models
across strategic production hubs for key agricultural
commodities can lead to the transition of Ethiopian
agriculture and processing food industry to an
organized, high-tech and safe, demand-led, and high-
value orientation.
Further, this initiative will create an excellent
perspective for Ethiopia to act as a stepping stone
between global modern agriculture and development
of food production in neighbouring African countries. 1
The major advantages of setting up of the IAIP in
Ethiopia are as follow:
i. Transfer of technology in agriculture and
processing
Introduction
• Due to migration of efficient international
best practices in production and
processing in line with international
requirements, farmers realize better
quality produce and better price
realization.
• Develop entrepreneurship in the farmers
and enable development of the food
processing industry by securing raw
material availability. It will also help in
creating new jobs for rural communities.
ii. Boost the image of produce from Ethiopia in
international markets.
• Domestic retailers will find it more
beneficial to tie up with agro food parks
for supplies of food stuff rather than
depend on imports for high quality foods
As part of the Growth and Transformation
Plan, the Ministry of Industry (MoI) and Ministry of
Agriculture (MoA) are going forward with a plan to
establish pilot IAIP with the following primary
objectives:
• Focus on agriculture as a business instead of a
developmental project
• Attract private investors into areas of high food
production to set up food processing plants
• Reduce current high levels of post-harvest losses,
add value for increased local content of foods
• Link farmers in clusters to food manufacturing
plants
• Utilizing the transformation of the agricultural
sector to create jobs, create wealth, ensure food
security and drive rapid rural economic growth.
• Focusing on value chains where Ethiopia has
comparative advantage
• Sharp focus on youth and women
Engagement of consultants
As enumerated earlier GoE represented by
MoI and MoA are working in partnership to establish
3
 A broadened concept of IAIP,
ACPZ and AIGC was evolved

an IAIP with the aim of transforming the agriculture
1 sector. In order to make this mission successful and
show a scientific implementation path to MoI & MoA it
was intended to utilize the assistance of United
Nations International Development Organization
(UNIDO) to take a lead for the preparation of feasibility
study and business plan for IAIP pertaining to the
Introduction
with the state of the art infrastructure facilities with
backward and forward linkages on the lines of UNIDO’s
Inclusive and Sustainable Industrial Development (ISID)
model. The integrated ACPZs and IAIPs shall be
spread across the country and would be linked to each
other through the establishment of Agro Industry
Growth Corridor (AIGC). The branding for this initiative

identified initial set of four locations in Ethiopia along
with Food and Agriculture Organization (FAO),
Agricultural Transformation Agency (ATA), Italian
Development Cooperation (IDC) and United Nations
Development Program (UNDP).
is coined as “Ethiopia Agropower”. Refer Exhibit No.
1.1.
Exhibit No. 1.1: Branding of ACPZ & IAIP initiative

As part of the ongoing effort for the project,

UNIDO hired national team of experts to carry out the
first phase of the study which is selection of location
for the IAIP. To prepare feasibility study and business
plan for the establishment of IAIPs in Ethiopia for the
four locations in the first phase, UNIDO has invited
proposal from consultants.

After the transparent selection process, the

UNIDO has mandated Mahindra Consulting Engineers
Limited (MACE), India, belonging to US $ 16.5 billion
Mahindra Group, for preparation of feasibility study
and business plan for establishing one IAIP in Ethiopia,
Source: MACE
vide UNIDO Contract 3000022676 dated August 8,
2014 and the MoI of the Federal Democratic Republic
Concept for the logo design
of Ethiopia (FDRE) has mandated MACE for
preparation of feasibility study and business plan for
The Elements of the logo consists of Ethiopia
establishing three more IAIPs in Ethiopia, vide Contract
country, Industry and Grains symbolizing the economic
dated October 31, 2014.
growth of Ethiopia by agro industrialization.
FAO & MoI had hired a team of national
The Ethiopia Agro power logo is designed to
consultants to carry out value chain analysis for the
visually symbolize the meaning of the initiative. To
selected commodities for IAIP and for the
directly connect with the world where the initiative is
configuration of RTCs to enable sustained operation of
taking place - The Ethiopian Country map is used. This
the IAIP. This report fully incorporates the findings and
is reinforced by using the elements of Ethiopian
recommendations of the national consultants in order
country's flag inside it.
to have a holistic plan of IAIP development with
effective linkages to the identified RTCs in the region.
As it is an agribusiness initiative, grains are
used to depict the agriculture sector, while the
Broadened approach
industry elements depict industries, power plants &
warehouses. The grains are arranged in a way to
MACE further broadened the concept of IAIPs
symbolize growth because of this initiative.
and evolved holistic approach for sustainable
agribusiness development of Ethiopia. MACE inducted
Colours of the logo
a new dimension to the concept by fostering
innovative, inclusive and sustainable model for
Superimposing the strong colours of the
achieving the desired objectives.
Ethiopian Country flag. The red symbolizes the energy,
green to prosperity, growth & harmony. A sure-fire way
The approach is to develop an integrated
Agro Commodity Procurement Zone (ACPZ) and IAIPs

4
 Potential zones for locating IAIP
identified across the country

to say to the world – Ethiopia is a fertile ground for A well structured and systematic methodology
investments. was adopted by the National Experts while short listing 1
Identified development zones the potential zones for locating IAIP in Ethiopia as
depicted in Exhibit No. 1.2.

Exhibit No. 1.2: Methodology for short listing zones

6. Alignment
1. Desk research
Aligned with corridors of ATA,
Review the IAIP concept paper
regional states, EHDA & sugar
& various related documents
plantations
Introduction
7. Ranking of agro zones
Prioritize & select pilot agro
zones through statistical &
analytical methods

2. Meetings & consultations 5. Delineation of agro zones 8. Select specific location

Undertake constitutive meetings Proposed short list of potential Identify specific site for the park
with different stakeholders agro zones from the selected agro zones

4. Targeting commodities
3. Formulate criteria
Identification of strategic
Establish selection criteria &
agricultural commodities for
collect needed data
industrial processing

Various zones have been selected across Ethiopia for this initiative as shown in Exhibit No. 1.3 and
further sites are also on the path of unveil.

Exhibit No. 1.3: Potential agro zones in Ethiopia

Source: National Experts Study

5
 Locations and focus crops for
initial four IAIPs identified

The regional zones identified for agro processing intervention are shown in the Table No. 1.1.
1
Table No. 1.1: Integrated ACPZ and IAIP – potential locations

Number
Serial number Region Potential agro zones Regional zones of
zones
Introduction

1 Tigray Western Tigray W. Tigray, NW Tigray 2

2 Tigray Southern Tigray Southern Tigray 1
3 Amhara South West Amhara W. Gojam, E. Gojam, Awi 3
4 Amhara North Gondar North Gondar 1
5 Amhara Eastern Amhara N. Shewa, S. Wollo 2
6 Oromia Central Eastern Oromia E. Shewa, Arsi, W. Arsi, Bale 4
7 Oromia North West Oromia SW Shewa, W. Shewa, HoroGudru, E. 4
Wollega
8 Oromia Western Oromia Jimma, Illubabor, W. Wollega 3
9 Oromia Eastern Oromia W. Harerghe, E.Harerghe 2
10 Oromia Southern Oromia Borena 1
11 SNNP Eastern SNNP Sidama, Gedeo 2
12 SNNP Northern SNNP Yem, Hadiya, Gurage, Siliti, Kembata 5
13 SNNP Southern SNNP GamoGofa, South Omo 2
14 Benishangul North West Benishangul Metekel 1
15 Gambella Central Eastern Agnwak 1
Gambella
16 Afar South East Afar Zone – 1 1
17 Somali Northern Somali Shinele, Jijiga 2

Source: National Experts Study

The shortlisted four regions for establishing first set of IAIP’s along with the focused crops / sectors is
given in the Table No. 1.2 and Exhibit No. 1.4.

Table No. 1.2: Four IAIPs identified for the study

Region Potential zones

Oromia C. Eastern Oromia
Amhara South West Amhara
SNNP Eastern SNNP
Tigray Western Tigray

Source: National Experts Study

6
 Principal objectives and
intentions of IAIP defined

Exhibit No. 1.4: Four IAIPs identified for present study

1

Introduction
Source: National Experts Study

Scope of services

The project objectives and intentions are detailed in Exhibit No. 1.5.

Exhibit No. 1.5: Project objectives and intentions

To attract private investors to

set up food processing plants
Processing and
To reduce post-harvest production
losses, to add value to
local content of foods
Industry specific
To link farmers in infrastructure
clusters to food
Planning of
IAIPs
manufacturing
plants Integrated
Agro
Industrial Social infrastructure –
Parks housing, recreational,
To give forward commercial
linkages for the
processed produce
Development & operation
To create jobs and drive of inclusive and
rural economic growth in sustainable industrial
Ethiopia development (ISID)
framework and strategies
Source: MACE analysis

7

The scope of services for preparation of
1 feasibility study and business plan for establishing
multiple IAIPs shall cover:
o Identification and finalization of location of IAIP
o Determination of the catchment area for IAIP
development
Introduction
o Identification, demarcation and planning of RTC
o Determination of the size of IAIP and common
infrastructure facilities
o Linkage studies between production and
processing of agro commodities
o Master planning and infrastructure assessment
o Preparation of IAIP zoning model
o Project cost estimation
o Preparation of business plan
o Viability assessment of IAIP
o Project structuring and PPP modelling
Kick-off meeting
MACE team attended project steering
committee (PSC) meeting on September 8, 2014. The
PSC members include:
8
Extensive interaction with
various agencies
o State Minister, Federal Ministry of Industry (MoI),
Chairman, PSC
o Representatives from MoI
o Representatives from MoA
o Representatives from ATA
o Representatives from UNIDO, Vienna
Representatives from UNIDO, Ethiopia
o
o Representatives from FAO
o Representatives from UNDP
o Representatives from Food, Beverages &
Pharmaceutical Industries Development Institute
(FBPIDI)
o Representatives from Ethiopian Meat & Dairy
Industry Development Institute (EMDIDI)
o Representatives from IDC
MACE made a presentation to the PSC on the
approach and methodology for conducting the study
and the session was highly interactive and the PSC
appreciated MACE for the innovative conceptualization
and commendable strategy towards ISID initiative and
providing clear picture for way forward.
 Extensive field visits,
interactions and data
collection
Inception report
MACE submitted the inception report
detailing the scope of engagement, approach and
methodology in conducting the study, conceptualization
& configuration and also incorporating the discussion
points of the PSC meeting held on September 8,
2014.
As enumerated earlier, MACE further
broadened the concept of IAIPs and the approach is to
develop an integrated ACPZ and IAIPs.
The inception report dealt at length the
master planning concepts, infrastructure and facilities,
agribusiness analysis, approach for project costing,
revenue modelling, financial modelling, development
strategy, project implementation structure, branding
and marketing strategies, etc. The inception report
also highlighted the deliverables and structure of the
final report.
Field visits, analysis and documentation
A senior team from MACE visited all the
identified IAIP sites in the four regions during
November and December 2014 along with UNIDO
team for finalization of IAIP sites in the regions.
MACE team also conducted detailed study
and analysis on following areas:
• Sector strategy
• Business plan
• Engineering and infrastructure aspects
• Environmental aspects
• Agri value chain analysis
• Project investment model
• Revenue modelling
• Financial modelling
• Investment promotion strategies
• Branding and marketing strategies
• Project structuring and development approach
• Private sector identification strategy
Interim report
MACE submitted an interim report in
December 2014 highlighting the work done and
progress achieved towards the preparation of the
feasibility report along with preliminary findings and
made presentation on the findings of interim report.
Draft final report
1
Subsequent to the submission and
presentation of the interim report, following activities
required for finalising the draft final report were
undertaken:
Introduction
The National Experts appointed by MoI carried
out detailed value chain analysis of the focus
commodities in the identified regions along with
location identification for the required RTCs pertaining
to each IAIP based on the site selection methodology
provided by MACE.
MACE along with UNIDO team had visited
some RTC locations along with National Experts for
validating the selection both from technical and
business perspective. Meantime, the team had also
interacted with the key stakeholder of the region and
the final selection of IAIP location was formalized.
UNIDO organized a high level delegation study
tour headed by HE State Minister of Ministry of
industry, GoE to Malaysia, Vietnam and Thailand. The
study tour was informative, relevant to the project
under consideration and key observations and learning
are dovetailed to the study after due factoring to the
regional and country context.
The structure of the draft final report
The present document titled “Feasibility study
& business plan” for integrated ACPZ and IAIP –
Western Tigray, Ethiopia is structured as follows in line
with terms of reference, discussion and presentation
made to PSC.
Chapter 1 – Introduction
An introduction to the project proposal, objectives
underlying the project concept and the structure
of the report with introduction to each chapter are
presented.
Chapter 2 – Detailed activities and approach
methodology
The detailed activities pertaining to development of
integrated ACPZ and IAIP are discussed. This
chapter also presents the approach methodology
adopted for the study.
9

Chapter 3 – Vision and mission
1 along with the enablers for achieving the desired
The vision and mission of the proposed integrated
ACPZ and IAIP is evolved after detailed study of
key considerations and specific issues.
Chapter 4 – Agro and allied sector potential of
Introduction
Ethiopia and Tigray region – an overview
This chapter presents an insight to the vast agri
and allied sector potential of the country in general
and Tigray region in particular. The detailed
analysis of the agri and allied sector potential
reveal the unlimited opportunities for value
addition and scope for establishing large scale agri
initiative in the country, integrated ACPZ and IAIP
in the present case.
Chapter 5 – Value chain analysis
This chapter presents a detailed value chain
analysis of the selected focus commodities carried
out by national consultants appointed by FAO /
MoI. Further, the chapter details on the
identification of key constraints among different
value chain actors along with appropriate
recommendations and interventions to mitigate
the challenges.
Chapter 6 - Conceptualization and configuration
of integrated ACPZ & IAIP
The constraints and challenges hindering the
growth of agribusiness in Ethiopia are identified
and the importance of agri clusters to address the
identified challenges and to promote sustainable
agribusiness is highlighted. In accordance with the
recommendations outlined in the Ethiopian Agro-
Industry Sector Strategy, GoE proposal to
establish IAIPs across identified locations in the
country is an important step to promote
sustainable growth in agriculture and allied
sectors. This concept was broadened by MACE to
evolve a holistic approach for the development
vision of GoE through which it is envisaged to
develop integrated ACPZ and IAIP with the state of
the art infrastructure facilities with backward and
forward linkages.
The concept underlying the development of
integrated ACPZ and IAIP as agro clusters of
excellence along with the rationale is discussed in
detail in this chapter. Further, the key factors
10
Well structured land
identification exercise
driving the development strategy are identified
objectives. The product differentiators which set
apart the integrated ACPZ and IAIP development
and create a new paradigm for sustainable
agribusiness in the country are described along
with factors influencing them. The significance of
benchmarking for the development is also
highlighted.
As a unique feature, the concept of RTC is
introduced and discussed. RTC is an integral part
of ACPZ and would primarily serve as aggregation
point of the IAIP and will act as backward
integration of IAIP ensuring the required quality
and quantity of raw materials.
As an effort to develop sustainable agricultural
development in Ethiopia, ensure balanced
agriculture and food industrialization across the
country, enhanced revenues to farmers and
employment potential to local population, multiple
integrated ACPZs and IAIPs are contemplated
which would eventually lead to development of agri
corridor across the country.
The likely impact of integrated ACPZ and IAIP in
the context of Ethiopia’s agri and allied sector
potential and benefits to rural community are
clearly brought out in this chapter.
Chapter 7 – Land for IAIP & RTCs
This chapter provides details on one of the
important element and influencing factor of the
development i.e. land identification. Various criteria
for land identification are listed and the
methodology adopted for assessment of criteria
for land selection is dealt in detail. Further, the
salient features of the identified location in terms
of its connectivity, infrastructure availability,
constraints & opportunities are also presented
with emphasis on the mitigation measures to be
adopted to overcome the constraints.
Chapter 8 – Zone definition
This chapter highlights the need for zone
demarcation and the methodology adopted for the
same. Pictorial representation of the existing land
use pattern and the transportation network with
spider diagram is presented for different lengths
of roads.
 Infrastructure gap analysis
and assessment for IAIP and
RTC
Detailed analysis has been carried out for
determination of effective zone of procurement for
focus crops and other crops by working out raw
material requirements, production area
requirements, and envisaged road network for
raw material movement, transport and landed
cost of raw material from various zones.
The chapter also presents the demarcation of the
IAIP and legal definition of the zones.
Chapter 9 – Master planning of IAIP & RTC
The importance of master planning exercise can
be understood and appreciated by the fact that it
provides a clear and precise blueprint for
undertaking the development process. This
chapter presents an introduction to the planning
principles, objectives and concept of planning the
core processing zone i.e. IAIP and the RTCs.
Planning and design considerations for carrying
out the master planning exercise are also detailed.
Further, the components of master plan such as
land use pattern, parcellation, zoning, development
plan, and phased development are also discussed
in detail. Various sustainability initiatives have also
been incorporated in the planning process so as
to position the development on a sustainable path.
Chapter 10 – Infrastructure and facilities
within IAIP & RTC
Provision of infrastructure and facilities is crucial
for the sustained development and operation of
IAIP and the infrastructure within RTC for effective
procurement of raw materials. Accordingly,
various supporting infrastructure and facilities for
establishing IAIP and RTC are identified and
planned. These facilities shall be regularly
maintained and continuously upgraded to be
globally competitive. These infrastructure facilities
are grouped under the following major heads:
(i) General infrastructure covering roads,
water supply, sewerage system, drainage,
power supply & distribution, street lighting
etc.
(ii) Social infrastructure covering residential
development, social facilities, health areas,
parks, transport system within the zone etc.
(iii) Environmental and green infrastructure
(iv) Specialized agri infrastructure within IAIP
covering R&D hub, extension centre, 1
knowledge hub, warehouses, procurement
centres, packing & labelling, grading &
sorting, QA & QC lab, administrative
building etc.
(v) Infrastructure for RTC covering
Introduction
agribusiness, social and commercial
components.
Chapter 11 – Infrastructure gap analysis –
RTC & IAIP off-site, connectivity and linkages
For sustained business operation of IAIP, it is
pertinent that agri infrastructure in ACPZ, off-site
infrastructure and IAIP connectivity and forward
linkage to the processed commodities are
adequately addressed.
The chapter at length analyses the requirements
of production farm linkages to IAIP, technology
dissemination, centre of excellence and capacity
building, knowledge cell and market information
cell, network of collection centres and primary
processing hubs, reefer transportation systems,
access road, power supply and water supply to
IAIP, rail and port connectivity, perishable air cargo
complex, market infrastructure, agri education
and knowledge hub, etc.
The chapter also provides the configuration, sizing
and other pertinent details of agri infrastructure in
ACPZ, off-site infrastructure and IAIP connectivity
and forward linkage of the processed
commodities.
Chapter 12 – Environmental and social
assessment
It is mandatory for any development process to
undertake environmental and social assessment
of the proposed development so as to plan
possible mitigation measures for averting
environmental degradation and to protect the
interest of the population likely to be disturbed and
displaced as a result of the development. A
preliminary environmental assessment covering
base line data of meteorological conditions, soil
characteristics, hydrology, air quality, noise levels,
water quality etc., has been carried out.
11

Environmental management plan for the sustained
1 operation of the IAIP is also discussed under 2
stages – construction & operation.
Chapter 13 – Development strategy and
project implementation structure – IAIP & RTC
Introduction
This chapter presents details of development
strategy and options, project structure, special
purpose vehicle, the roles and responsibilities of
various agencies etc. in developing and managing
IAIP.
This chapter deals on various scenario options for
the development of IAIP clusters and the
scenarios were analyzed with respect to extent of
participation from GoE, regional government, and
participation from private sector including roles
and responsibilities in development and operations
of the proposed project. The IAIP development
options include:
• Option 1 - 100% owned and managed by
GoE or regional government through
designated nodal agency
• Option 2 - PPP structure with GoE and
regional government with 26% equity
participation
• Option 3 - Involvement of GoE, regional
government, financial institution & banks,
consortium of private investors - EPC and
O&M through professional agencies
• Option 4 - 100% under private sector
The detailed methodology for the selection of
strategic partner for IAIP is presented. Two
approaches are suggested for selection of private
sector for the development and operation of IAIP.
In the first approach, only financial bid shall
constitute the sole criteria for award of contract
after technical qualification. Experience score,
technical threshold capacity of the bidder are
based on past projects. The technical weightage
gained by bidder after the RFQ stage in the
technical evaluation is not a deciding factor for the
award of the contract. This approach is adopted to
ensure that there is no revenue loss either in
terms of receipt to the government or outflow
from the government arising out of differential
technical score among the technically shortlisted
ranked bidders.
12
Development strategy and
project implementation
structure for IAIP and RTC
In the second approach, quality cost based
selection method (QCBS) is suggested. The multi
criteria analysis shall be adopted for finalization of
the successful bidder. The technical evaluation
and ranking parameters would include experience
in similar developments, operation and
management, net worth and other financial
resources, capability in agribusiness sector,
guaranteed volume of products handled,
employment creation, tie up or anchor tenant as a
consortium member, marketing commitments,
capacity and commitment to develop the sector in
terms of knowledge dissemination, capacity
building, CSR initiatives and linkages etc. The
financial evaluation parameters could be based
upon either maximum revenue to GoE and regional
government or least financial commitments to
GoE and regional government. The technical
score duly factors the past experience and
bidders proposal for the IAIP. The technical scores
are assigned and are carried as a decisive factor
in addition to the financial score in award of final
contract. The combined technical and financial
score of the bidder will be considered for
evaluation.
The governance and management structure of the
SPV are fully described in the chapter.
The governance and management of RTC are
dealt at length in this chapter.
The activities of the SPV during implementation
phase and management phase are discussed.
The legal frame work for important elements of
the development are presented and discussed in
detail.
In an initiative to create sustainable agribusiness,
a farmer centric and investor friendly Integrated
Agribusiness Development Policy 2015 has been
conceived to give impetus for the development of
integrated ACPZ and IAIP across the country. This
policy would form the foundation for implementing
a constructive integrated ACPZ and IAIP apart
from providing a well-defined guideline in the
agriculture and allied sectors which would
enhance the income of farmers, increase the
country’s GDP and more importantly provide basic
food security to the citizens of Ethiopia.
 Potential revenue drivers
for IAIP & RTC identified
and analysed
The policy aims to create an enabling institutional
structure for addressing the thrust areas
requiring intervention, facilitating flow of
investment, technologies, skill sets and modern
management practices.
The policy addresses supply chain alignment with
domestic and international requirements and
improvement of market access through market
intelligence. Further, some of the regulatory
hurdles that have been affecting growth in the
sector have been refined.
The policy hopes to provide an enabling framework
leading to increase in yield, reduction in consumer
prices in the domestic front, grading and food
safety practices, increase in exports, reduction in
post-harvest losses, sustainable farming practices
and increased penetration of technology.
The policy facilitates state of the art technology,
knowhow and avenues for international marketing
of the produce apart from investments by private
sector in developing the much needed agri
infrastructure & agro based industry units in a fair
and transparent manner for ensuring sustainable
agribusiness development in Ethiopia.
The chapter also analyses the strategic linkages
and cooperation areas.
Model formats of MoU for various co-operation
areas are presented along with the possible
opportunities for the participants of the MoU.
Chapter 14 – Project cost – IAIP & RTC
The chapter deals on the cost of developing IAIP,
specialized agri infrastructure within ACPZ,
external connectivity and offsite infrastructure to
IAIP. The RTC project cost analysis is also carried
out independently.
The phase wise project and the component wise
break up are also presented.
The chapter also provides component wise mode
of development and investment by 1) GoE and
regional government, 2) IAIP PPP and 3) IAIP PPP
or separate SPV or GoE and regional government.
Chapter 15 – Revenue drivers – IAIP & RTC
1
The potential revenue drivers are identified and
categorized into different heads like revenue from
developed plots - industrial, residential,
commercial and social zones, revenue from built
up space - industrial, residential, commercial and
Introduction
social zones, revenue from facility management
and income generation from operations of
specialized agri infrastructure facilities within IAIP
are discussed at length. Similar exercise is also
done for assessing the revenue drivers of RTC.
IAIP & RTC specific model for rational assessment
of revenue generation is evolved considering the
findings of the study.
The chapter also highlights other possible revenue
generation opportunities for IAIP like margins from
commercial and common social infrastructure,
income from business support, income from EPC
services, income from various business facilitation,
tie ups, produce marketing support, margins
from food court and restaurant, vending
machines, revenue from advertisement, vehicle
and truck parking, income generation from
product branding and services promotion
activities, income generation from seminars,
conferences and workshops, income generation
from other services etc.
The detailed analysis are presented in this chapter
and revenue streams are projected over the
horizon period of 15 years, including the phase I
development and is taken to the next stage of
process namely financial analysis and to evolve a
model for sustained operation.
Chapter 16 – Means of finance, financial and
investment model analysis – IAIP & RTC
The means of finance for the development of IAIP
& RTC are discussed.
The IAIP specific financial model is developed and
the detailed financial analyses are presented.
The financial commitments of GoE and regional
government, private sector are clearly analyzed in
relevance to the various development options.
Further the chapter presents financial viability
analysis of RTC on a standalone basis.
13

1 The detailed viability analysis has been conducted
and presented in the form of tables and exhibits
for easy understanding. The project is found
technically feasible and financially viable.
Chapter 17 – Integrated ACPZ and IAIP
Introduction
branding and marketing strategies
Structured promotion program is recommended
for integrated ACPZ and IAIP to attract domestic
and global players for ensuring sustained
operations.
Well planned strategic branding and advertising
campaign and other sales promotion methods
shall be adopted to promote this unique concept in
identifying the integrated ACPZ and IAIP developer
/ co-developer and / or anchor tenant for
industrial zone / commercial zone / business
zone / education zone / specialized agri
infrastructure.
It is pertinent to create an identity and develop
communication strategy to inform target groups
including co-developers about the integrated ACPZ
and IAIP initiative. Good branding provides
opportunities for greater collaboration and
synergies and also endows an external
manifestation of strategic intent and creates
differentiation in the market.
The marketing strategies are discussed and
action plan is proposed in this chapter.
Chapter 18 - Implementation schedule and
micro level action plan
The project implementation schedule for the
integrated ACPZ and IAIP clusters are presented
with proposed time schedule for each of the
identified activities. While developing project
implementation schedule, due attention has been
given for early implementation and hence phased
14
IAIP to benefit agribusiness
and stakeholders
development is suggested. The phasing plan is
also given in this chapter.
The chapter also gives the action plan on micro
level basis for the identified activities.
Chapter 19 – Risk mapping, analysis and
mitigation strategies
Various risks associated with the project
implementation stage and operation stage is
identified. Integrated ACPZ and IAIP specific risk
matrix modelling is done and presented in this
chapter.
The strength, weakness, opportunity & threat are
analyzed at length in the context of Ethiopia and
development of integrated ACPZ and IAIP. The
mitigation measures for weakness and threats
along with leveraging the strengths and
capitalizing the opportunities have been taken care
in the configuration and project structuring.
Chapter 20 - Integrated ACPZ and IAIP benefits
and contribution
The integrated ACPZ and IAIP clusters are
expected to contribute to growth of the
agribusiness in many aspects.
The successful implementation of the integrated
ACPZ and IAIP shall significantly improve the
prospects of agriculture and allied sectors in
terms of enhanced production, increased value
addition opportunities, strong marketing support,
etc. The benefits and the contribution of the
integrated ACPZ and IAIP with respect to various
parameters are analyzed and presented in this
chapter.
Further, the chapter deliberates on short term,
medium term and long term goals along with
focus area, facilitators, enablers and linkages for
the proposed integrated ACPZ and IAIP.
 Chapter – 2
Detailed activities and approach methodology
Objective of integrated ACPZs and IAIPs
The primary aim of the proposed integrated
ACPZs and IAIPs is to devise a world class agro
ecosystem where farmers, growers, processors,
marketing institutions, exporters, research institutions,
academic institutions, industrial bodies, government,
Exhibit No. 2.1: Integrated ACPZ and IAIP basic definition
Source: MACE analysis
GoE with active private sector participation is
keen to establish and operate integrated ACPZs and
IAIPs covering agro cultivation zones, precision
farming, controlled environment growing, organic
farming, agro and food processing hubs for domestic
and export market etc. for housing domestic and
international companies.
etc. are engaged in a seamless manner for sustainable
agribusiness development.
Integrated ACPZ and IAIP may be seen as the
application of industrial ecology in the agro sector. The
concept of sustainable development occupies centre
stage as shown in Exhibit No. 2.1.
The core processing zones shall be equipped
with the state of the art infrastructure including
general infrastructure such as graded plots, roads,
power, water, communications, drainage, sewerage,
sewage treatment plant, effluent treatment plant,
storm water drains, rain water harvesting, fire fighting
etc. specialized infrastructure such as auction halls,
15

cold storages, quarantine facilities, quality control labs,
2 quality certification centres, raw material storage,
controlled and modified atmospheric storage, primary
processing centres, central processing centres etc.
Detailed activities and approach methodology
The production zones supporting the processing zones
shall have RTC, centre of excellence, education hubs,
market information dissemination, farmer’s schools
etc. The processing and production zones will be fully
equipped with associated commercial and residential
supporting infrastructure.
Integrated ACPZ and IAIP clusters planned in
Ethiopia at various strategic locations aim for
sustainable, balanced agri industrialization and
development of all the regions of the country and to
utilize the unexplored opportunity of the region, besides
providing hinterland connectivity, promoting
investments in the agricultural sector and developing
Exhibit No. 2.2: Objectives of integrated ACPZ and IAIP
Source: MACE analysis
Preparation of feasibility study and business plan to establish integrated ACPZs and IAIPs in Ethiopia –
study coverage
The major study areas and coverage for preparation of feasibility study and business plan is shown in
Exhibit No. 2.3.
16
Integrated ACPZ and IAIP
clusters promote balanced
agri industrialization
rural communities thereby reducing rural urban
migration significantly.
Integrated ACPZs and IAIPs shall also
facilitate the promotion of research and development
in partnership with industry, assisting in the growth of
new ventures, and promoting economic development.
The proposed FBPIDI and EMDIDI, a new initiative of
GoE, shall have extension centers in the IAIP to bridge
the gap between academia and industry. The proposed
integrated ACPZs and IAIPs are a timely initiative to
create employment, wealth, food security and fits well
with the new trends in developing sustainable
technologies and innovative products to address the
challenges posed due to the rapid industrialization &
urbanization and fast depletion of natural resources.
The objectives of the development are shown
in Exhibit No. 2.2.
 Stages defined for study
coverage

Exhibit No. 2.3: Study coverage

2

Detailed activities and approach methodology

Source: UNIDO – RFP document and MACE analysis

Approach methodology for the study

The approach methodology adopted for the study is depicted in the Exhibit No. 2.4.

17
 Approach adopted for
feasibility study

Exhibit No. 2.4: Approach methodology

2
Detailed activities and approach methodology

Source: MACE analysis

Work breakdown structure
The work breakdown structure is detailed in
Exhibit No. 2.5. These tasks are carried out in
18
nineteen (19) stages as depicted in the Exhibit No.
2.5. However these stages are not sequential and a
chapter in this report may cover and combine several
stages or may cover a part of a stage.
 Identification of micro level
activities in developing business
model and strategic roadmap for
integrated ACPZ & IAIP
Exhibit No. 2.5: Stage wise activities
Stage 1 - Agro clusters
o Situation analysis of agribusiness in Ethiopia
o Agri-clusters – growth enablers
o IAIP – brief overview
o Success models and international experience
of large scale agri-clusters
o Lessons learnt from other countries and
implications for Ethiopia
Stage 3 - Agro and allied sector potential of
Ethiopia and Tigray region - an overview
o Sector performance
o Allied sector performance
o Cropping seasons
o Analysis of crop scenario
o Major constraints and challenges
o Market outlook
o Growth potential
o Government interventions
Stage 5 – Conceptualization and configuration
of ACPZ (including RTC) and IAIP
o Project related significant factors for
investment decision
o Uniqueness and core offering of the IAIP
o Analysis of the scope for operation of the IAIP
o Sector coverage
o Major nodes of the IAIP
o Concept of RTC
o Identification of the sub sectors, backward
and forward linkages, social infrastructure
o Product differentiator
o Farmer centric and investor friendly
agribusiness initiatives
o Development of agro corridor
o Social inclusion and rural development
through agribusiness initiatives
Stage 7 – Zone definition – IAIP & RTC
o Location and land for the proposed IAIPs &
RTC
o Existing land use pattern and transportation
network
o Assessment of effective zone of procurement
of raw material
o RTC’s function as raw material aggregation
and feeder to IAIP
o Demarcation
o Legal definition of IAIP & RTC
2
Stage 2 – Vision and mission
Detailed activities and approach methodology
o Conceptualization
o Focus areas, facilitators, enablers, and linkages of
the IAIP
o Vision
o Mission
Stage 4 – Value chain analysis
o Assessment of production levels, marketable surplus
o Identification of main value chain actors and their
functions
o Product wise value chain analysis
o Identification and analysis of key constraints along
the value chain
o Recommendations and interventions to address the
constraints
Stage 6 – Location analysis – IAIP & RTC
o IAIP location detailing and salient features
o Development of criteria for selection for IAIP location
o Connectivity in terms of road, highway, sea port & air
port
o Compliance evaluation to criteria
o RTC location selection
Stage 8 – Master planning of IAIP & RTC
o Planning principles
o Goals and objectives of planning
o Planning concept
o Planning considerations
o Broad design considerations
o Zones spotting
o Sustainability initiatives
o Master plan components
o Zoning, product mix and facility configuration
o Land use pattern
o Detailing the locations and sizes of various land uses
o Zoning (industrial, residential, commercial and other
supporting facilities)
19

2 Stage 9 – Infrastructure and facilities within
IAIP & RTC
o Infrastructure objectives
Detailed activities and approach methodology
o Identification of infrastructure requirements
o Infrastructure planned within IAIP & RTC
o General infrastructure
o Road category and network
o Water supply, treatment and network
o Sewerage system – collection, treatment and
recycling
o Drainage
o Power supply and distribution
o Street light
o Utilities mapping and schematic plans
o Social infrastructure
o Transport system
o Specialized agri infrastructure
o Environmental infrastructure and green
infrastructure
Stage 11 – Environmental and social
assessment
o Objective
o Climate & rainfall
o Soil characteristics
o Hydrology
o Ambient air quality
o Noise level
o Surface water quality
o Ecology and biodiversity of the region
o Socio – economic conditions
o Specific compliance to the environmental
regulations of the region
o Project Affected People (PAP) and Project
Affected Families (PAF)
o Demographic features
o Environmental management plan
20
Extensive field survey, research and
analysis in structuring business model
and delivering strategic roadmap
o Phasing
Stage 10 – Infrastructure gap analysis for
procurement zone and external connectivity
o Requirements of production farm linkages to IAIP &
RTC
o Infrastructure and facility configuration of RTC - raw
material collection, primary processing, technology
dissemination, centre of excellence and capacity
building
o Knowledge cell and market information cell
o Reefer transportation systems
o Access road, power supply and water supply to IAIP
& RTC
o Port connectivity
o Perishable air cargo complex
o Market infrastructure
o Agri education and knowledge hub
Stage 12 – Development strategy, project
implementation structure, legal aspects and
document templates – IAIP & RTC
o Development approach
o Development option and strategy
o Assessment and recommendations for private
sector to lead development process
o Project structuring and special purpose vehicle
o Governance & management structure
o Legal framework and governance structure
o Land access and rights / usage mapping including
legal implications
o Strategic partners / developer
o Analysis of the commitment required
from development partners
o Roles and responsibilities of the concessionaire &
government authorities (regional & federal),
investors, anchor and other companies, suppliers,
farmers, local communities
o Roles of regional & federal government – agency by
agency
o Micro level activities of the node development
companies
o Strategic linkages
o Formation of various SPVs and analysis of legal
structure
o Project structure
o Need for partnership with other countries
o Likely partnering countries
o Model MoU between SPV and resource providers
o Model MoU between SPV and international
investors
 Business sustenance is
determinant for success
integrated ACPZ & IAIP
Stage 13 – Project cost – IAIP & RTC
o Approach
o Project cost
o Details of cost estimates
o Phase wise project cost
o Specialized agri infrastructure cost
o Costing within the facility, costing linking the
facilities and costing feeding to the facilities
o Investment outlay for upgrading the
production area, and external linkages,
delivery models, options
recommendations
Stage 15 – Means of finance, financial and
investment model analysis – IAIP & RTC
o Model analysis
o Funding requirements and means of finance
o Assumptions for financial analysis
o Cost of operations
o Financial expenses
o Working results
o Internal rate of return
o Debt service coverage ratio
o Projected cash flow statement
o Payback period
o Projected balance sheet
o Cost benefit ratios
o Social, economic and environmental indicators
o Selective financial indicators
Stage 17 – Implementation schedule and
micro level action plan for implementation
o Implementation and monitoring mechanism
o Micro level action plan
o Implementation plan & phasing
o Statutory approval and linkages
key
of
o Model MoU between SPV and research/ innovation
partners 2
o Model MoU between SPV and product marketing
support providers
Detailed activities and approach methodology
o Model MoU between agri processing units and
farmers
o Procurement, bidding document and negotiation
procedures
o Template for agreements to govern the
IAIP investment, infrastructure development, service
provision, etc.
o Identifying opportunities for SME’s
Stage 14 – Revenue drivers – IAIP & RTC
o Revenue streams
o Phase wise revenue generation
and
Stage 16 – Branding and marketing strategies
o Strategies
o Micro level sub sector wise project opportunities
and project profiles
o Major marketing programs
o Communication strategy including investor outreach
program
o International road shows
o Strategies for popularizing integrated ACPZ & IAIP
Stage 18 – Risk mapping, analysis and mitigation
strategies
o Approach towards risk management
o Critical success factors
o SWOT analysis
o Multi criteria analysis for risk management
o Risk assessment, impact analysis and mitigation
strategies through multiple approaches
o Development of risk assessment matrix during
implementation
o Development of risk assessment matrix during
operation
21
 Outcomes & outputs, benefits &
contribution are mapped in the
study

o Risk assessment modelling and risk rating analysis

2 Stage 19 – Benefits and contribution
o Statement of integrated ACPZs & IAIPs overall objective
o Benefits to growers, farmers, rural communities, women, youth, traders, industries, consumers,
Detailed activities and approach methodology

exporters, etc.
o Contribution for sustainable value chain operations

Source: UNIDO – RFP document and MACE analysis

22
 Chapter – 3
Vision and mission
Development approach
The development approach includes efforts in
increasing productivity through the concept of
optimized resource utilisation, preserving the produce,
value addition and reaching high end markets besides
fulfilling domestic requirements. Hence, the strategic
Exhibit No. 3.1: Sustainable inclusive growth development
Source: MACE analysis
The integrated ACPZ and IAIP aims to provide
a mechanism to bring together farmers, processors
and retailers and link agricultural production to the
linkage between the gap, intervention and the
framework is depicted in Exhibit No. 3.1. Thus an
integrated end to end approach is evolved on the
concept of ISID and triple bottom line approach of
ensuring environment, economic and social
sustainability.
market so as to ensure maximization of value addition,
minimization of wastages and improving farmers’
income as depicted in the Exhibit No. 3.2.
23
 Integrated ACPZ and IAIP
shall adopt end to end
approach

Exhibit No. 3.2: Production to market linkage – end to end approach

3
Vision and mission

Source: MACE analysis

The integrated ACPZ and IAIP shall provide
right direction for development of agri and allied
business in a sustainable manner to ensure rural
prosperity and better returns to farming community
with improved technological tools, several innovative
concepts and industrial investments driven by private
sector.
Focus area, facilitators, enablers, linkages of the
integrated ACPZ and IAIP
The integrated ACPZ and IAIP shall achieve its
objectives through well-conceived model for linkages
between key stakeholders as detailed in Exhibit No.
3.3.

24
 Integrated ACPZ and IAIP
shall be a superior world
class hub
Exhibit No. 3.3: Focus area, facilitators, enablers, linkages of the integrated ACPZ and IAIP
Source: MACE analysis
Key consideration
The key aspects covering zoning processes,
physical resources in terms of general infrastructure
and specialized agri infrastructure and facilities,
financial resources and project development structure,
governance, establishing strategic alliances and
3
Vision and mission
building relationships with corporate, industry, country
partnerships, government, research organizations,
professional societies and society, as depicted in
Exhibit No. 3.4 are deliberated in the master plan
while developing vision and mission for the proposed
integrated ACPZ and IAIP.
25
 Strategic plan to realise
vision & mission is evolved

Exhibit No. 3.4: Key considerations – vision and mission

3
Vision and mission

Source: MACE analysis

Specific issues addressed during the process term and how these issues are likely to affect the
are shown in Exhibit No. 3.5. The core purpose is to integrated ACPZ and IAIP development plans and
identify key external issues having influence on operations.
integrated ACPZ and IAIP over the projected near-

26
 Integrated ACPZ and IAIP
clusters is poised to play
significant role in
transformation

Exhibit No. 3.5: Specific issues considered – vision and mission

3
Trends, constraints
Potential competitors New and likely competitors
or problems

Vision and mission

•Affecting the agribusiness sector •Focus areas, products, services •In three to five years
•New and emerging area, regulatory •Strategies
changes, changing technology, new •Partnership and linkages
service / market developments

Anticipated trend in the next five The impact due to prospective

Trends, constraints, or problems
years changes

•Sustainable agri practices, post •Affecting current and targeted •Business model
harvest infrastructure, food segments
processing, changing food habits, •Consumers
new products •Industry
•New segments
•Industry needs

Source: MACE analysis

Vision
To develop agri industrial cluster of excellence
for sustainable development of Ethiopia.
To conceptualize integrated ACPZ and IAIP as
preferred destination for processing, manufacturing
and business activities, harnessing the untapped
potential of Ethiopia in agri and allied sectors.
To achieve sustainable agri industrialization by
creating world class industrial, environmental, physical
& social infrastructure.
To establish robust structure for agri
industrialization through investor friendly policy
framework and transparent governance.
To boost foreign investments in agri
infrastructure and agri industrial segments.
To be recognized as a signature of choice for
carrying out agribusiness activity founded on
collaborative model fulfilling the aspirations of an
inclusive society through innovative approach and
sustainable solutions
Source: MACE analysis
Mission
• To establish a world class agribusiness
ecosystem that enables value creation by
enabling conducive business environment,
capacity building, skill development and
experiential learning so as to significantly impact
monetary & resource cutbacks and build
sustainable solutions of national importance.
• To promote the development of all areas of agri
& allied sectors to the highest possible levels of
excellence, through extensively networked
educational, research, training and development
programs.
• To establish strong links between farmers,
growers, breeders on the one hand and
logistics provider, processors, industry,
exporters, government, R&D institutions and
social scientists on the other, so as to harbour
the best professional capabilities in agribusiness
sector.
Source: MACE analysis

27
 Chapter – 4
Agro and allied sector potential of Ethiopia and
Tigray region – an overview
Introduction
Agriculture is a strategic sector in the
Ethiopian economy and plays a significant role in
stimulating overall economic growth, reducing poverty
and achieving food security. The sector accounts for
about 42 percent of the country’s total GDP, more
than 80 percent of exports, and 85 percent of
employment (MoA, 2014).
Ethiopia is well endowed with natural
resources. With a total arable land area of 51.3 million
hectares, of which only 13.9 million (27 percent of the
arable land) is currently being cultivated, and a great
variety of climatic conditions and soil types, the country
can produce many agricultural commodities.
Furthermore, water resources are hardly tapped,
meaning that there is great potential for increasing
agricultural production under irrigation.
Despite its strategic importance, however, the
sector is still dominantly subsistence type in which
more than 90 percent of the total cultivated land is
cultivated by small-scale farmers. Smallholder farming
is largely characterized by a subsistence-oriented
production system, low levels of modern inputs, low
productivity and heavy dependence on rainfall.
The Ethiopian government has been thus
exerting utmost efforts to support the development of
the sector through designing, introducing and
implementing relevant policies, strategies, and
programs including Agriculture and Rural Development
Policy, Sustainable Development and Poverty
Reduction Program (SDPRP), Plan for Accelerated and
Sustainable Development to End Poverty (PASDEP),
Food Security Program, Growth and Transformation
Plan (GTP), Agricultural Growth Program (AGP) etc.
As a result, agricultural production and
productivity have been showing progressive growth.
Over the past decade, the country has registered
remarkable growth in its gross domestic product
(GDP) placing Ethiopia among the top performing
economies in sub-Saharan Africa.
28
Agricultural production system in Ethiopia
Agricultural production is dominated by
smallholder households which produce more than
90% of agricultural output and cultivate more than
90% of the total cropped land. Smallholders drive their
income either in cash or through own-consumption
from agricultural production. According to the national
accounts, the agricultural sector consists of crop,
livestock, fishery and forestry sub-sectors. Crop
production is the dominant sub-sector within
agriculture, accounting for more than 70% of the
agricultural GDP followed by livestock which
contributes more than 20% of the agricultural GDP.
The contributions of forestry and fishing do not exceed
10%.
There are two main production systems in
Ethiopia: the pastoral nomadic system, and the mixed
crop production system. The pastoral livestock
production system dominates the semi-arid and arid
lowlands. These regions cover a vast area of lands with
a small livestock production. The crop production
system can be classified into smallholders’ mixed
farming, producers’ cooperative farms and private
commercial farms based on their organizational
structure, size, and ownership.
The major objectives of small holder farmers’
production are to secure food for home consumption
and to generate cash to meet household needs such
as clothing, farm inputs, taxes and others. The private
commercial farms are mainly established for the
purpose of profit making by selling agricultural
products at local market and/or abroad. With the
growth of private commercial farms and the
interventions of the Government, the commercial
agriculture growth got stimulated and the flow of FDI
into the agriculture sector showed rapid growth.
Cropping seasons
In the main agricultural regions in Ethiopia
there are two rainy seasons, the Meher and the Belg,
and consequently there are two crop seasons. Meher
 Meher and belg are the
two cropping seasons
is the main crop season. It encompasses crops the Belg season crop. The characteristics of the
harvested between Meskerem (September) and cropping seasons in Ethiopia are provided in Table No.
Yeaktit (February). Crops harvested between Megabit 4.1.
(March) and Nehase (August) are considered part of
Table No. 4.1: Cropping seasons in Ethiopia
Belg season
Areas North and east shoa, southern parts of
SNNP, west Hararghe
Normal rains February – May
The belg rains cover the months of
February to May in most belg growing areas
though some areas have early rains and
others have late rains. In addition to
regional variability in rainfall distribution,
there is also unpredictability.
Planting During belg season, different crops are
planted at different months. For example,
barley and wheat are planted in February
and maize in May. Despite the regional
variability and different crop planting time
and requirements, for the belg season as a
whole, fertilizers should be available to
farmers around January.
Food deficit periods March – May
Harvesting Late May-July depending on crops
Crops Cereals and pulses
General facts • High fertilizer prices, because of which
farmers usually use less than the
recommended rates. Farmers
experiment with applying inorganic
fertilizers with organic manure
• Farmers buy fertilizers when the rains
start
• Late belg rains delay land preparation
for the meher season and prevent long
season’s crops of maize and sorghum.
• When belg rains are late, farmers
substitute high yielding crops of maize
and sorghum with low yielding crops of
barley and wheat
4
Agro and allied sector potential of Ethiopia and
Meher season
Tigray region – an overview
Eastern and southern Tigray, eastern and
western Amhara, north and east Shoa,
western Oromia, midlands and highlands of
Bale, parts of Benishangul Gumuz,
Gambella, southern and eastern SNNP
June – September
The long rainy season normally covers the
months of June and September. However,
there is regional variability and
unpredictability. The rains may start late
and stop early during the flowering and
grain filling stages of the crops. In some
places, there are unseasonal rains in
October and November.
Differs according to crops. Maize and
sorghum in April and May. Teff is planted in
July when the soil is wet.
Despite the regional variability and different
crop planting time and requirements, for
the meher season as a whole, fertilizers
should be available to farmers around May
before the rains start and road access
becomes difficult.
July – September
September –March depending on crop
types and rainfall conditions
Cereals and pulses
• Because of high fertilizer prices and
shortage of improved seeds, farmers
usually use less than the
recommended rates. Farmers
experiment with applying inorganic
fertilizers with organic manure.
• Farmers buy fertilizers when the rains
start.
• Late onset, erratic distribution and
early secession of rains are common.
• Dry periods may coincide with
flowering and grain filling stages of
cereal and pulse crops.
29
 Grain crops constitute the
majority of the annual total
agricultural crop production

Meher is a long rainy season; almost 80 to
4 90 % of the private peasant farmers carry out their
crop production activities during this season. It
contributes more than 90% to the total agricultural
output while Belg contributes around 5%.
Agro and allied sector potential of Ethiopia and
highly important to enhance the food security of
small holder farmers in Ethiopia.
The total cropland area and production of
grain crops during the survey year for private

peasant farmers (Meher season) were 11,607,473

Area and production of major crops hectares and 251,536,624 quintals, respectively.
While the figures for commercial farms were
Tigray region – an overview

To assess, monitor and evaluate the sector
performance, agriculture sample surveys are being
conducted annually and the following paragraphs
provide an insight into the performance of the
sector for the production year 2013/14 (2006
E.C).
Grain crops
Grain crops constitute the majority of the
annual total agricultural crop production at country
level. For the private peasant holders more than half
of the share of total agricultural crop output was
accounted by grain crops. Hence, these crops are
602,314 hectares and 11,919,953 quintals,
respectively. (Table No. 4.2). The data for private
peasant holding for Belge season is provided in
Table No. 4.3.
The result reveals that more than 95% of
the total grain production comes from private
peasant holders. Out of the total grain crop area for
private peasant farms cereals, pulses and oilseeds
covered about 9,848,473; 1,742,602 and 16,125
hectares, from which 215,835,226; 28,588,806
and 7,112,592 quintals were harvested, in their
respective order.

Table No. 4.2: Area and production grain crops for private peasant holding & commercial farms (main
season, 2013/14)

Private peasant Commercial farms

Crop type
Area Production Area Production
Grain crops 11607473 251536624 602314 11919953
Cereals 9848746 215835226 273826 8788401
Pulses 1742602 28588806 45729 838829
Oilseeds 16125 7112592 282759 2292723
Source: AGSS 2013/14

Table No. 4.3: Area and production grain crops for private peasant holding (belge season, 2013/14)

Crop type Cultivated area in hectare Production in quintals

Cereals 10,37,966 95,76,747
Pulses 2,61,101 13,88,084
Oil seeds 28,793 5,741
Source: AGSS 2013/14

As indicated above, for the private peasant
farmers’ cereals take the majority share of area and
production out of the total grain cropped area and
production. The percentage share of cereals was
about 79% and 86% of grain crop area and
production, respectively. The share of cereals from the
total grain cropped area of the commercial farms was
about 45%. For these farms the highest share of total
grain cropped area was covered by oil seeds.
Crop yield for selected major grain crops
Productivity crops (amount of crop harvested
per unit of land area planted) determine the volume of
total agricultural crop production directly. It is the most

30
 Yields of major food crops have
almost been low and remained
constant over the years in the past

commonly used impact indicator to determine the of major food crops came from the increased total
performance and effectiveness of the agricultural crop land at country level. However in recent years, 4
sector of an economy. However, crop yields are crop yield shown a promising increment at private
inevitably affected by many factors, these are weather, peasant farmer plot level and in commercial farms.

Agro and allied sector potential of Ethiopia and

input price, changes in farming practices, amounts of Even though there is difference in farm management
fertilizer used quality of seed varieties, and use of practices and input usage crop yield in commercial and
irrigation. small holder farmers show little difference during the
survey year. The yield of major grain crops both for

Tigray region – an overview

In Ethiopia the yields of major food crops have private small holders and commercial farms for major
almost been low and remained constant over the years production season (Meher) of the year 2013/14 is
in the past. Due to this the increased total production indicated in Exhibit No. 4.1.

Exhibit No. 4.1: Crop yield for selected major grain crops (private small holdings & commercial farms, main
season, 2013/14)

Source: AGSS 2013/14

Vegetables, root and permanent crops
During the major season of the survey year a
total of 1,985,725 hectares of land were covered by
vegetables, root crops and permanent crops both in
small holder farmers and commercial farms. The total
crop output from these crops was found
141,520,320 quintals (refer Table No. 4.4). The
details of area and production of crops for private
peasant holding in Belge season is given in Table No.
4.5.

Table No. 4.4: Area and production of crops for private & commercial farms (major season, 2013/14)

Cultivated area in hectare Production in quintals

Crop type
Private peasant Commercial farms Private peasant Commercial farms
All crops 141,44,112 9,72,849 3260,77,132 796,41,442
Grain crops 124,07,473 6,02,314 2515,36,624 119,19,953
Vegetables 1,61,488 6,469 72,28,937 8,30,826
Root crops 2,09,880 1,219 416,08,725 2,95,102
Permanent crops 12,59,190 3,47,479 257,02,847 658,53,883
Source: AGSS 2013/14

31
 Vegetables, root crops and
permanent crops contribute
35% production of all crops

Table No. 4.5: Area and production of crops for private peasant holding (belge season, 2013/14)
4
Crop type Cultivated area in hectare Production in quintals
Grain crops 13,27,860 109,70,572
Agro and allied sector potential of Ethiopia and

Vegetables 28,174 18,88,449

Root crops 1,54,310 126,36,839
Source: AGSS 2013/14
Tigray region – an overview

Utilization of crop Exhibit No. 4.3: Percentage share of land use by

types, Private peasant holdings 2013/14
Crop product utilization survey data indicates
that 67 percent of the cereals produced were used for Other land
household consumption. Nearly 14 and 15 percent Wood land use
1.5% 4.8%
were used for seed and sale, respectively. Grazing
land
Land utilization 10.8%
Fallow land
This summary contains the land use and 4.0%
average holding size per households and per holders in
Permanent
the small holder agriculture in the country for the crop area
2013/14 production year. The survey results on the 7.0%
total land area under different types of land uses Temporary
shown in Exhibit No. 4.2. According to the result crop area
about 17.9 million hectares of land was used in 71.9%
different types of land use by small holder farmers Source: AGSS 2013/14
during the major season of the survey year.
The total land used for temporary crops
Exhibit No. 4.2: Total land use area disaggregated cultivation was more than 12.8 million hectares. The
by land use types for private peasant holding, land used for cultivation of permanent crops and
2013/14 grazing land was 1.2 and 1.9 million hectares,
respectively. The percentage share of land area for
Land uses area by types temporary crops was about 72%, while share of land
area for permanent crops and grazing land 7% &
14
10.8%, respectively. Refer Exhibit No. 4.3. The survey
12
result shows that there were 15.5 million agricultural
10 holders and around 15 million agricultural households
all over the country. The average holding sizes per
Millions

8
6 household and per holder were 1.17 hectare and 1.13
4 hectare during the survey year in each respective
2 order. While the average holding size in all cropped
0 area per household and per holder were 0.95 hectare
and 0.92 hectare, respectively. Refer Exhibit No. 4.4.
Wood land
Grazing land
Temporary crop

Permanent crop

Other land use

Fallow land
area

area

Land use area (in Ha)

Source: AGSS 2013/14

32
 Percentage of land area for
temporary crops is high as
compared to permanent crops

Exhibit No. 4.4: Average holding size per of total cattle, sheep and goats, and other animals
households & holder, 2013/14 production year (horses, donkeys, mules and camels) which were 4
mainly used as a supportive to production of crops and
transportation, at country level are indicated in Exhibit

Agro and allied sector potential of Ethiopia and

No. 4.5.& 4.6.
1.5
Exhibit No. 4.5: Total number of cattle, sheep and
1
goat

Tigray region – an overview

0.5
Total number of cattle, sheep and goat
0
All land use All crop area 100

Millions
Average holding size per household (Ha)
Average holding size per holder (Ha)
0
Source: AGSS 2013/14 Cattle
Sheep
Goats
Livestock sub sector

Among Africa countries Ethiopia is considered Source: AGSS 2013/14

to have the largest livestock population. There are
huge number of cattle, sheep, goats, horse, donkeys, Exhibit No. 4.6: Estimated number of livestock by
mules, camels, poultry and beehives in the country. type
This livestock sector has been contributing
considerable portion to the economy of the country, Number of horses, donkeys, mules &
and still promising to rally round the economic camels
development of the country. The livestock sector
accounts for 16% of the national (and 27-30% of the
agricultural) GDPs, and 13% of the country's export 8
earnings. The country's annual livestock and meat
export potential is currently estimated to be USD136 6
Millions

million; however the earnings realized in reality is much

low than the potential. This discrepancy is primarily 4
due to the illicit cross border trade with neighbouring
countries with the annual value of this cross-border 2
trade in livestock and in hide & skin estimated at over
USD100 million, and is identified as a real threat to the
0
country's economy. The illicit export trade has been Horses Donkeys Mules Camels
identified to include some 325,800 cattle, 1,150,000
shoats, 300,000 skins and 150,000 hides annually. Source: AGSS 2013/14

Livestock products and by-products in the At national level the estimated number of
form of meat, milk, honey, eggs, cheese, and butter poultry population and beehives also indicated in
supply etc. provide the needed animal proteins that Exhibit No. 4.7.
contribute to the improvement of the nutritional status
of the people. According to Annual Livestock Sample
Survey year 1 (2013/14) the total estimated number

1
The Annual Livestock Sample Survey covered the rural agricultural population
in all the regions of the country except the non-sedentary population of three
zones of Afar and six zones of Somali regions.

33
 Livestock area of economic and
social importance both at the
household and national levels

Exhibit No. 4.7: Estimated number of poultry and

4 Beehives (Private peasant holdings, 2013/14) Economic importance of livestock in Ethiopia

Livestock are of economic and social

Agro and allied sector potential of Ethiopia and

importance both at the household and national levels,

60 and have in the past provided significant export
earnings. Livestock contribute 15 to 17 percent of
50
GDP and 35 to 49 percent of agricultural GDP, and
Tigray region – an overview

40 37 to 87 percent of the household incomes: the large

Millions

30 variations are due directly or indirectly to climatic

20
10
0 income generation, including cash storage for those
All polutary All beehives
Source: AGSS 2013/14
Milk, honey and egg production
Estimation of milk production entails three
components, namely number of milking cows/camels,
number of months milking cows/camels actually
milked within the reference period and average milk
production per cow/camel per day. Milk production is
estimated based on the concept of “net production”.
As indicated in Table No. 4.6 the estimate of total cow
milk production for the rural sedentary areas of the
country was about 2.9 billion liters. On the other hand,
the estimate of camel milk for the same areas of the
country was about 230 million liters. The survey result
shows that 43.8 million kilograms of honey was
produced during the survey year, while the total
number of 100 million eggs was produced during the
survey year.
Table No. 4.6: Quantity of Milk, Egg and Honey
Production (private small holdings, 2013/14)
variation.
Livestock have multiple uses aside from
beyond the reach of the banking system, draught and
pack services, milk and meat for household
consumption, and manure for fuel and fertilizer. In
addition to these non-market values, a thriving informal
export trade in live animals further emphasizes the
significance, albeit unrecognized by official statistics, of
livestock (and particularly cattle) in the Ethiopian
economy. This importance is pronounced in pastoral
regions, and women’s crucial role is widely
acknowledged: both directly in primary production, and
indirectly through the contribution of livestock to
household assets and food security.
Estimates of the livestock herd size for cattle
and other species in Ethiopia vary widely. Table No.
4.7 shows Ethiopia’s estimated cattle population at
approximately 49 million, with 25 million sheep, and
nearly 22 million goats. Estimates from the
International Livestock Research Institute (ILRI) show a
similar number of cattle but other sources put the
estimate as high as 58 million. The FAO ranks Ethiopia
ninth in the world in terms of total number of
ruminants; however.

CSA estimates for 2006/2007 suggest

Livestock products Quantity produced
numbers as high as 58 million cattle. Livestock
Milk production in liters Diagnostics July 2010 | 11 suggest that comparable
Cow milk 2,903,247,759 statistics for Sudan and Nigeria (both with large herds)
Camel milk 2305,09,032 are inflated, which would give Ethiopia the largest
Honey production in kilo 438,01,680 livestock herd in Africa, with seventh place globally.
grams Table No. 4.7 illustrates the relative importance of
Egg production (number) 1008,41,464 different species by region in Ethiopia.

Source: AGSS 2013/14

34
 Livestock is an essential input
to farming and beyond

Table No. 4.7: Livestock populations and regional distribution (in 000 heads) 4
Regions Cattle Sheep Goats Equines Camels

Agro and allied sector potential of Ethiopia and

Tigray 3,103 1,376 3,107 476 32
Afar 473 403 801 26 171
Amhara 12,748 8,987 6,022 2,438 50
Oromia 2,245 9,098 7,439 3,738 255

Tigray region – an overview

Somali 620 1,162 283 96 24
Benishangul Gumuz 411 84 321 49 -
SNNP 9,263 3,838 2,626 732 -
Source: AGSS 2013/14

Utilization of livestock products o The presence of standing committee for

Data on the utilization of animal products
were also collected during the agricultural survey held
in 2013/14 (2006 E.C) to assess product usage
experience of holders. The products for which
utilization data intended to be collected were milk, egg,
honey, meat, hides and skins, wool and by-products
such as butter, cheese, and bees wax. It is commonly
accepted that these products are often used for
household consumption and/or sold to finance the
purchase of basic household commodities such as
coffee, salt, cooking oil, sugar, etc.
Livestock development opportunities
There remains ample development
opportunities within the livestock sub-sector for
improvement and expansion, and thus for its
contribution to poverty reduction and growth. The
major opportunities arise from the following:
o Large and diverse livestock resource base
across all agro ecological zones
o An increasing human population with a growing
trend of urbanization and income
o Comparative advantage in the type (taste),
location (proximity), and sustainable supply for
the lucrative livestock export market
o The huge potential for synergy within agriculture
and with the wider economy
o The greater possibility for market-led
development of smallholder dairy production
o Enhancement of indigenous institutions and
knowledge systems for management of
common property in pastoral areas
pastoral affairs at higher levels
In addition to the above, the global trade in
livestock commodities is expected to increase as well
as providing further opportunities for the low cost
production and marketing of livestock.
Fishery subsector
The inland water body of Ethiopia is estimated
to encompass about 7,400 km² of lake area and a
total river length of about 7,000 km. As many other
countries challenged in the world, population rise,
urbanization, agricultural development, industrialization
and other water resource development activities have
resulted in a decrease in the species diversity of
freshwater fish species.
Fisheries production is also under-exploited
while current demand exceeds supply by about
fourfold.
Production and supply potential of major Ethiopian
water bodies
Following Eritrea’s secession from Ethiopia in
1993 and the consequent loss of its coastline,
Ethiopia has only inland freshwater capture fisheries. It
has no significant aquaculture development. The inland
capture fishery comprises: Rift Valley lakes (for
example, lakes Chamo, Abaya and Ziway and the
northern part of Lake Turkana) and Lake Tana, which
although shallow, is the largest lake in Ethiopia; rivers;
and small water bodies (reservoirs, natural ponds).
There is fishing on all these water bodies, but
commercial production (i.e. serving markets other than

35
 Livestock development policy aims
to increase the contribution of
livestock to the socioeconomic
development

the local communities) is concentrated on the five
4 lakes, with Chamo, Ziway and Tana particularly
dominant.
The main species are Nile tilapia, representing
Agro and allied sector potential of Ethiopia and
water bodies. The lakes and rivers support highly
diverse aquatic life, ranging from giant mammals like
the African Hippopotamus, to microscopic fauna and
flora.

60% of the catch, Nile perch (favored but increasingly

scarce), barbus (two species) and catfish. There are Major lakes in Ethiopia with their altitude,
seasonal variations in the availability of different types mean depth, area, production potential and their catch
of fish, but as there are some differences between the per year are shown in Table No. 4.8. The major
Tigray region – an overview

lakes, traders can smooth out supply to some extent.
There are 180 different species of fish in Ethiopia and
30 of those are native to the country. For the sake of
convenience, the country's water bodies are classified
into four systems: lakes, reservoirs, rivers and small
reservoirs and small water body’s area, potential for
fishery and catch per year showed in the Table Nos.
4.9 & 4.10 respectively. Table No. 4.11 shows that
the production is less than the potential of the water
bodies.

Table No. 4.8: Major lakes and fish production potentials

Mean depth Area Fishery potential Catch

Water bodies Altitude (m)
m) (km 2) (tonne/yr) (tonne/year)
Tana 1,829 8 3,500 10,000 1,454
Ardibo and Lugo 670 37 51 400 330
Ziway 1,848 2.5 434 2,941 2,454
Langano 1,585 12 225 240 151
Abijata 1,578 7.6 205 2,000 500
Shalla 1,558 87 250 1300 10
Awassa 1,708 11 97 611 853
Abaya 1,285 7 1,070 600 412
Chamo 1,282 6 551 4,500 4,359
Turkana (1.3% of 365 33 94 750 75
total area)
Sub total 6,477 23,342 10,598
(Source: Ethiopian Investment Authority)

Table No. 4.9: Major reservoirs and dams

Reservoir or dam Area (km 2) Fishery potential (tonne/year) Catch (tonne)

Koka 255 1,194 625
Fincha-Amerti 250 1,330 333
Beseka 39 205 41
Denbi 72 383 77
MelkaWakena 82 434 109
Aba-samuel 44 234 59
Alwero dam 74 394 79
Hashengie 20 106 21
Small Abya 12 66 13
Wedecha 10 53 11
Sub total 857 4,399 1368
(Source: Ethiopian Investment Authority)

36
 Huge potential exists for
increasing the fish
production

Table No. 4.10: Small water bodies 4

Fishery potential
Water body Area (km 2) Catch (tonne)

Agro and allied sector potential of Ethiopia and

(tonne/year)
Southern region (Cheleloka Swamp) 100 423 21
Gambella (swamps and flood plains) 125 529 132
Small reservoirs and ponds 50 1,000 150

Tigray region – an overview

Sub total 275 1,952 303
(Source: Ethiopian Investment Authority)

Table No. 4.11: Summary of Ethiopian water bodies and their fisheries

Fishery potential Catch

Water bodies type Extent
(tone/year) (tone/year)
Major lakes 6,477 km2 23,342 10,598
Major reservoirs and dams 857 km2 4,399 1,366
Small water bodies 275 km2 1,952 303
Rivers 7,185 km 21,788 3,121
Total 51,481
(Source: Ethiopian Investment Authority)

Demand and consumption of fish for the fish product could be tremendously increased
from the current level.
Fish demand
Total demand for fish in 2003 was about 67
Fish as a source of human food has a long thousand tonnes, which is envisaged to grow nearly to
history in Ethiopia. People consume large amount of 95 thousand tonnes in 2015 and 118 thousand
fish in fasting days, in big cities, around production tonnes in 2025 Refer Table No. 4.12.
areas and towns, especially in Zeway, Arbaminch,
Bahir Dar and Addis Ababa. Outside these areas, Table No. 4.12: Projected demands for fish
however, the domestic market for fish is small. The
factors which account for this low level of local fish Years Demand in
consumption are the following. tonnes
2003 67,000
I. Fish has not been integrated into the diet of 2015 95,000
most of the population. 2025 118,000
II. Due to religious influences on consumption (Source: Ethiopian Investment Authority)
patterns, the demand for fish is only seasonal.
During lent, for example, Christians who abstain Options for sustainability in fishery production
from eating meat, milk and eggs consume fish. for food security are:
III. Limited supply of the product and its high price.
o Delineate fish sanctuaries, such as protection
Fresh fish is produced in the Great Rift Valley of breeding grounds
lakes and in some other northern parts of the country. o The fishery sector should engage in land use
Price wise, too, fish is relatively expensive compared planning with other stakeholders in the
with the local prices of vegetables and grains on a unit watershed to make water use sustainable
weight basis, but it is frequently less costly than o Free access to fresh waters should be
alternative animal protein sources. With increased regulated.
marketing efforts and increase in supply, the demand

37

o Restock freshwater systems, work done at
4 Lake Tana,
o Create value addition at each market chain
o Cutback on external nutrient load and
Agro and allied sector potential of Ethiopia and
eutrophication
o Capture free nutrients
o Cutback on pollution from aquaculture
practices and others
Tigray region – an overview
o Use ephemeral waters (e.g. new dams) with
fast growing and flexibly feeding fishes
o Harnessing flood waters for irrigation and fish
farming
Large commercial farms
Private commercial agriculture before 1991
The development of modern commercial
farms in Ethiopia goes back to the imperial era of the
1950s and 1960s when Western donors had an
influence on policy formulation and objectives for the
country’s development. Its importance was not based
on national priorities but on the idea of investment in
large-scale enterprises for the purpose of
modernization and prosperity. As the development
thinking of the time was based on ideas developed in
Western countries, priority settings were frequently
not relevant to the country’s situation. In addition to
the idea of agricultural modernization borrowed from
Western donors, the regime also received technical
assistance and financial resources from outside
sources. As a result, starting with large-scale
mechanization and export promotion, numerous large
scale commercial farms were established during the
1950s and 1960s. Although modern commercial
farms were established in most regions and zones of
the country, they were concentrated more in the
Eastern Shewa, many localities of Arsi, a vast area in
present-day Afar, especially along the Awash River and
the Addis–Djibouti railway, and the wheat belts of the
Bale and Arsi zones in the Oromia region. A
considerable number of farms were also developed in
the SNNP, Amhara and other regions. The
establishment of the Development Bank of Ethiopia
(previous known as the Agricultural and Industrial
Bank) stimulated the rapid development and expansion
of modern private commercial farms in Ethiopia.
In the aftermath of the 1974 revolution, the
Derg regime adopted socialism as its economic and
political system and reshaped agricultural development
38
Government plans to establish
one FTC in every rural Kebele
policy along the principles and practices of socialism. In
line with the centrally planned economy, the farms
were consolidated and brought under a centralized
management with the formation of a ministry known
as the Ministry of State Farms. While the ministry was
the central and high level decision-making body,
regional and sector-specific enterprises and
corporations were established as intermediate
management and coordination organs for the
administration and close supervision of production on
farms.
Owing to the large farm size, vast geographic
areas covered and numerous sectors of engagement,
as well as the thousands of workers employed, the
share of agricultural spending was much higher
compared to the smallholder sector. Moreover, an
enormous amount of the national budget was allocated
to establish and develop new large-scale state farms
and parastatal enterprises to undertake the
production and supply of agricultural products
(especially cereals) to the army and urban consumers.
These parastatal enterprises dominated large-scale
agriculture in Ethiopia. In addition, the policy prohibited
the establishment of private commercial farms and
the growth of entrepreneurship in the agricultural
sector diminished until the ousting of the Derg in
1991.
Private commercial farm sector policy and growth
after 1991
After the change of government in 1991, the
new government took reform measures and
introduced new economic policy guidelines for the
development of the agricultural sector and the national
economy at large. The government adopted a free
market economic policy, liberalized markets and
prices, removed restrictions on the movement of grain
and created a more enabling environment for the
participation of private entrepreneurs in business and
investment. A new investment code and incentive
systems stimulated the growth and expansion of
private investment. During the 1990s, the agriculture
sector was primarily the focus of domestic investors,
while the flow of Foreign Direct Investment (FDI) was
not significant. Along with the growth of newly
established private commercial farms, the government
started the privatisation of parastatal and state owned
enterprises inherited from the Derg regime.
Consequent to these measures and the expansion of
 FDI inflows in the agricultural
sector account for more than
30% of total FDI inflows
private farms, commercial agriculture growth has
been stimulated starting from the last decade. This
was also the time when the flow of FDI into the
agricultural sector showed rapid growth.
The Ethiopian Investment Agency (EIA) and
regional Investment Offices are institutions mandated
to license and legalize private investment. The EIA is
responsible for granting investment licenses to foreign
investors, whereas the regional Investment Offices
license domestic investors in their respective regions.
Starting in the early 2000s, the procedure of
investment licensing has become more efficient
through instituting a one-stop service for all permits
and legalization, including the allocation of land. In
2011, for example, the government announced that a
total of 3 million hectares of land was ready for private
investors interested in engaging in agriculture. The
elimination of bureaucratic hurdles and the shorter
time taken to acquire investment licenses have made
Ethiopia one of the top African countries to attract
foreign investors.
There are three distinct types of farms in the
present-day large-scale private farm sector:
o A significant number of state farms that have
been privatised and transferred to the private
sector;
o State farms that are still operating as
parastatal or state enterprises; and
o Newly established private farms, which have
been growing in number over the last two
decades.
Considering that the smallholder sector
landholding share is about 83%, the total landholding
of the large-scale private farm sector can be assumed
to be approximately 10%.
Domestic investment in the agriculture sector
During the 1992/1993–2010/2011
period, the EIA and the regional Investment Offices
licensed 56 421 investment projects with an
aggregate capital of Birr 1.1 trillion (about US$600
billion). Of these projects, 47 420 (84.1%) were
domestic, 8 896 (15.7%) foreign and 105 (0.2%)
were investments undertaken by state or parastatal
enterprises. In terms of capital, 39.4% was attributed
to domestic investors. In 2010/2011 alone, 6 322
investment projects with a combined capital of Birr
249.5 billion (US$16.1 billion) were approved, a 4
record high since 1992/1993. In terms of the total
number of projects approved, domestic investment by
Agro and allied sector potential of Ethiopia and
far exceeds foreign investment. The rate of growth in
the total number of projects approved was more
significant after 2003/2004, with a sharp rise
between 2005/2006 and 2009/2010.
Tigray region – an overview
Foreign investment in agriculture and its impacts
The inflow of FDI has been growing,
particularly from the start of this century. Total FDI
inflows into Ethiopia have increased continuously from
US$135 million in 2000 to US$545 million in 2004.
From 2004 to 2007, the yearly FDI inflows varied
between US$545 million and US$265 million
(UNCTAD 2008, cited in Weissleder 2009). FDI
inflows in the agriculture sector also increased during
this period, accounting for 32% of total Ethiopian FDI
inflows.
Since 2005, investment increased
dramatically, with total FDI inflows reaching about
US$3.5 billion per year. The increase appears mainly
through pre-implementation investments, which
include land that can be leased for 20–45 years. This
sort of investment has increased by 600% compared
to the trend prior to 2005. Main reasons for this
significant change in FDI are:
o Depreciation of the Ethiopian Birr compared
with the currencies of investor countries;
o The investment climate of Ethiopia.
The floriculture/horticulture sector was the
main focus of investment flows between 2000 and
2005. Investors from the EU, India and Israel provided
more than 60% of the total FDI inflows in this sector,
although it is also important for Saudi Arabia and the
USA. In recent years, investment in floriculture /
horticulture has shown dramatic growth, to the point
of surpassing most African nations with operations
established long before those in Ethiopia. The Ethiopian
floriculture industry has become the second-largest
flower exporter in Africa (after Kenya) and fourth-
largest in the world. The export value earned by the
country is expected to rise to US$550 million by
2016. In addition to foreign exchange generated, the
sector has also created employment opportunities for
39

a large number of previously unemployed people,
4 particularly women.
The other major development in FDI is the
Agro and allied sector potential of Ethiopia and
large-scale commercial farm sector. Foreign investors
in this sector are mostly from India and Saudi Arabia,
as are companies from the USA, the EU and, very
recently, China. While FDI in floriculture/horticulture
Tigray region – an overview
remained stable in absolute terms after 2005,
investments in meat production and biofuel increased
significantly between 2006 and 2008.
Considering that the agricultural sub-sectors
chosen for investment are primarily export-orientated,
it is appropriate to assume that the major drivers of
FDI in Ethiopia are food security and secure financial
returns, rather than the traditional motives of
efficiency and market-seeking.
Challenges of agricultural sector
Crop production
The Ethiopian economy is among the most
vulnerable in Sub-Saharan Africa. It is heavily
dependent on agricultural sector, which has suffered
from recurrent droughts and extreme fluctuations of
output. Productivity performance in the agriculture
sector is critical to improvement in overall economic
Exhibit No. 4.8: Real GDP growth rate (in Percent)
Despite the considerable successes achieved,
based on regional comparisons, productivity of the
agriculture sector still remains well below potential.
The agricultural GDP per hectare of cultivated land is
at about half of Kenya or Morocco. In 2007, the figure
was USD 587 per hectare for Ethiopia, USD 1,190
40
Growth and transformation plan
aims to end poverty by sustaining
rapid and broad based growth plan
witnessed in the past
well-being in Ethiopia. Government has initiated suitable
mitigation measures and interventions to address the
constraints affecting the agricultural productivity.
Livestock
Despite its potential, livestock development in
Ethiopia suffers from low input - low-output subsistence
production and marketing systems. Constraints
contributing to such low level of livestock development
are wide ranging and are identified as diseases, feed
shortage, demand constraint, institutional and policy
constraints.
Growth potential
Over the past decade, the country has
registered remarkable growth in its gross domestic
product (GDP). Between 2004 and 2012, real GDP
growth averaged 11%, placing Ethiopia among the top
performing economies in sub-Saharan Africa. The
growth registered is very high compared to the 5.7
percent of Sub Saharan Africa average growth rate for
the same period and the average GDP growth rate of
7 percent required to achieve the MDGs target of
reducing poverty by half by 2014/15 (MoFED, 2013).
It is noted also that this remarkable growth
performance has been achieved amidst global
economic challenges.
per hectare for Kenya, and USD 1,150 per hectare for
Morocco (Accelerating Ethiopian Agriculture
Development for Growth, Food Security, and Equity;
2011). Addressing this productivity gap would yield
substantial benefit for both growth and food security.
Recent studies have indicated that Ethiopia could
 Production increase has been due to
increase in areas cultivated without
significant improvements in
productivity
increase agricultural GDP per smallholder by 95
percent by 2025, through a new trajectory of growth,
by:
o Improving crop productivity by 80 to 90
percent (through improved inputs, practices,
and mechanization),
o Sustainably converting 8 to 10 million
hectares of land to new cultivation,
o Irrigating over five million hectares, an
increase from the 0.4 to 0.8 million hectares
under cultivation today,
o Increasing export focus in niche commodities,
o Developing downstream trading and
processing industries, like canning, and
o Combining these efforts with intensive
capacity building in both the public and private
sector.
This would raise millions above the poverty
line and would help to resolve the ongoing food
security issues, even as the population grows. Ethiopia
could thereby achieve a minimum 6 percent per
annum increase in real agricultural GDP (slightly higher
than growth rates over the last 10 years), contributing
an additional USD 19 billion to total GDP by 2025.
Agricultural export value could reach USD 8 billion
through strategic choices in high- value export crops
and a vibrant livestock sector, placing Ethiopia on par
with other leading countries in terms of agricultural
exports.
Market outlook
The market outlook for Ethiopia is also
promising despite some challenges. The country is
becoming less dependent on its leading export, coffee,
as its source of foreign exchange, and it is hoped that
the recent significant investment by GoE in upgrading
the country’s physical infrastructure (e.g., roads,
hydropower dams, etc.) will help to sustain and drive
economic growth.
Domestic demand is also set to increase –
population growth is forecast at 2.3 percent per
annum, and GDP per capita is likely to continue to rise
increasing domestic spending power. Export value has
more than doubled over the last 10 years. Ethiopia’s
membership in the United Nations Economic
Commission for Africa (UNECA) and the Common
Market for Eastern and Southern Africa (COMESA)
supports trade within the region. 4
Government strategies and initiative
Agro and allied sector potential of Ethiopia and
Ethiopia’s development strategy has been
founded on Agricultural Development Led
Industrialization (ADLI) since its introduction in 1993.
ADLI guides government policies regarding both
Tigray region – an overview
overall economic development and agricultural
development. ADLI sees the agriculture sector as the
prime focus of development policy.
The Poverty Reduction Strategy Paper (PRSP)
articulates the country’s strategies for reducing
poverty in line with the Millennium Development Goals.
Ethiopia prepared an Interim PRSP in November
2000. The full PRSP for 2002 to 2004 was called the
Sustainable Development and Poverty Reduction
Programme (SDPRP). The SDPRP includes an
‘overriding and intentional’ focus on agriculture,
(MoFED 2002). The SDPRP aims to:
o Enhance the productive capacity of
smallholder farmers;
o Promote crop diversification;
o Shift to a market-based system;
o Increase the coverage of rural water supply;
and
o Support household food security and
emergency response.
Specific agricultural measures include:
o Menu-based extension packages, building on
the Participatory Demonstration,
o Extension and Technical Education System
(PADETES), which was started in 1993;
o Expanding the coverage of micro-financing
institutions;
o Improved training for extension and vocational
training;
o Improved use of and markets for agricultural
inputs (especially fertilizer and seeds);
o Supporting autonomous cooperatives in
marketing and farmer networks;
o Exploring the possibility of an agricultural
products exchange market; and
o Agricultural research, water harvesting and
small-scale irrigation.
41

The Plan for Accelerated and Sustainable
4 Development to End Poverty (PASDEP) followed the
SDPRP and covered 2005/2006–2009/2010
(MoFED 2006). PASDEP maintained the emphasis on
Agro and allied sector potential of Ethiopia and
the eradication of poverty, also stressing governance
and decentralization. PASDEP consisted of eight
pillars:
Tigray region – an overview
o Commercialization of agriculture and
promotion of more rapid non-farm private
sector growth;
PASDEP contained a new emphasis on the
commercialisation of agriculture and strong private
sector growth. This included a shift to higher-value
crops, including niche high-value export crops and a
focus on selected high-potential areas. It also included
support for large-scale commercial agriculture where
feasible, and better integration of farmers with local
and global markets. PASDEP recognised the
challenges of combining this new focus with support
for pro-poor subsistence farming and also included
support for improving the yields of basic food grains
through intensified extension, demonstration and
small-scale irrigation, complemented by veterinary
services, a productive safety net, off-farm income
generation and environmental protection. The main
instrument for delivering agricultural growth in
PASDEP was the PADETES programme, which was
further intensified.
The importance of agriculture, and of the
commercialisation of smallholder agriculture, has been
generally supported in Ethiopia. The focus on
commercialization saw the introduction of the Ethiopia
Commodity Exchange (ECX) under PASDEP in 2008.
This was the first such exchange in Africa and is a
unique partnership of market actors, the members of
the exchange and the government of Ethiopia. The ECX
is an example of a national multi-commodity exchange
that provides a low cost, secure marketplace and
services to benefit primarily agricultural market
stakeholders. It connects all actors – from farmers to
exporters – to market information system, linking rural
sites and remote electronic trading.
The Growth and Transformation Plan (GTP)
followed PASDEP and applies to the five-year period
2010/2011–2014/2015 (MoFED 2010). The
overriding development agenda of the GTP is to end
42
Growth and transformation plan
aims to end poverty by sustaining
rapid and broad based growth plan
witnessed in the past
poverty by sustaining the rapid and broad-based
growth path witnessed during the past several years.
The GTP has seven pillars:
o Faster and equitable economic growth;
o Maintaining agriculture as a major source of
economic growth;
o Creating favourable conditions for the
industry;
o Infrastructure;
o Social development;
o Governance; and
o Empowerment for women and youth
The GTP continues to emphasize the
importance of agriculture, focusing on the
intensification of marketable farm products for both
domestic and export markets by small as well as large
farmers. The emphasis remains on high-value crops,
high-potential areas, commercialization and large-scale
commercial agriculture, where it is feasible. There is
also continued emphasis on water resource
management and irrigation, especially at small scales.
Patterns in public expenditure
A high share of the country’s public
expenditure is allocated to pro-poor and development
oriented sectors, including agriculture and food
security. The share of pro-poor spending has
increased from 42.8% in 2001/2002 to about 60%
in 2007/2008. The average pro poor expenditure
was approximately 54% of total public expenditure
over the period. After education, the share of
agriculture and food security is the largest in the total
pro-poor expenditure, accounting for 12.6% of the
expenditure. Nevertheless, food security sector
spending takes a large share of the expenditure
allocated for the agriculture sector. The expenditure
figures clearly show the Ethiopian government’s policy
emphasis on agriculture and pro-poor spending, in line
with the poverty reduction strategy.
Following the scaling up of the PADETES
programme around 1996/1997, the total
expenditure allocated to the agricultural sector
increased significantly between 1996/1997 and
2004/2005. After 2004/2005, the expenditure
share of agriculture and rural development showed a
 Small holder farming has been
the priority of Government
policy in agriculture sector
sharp decline with a significant decrease in each of the
following years. However, these expenditure patterns
do not include the cost to the government of the
incentives introduced to stimulate private investment
in commercial agriculture, including, in particular
reductions in taxes and duties. The present analysis of
spending patterns shows that the emphasis placed on
agriculture has been reflected in improved budget
allocation.
Achieving balance between agriculture and industry
The current balance of support to agriculture
and industry in Ethiopia is the result of an evolution of
strategies, based partly on political commitments and
partly on the emerging experience with the success of
past support. Agriculture has always been central to
economic strategy and remains the sector that is
expected to make the greatest contribution to poverty
reduction.
There is not, as yet, an effective national
monitoring and evaluation system to provide
systematic evidence about the variations and trends in
the effectiveness of public expenditure in support of
either agriculture or industry. Reforms to introduce
results-based budgeting will help this emerge, but, in
the short term, an increase in the range and quality of
one-off evaluation studies would help to provide
evidence.
Government support to smallholders
Agriculture is the strategic sector that has
been given a leading role in the country’s economic
growth and poverty reduction agenda in the SDPRP;
smallholder farming has been the priority of
government policy in the agricultural sector. In the
PASDEP strategy, the focus was on enhancing the
productive capacity of smallholder farmers, promoting
diversification, shifting to a market-based system,
ensuring food security at the household level,
strengthening emergency response and reducing
vulnerability. In order to realise the development goals
of ADLI – primarily increasing of agricultural
productivity and aggregate production – the Ethiopian
government introduced an agricultural extension
programme, known as the Participatory Agricultural
Demonstration, Extension, Technical and Education
System (PADETES) in 1994/95 and started the
package approach on a large-scale demonstration
programme. 4
The main extension package types promoted
Agro and allied sector potential of Ethiopia and
by PADETES are:
o Regular extension packages for cereal crops
which are mostly seed and fertilizer;
Tigray region – an overview
o Minimum packages emphasizing
management of natural resources and
traditional crops; and
o Household packages providing farm
households with a menu of technology (water
harvesting, dairy, apiculture and horticultural
production).
At first, the focus of PADETES was
demonstration and training on the use of improved
crop technology packages through the provision of
seed, fertiliser and credit.
Whereas the initial focus of PADETES was on
food crops, the extension system later developed
redefined packages to fit the conditions of the different
agro ecology zones and the types of crops grown. In
response to evaluation findings and feedback, modified
packages that specifically targeted the following
products were developed:
o High-value crops (spices, oilseeds, vegetables);
o Livestock (dairy, poultry, beekeeping,
fattening);
o Natural resources (forestry, soil and water
conservation); and
o Coffee
A major improvement in the modified
PADETES is its use of more appropriate
recommendations and agro-ecology specific
technology packages that suit different crops and a
variety of agro ecology zones including the moisture
reliant highlands, moisture-stressed lowlands, and
pastoral and coffee zones.
In line with its strategy of intensification
through extension, the government increased
agricultural expenditure to develop the capacity of
PADETES to deliver extension services rapidly by:
43

o Building manpower capacity, particularly the
4 number of extension field workers
(development agents);
o Increasing input supply; and
Agro and allied sector potential of Ethiopia and
o Constructing required facilities.
In addition, the policy of economic
liberalization, decentralization, and agricultural
Tigray region – an overview
transformation with a focus on smallholder
commercialization and export orientation will make the
delivery of extension services complex, and indeed
more knowledge-and information-intensive. Agricultural
extension should deliver services that can meet
specific needs in diverse agro-ecology and
socio‐economic contexts to sustainably increase
productivity, to stimulate diversification into high value
products, to shift into value addition, and to enhance
smallholder competitiveness in both domestic and
export markets.
As a result, the field extension service now
has a strong foundation of Farmer Training Centres
(FTCs) and trained development agents (DAs) already
in place in the field. Roughly 8 500 FTCs have been
created throughout Ethiopia and trained DAs
increased from 2 500 in 1995 to 63000 in 2005.
The establishment of FTCs and the
accompanying strategy and guidelines of the Ethiopian
MoARD suggest the beginning of a strategic shift
towards knowledge based approach to smallholder
agricultural development as well as a shift from a sole
focus on the transfer of technology (ToT) to emphasis
on human resource and social capital development.
This approach, if effectively implemented, can
empower smallholder farmers and pastoralists, and in
the long‐run can enable rural households and
communities to solve their own problems.
In 2004, the government embarked on a
further expansion of the extension system. It was
Table No. 4.13: Agriculture production in Tigray region
Crop No. of holders Area in hectare
Grain crops 98,446
Cereals 92,312
Teff 13,721
Barley 5,483
Maize 72,577
44
Agriculture is important
activity in Tigray region
based on the creation of Agricultural, Technical and
Vocational Education and Training colleges (ATVETs) to
train a new cadre of extension workers, and the
establishment of FTCs as the focal point of extension
support in every kebele (local administrative unit) in the
country.
Tigray region – profile
Agriculture is one of the most important
activities in Tigray, where about 65% of the land is
under cultivation, with the rest taken up by pasture,
forests and wasteland. Over 95% of the cultivated
area is farmed by smallholders, most of whom follow a
mixed crop/livestock system. Over the last few
decades, farming practices in Tigray have largely been
determined by the shortage of land and prevalence of
very small holdings. Land holdings in Tigray have
shrunk over the last decades, and now tend to be very
small. A regional survey study found that average
holdings in the region covered 1.7 hectares, varying
from 0.37 ha in highly populated areas to 3.5 ha in
less populated areas.
Agriculture in the Tigray highlands consists
exclusively of small-scale family farms. Land tenure
regime was introduced in the 1980s and has led to
broad equality in the size of landholdings. Cultivated
crops include common cereals such as barley and
wheat as well as teff, a cereal with very fine grains
endemic to Ethiopia. Leguminous crops are also
important. With a rotation intensity of 0.91—that is,
the ratio of cropped area to cropped plus fallow—and
the existence of clearly demarcated fields, the
agricultural system in the Tigray highlands can be
characterized as a permanent upland farming system
practiced by a sedentary population.
The details of agriculture production in Tigray
region is given in Table No. 4.13.
Production in quintal Yield (q t / ha)
143,103.01 2,522,226.50
68,460.78 1,877,941.27
5,450.33 * *
* 12,686.67 *
5,481.82 171,789.04 31.34
 Grain crops constitute the
majority of the annual total
agricultural crop production

Crop No. of holders Area in hectare Production in quintal Yield (q t / ha)

Sorghum 78,568 44,940.06 1,314,194.77 29.24 4
Finger millet 37,438 9,888.66 227,037.49 22.96
Pulses 22,646 1,829.42 28,302.60

Agro and allied sector potential of Ethiopia and

Faba beans 11,568 681.97 13,496.87 19.79
Field peas 2,127 * * *
Haricot beans * * 743.6 *

Tigray region – an overview

Oilseeds 82,667 72,812.81 615,982.63
Neug 10,439 2,191.22 * *
Linseed 1,889 89.13 * *
Sesame 76,718 70,515.27 574,432.15 8.15
Vegetables 28,357 297.79 20,196.28
Red peppers 18,657 216.03 5,865.31 27.15
Fruit Crops 7,690 * *
Papayas 3,897 * * *
Hops 7,560 96.68 3,344.04 34.59
Source: CSA data for 2013-14

The regional government of Tigray has
undertaken a massive program of investment and
resource conservation an the regional development
strategy of conservation-based agricultural
development–led industrialization has focused on
promoting conservation of natural resources and
improvement of agricultural productivity and welfare
through a broad program of rehabilitation of natural
resources, investment in infrastructure, agricultural
extension, education, and other services. These efforts
built on the philosophy of self-reliance and strategies of
local democratic participation and community
mobilization for local conservation and development
efforts that were initiated during the struggle of the
Tigray People’s Liberation Front (TPLF) against the
Derg regime and has been given high priority as a
result of the recurrent famines in the region.
Livestock are predominantly cattle (especially
oxen) and also include sheep, goats, donkeys, and
mules. An average family owns 1 or 2 oxen, 5 to 6
goats or sheep, and sometimes a donkey. An
exceptionally rich farmer may possess 6 or 8 oxen, 20
or 30 goats and sheep, and 3 to 4 mules or donkeys.
Livestock-keeping is part of the permanent upland
system. It is very important for farmers, especially as a
source of support: oxen are essential for the
production system, being used for ploughing and
threshing, and donkeys are used to transport heavy
loads.
Livestock, especially sheep and goats, are also
considered as insurance for difficult periods. The
production of meat and milk is only of secondary
importance for most farmers. Yet it must be
considered that 475,321 smallholder farmers in
Tigray manage approximately 844,845 oxen. Overall,
livestock productivity is low in the region due to the
shortage and poor quality of fodder.

45
 Chapter – 5
Value chain analysis
Agriculture is a strategic sector in the
Ethiopian economy and plays a significant role in
stimulating overall economic growth, reducing poverty
and achieving food security. The sector accounts for
about 42 percent of the country’s total GDP, more
than 80 percent of exports and 85 percent of
employment (MoA, 2014). Despite its strategic
importance, however, it has been and is still dominantly
subsistence type in which 96 percent of the total
cultivated land is cultivated by small-scale farmers.
The Ethiopian government has been thus
exerting utmost efforts to support the development of
the sector through designing, introducing and
implementing relevant policies, strategies, and
programs including Agriculture and Rural Development
Policy, Sustainable Development and Poverty
Reduction Program (SDPRP), Plan for Accelerated and
Sustainable Development to End Poverty (PASDEP),
Food Security Program, Growth and Transformation
Plan (GTP), Agricultural Growth Program (AGP) etc. As
a result, agricultural production and productivity have
been showing progressive growth.
Nevertheless, the smallholder farmers have
been exposed to a number of longstanding constraints
that obstruct the growth and sustainability of the
sector. Lack of well-developed market and market
prices are among the key constraints faced to the
sector.
Cognizant of this, the government in
collaboration with its development partners has
designed Ethiopian Agro-Industry Sector Strategy
which outlines a development path that will address
these challenges and ultimately lead to increased
investment, greater competitiveness, more exports
and increased employment in the Agro-Industry sector.
Integrated Agro Industrial Parks (IAIPs) are going to be
established in different parts of the country to address
the challenges related to market and maximize the
benefit of producers as well as the country through
processing and value addition to the surplus
agricultural production. Towards this end, IAIP project
office is established under Ministry of Industry to
coordinate and facilitate the process of potential
regions identification and establishment of IAIPs.
Seventeen regions, in which the IAIPs are going to be
established, are identified in the country out of which
four (Western Tigray, South west Amhara, Central
east Oromia and Eastern SNNP) are further selected
for piloting the IAIP project. Feasibility studies are
underway in these four pilot regions.
As part of the feasibility study, the FAO
commissioned national consultants for conducting
Value Chain Analysis (VCA) and Rural Transformation
Centers (RTC) study in these regions. This report is
presenting the objectives, methodologies and findings
of the VCA and RTC study conducted in Western
Tigray region.
Methodology
Quantitative and qualitative data were
gathered from primary and secondary sources using
questionnaire, key informants interview, focus group
discussion and field level observation. While secondary
data were collected form CSA, Ethiopian Customs
Authority, Ministry of Trade, Ministry of Industry and
from trade and industry and agriculture sectors at
regional, zonal and woreda level, primary data were
gathered from key informants’ interview, focus group
discussion and filed observation at all level.
Honey, dairy, live animal and meat, and poultry
from the livestock subsector, and sesame and
sorghum from the crop subsector were selected as
potential and strategic commodities for the value chain
analysis through standard approaches, tools and
criteria.
Value chain analysis
 Honey value chain
Ethiopia is a country endowed with diverse
and unique flowering plants that are highly suitable for
sustaining a large number of bee colonies and to the
long established practice of beekeeping. The nation is
10th biggest honey producers in the world and the
largest one in Africa. Moreover, it is the leading in
Africa and 4th in the world in bees wax production and
export.
46
 Significant potential for
apiculture
The total number of beehives (all types of
hives) in Ethiopia, in 2012/13 production year, was
5,207,300 (of which 4,996,933 or 95.96% was
traditional). The remaining is shared between modern
and intermediate beehives 155,376 (2.98%) and
54,991 (1.06%), respectively.
Honey production in Ethiopia in 2012/13
production year was 45,905.2 tons, of which
41,742.9 tons (91.93%) was from traditional beehive.
The remaining is shared between modern 3075.32
tons (6.7%) and intermediate 1089 tons (2.37%).
Ethiopian’s honey-production potential and its
likely contribution to poverty reduction have been
recognized in recent years, and is incorporated into
the working agenda of the Government of Ethiopia,
especially the Ethiopian Ministry of Agriculture (MoA),
National Research Centers (Holeta, Andasa), and
various nongovernmental organizations (NGOs), such
as SNV (Netherlands Development Agency), Oxfam
GB, and SOS Sahel. These agencies share the belief
that the Ethiopian honey value chain is an important
part of the country’s development strategy. Several
other institutional bodies have also emerged to
promote the Ethiopian honey sector—namely, the
Ethiopian Honey and Beeswax Producers and
Exporters Association (EHBPEA) and the Ethiopian
Beekeeper’s Association (EBA).
Honey production in Ethiopia has been
increased overtime due to the introduction of
beekeeping technologies and as the result of capacity
building efforts made on beekeeping. Though honey
export has been showing an increasing trend (from
about 232 qt. in 2005 to about 2,744 qt. in 2009,
large volume of honey produced in the Ethiopia is
consumed locally mainly due to poor quality of honey
and lack of meeting the minimum quality standard set
by EU as a major reason.
Tigray Regional National State is among the
potential honey and beeswax producer in Ethiopia. In
2012/13 Tigray region was in a fourth rank in terms
of beehives population and total annual honey
production following to Oromia, Amhara and SNNP
regions. However, it was the leading in terms of using
modern beehives and average annual yield of all types
of beehives.
The agro-ecology of Western Tigray region is
suitable for honey production. In the 2012/13 5
production year, Western Tigray region was
contributed for 29.25% of the total beehive population
and 40.2% of the total honey production of the region.
Value chain analysis
Out of the total number of beehives in
Western Tigray region in 2012/13, 79.8% was
traditional. In terms of honey production, 76.35% total
production of the region was from traditional beehives.
While 47.78% of the total honey produced in the IGC
in 2012/13 was used for household consumption,
52.22% was used for sell. Along the honey value chain
(farm to fork), there are different actors.
The major actors in the honey value chain in
Western Tigray region include input suppliers,
producers, processors, traders and consumers.
Honey bee colony, modern beehive & its accessories
and beeswax are the major inputs required for
improved honey production. While smallholder farmers
are the main sources of bee colonies, and traditional
beehives. Modern beehives, wax, and the accessories
are supplied by bureau of agriculture. Cooperatives are
also involved in the distribution of inputs particularly to
their members. Inadequate & inconsistent supply of
modern bee hives & accessories, high cost of modern
beehive and its accessories as well as bee colonies
inadequate supply of beeswax are the constraints
identified in the input supply. However, the supply of
modern beehives and accessories is not satisfactory in
terms of quantity, specification and price. Therefore,
there is a need for strengthening the input and
technology supply system in order to increase
productivity and production in a sustainable basis.
Smallholders are the major honey producers
in the region. As compared to the other parts of the
region as well as the country, productivity of honey in
the region was the highest. In 2012/13, the average
annual yield of all types of beehives in the region was
much higher than the regional average yield. While the
average annual yield of traditional and modern hives in
the region was 18.75 kg/hive/year and 23.7
kg/hive/year, respectively. The average yield from
traditional beehives and modern beehives of Tigray
region, in the same production year, was 13.11
kg/hive/year and 17.6 kg/hive/year, respectively.
The average yield difference between traditional and
modern beehive within the region was also
considerable. Generally, the average yield and total
47
 Honey value chain

honey production are still below the potential

5 productivity of honeybees. This is mainly due to the
constraints including inadequate use of modern
beehives and accessories, poor technical knowledge
and skill on honey bee management, damage of
Value chain analysis
Though honey can be processed in to
different products, honey processing in the region is
limited to separation of honey in to beeswax and table
honey and brewing of local drink ‘Tej’. This is mainly due

colonies while using pesticides for crops, shortage of
flowers and water in dry seasons, poor practice on
supplementary feed and water supply in dry seasons.
Therefore, there is a need for modernizing the honey
subsector through strengthening of the input supply
system, build the knowledge and skill of producers in
honey bee management and honey production.
to lack of knowledge and technologies enabling
processing honey in to variety of products.
The main actors along honey marketing
channel and their interactions are presented in Exhibit
No. 5.1.

Exhibit No. 5.1: Honey market channel and interventions

Source: FAO / MOI National consultants report

The constraints, opportunities and interventions at each level of the value chain are presented in Table
No. 5.1.

48
 Interventions for apiculture

Table No. 5.1: Summary of constraints, opportunities and strategic interventions – honey value chain
5
Level of
Constraints Opportunities Strategic interventions
value chain
Input supply • Inadequate & • The presence of • Design/strengthen the

Value chain analysis

inconsistent supply of associations, private technology supply system for
modern bee hives & operators, cooperatives the honey sector
accessories supporting the input • Establish/strengthen private
• High cost of modern supply system bee colony multiplication and
beehive and accessories • Presence of private bee marketing as a business in
• High cost of bee colony suppliers order to improve the supply of
colonies bee colonies and income of
• Inadequate supply of operators
beeswax
Production & • Low productivity due to • Experience of honey • Strong efforts and focus
postharvest poor technical production even in towards changing the mindset
knowledge on honey bee traditional beehives of producers in adopting
management and in • Government and NGOs modern beehives technologies
adequate use of modern attention and support in through consistent and
beehives and introducing modern effective training and
accessories beehives and accessories demonstration, and farers to
• Pesticide application for and capacity building farmers experience sharing
crops damage bee • There is very good selecting best practices
colonies though there improved honey • Avoid using pesticide in fields
are recent production experience in accessible by bees or
improvements neighboring zones in the chemicals should be applied in
• Poor practice in supply region a planned and appropriate
of supplementary feed • Strong environmental mechanisms
and water in dry rehabilitation and area • Strengthen the efforts being
seasons closure practices made for natural resources
• Poor apiary support honey production conservation and management
management (including in increasing honey flora • Establish / strengthen the
proper and timely • Increasing demand and linkages between producers
application and removal price of Tigray honey and private business
of additional boxes and both in domestic and enterprises engaged in and
queen excluder, international markets capable of transferring
sanitation and technologies appropriate to
protection against farmers for mutual benefit
natural enemies) • Improve the knowledge and
skill of producers on the
practices and the need for day
to day honey bee colony
management
Marketing • Lack of well-organized • Recognition of Tigray • Support to cooperatives to
markets and market honey by both domestic enable them actively involved in
linkage and abroad consumers honey collection, processing,
• Low domestic demand as very good quality packaging and marketing
for processed (table • Availability of large • Extension has to be strengthen
honey) for low level of volume of honey towards quality

49
 Potential opportunities
across value chain

Level of
5 value chain
Constraints Opportunities Strategic interventions
income and price production within and • Establish linkage between
reasons around the growth producers (smallholders,
• In sufficient market corridor honey coops/union) with the
Value chain analysis

information reaching • Expansion of institutions potential buyers including the

market actors in Ethiopia which can IAIP
• Low product quality due create demand through • Capacity building in business
to poor harvesting and promotion of Ethiopian development and management
use of improved honey honey in domestic as well to honey producing
handling techniques as international markets cooperatives, small holders
and traders, in honey business
management
• Strengthen promotion of
Ethiopian honey in the
domestic and international
markets
• Ensure behavior change on
market actors along the value
chain in maintaining quality of
Ethiopian and avoidance
different types of adulterations
Processing • Limited knowledge and • Some experience on • Build the capacity of
experience in honey honey processing, cooperatives, common interest
processing and value packing, and labeling in groups in honey processing
addition along the supply the region and marketing
chain • Government efforts in • Strengthen promotion and
• Limited supply and less promoting and introduction of appropriate
affordable honey introducing of beekeeping processing and packaging
processing and and honey processing equipment
packaging equipment to equipment though it is • Create domestic and
the smallholder limited international market for
• Local consumers processed Ethiopian honey
interest to use products
processed and packed
honey is poor
Retailing • Poor market information • Government and • Strengthening of financial
• Poor business partners focus on services
development and marketing & market • Training to cooperatives
management skills infrastructure management on
• In adequate market • Improved access to entrepreneurship and
infrastructure and finance business development
selling shops • Characterize and label the
• Adulteration product
• Support private honeybee
colony rearing and trading to
establish sustainable colony
supply
• Link honey coops/union with

50
 Potential for dairy sector
Level of
value chain
Constraints
Consumption • Little knowledge and • Availability of different
interest in using
processed and packed
honey • The
• Poor knowledge and skill
in preparation of dishes
in which honey is an
ingredient, mixed
• Price of table honey is
not affordable to the
majority of ordinary
citizens
Source: Focus group discussion, key informants interview, literature review
In conclusion, Ethiopia in general and the
region in particular have huge potential to honey
production. However, the actual productivity and
production of honey is by and in large below the
potential which attributed to constraints including poor
input and technology supply, poor knowledge and skill
of producers and market problems. Provided that the
constraints along the value chain are addressed, the
country in general and the region in particular can be
benefited a lot form the subsector.
Dairy value chain
Ethiopia is the highest in Africa and 10th
largest in the world in livestock population. The
country’s cattle population is estimated to be about 54
million in 2012/13 out of about 10.7 million (20.7 %)
was milking cows. The livestock sub sector has
significant contribution to the country’s economy
accounting for about 16 percent of total GDP, of which
the dairy sub-sector contributes 50 percent.
The livestock subsector serves as major
source of livelihood for about 11.4 million rural
smallholders in the country. In addition to being a
source of employment, it provides protein rich food
and income for meeting daily expenses, social
obligations and creates opportunities for increasing
savings of the smallholder rural poor. Moreover, the
dairy sector has the potential to impact positively on
urban consumers through lowering dairy prices which
Opportunities Strategic interventions 5
the local and terminal markets
10
• Promotion of processed honey
Value chain analysis
types of honey with products
different prices • Packaging quantity of
nutrition and processed honey and the type
medicinal value of honey of packages need to consider
is widely recognized the purchasing capacity of the
major market
is critical for achieving food and nutrition security at
household level.
The total national milk production in
2012/13 was estimated to be 4.9 billion liters about
20.8 percent increase from that of 2010/11. Of the
total milk produced, 2.2 billion liters or 44.9 percent
was used for household consumption d about 250
million liters (5.1%) of the total milk production was
sold (marketable surplus). Generally, milk production
has increased over the past three years; 2.94, 4.06
and 4.9 billion liters of milk in 2009/10, 2010/11
and 2012/13, respectively. Similarly, consumption
per capita has also improved (36, 48 and 54 liters per
person) for the respective years. Despite the presence
of large size of livestock resource endowment,
however, total milk production that needs to be
obtained from this population is substantially minimal
or mere subsistence. The traditional milk production
system is dominated by local breeds of low genetic
potential accounting for about 97 percent of the
country’s annual production of milk with average
production 237.6 liters per cow per annum. In
contrast, average milk production per cow per annum
in neighboring countries like Kenya was 507 liters in
1998 while it was about 350 liters in Uganda and 209
liters in Ethiopia in the same year. One of the key
interventions needed for dairy value chains
development in Ethiopia is the introduction of
genetically improved cows. While Kenya has around
three million crossbred dairy cows, only 30,000 is
reported to Ethiopia.
51

5 At present, Ethiopia is a net importer of milk
and milk products while export is insignificant. While
the export values increased from 73,000 USD to 123
USD between 2005 and 2009, the import values
Value chain analysis
substantially increased from 5.6 million USD to 10.3
million USD during the same period.
The sub sector has been facing a number of
key and longstanding challenges that attribute to the
poor performance of the dairy sector which need to be
strategically and comprehensively addressed by the
major stakeholders. Shortage of cross breed dairy
cows, inadequate animal feed both in terms of quantity
and quality, poor livestock husbandry, inadequate
coverage of extension services, poor market
infrastructure and weak linkages between dairy
farmers and key input suppliers are major constraints
of the sector.
The economy of Western Tigray region is
mixed crop/livestock farming system and its agro-
ecology is by and large lowland with few areas
classified as highland. The region has the highest
number of livestock population in the region accounting
for a total of 1,178,746 (53.6 %) of the region’s total
cattle population. There are 372,160 milking cows
representing about 17 % of the total cattle in the
region and 52.7 % of the total milking cow population
in the region. Local breeds other than Begait, Begait
breed and few cross breeds (Local x Holstein Frisian)
are constituents of the cattle population in the region.
Input suppliers, producers, collectors,
distributors and retailers are the major players the
dairy value chain in the region. Animal feed, health
services and improved breed are among the major
inputs required in the dairy sector. In fact, housing and
milking and milk processing equipment and milk and
milk product containers are also important inputs in
developing dairy value chain.
Animal feed is a very determinant input for the
dairy value chain or is a determinant factor for the
reproduction, milk productivity and health status of the
dairy cows. Western Tigray region, especially the
Western zone is endowed with abundant wealth of
natural resources such as natural grasses, huge
residues of sesame and sorghum crops which can be
used as important ingredients of animal feed.
However, the available resource is mostly wasted as
52
Value addition for milk
products
there is no practice of timely collection and proper
preservation practices. It is excess during harvesting
and very scarce few months later. There is also some
experience in the North West zone in using different
types of concentrate feed such as wheat bran, oil
seeds cake, and urea treated crop residue and in
some cases molasses either mixed or sole. In Humera
and Shire towns, Private operators and NGOs such as
ACDI/VOCA and The well-foundation are trying to
introduce and demonstrate the manufacturing and use
of concentrate livestock feed through establishing feed
manufacturing enterprises and capacity building. Best
experiences should be extracted and scaled up to
unreached parts of the region.
Government and private operators are major
suppliers of veterinary drugs and equipment in the
region. The animal health services (vaccination and
treatment) however are almost entirely delivered by
the government structure (BoARD).
Few cross breeds (Local x Holstein Frisian)
and local breeds namely Begait and Arado are
constituents of the cattle population in the region.
Though the demand for cross breed heifers, for their
better milk productivity is high in the area, the supply
side is too low for low availability of cross breed
heifers. As a solution crossing through artificial
insemination is undertaken aggressively by introducing
synchronization technology.
Smallholder producers are the majority in the
dairy production system in the region. There are very
few small scale private producers but their
contribution in milk production is insignificant. Are also
some cooperatives started to be engage in production
as well as processing of milk.
Milk is sold by smallholder producers, in most
cases, directly to consumers and to retailers at ETB15
per liter, while retailers sell it at ETB20 per liter.
Smallholder producers also sell to small collectors who
live in their vicinities, without having to travel long
distance in which case this kind of transaction is
informal and quality of milk is compromised.
Although there is huge milk potential in the
western Tigray region, it is largely consumed or
wasted domestically. The status of milk processing and
preservation in the region is very poor. The Well
foundation has installed of machineries for large scale
 Dairy product value chain

of milk processing in Shire town, north-western zone.
Setit Humera union has also installed milk processing
plant in the town of Humera. But both are not yet
functioning. If these two companies become
operational, they will attract more actors into the value
expected by and in large addressing the challenges in
milk collection, processing, packaging and marketing. 5
The main actors along dairy value chain and
their interactions are presented in Exhibit No. 5.2.

Value chain analysis

chain. In fact the Integrated Agro Industrial Park is

Exhibit No. 5.2: Dairy product value chain

Source: FAO / MOI National consultants report

The constraints, opportunities and interventions at each level of the value chain are presented in Table
No. 5.2.

Table No. 5.2: Summary of constraints, opportunities and proposed interventions – dairy value chain

Value chain Proposed strategic

Major constraints Opportunities
levels interventions
Input supply o Lack of access to o National Artificial o Strengthening the capacity
improved variety of Insemination Service and increasing the service
cattle breed already exists which can coverage of the National
be expanded to Artificial insemination center
community level at regional, zonal and woreda

53
 Strategic interventions for
dairy sector

Value chain Proposed strategic

5 levels
Major constraints Opportunities
interventions
o There is one animal ranch levels through training more
in Humera area which is technician in AI at farm level
providing cross-breeding
Value chain analysis

service in the area

o Inadequate supply of o There are well o Improve supply of drugs
veterinary drugs and established public through investment,
poor quality of drugs institutions like Veterinary promote private investment
College of Mekelle in the manufacturing and
University, National supply of drugs with
Veterinary Institute (NVI) affordable price to
that can assist in smallholder farmers
ameliorating the problem o Strengthen the capacity of
research institutions to
expand their research
activities on veterinary drugs
o Improve linkages between
research institutions and
dairy farmers so that
farmers will have access to
research out puts
o Inadequate animal o The government has o Expansion of extension of
health extension given serious focus to the animal health services
services delivery of extension coverage in regions and
services strengthening the capacity of
extension workers through
training
o Lack of adequate o Commercial feed o Strengthen the capacity of
animal feed and manufacturing has been smallholder farmers through
poor access to established in six different training on animal feed
quality forage, and places in the region and development and production
forage seed and can be expanded from using available resources
cuttings experiences of these o Promote private investment
centers on forage production and
improve supply of animal
feed, expansion of seed
multiplication centers by
promoting private
investment
Marketing o Seasonal fluctuation o Marketing agencies are o Promote consumption of
of demand leading to established in all regions milk and products using
inconsistency in milk to promote and improve communication mass media,
supply and marketing of products by increase level of awareness
processing disseminating daily of the public on the
o Lack of market information on prices and nutritional value and
infrastructure markets importance of dairy products
on daily diet through
communication mass media
o Establishment of rural

54
 Meat and live animal sector
analysis

Value chain Proposed strategic

levels
Major constraints Opportunities
interventions 5
transformation centers is
needed in solving problems
on market outlets for

Value chain analysis

smallholder farmers
Production o Lack of milk quality o There is quality assurance o Establish quality and grading
and grading agency in the country but standards of milk and put in
standards, and enforcement place enforcement
enforcement mechanisms need to be mechanisms
mechanisms put in place
Input supplier o Weak linkages o MoA, regional, can play a o Integration of services
between producers key role in bringing the provided by different
and research different relevant institutions in the overall
institutions and stakeholders together to development of the livestock
other support align their activities and sector through the
service providers create a synergy in leadership of MoA
solving the problem of the
sector
Support o Limited access to o Micro-finance and o Expansion and improvement
services credit facilities commercial institutions of micro-finance services,
are expanding in all encourage commercial
regional, zonal and banks to expand their credit
woreda level towns lines to smallholder dairy
farmers
Source: Focus group discussion, key informants interview, literature review

Meat and live animals value chain
Despite the huge livestock population and high
potential for meat production in the country, the
benefit from the sector remains insignificant. This is
mainly because of the constraints related to poor feed
supply system and high cost, poor health services, low
value addition and poor market linkage.
Ethiopia’s domestic meat consumption is
reported to be low for some reasons- low per capita
income, high meat price and long fasting period for the
majority Orthodox being the major ones. In 2006/07,
Ethiopia’s domestic meat consumption was estimated
to be 2.4 kg/capita/ year for beef, 0.7 kg/capita for
sheep meat and 0.4 kg/capita per year for goat meat.
Currently, the demand for meat is mainly met from
domestic production. However, the projections over
the next 15 years, due to exploding demand as a result
of rapidly increasing population growth to 127 million
people and rising per capita income, show a deficit of
about 3 million MT of meat in 2028. Per capita meat
consumption will then be about 47 kg/year. Therefore,
this gap implies the need for substantial investments in
the sector.
Western Tigray region is known to be
livestock potential accounting the highest population in
the region. In the region, meat is almost exclusively
derived from local breed livestock (mainly Begayt and
Arad). In terms of productivity Begayt breed is best
compared to the other local breeds. Previous studies
show that there is a high marketable surplus in the
Western Tigray region and many live animals are
exported through informal channels to bordering
countries particularly to Sudan.
There are different actors in the region
engaged in the meat value chain. The main actors
include input suppliers, producers, processors, traders
and consumers.
The inputs required for meat and live animals
production include animal feed, better breeds, health
services etc. Animal feed is a very important factor
and input for meat and live animal value chain. It
determines the reproduction, productivity and health

55

status of animals. Western Tigray region, especially
5 the west zone, is endowed with abundant wealth of
natural resources such as natural grasses, huge
residues of sesame and sorghum crops which can
serve as an important ingredient in formulating
Value chain analysis
balanced livestock feed. However, considerable portion
of these resources are not utilized. This is due to poor
practice of timely harvesting, collection and proper
preservation by the communities. It is excess during
harvesting time but become very scarce few months
later.
Generally, the feed resource management in
Western Tigray region particularly in the western zone
is very poor which renders to pervasive and persistent
shortage of feed to the live animals and meat
production. The shortage of feed in turn has significant
negative impact on the reproduction, production,
productivity as well as health status of animals.
Recently, it is reported that some initiatives
are emerging to increase concentrate feed within the
Western Tigray region. Though it is not yet functioning,
a big concentrate feed manufacturing plant is
established by the Well-Foundation in Endasilassie
town. Setit Humera Union has also establishing one
commercial feed manufacturing enterprise in Huera
town, in collaboration with ACDI/VOCA-Ethiopia FEED II
project. There is also experience of using concentrate
feed by private operators/actors in in the region.
Therefore, supporting and scaling up of the emerging
practices and experiences of proper harvesting,
collection, preservation and utilization of the natural
and human grown feed resources as well as
manufacturing and utilization of commercial feed could
improve the feed supply both in terms of quantity and
quality. For the natural grasses, crop residues and
some improved forage crops, the farmers themselves
and some commercial farmers are the main suppliers.
Whereas the concentrate feed ingredients such as
wheat bran, oilseed cake etc, are supplied by
cooperatives and private operators.
Livestock breed is also another important
input in the meat value chain in the region. There is a
well-known and highly productive local breed called
‘Begayt’ for the three types of livestock (Cattle, Sheep
and Gaot). Begayt it relatively most productive both in
terms of meat and milk compared to other local
breeds. In order to maintain the breed and improve
their productivity, the region has recently established a
56
Potential of livestock sector
ranch in Kafta humera woreda Western zone. This is
very good opportunity for and has to be supported by
the IAIP initiative as it can contribute in improving the
production and productivity of meat both in terms of
quantity and quality.
Animal health services are also the other
important inputs that determine the production and
productivity of livestock. Supply of adequate and
standard veterinary drug and equipment, availability of
cattle crush for vaccination and treatment around the
producers is very important. Though some private
operators involved in the supply of drugs and
equipment, it is the government that mostly provides
animal health services vaccination, treatment of
different diseases in its animal health posts and clinics,
and through its veterinary technicians.
Livestock vaccination in 2012/13 in Tigray
region was 66.16% cattle, 58.08% sheep and
37.21% goat. This shows that the vaccination service
has to go a long way to improve the animal health
service in the region though it is higher than the
national- 38.42%, 16.79% and 16.86% for cattle,
sheep and goat respectively. Quarantine services has
to be strengthen in the region as it is bordered with
Sudan, Eretria and other parts of the country.
The livestock production system in Tigray
Region involves two production systems like in the rest
of the country. The relatively high productive local
breed called Begayt are largely found in this region. In
2012/13, Western Tigray region has produced an
estimated production of 16,573.62 MT, 608.20 MT
and 5,267.67 MT meat for cattle, sheep and goat,
respectively. Shortage of feed supply and poor animal
nutrition practices, different types of livestock diseases
(low level of health service and poor overall livestock
resource management are the major constraints
affecting meat production in the region. Therefore,
enhancing the production and productivity of meat
through improving the input supply system and
awareness of actors would help to increase benefit of
actors as well as supply of meat animals to the Ba’eker
IAIP.
Butchers are the major actors in the
Western Tigray region in meat processing which
involves slaughtering of animals and sale for domestic
consumers. The only Export Abattoir operating in
Tigray Region is Abergelle, which has slaughter, chill
 Livestock sector
opportunities
and freezing facilities and the facilities are for cattle,
goat and sheep. Abergelle is predominantly, supplied
by traders, agents and feedlot operators. It also buys
animals from big traders at the factory gate. Low level
of value addition in the live animals and meat product,
the value from slaughtered animals is less maximized
and abattoirs and slaughterhouses operate below their
capacities are some of the challenges in meat
processing.
The domestic markets can be classified into
village level markets, major rural markets, distribution
markets and terminal markets. Village level markets
are attended by producers both as sellers and buyers
and commonly intermediated by brokers, with
purchase being primarily for replacements and rarely
for fattening. Traders dominate purchases at major
rural markets, and they sell to distribution and terminal
markets where purchases for fattening and slaughter
takes place. For fattening, feedlots buy on a relatively
large scale; while household fattening units buy retired
draught oxen and butchers mainly by either directly or
through a trader from household fattening units.
Exhibit No. 5.3: Meat & live animal value chain
Source: FAO / MOI National consultants report
The constraints, opportunities and interventions at each level of the value chain are presented in Table
No. 5.3.
The Ethiopian live animal export marketing has 5
two forms called formal and informal and it is with
these forms of trade that the country is considered as
a major supplier to Djibouti, Kenya, Somalia, Sudan and
Value chain analysis
Saudi Arabia. Although it is difficult to capture the
actual numbers of live animal and amount of meat in
the informal trade in Ethiopia, it is estimated to
account for 75-80% of all live animal trade. This
informal trade of livestock is found to be one of the
major challenges in the Western Tigray region due to
the illegal trade through Sudan and Eritrea borders.
The establishment of the IAIP is thus a big opportunity
for the smallholder and private operators to be
engaged in feedlot activities and generate sustainable
income by supplying their production with fair price
and in their vicinity. As a result, the sub-sector will also
significantly contribute to the national economy.
The main actors along meat & live animal
value chain and their interactions are presented in
Exhibit No. 5.3.
57
 Strategic interventions
for meat and live animal

5 Table No. 5.3: Summary of constraints, opportunities and proposed interventions – meat & live animal
value chain

Level of value
Constraints Opportunities Strategic interventions
Value chain analysis

chain
Input supply & o Low level of investment
service both by the public and
provision private sector on
livestock development,
especially on technology
& service provision
o Depletion/loss of local
breed called Begayt
o Lack of Quarantine
service for animals
coming from Eritrea and
Sudan and this is also a
bottleneck to promoting
formal exports
o Current animal
management and value
chain services are
lacking in terms of
proper feeding, fattening,
animal health care and
other related services this
is also highly correlated
with poor services in the
animal clinics, shortage
of clinics and shortage of
vaccines
Production o People are more
concerned over social
prestige for live animals
than commercial / of the sector for both
economic value of them
this negatively affects the
productivity of livestock
o Urban agriculture is
poorly developed in the
region
o Shortage of water for
animals in some areas
o Actors in the value chain
have little understanding
of meat quality standards
that export markets are
willing to pay for
o High value is lost because
of poor animal
There are numerous o Undertake key policy and
opportunities to provide investment actions to
specialized services along promote public and private
the value chain, on a joint investment on livestock
venture or for-profit basis, development
like o Put mechanism in place to
protect local breeds
o Commercial feed (Begayt). This could be
production and addressed through a
distribution special support to the
o Fattening Ranch in Northwest zone
o Feedlots operation o Closely work with MOA &
o Animal health services Ethiopian Investment
provision Commission to attract
o Logistics and investment on accredited
transport quarantine service
o Mobile abattoirs o Promote & encourage
investment on feed and all
the animal production
management services
The government has o Create awareness to
become increasingly promote the economic
interested in the potential value of livestock
emphasizing on increasing
economic growth and exports and gaining
poverty reduction and is access to attractive and
also interested in remunerative markets in
enhancing the the region, which in turn
contribution of livestock to requires a major increase
foreign exchange. This in the investment to
high interest of the enhance the quality and
Government is an safety of the animal
opportunity to invest on products.
livestock production o Promote urban agriculture
and allocate land for the
same so that demo sites
will evolve
o Give emphasis to water
infrastructure

58
 Poultry value chain
analysis

Level of value
chain
Constraints Opportunities Strategic interventions 5
management, particularly development
with respect to the age of o Develop guidelines and
the animal when sold standards and train the

Value chain analysis

actors
o Train and coach owners to
sell at age and weight that
are optimal to maximize
the economic value
Processing o Low value adding o The attention given to o Enhance further value
o The value from agro-processing by addition/processing by
slaughtered animals is the Ethiopian promoting private
not maximized government in its investment
o Abattoirs and GTPs and the o Strategize to fully tap to
slaughterhouses operate increasing demand export markets for offal,
well below their installed for meat both in the intestines, meal and other
capacities local and international animal parts
market present an o Address the supply side
excellent opportunity constraints (feed, breed,
for private investment health service, etc.) to
on meat processing utilize their capacity
Marketing o There are no market o The growing ICT and o The establishment of RTCs
places close to mobile applications around the smallholders in
smallholders and that which provide Mobile- the animal production
forces them to travel based data collection, hubs helps to address this
long distances to sell Mobile Market problem
animals Information, Mobile o Facilitate B2B linkages to
o Seasonal nature of Banking, TV and Radio have access to more
market programs profitable and long-term
o High informal/illegal o Population growth markets
export and rising per capita o Facilitate the
income are leading to establishment of an
exploding domestic internationally accredited
demand for meat quarantine system and
reduce export
requirements to the
minimum possible
Source: Focus group discussion, key informants interview, literature review

Poultry value chain
The Ethiopian poultry sector is largely
traditional backyard and small scale production system
which is mainly targeted for either self-consumption or
the market. This traditional production system is
characterized by small flock sizes, low input and output
and suffers from periodic devastation by disease.
Chickens do not have a separate house and live in
family dwellings together with human population and
as there is no planned feeding, scavenging is almost
the only source of diet. Moreover, there is no planned
breeding and it is by natural incubation and brooding
that chicks are hatched and raised all over the rural
Ethiopia. As a result, operating village poultry becomes
challenging due to the periodical and recurrent
outbreak of poultry diseases and the high prevalence
of predators). Nonetheless, poultry is an important
economic activity and serves as source of cash income
to millions of the rural poor, especially rural women
who rely on selling of poultry and eggs for cash income

59

for purchasing salt, cooking oil and other necessary
5 things for their family.
In 2012/13, poultry population was
estimated to be about 50.4 million at country level. It
Value chain analysis
includes, cocks, cockerels, pullets, laying hens, non-
laying hens and chicks of which chicks hold the largest
with estimation of about 19.8 million, followed by laying
hens, 16.6 million, pullets 4.8 million. Cocks and
Cockerels are separately estimated to be about 5.19
million and 2.69 million, respectively, while non-laying
hen account for about 1.53 million only. With respect
to genetic type of composition, a large majority of the
total poultry population or 96.9 percent are
indigenous, 0.54 percent hybrid and 2.56 percent
exotic.
A total of 12,177 ton of poultry meat was
produced in the year 2012/2013 and the total
number of eggs produced during the same year was
estimated 93.13 million at country level with average
number of egg-laying period per hen estimated at 4 for
indigenous, 5 for hybrid, and 1 for exotic. Similarly, the
average length of a single egg-laying period per hen
was also estimated to be about 21 days for local
breed, 32 days for hybrid and 93 days for exotic
breeds. Of the total egg produced, 26.99 percent was
used for household consumption while 36.79 percent
was sold and 36.04 percent was used for other
purposes like reproduction/hatching.
The economic benefits of the poultry
subsector to the rural poor and to the whole economy
of the country can be very significant. However, there
are a number of challenges that confront the backyard
production system which is operated by the majority of
the rural poor. Lack of feed, especially concentrate
feed, inadequate supply of drugs and shortage of
vaccine and veterinary services and facilities, lack of
poultry equipment, like waterier, feeder, brooder,
incubator, and access to credit are among the
bottlenecks that need to be improved. On the other
hand, the government has given the livestock sector a
special emphasis on the next Growth and
Transformation Plan so that Ethiopia will meet
domestic demand for chicken meat and eggs and
produces surplus for export. By addressing the major
challenges, the poultry sector will be transformed from
the traditional backyard family system to improved
family poultry by introducing hybrid and exotic breeds.
60
Poultry sector opportunities
The poultry production is also very important
sector to the West Tigray region. In 2012/13, the
region contributed about 2,248,932 or 43 percent of
the total poultry population in the region. With regard
to genetic composition of the poultry population in the
region, about 95 are indigenous and the remaining
percentage shared between hybrid 3.7 percent and
exotic 1.3 percent. It is reported that more than
70,000 hybrid chicks have been distributed to farmers
in the last two years since after the survey of
2012/13 was taken. This is because few private
poultry farms have begun distribution of chicks and
feed in the area. The poultry farm in Mekelle is the
major exotic breed poultry distributer in the region
through its agents.
In the 2012/13 production year, a total of
480,637 chickens were sold and 1,274,018 chickens
were slaughtered. A total of 1,146 ton of poultry meat
and 2,224,216 eggs were also produced during the
same year in the region. The region contributed 44.5
percent of the total poultry meat and 23.8 percent of
eggs production of the region which shows great
potential of the region for poultry development.
Availability of veterinary drugs in terms of
quality, quality, affordability and timeliness is found to
be very crucial in the poultry sector as diseases are
prevalent in the backyard or traditional poultry
production system. The traditional poultry production
system also suffers from poor management such as
shelter, health, feeding and breeding which require
effective coordination and integration of interventions
by the respective government, research institutions,
universities, the private sector and the public at large.
Input suppliers, producers, collectors,
processors and retailers are the main players in the
poultry sector in the target region. There are also
development service providers such as micro-finance,
commercial banks and consulting firms that contribute
in the facilitation of the chain.
Improved poultry breeds, poultry feed,
veterinary services and proper housing are the major
inputs required in poultry production. The traditional
backyard family production system is exposed to
shortage of balanced feed which is a determinant
factor in the production and productivity poultry.
 Significant private sector
participation in input supply chain
The periodic and recurrent outbreak of
diseases and high prevalence predators as chickens
roam around to many places for scavenging as a
means of getting their daily food is the other challenge
from which the subsector is suffering. Studies
indicated that 20-50 percent mortality rate in the
indigenous chickens and can be as high as 80 percent
during epidemic of diseases like Newcastle and thus,
village poultry operation is challenging. As a result,
there is a great need for adequate and timely
veterinary drugs, vaccines, and veterinary health
extension services by smallholders.
Supply of concentrate feed such as
processed cereal grains, cereal grain bi-products and
oil seed cakes are highly needed as smallholder
farmers lack adequate feed supply for their poultry and
scavenging can become even difficult for birds during
certain months of the year.
In addition, smallholders lack the capital in
purchasing inputs. Thus, access to credit is also
needed if smallholders are going to benefit from the
sector, improve their livelihoods and contribute to the
overall growth of the country’s economy.
Government, private sector, and development
partners play a central role in the supply of the
different and necessary inputs needed in the poultry
sector. i.e., provision of veterinary drugs, vaccines and
animal health extension services, are mainly supplied
by the government. The government also distributes
from its breeding and rearing centers, fertile eggs,
baby chicks, pullets/cockerels and culled layers to the 5
rural farmers, especially women, at a highly subsidized
price.
Value chain analysis
Private operators are also involved in supply of
drugs, hybrid, exotic, concentrated feed and poultry
technology to smallholders. As most of the suppliers
are located around Addis Ababa, it is very far and
expensive for smallholders to make such a journey.
Mekelle poultry farm is expanding its business by
establishing distribution agents in different parts of the
region. These agents supply exotic chicks and
concentrate feed to their customers with orientation
on how to manage chicks, feeding and vaccination.
There are individuals, especially youth and
women who have organized themselves as small
distributers. They buy day-old chick from Mekelle
poultry farm for ETB24 per chick and sell them for
ETB54 after feeding and managing them for 30-40
days. They also provide training to customers on how
to manage their chicks, formulate feed and how to do
mass vaccination. But the demand for chicks and their
feed by the smallholder is very high compared to the
supply. Therefore, a comprehensive and strategic
intervention that addresses the major challenges in
the supply chain is needed for the overall development
of the poultry sector.
The main actors along poultry value chain and
their interactions are presented in Exhibit No. 5.4.
61
 Poultry meat value chain

Exhibit No. 5.4: Poultry meat value chain

5
Value chain analysis

Source: FAO / MOI National consultants report

The constraints, opportunities and interventions at each level of the value chain are presented in Table
No. 5.4.

Table No. 5.4: Summary of constraints, opportunities and proposed interventions – poultry value chain

Function level Constraints Opportunity Strategic Intervention

Input supply o Shortage of parent o Government has given a o Expand existing
stock day old chicks, focus to the sector and multiplication centers for
pullets, broiler and there are centers where day old chicks, pullets,
layers these inputs are broilers and layers,
distributed, there are encourage importing and
commercial operators selling of improved semi-
engaged in the supply of scavenging poultry breeds
these inputs by the private sector and
through PPPs
o Shortage of feed both o There are private o Expand production centers,
in quantity and quality operators engaged in the encourage the private
supply of feed, unions are sector to invest in the
also established to production of chicken feed
manufacture and and increase supply of feed,

62
 Strategic interventions
for poultry meat sector

Function level Constraints Opportunity Strategic Intervention

distribute concentrate o Put in place enforcement 5
feed mechanisms for quality
standards
o Inadequate supply of o There are public o Expand capacity of existing

Value chain analysis

veterinary inputs such institutions such as the
as drugs and vaccine National Veterinary
Institute, Livestock Agency
which provide veterinary
drugs
o Private operators are also
engaged in the supply of
veterinary equipment and
related supplies
o Shortage of poultry o There are universities and
equipment research institutions
engaged in research of
technologies, there are
also private operators
engaged in the supply of
poultry equipment
Production o Poor poultry o There are universities,
husbandry and research institutions and
management, shelter, the livestock agency which
health, feeding, can provide training on
breeding and quality poultry management
o Lack of access to o Micro-finances and
credit commercial banks are
expanding
Processing o Lack of cold storage, o There are private
chilling and packaging operators engaged in the
materials supply of this equipment
Marketing o Lack of collection o Government is proposing
centers and market establishment of rural
infrastructure transformation centers
which will serve as
organized markets
o Inadequate market o Telecommunication
information technology and
infrastructure is
expanding in the country
o High cost of inputs o Demand for poultry meat
and eggs is increasing
through rising
urbanization and
improving income
o Lack of proper quality o There is quality and
standards standard conformation
agency responsible for
supply mechanisms and
vaccines in regions up to
woreda level
o Encourage private sector
involvement in the supply of
equipment, encourage
universities to engaged
themselves in research on
affordable and modern
technologies
o Expand extension service
coverage to regions,
provide training and
education on poultry
management, shelter,
health and feeding
o Encourage the financial
sector to expand its credit
services to smallholders
o Incentivize the private
sector to invest more on
poultry technologies
o Implement establishment of
rural transformation
centers and integrated
agro-industrial parks
o Promote the use of ICT in
rural areas and strengthen
market infrastructure
o Increase supply of inputs
for poultry development
through expansion of
existing manufacturing and
supply mechanisms
o Put in place rules and
regulations, guidelines and
enforcement mechanisms

63

Function level Constraints
5 regulations on quality, and
standards
Value chain analysis
o Poor linkage between o There are cooperatives
value chain actors
Source: Focus group discussion, key informant interview and literature review
Sesame value chain
Sesame is a very important crop for the
Ethiopian economy and is one of the main sources of
income for many smallholder farmers. Existing
statistics show that the Ethiopian sesame farms
employ over 500,000 workers during the peak
season. The production of sesame has doubled in the
past five years, but farmers still face a number of
challenges including declining soil fertility, poor access
to credit and low yields. The four major Sesame
producing regions in Ethiopia are Amhara, Tigray,
Oromia and Benishangul-Gumuz. In 2011/12
production year, the contribution of these regions form
the total country’s production was 39% for Amhara,
29% for Tigray, 23% for Oromia and 9% for
Benishangul-Gumuz.
Ethiopia is the world’s second largest sesame
exporter. The supply of Ethiopian sesame seed to the
world markets has been increasing significantly. The
current Ethiopian sesame export is U.S. $300 million
per year and is expected to increase to $500 million in
the next two years. The main importers of Ethiopian
Sesame are China; which is also a major sesame
exporter, Israel, and Turkey. Europe is a major user of
sesame seed for bakery applications and
confectioneries. Currently, the main suppliers to
European Union countries are India and Sudan.
Humera sesame variety is appreciated
worldwide for its aroma and sweet taste. It has
uniform white seeds, which are quite large in size. This
makes it very suitable for bakery products. The Gondar
type is also suitable for the bakery market. The major
competitive advantage of the Wellega type is its high
oil content. Type and quality are very important factors
in the world sesame market.
64
Sesame value chain
Opportunity Strategic Intervention
on quality standards,
strengthen the capacity of
the Agency for quality
conformation
o Promote linkages between
established which can actors through trade fairs
serve as a bridge and mass media and
between the different through cooperatives
actors in the value chain
The Westen Tigray region is one of the major
sesame producers in the country. In the 3012/13
production year the region contributed more than
31% of the country’s total production and above 97%
of the total production of Tigray region.
Different actors are involved along the value
chain of sesame. Input suppliers, producers,
processors, traders and consumers are the key actors
identified in the region. Seed, fertilizer, machineries
and pesticides are the major inputs required for
sesame production. The Ethiopian Institute of
Agricultural Research (EIAR) is mandated to conduct
research and produce foundation sesame seeds.
Sesame is center of excellence for Humera & Gondar
Agricultural Research Centers. These research
centers currently are also supplying certified seeds to
Ethiopian Seeds Enterprise (ESE), the only commercial
Sesame seed distributor in Ethiopia. Usually, the White
Sesame varieties from Gonder and Humera have
higher value in the exchange market as compared to
the others.
The types of fertilizer commonly used for
sesame in the region are DAP and Urea. The
government is the key actor in the supply and
distribution of fertilizer. The Agriculture and Rural
Development Bureau through its structure identify the
demand and the Agricultural Input Supply Corporation
manages the supply up to regions. The regional
agriculture and rural development bureau in
collaboration with the unions and primary cooperatives
distribute to the producers. Generally, there is no
noticeable problem in the supply and distribution of
fertilizer. The problem is less adoption of an application
of fertilizer by the producers (both the smallholder and
investors).
 Sesame processing
opportunities
Leaf roller, leaf worm, Miner, bollworms,
aphids, caterpillar, stock borer, soil dwelling pests,
shoot fly, armyworm, grasshopper, leafhopper, sucking
insects, crickets and locusts are the insects attacking
sesame. Producers thus use Ethiolathion (Malathion),
Ethiozinon (Diazinon) and Ethiothrothion (Fenithrothion)
against the different pests. Adami Tulu Pesticide
Processing Share Company- the only pesticide
producer in Ethiopia.
Cultivation of Sesame is labor-intensive
especially during land preparation, weeding and
harvesting. These activities need to be carried out very
carefully in order to secure a higher yield and decrease
the possibility of shattering. The highest labor demand
is during weeding and harvesting (June to November).
Farming machineries and equipment are also
used depending on the type of farming practices used.
Smallholder farmers mostly use the traditional farming
equipment (hand-made tools supported by oxen or
horses). The commercial farmers however commonly
use tractor and implements such as planter and
cultivator. Many private operators situated in Addis
Ababa are distributing the machineries and Nazareth
Tractor Factory, a government-affiliated enterprise,
situated in Adama, is also distributing tractors and
accessories.
In the Western Tigray region, sesame is
produced both by the smallholders and commercial
farmers. In 2012/13 a total of 67,462.4 hectare of
land was cultivated and a total of 56339.94 MT
produce was harvested in the region. The production
accounted for above 31% of the country’s production
in the reference production year. In terms of
productivity, the average yield of Western Tigray 5
region is the highest in the country even it is above 10
quintal/ha. As compared to the productivity of
countries like India where the average yield rate is
Value chain analysis
36qt/ha, sesame productivity in Ethiopia in general
and in the Western Tigray region in particular is too
low. Erratic rainfall, insects like Sesame Leaf Roller or
Web Worm, Green peach aphid and Sesame seed bug
shortage of daily laborers in the major producing areas
& in the peak seasons are some of the constraints
affecting sesame production.
Sesame Processing is not well developed in
Ethiopia. Currently there are only few companies in
engaged in sesame processing limited to cleaning and
hulling. The only exception to this is Ambasel Trading
House that is also engaged in Tahini production. The
most common practice in Ethiopia is the export of
Cleaned Raw Sesame. Cleaning is a simple process of
removing foreign material from the harvested Sesame
seed. In fact, the first step in any value addition related
to Sesame is the cleaning process. Cleaning is thus a
prerequisite for exporting Raw Sesame Seed, although
the percentage to which it has to be cleaned varies for
different countries. In addition to the private operators
mentioned above, Setit Humera Framers Cooperatives
Union has the sesame cleaning facility in Humera.
Hulled sesame, Tahini and sesame oil are the major
schemes of sesame value addition.
The main actors along sesame value chain
and their interactions are presented in Exhibit No.
5.5.
65
 Sesame value chain
analysis

Exhibit No. 5.5: Sesame value chain

5
Value chain analysis

Source: FAO / MOI National consultants report

The constraints, opportunities and interventions at each level of the value chain are presented in Table
No. 5.5.

Table No. 5.5: Summary of constraints, opportunities and proposed interventions – sesame value chain

Level of
Constraints Opportunities Strategic interventions
value chain
Input supply o Limited improved and o Improvement on the o Promote research on
appropriate sesame road network, sesame variety and
variety in the middle of communications and establish efficient
highly visible efforts increasing trend of distribution system
o Lack of access to finance research attracts o Encourage financial
for working capital business development institutions to operate in
o Shortfall and high cost of service providers the area & strengthen
machineries & spare parts the saving & credit
for commercial farms coops
o Attract more investment
on machineries
Production o Erratic rainfall affects o The attention given to o Ensure awareness is
quality and volume of sesame in the GTP created on timely
production brings an excellent harvesting and post
o Incidence of diseases like opportunity to improve harvest handling to
Bacterial blight are good quality sesame minimize loss
affecting production and production and o Provide disease free seed
productivity productivity remove infected plants
o Incidence of insects like and residue, treat seeds
Sesame Leaf Roller or destroy alternate hosts

66
 Strategic interventions
for sesame processing

Level of
value chain
Constraints Opportunities Strategic interventions 5
Web Worm, Green peach weeds and practice crop
aphid and Sesame seed rotation
bug are affecting o Control vectors

Value chain analysis

production and particularly Jassid,
productivity destroy alternate hosts
o Sesame productivity is low and infected plants and
due to low level of use appropriate
extension service chemicals
o Shortage of daily laborers o Enhance the extension
in the major producing follow up
areas & in the peak o Improve the health
seasons service in the area to
attract more labor
Processing o Absence of modern o The emphasis given to o Create access to finance
warehouses has resulted agro-processing and to coops to construct
in mishandling of output manufacturing in the more warehouses
o Storage pests like Red GTP series is an o Warehouse fumigation
flour beetle and Rice moth existing opportunity to supply of clean sacks
o Value addition is still at a enhance sesame o Engage the commercial
low level processing entities (coops) in
sesame further
processing and attract
more investment in
sesame processing
Marketing o The low productivity as a o The Tahina production o Ensure awareness is
result of erratic rain fall and other related value created on timely
has reduced the supply of adding by Ambasel harvesting and post
sesame and quality of the Trading and other harvest handling to
seed companies present an minimize loss &
o High transport costs opportunity for the mishandling
o Extended supply (value) Ethiopian sesame to o Improve infrastructure
chain reduced the profit enter to niche markets o Organize the
margin of producers and smallholders into
thereby hindered their commercial entities and
incentive to produce more establish market
o Uninformed or information system
misinformed decision on o Conduct further
stock levels resulted in a research and re-grade
wrong speculation the sesame from specific
o Absence of area specific areas
official grades/ranks o Work to improve purity
o The purity requirements of to meet requirements
the major buyers is and identify distant
stringent markets that have less
stringent requirements
Source: Focus group discussion, key informants interview, literature review

67

Sorghum value chain
5 2004-2009, and nearly all of the supply was from
Sorghum is an important food crop for many
of the food insecure people in the World especially for
those living in marginal areas. It is grown in marginal,
Value chain analysis
semi-arid environments characterized by low and
erratic rainfall. In terms of production, it is known to be
the fifth major cereal crop in the world following to
Maize, Wheat, Rice and Barley. It is also the major
staple food crop for millions of people in Africa
including Ethiopia. In Ethiopia, sorghum is fourth
important food crop after maize, wheat and teff in
terms of production. In sorghum production, Ethiopia is
the third major country in Africa following to Nigeria
and Sudan and eighth in the world.
Except Afar, sorghum is reported as it is
growing in all regions of Ethiopia. Oromia region
stands first in sorghum production in 2012/13 by
accounting 41.33% of the total annual production of
the country. Amhara and Tigray regions followed 2nd
and 3rd accounting 31.15% and 14.02%,
respectively.
Sorghum is grown in all zones of Tigray
region. However, the Western and North West zones
which constitute the target Agro Industrial Growth
Corridor take the largest share both in terms of
cultivated area and total annual production. The
Western Tigray region accounted approximately 70%
of the total production of the region in 2012/13
production year. In terms of productivity, the highest
average yield at smallholder level in Ethiopia in
2012/13 was recorded in the region (33.38qt./ha.)
and followed by Jigjiga zone of Somali regional state
(32.32qt/ha). Generally, the Western Tigray Agro
Industrial Growth Corridor very potential in sorghum
production in which both production and productivity of
sorghum have been showing an increasing trend
between the period of 2008/09 and 2012/13.
However, productivity of sorghum in the region is still
very low compared to its potential. This lower
productivity is attributed to various constraints
including lack of improved seed verities, striga and
other important weeds, lack of appropriate market and
prices, etc. Furthermore, farmer adoption to improved
agricultural inputs has also been remained negligible.
The main purpose of sorghum production in
Ethiopia in general and in the region in particular is for
human consumption. The average annual per capita
68
Sorghum value chain
consumption of sorghum was in Ethiopia 25.34 kg in
domestic production. Likewise, the largest volume of
sorghum produce in the Western Tigray region has
been consumed at household level and the remaining
is sold at local markets. Market problem in the region
is very serious challenge to the producers. Though
marketable surplus in the growth corridor is higher,
only 14.47 % and 10.21% of sorghum grain was sold
in local markets in the Western zone and Northwest
zone, respectively. It is also reported that large volume
of sorghum produce is going out to the neighboring
countries mainly to Sudan through unofficial cross
border trade. Some studies indicated that about
13,000 metric tons of sorghum was exported in
2009 unofficially to Sudan through cross border trade.
Generally, region is very potential in sorghum
production and able to supply large volume of sorghum
grain to formal markets.
The main players along the sorghum value
chain in the region include smallholders responsible for
sorghum production, rural assemblers, cooperative
unions, retailers, wholesale traders in surplus and
deficit areas, government and private grain and seed
trading companies. The major inputs required for
sorghum production in the region are seed, fertilizer,
pesticides and labor. Lack of improved seed varieties
to meet the demand of farmers, because of the limited
capacity to multiply and distribute certified sorghum
seed and high labor cost are the key constraints
regarding input supply. Seeds are mainly sourced from
retained grain, and only in limited cases, are improved
seed used. Ethiopian Seed Enterprise (ESE) is the only
company producing certified sorghum seed in for the
region. The improved sorghum varieties released or
registered in Ethiopia some years back were meko,
Teshale, Gubiye and Abishir. The demand for sorghum
seed is not documented and commercialization of
sorghum seed has been hampered by the fact that
farmers retain their own grain as seed after harvest.
The types of fertilizer commonly used for
sorghum in the region are DAP and Urea. The
government is the key actor in the supply and
distribution of fertilizer. The Agriculture and Rural
Development Bureau through its structure identify the
demand and the Agricultural Input Supply Corporation
manages the supply up to regions. The regional
agriculture and rural development bureau in
collaboration with the unions and primary cooperatives
 Sorghum processing
opportunities
distribute to the producers. Generally, there is no
noticeable problem in the supply and distribution of
fertilizer. The problem is less adoption of an application
of fertilizer by the producers (both the smallholder and
investors). At the smallholder level, family labor is the
main source of labor for plowing, sowing, weeding and
harvesting.
In Western Tigray region sorghum is
produced both by smallholders and commercial
farmers. In 2012/13 the total area cultivated and
production was 124,278 hectare and 3,533,899
quintals, respectively. The production of the region
accounted for about 70% of the total production of the
region. However, productivity of the crop is still low
attributed to striga infestation, poor soil fertility, less
use improved seed varieties, and poor field
management practices.
Sorghum is consumed in various forms,
including enjera, porridge, nefro, and local spirits such
as tella and arekie. It is mainly processed at household
level using traditional means. Enjera is the principal use
of sorghum prepared alone or mixed with teff. In
Ethiopia in general and in the Western Tigray region in
particular, sorghum is also used in making local brew
called Tela. However, it can be processed into a
number of products such as bread, biscuits,
confectioneries, and composite flours and could also
be used as feed, silage, building material, fuel and
molasses. Sorghum is gaining commercial significance
especially in the malting and brewing industry, with
Nigeria malting and brewing industries consuming
about 152,000 MT per annum. Similar efforts are
being replicated in Ghana, Uganda and Kenya where
the brewing industries are contracting sorghum
farmers to grow sorghum on agreed prices. It can be
said thus sorghum processing in Ethiopia in general at 5
a commercial level is almost null. Lack of knowledge
and lack of sorghum value addition technologies are
the key constraints hindering sorghum processing. As
Value chain analysis
the volume of sorghums production in the region is
beyond the household consumption, there is a need for
agro processing interventions in the growth corridor.
The establishment of the IAIP within the region is thus
a very good opportunity to maximize the benefit from
the commodity.
Sorghum marketing in the region is poorly
developed, as it is not commercialized. In this region,
sorghum marketing involves rural assemblers or
brokers who either transport to main urban centers or
sell to traders in the rural market centers. Once the
grains reach the wholesale markets, which also act as
retail outlets, they are sold to retailers through a
brokerage system. The sorghum grains are
segregated by color and size, with very little mixture of
the grains. They are sold to consumers using weighing
scale at prices based on color and size of the grains.
The traders and brokers are usually small business
people with low capital and often deal in multiple
cereals. The traders usually have an advantage over
the producers because they have better information
on market conditions. Lack of market & weak
organization of producers and lack of access to
market information are the key constraints identified
at the marketing level.
The main actors along sorghum value chain
and their interactions are presented in Exhibit No.
5.6.
69
 Sorghum value chain
analysis

Exhibit No. 5.6: Sorghum value chain

5
Value chain analysis

Source: Field survey result (2014)

The constraints, opportunities and interventions at each level of the value chain are presented in Table
No. 5.6.

Table No. 5.6: Summary of constraints, opportunities and proposed interventions – sorghum value chain

Level of value
Constraints Opportunities Strategic interventions
chain
Input supply & o Labor is expensive as o As there are no input o Add more value and
service the area is high suppliers specific to create access to more
provision potential for sesame sorghum, there is a huge distant markets to make
o Lack of improved potential for private the value chain more
seed varieties to investment as the profitable to absorb the
meet the demand of demand for it seems high cost of labor
farmers, because of increasing o Encourage the research
the limited capacity o The introduction of HR centers to come up with
to multiply and variety presents an foundation seed and
distribute certified opportunity for promote private
sorghum seed smallholders to increase investment on certified
production sorghum seed
production and
distribution
Production o There is no research o Ethiopia has enormous o Promote research and
and development potential for the development for
work & serious expansion of sorghum sorghum and give
problems of Striga, a production both for mandate to one of the
parasitic weed domestic consumption research centers in the
o There is no high and export region

70
 IAIP to harness the agro
potential of the region

Level of value
chain
Constraints Opportunities Strategic interventions 5
yielding variety for o Encourage the research
sorghum centers to come up with
o Lack of strong foundation seed and

Value chain analysis

linkage among promote private
research, extension investment on certified
system and sorghum seed
producers production and
distribution and also
strengthen the linkage
between the different
actors
Processing o There is no any new o The attention given to o Introduce value addition
technology agro-processing in the equipment to promote
introduced on GTP encourages more value addition at
sorghum value investment on sorghum smallholder and
addition value addition commercial level
o Lack of diversified o Incentivize innovation in
use of the crop apart the sorghum
from subsistence diversification both for
human and animal
consumption
Marketing o Lack of market & o Domestic and export o Further market research
weak organization of market demand for and organization of
producers cereals is increasing producers into
o Lack of access to commercial entities is
market information recommended

The report on value chain conducted for the findings of the reports are dovetailed at appropriate
focus crops by the national consultants in its absolute places in this report.
form is enclosed as Annexure – 5A. Further, the key

71
 Chapter – 6

Conceptualization and configuration of

integrated ACPZ (including RTC) & IAIP

Need for the project

There are several challenges that need to be
Innovation has become a necessity in today’s addressed for the sustainable development of
business and it is the quintessential key to sustainable agribusiness in Ethiopia as detailed in Exhibit No. 6.1.
development of agribusiness.

Exhibit No. 6.1: Constraints in agribusiness in Ethiopia

• Weak linkage between agriculture and industry

• Uneconomic scale of operation
• Lack of consistency in supply and quality
Supply chain • Lack of cost competitiveness and high cost of farm inputs
management • Poor access to credit
issues • Overemphasis on inefficient fertilizer procurement and distribution
• Low public investment in the sector
• Inadequate & inappropriate storage and distribution infrastructure
• Lack of technical support for the sector

Technological constraints

• Failure to modernize agriculture on a large scale

• Outdated land tenure system
• Low adoption of research findings and technologies
due to weakened extension services
• Low level of agricultural mechanization
• Lack of modern practices on irrigation Inadequacy of
• Lack of year-round farming through irrigation exportable varieties
• Small and un-irrigated
• Unproductive plantations needing replacement / High cost of obtaining
rejuvenation Constraints
for exports certification
• Low productivity of crops due to inferior genetic
stocks
• Inadequate supply of quality planting materials of Limited knowledge on
improved varieties market trends and
needs
• High incidence of pests and diseases
• Heavy post-harvest losses
• Poorly developed value chain
• Subsistent livestock farming
• Quality deterioration due to improper handling of milk
and milk products
• Poor hygienic conditions and practices in
slaughterhouses
• Lack of fish handling facilities, etc.

Source: MACE analysis

72
 IAIP and RTC conceptualized in
line with Ethiopian Agro Industry
Sector Strategy
An effective and proven approach to address
these challenges is to promote large scale agri
clusters. An agro-based cluster is defined as a
concentration of producers, agribusinesses and
institutions that are engaged in the same agricultural
or agro-industrial subsector, and interconnect and
build value networks when addressing common
challenges and pursuing common opportunities.
Ethiopia endowed with bounteous natural
advantages offers immense opportunities for high
growth in agriculture and allied sectors. It is imperative
to take and develop strategies to leverage the growing
demand in both domestic and international markets,
besides fulfilling its food security and nutritional
security. Based on the findings, the thrust areas
requiring priority attention would include improving
production and productivity, reducing production cost,
wastage reduction, increasing value addition, price
stabilization, use of hi-tech agriculture technologies,
genetically modified varieties, micro propagation, micro
irrigation / fertigation, integrated nutrient
management, organic farming, integrated pest
management, protected cultivation / greenhouse
technology, post-harvest management, conservation
and development of native livestock, adoption of state
of the art food processing technologies, focusing on
high unit value realization in export markets etc.
In order to address the constraints as
enumerated above to leverage the potential
opportunities of the agro and food sector in the
country, Ethiopian Agro – Industry Sector Strategy
was evolved by the Ministry of Trade and Industry
(MoTI) in collaboration with the Ministry of Agriculture
and Rural Development (MoARD) and with the support
of UNIDO, FAO and UNDP. The strategy document is
enclosed as Annexure – 6A.
The strategy lays emphasis on increasing
competitiveness, exports and investments as well as
employment in the Agro-Industry sector of Ethiopia. On
the basis of objective analysis, strategic themes have
been identified that will provide the basis for
interventions over the next five years. Each strategic
theme demands that the government, private sector
and other stakeholders cooperate closely in
implementing crucial action programmes that deal
with key strategic challenges facing the priority
sectors. The strategy offers a sound basis upon which
constructive engagement with stakeholders can be
forged – a partnership based on best practices that
must be effective at the national, regional and sub-
sector levels. 6
On the basis of objective analysis, the
following strategic themes have been identified:
Conceptualization and configuration of integrated ACPZ
• Agro-Industrial Infrastructure Development
(development of Integrated Agro-Food Parks)
• Linking farmers to the industry (introduction
of contract farming)
• Increased performance of the small and
(including RTC) & IAIP
medium-scale Agro-Food Processing
Industries (industrial upgrading)
• Building institutional capacity for the
development sector (strengthening the Agro-
Industry Development Department of the
MoTI)
• Skills and education for Agro-Industries
development (technical and managerial
training)
• Improved export performance
• Increased level of Foreign Direct Investment
(strategies to attract FDI)
• Promoting research and development in the
Agro-Industry sector (establishment of a Food
Development and Research Centre (FRDC)
In line with the above, GoE has come out with
an ambitious programme of developing IAIPs across
the country as a growth engine for agribusiness
development. The IAIP would be supported by the
development of Rural Transformation Centres (RTC)
across the catchment area of IAIP to render the raw
material aggregation support to IAIP.
Integrated ACPZ and IAIP cluster concept
It is a fact that the sustainable development of
agri and allied sectors is essential for achieving the
desired objectives such as food security, value addition,
growth in exports, creating jobs for millions of teeming
youths, creating value chains where Ethiopia has
comparative advantages and changing the perception
about agriculture as a business initiative instead of
mere developmental projects.
It is a well-established fact that availability and
access to infrastructure is a prerequisite for attracting
inward investments to the country and the concept of
agri cluster development would aid in attracting
investments by addressing the infrastructure
bottlenecks. There are many such international agri
73
 Many international agri clusters
have successfully transformed the
profile of the region

clusters that have successfully transformed the profile
6 of the region beyond imagination.
The cluster development will have to leverage
the existing logistics network of the region and hence
Conceptualization and configuration of integrated ACPZ
Even significant imbalance is observed in availability of
agri, industrial, environmental, physical & social
infrastructure. However, the existing agri and allied
infrastructure is inadequate for handling the envisaged
growth in terms of domestic demand, agro production,

the clusters need to be aligned along major transport
arteries. Further, this alignment also needs to be
integrated with existing agribusiness regions to have a
proper assimilation of greenfield and brownfield
development.
agri industrial output, business volumes, exports and
social development. This infrastructure inadequacy
proves to be a major constraint for growth. The
development model for sustainable agribusiness need
to effectively address this priority constraint.

Development of agribusiness is not uniform Exhibit No. 6.2 highlights the significant
(including RTC) & IAIP

across the country. Further the inherent strengths factors (project related) which the agri companies
such as availability of natural resources, raw materials consider while making investment decision.
and skill sets etc. vary from one region to another.

Exhibit No. 6.2: Project related significant factors for investment decision

Raw material
supply side - Specialized Upstream &
World class Supporting agri downstream
quality and infrastructure infrastructure
quantity infrastructure linkages

Reduced Reduced cost Marketing

development of operations Concentration Access to infrastructure
on core activity technology
cycle in long run and linkages

Source: MACE analysis

Thus, it is contemplated to broaden the
concept of developing an integrated world-class agri
and food processing industrial hub, with linkages to
production zones, with state of the art
infrastructure facilities to provide conducive
environment addressing the above mentioned
issues for companies engaged in agri inputs, hi-tech
greenhouse cultivation, focus crop processing,
other agro commodities processing, food
processing, agri engineering and allied areas as
depicted in the Exhibit Nos. 6.3 & 6.4.

74
 Integrated ACPZ and IAIP
encompasses agri and allied
sectors in a holistic manner

Exhibit No. 6.3: Integrated ACPZ and IAIP encompasses agri and allied sectors in a holistic manner
6

Conceptualization and configuration of integrated ACPZ

Animal
Dairy husbandry

Agri Apiculture
education

(including RTC) & IAIP

Horticulture

Food
processing Fisheries

Agri
infrastructure
Agriculture

Source: MACE analysis

Exhibit No. 6.4: Integrated ACPZ and IAIP concept plan

Source: MACE analysis

75

ACPZs are, by definition, large delineated
6 regions that shall provide a world class environment
and infrastructure for agribusiness. The state of art
agri industrial, environmental, physical & social
infrastructure shall be established in the integrated
Conceptualization and configuration of integrated ACPZ
ACPZ and IAIP with adequate connectivity for freight
movement. The constituents of an ACPZ would include
open area production zones, controlled environment
growing, precision farming, knowledge hubs and
research facilities, rural hubs, agri infrastructure,
collection centres, primary processing hubs, RTCs,
social infrastructure, agri marketing infrastructure and
(including RTC) & IAIP
other such compatible developments. These would
entail development of agri business zones with
excellent backward and forward linkages, knowledge
hubs, R&D institutions and supporting universities,
social infrastructure like integrated township,
Exhibit No. 6.5: Integrated end to end approach for sustainable agribusiness
Source: MACE analysis
The enabling environment in the integrated
ACPZ and IAIP would allow the occupants to focus
exclusively on precision farming, hi-tech cultivation,
preservation, processing, research, technology
development and innovation in a safe, secure,
aesthetic, professional and high-quality environment.
The integrated ACPZ and IAIP shall focus on
creating an enabling institutional structure for
76
Conceptualized integrated
end to end approach for
sustainable agribusiness
healthcare, educational infrastructure, agro tourism
infrastructure, destination development etc.
The agro processing zones (IAIPs in this case)
would have state of art infrastructure including general
infrastructure such as site grading, roads, power,
water, communications, drainage, sewerage, sewage
treatment plant, effluent treatment plant, storm water
drains, rain water harvesting, fire fighting etc. and
specialized infrastructure such as auction halls, cold
storages, quarantine facilities, quality control labs,
quality certification centres, raw material storage,
controlled and modified atmospheric storage, central
processing centres, etc as enumerated in Exhibit No.
6.5. Furthermore, the state of the art environmental
infrastructure shall be created.
addressing the thrust areas, facilitating technologies,
skill sets and modern management practices. The
agribusiness cluster addresses issues like supply chain
alignment with domestic and international
requirements and improvement of market access
through market intelligence. The integrated ACPZ and
IAIP shall also provide an enabling framework leading
to increase in yield, reduction in consumer prices in
domestic front, grading and food safety practices,
 Integrated ACPZ and IAIP
shall adopt globally
competitive strategies
increase in exports, reduction in post-harvest losses,
sustainable farming practices and increased
penetration of technology. A special emphasis is laid on
facilitating state of art technology, knowhow and
avenues for international marketing of the produce
apart from infusing investments on a transparent
mode to develop the much needed agri infrastructure
& agro based industry units.
The integrated ACPZ and IAIP cluster
development aims at achieving balanced regional
development by leveraging the opportunities in a
sustainable manner which was hitherto either
unexploited or not utilized to their potential. This would
necessitate development of manufacturing and
agribusiness zones on a cluster model, harnessing the
skill sets of the region, ably supported by competitive
industrial, environmental, physical and social
infrastructure. The development of integrated ACPZ
and IAIP would yield the desired results in terms of
economic and social development of the region.
The integrated ACPZ and IAIP shall be
positioned as an integrated industrial and business hub
and shall work with regional research partners,
companies and entrepreneurs to facilitate and
undertake clustering, commercialization and
incubation activities. The integrated ACPZ and IAIP will
also participate in any wider regional innovation system
where benefits can accrue through the collaboration
between local innovation and incubated ventures.
The integrated ACPZ and IAIP will act as a
platform to facilitate this engagement and
collaboration with domain experts, stakeholders, key
participants and shall lead the innovation movement in
the field of agribusiness.
The integrated ACPZ and IAIP clusters shall
also aim to herald a mindset change at the grassroots 6
level so that more and more people in education,
business, government, NGOs, urban and rural
development engaged in innovative activities, are co-
Conceptualization and configuration of integrated ACPZ
opted and participate in shaping the innovation
strategy at national level.
Strategies of integrated ACPZ and IAIP
International benchmarking of product and,
(including RTC) & IAIP
expertise in the creation of seamless integration of
agri production and processing, plug-n-play
infrastructure, cost effective delivery, right sector
selection and focused marketing are some of the key
drivers for the success of the integrated ACPZ and
IAIP.
The comprehensive planning, development,
operation and management guidance on key issues
such as delineation of the production, effective linkages
between production and processing, zoning within IAIP,
country partnership, backward & forward linkages,
general infrastructure, specialized infrastructure,
project structuring, financing, connecting with market
needs, research priorities, industry academia
relationship, strategic linkages, measuring
performance and efficacy, and developing world class
cluster image etc.; are all key factors in the
development strategy. Environmental sustainability,
phyto sanitary and hygienic considerations, food safety
standards etc are also key considerations when
drafting the development strategy.
Integrated ACPZ and IAIP shall adopt globally
competitive strategies as demonstrated in Exhibit No.
6.6.
77
 Integrated ACPZ and IAIP shall
achieve its objectives through well-
devised enablers

6 Exhibit No. 6.6: Strategies of integrated ACPZ and IAIP'

Holistic approach for sustainable development of agri and allied sectors

Conceptualization and configuration of integrated ACPZ

Sustainable agri input – agri infrastructure – agriculture – horticulture – fisheries –

animal husbandry – apiculture – sericulture – agro forestry – agro and food
processing development of Ethiopia
(including RTC) & IAIP

To position Ethiopia as a self-

sufficient in agri sector and
subsectors and exporting
products world over
Globally competitive strategies
Balanced agro and food
industrialization spread across
the Country
Enhanced
Leveraging and harnessing the Addressing To
core offering of the region Attract revenue to Employment Leadership
domestic increase
To raise the competitiveness
domestic farmers, potential to in Innovation
requirement the
and efficiency of SME, women and global growers, local & high end
and export led industrial
entrepreneurship and youth Investments fishers, rural population technology
growth output
involvement in new agricultural community
practices

Source: MACE analysis

Objective enablers state of the art infrastructure facilities

The proposed integrated ACPZ and IAIP shall
achieve its objectives through well-devised enablers as
illustrated in Exhibit No. 6.7 below:
Exhibit No. 6.7: Integrated ACPZ and IAIP
objective enablers
• Create a vibrant large size agro clusters with an
efficient and effective business environment
• Establish a premier world class business hub,
internationally renowned for its infrastructure and
creative energy – preferred home to national /
international companies for partnering and
networking
• Delivering innovative solutions and nurture skills to
meet the fast changing world
• Focused development and attain leadership on a
global platform in providing sustainable agro clusters
domain
• Better utilization and value-addition of agricultural
produce
• Create world class multi formatted industrial
developed land, built up space for business,
residential and commercial space with excellent
• Create the critical infrastructure to fill the gaps in
the supply chain from farm to consumer
• Specialized agri infrastructure facilities at an
affordable cost structure
• Minimizing wastage at all stages in the food
processing chain by development of infrastructure
for storage, transportation and processing of agro-
produce.
• Induction of modern technology into agriculture and
food processing industries
• Provide an intellectually stimulating environment
through which professional from academia, industry,
boutique firms, incubators and research laboratories
can collaborate on projects of business,
Government, societal, commercial and national
significance
• Produce professionals in different sectors with
different skills, who will be capable of innovating,
creating and harnessing both local and global best
practices for solving problems of local and national
interest in the arena of agribusiness
• Create live and vibrant links with industry, academia,
R&D institutions and market nationally and globally
through dynamic knowledge networks
• Encouraging R&D in food processing for product and

78
 Integrated ACPZ and IAIP clusters shall
effectively address the major
constraints to agribusiness
process development
• Providing policy support, promotional initiatives and
facilities to promote value added exports
Source: MACE analysis
Product differentiators
The Exhibit No. 6.8 highlights the project
conceptualization and product differentiation created
through innovation and positioning. Well strategized
agri and allied sector production, linkages between
production and processing, strong infrastructure and
a unique interdisciplinary environment are expected to
contribute towards the goal of creating centres of
excellence in the identified segments.
The proposed integrated ACPZ and IAIP
clusters shall set a new paradigm for sustainable
agribusiness development and shall effectively address
three major constraints to agribusiness viz.,
o Outdated cultivation practices,
technologies & management
o Lack of public investment in connectivity
& logistical infrastructure and
o Lack of private investments in post-
harvest, agro processing and
management
The integrated ACPZ and IAIP ensures
substantial increase in the investments aimed at
streamlining agricultural value chain by attracting state
of the art technology and by encouraging best
practices in every aspect of agribusiness, all of which
will help in reducing total transaction costs and
improve realization for farmers.
The integrated ACPZ and IAIP clusters would
essentially be a confluence of enabling nodes, the
development of which would supplement and
complement the core objectives of the development 6
process. The enabling nodes would cover a horizon of
activities fundamentally of importance to propel the
conceived development of agri and allied sectors in the
Conceptualization and configuration of integrated ACPZ
country.
The IAIP is planned to evolve into a world-class
agribusiness environment characterized by
professional and modern estate management,
meticulous institutional systems, transparent
(including RTC) & IAIP
guidelines and rules, efficiency of services and
discipline with affordable price structure.
The facilities proposed in IAIP are fully
secured and provide the required level of control on
the data and information protection. The occupant
units shall have access to intellectual resources, high
quality specialized and specific infrastructure facilities
(both within and outside the IAIP), highly specialized
equipment, shared resources, business incubation
space and a variety of technical, entrepreneurial and
commercialization services. The occupant units can
enjoy a multi formatted space agreements – long term
leasehold, short term lease, and monthly lease.
The domestic companies engaged in
knowledge sector do look out to have access to the
latest technology from the agriculturally advanced
countries as well as to the marketing support in the
foreign markets. Domestic researchers need to
collaborate with quality researchers from agriculturally
advanced countries as such shared experiences often
lead to adoption of best practices. The integrated
ACPZ and IAIP therefore can play a significant role in
this segment also by collaborating with reputable
university / research organizations.
79
 RTC is a strategic intervention for
business sustenance

Exhibit No. 6.8: Product differentiators

6
•Linkage of agriculture production and processing on a cluster approach
•Integrated system in terms of self-contained eco friendly cluster at vantage location with all the requisite
Unique facilities and supporting infrastructure.
Conceptualization and configuration of integrated ACPZ

positioning

•The components of the IAIP would include industrial, environment, social and physical infrastructure with
multi formatted user friendly options for occupant units
Innovative •Entire segment: agri input - agri infrastructure - agriculture – horticulture – animal husbandry -
configuration fisheries – apiculture - sericulture - food processing
(including RTC) & IAIP

•Large clusters
•Work live learn play
•Pioneering model in the country
Emerging
trends •Focus on agri infrastructure and synergetic with government initiatives

•The project shall be implemented in phases in relation to industry’s growth, market dynamics, policy and
regulations of government with respect to agri and allied sectors and domestic and export demand in the
Risk conventional products and emerging area from industry
mitigation

•To be successful in promoting international agri cluster, partnering with interested countries, reputable
players, universities and research centers is an important ingredient for the concept and project
Right sustainability
partnering

•Strong linkage with farmers, rural community, industry, government and other stakeholders – agri cluster
Strong provides enabling environment
linkages

Source: MACE analysis

RTC – An introduction Inclusive rural development is about improving

Rural Transformation Centre (RTC) is a facility
to implement integrated initiatives for the rural
communities within 100 kilometre radius of the
proposed IAIP site. RTC is one of the rural
development initiatives of GoE which would not only
promote inclusive rural development but would also
serve as a backward linkage to the IAIP in terms of raw
material sourcing and supplying.
the quality of life of all members of rural society. To be
specific, the concept of rural development covers
three different yet interrelated dimensions of rural
development, namely economic dimension, social
dimension and political dimension. The key drivers of
inclusive rural development are: high overall economic
growth, effective land reform, rural infrastructure,
effective institutions, rural financial services, a dynamic
agricultural sector, rural non-farm enterprises, and
subsidies.

80
 RTC connects rural
landscape with agro
industry

Exhibit No. 6.9: Inclusive rural development

6
Economic

Conceptualization and configuration of integrated ACPZ

dimensions
•Capacity and
opportunities to
participate and
benefit from growth
Social dimension process Political dimension
•Comprehensive •Capacity and

(including RTC) & IAIP

social development opportunities to
participate in political
process

Inclusive rural
development

The economic dimension of inclusive rural
development encompasses providing both capacity
and opportunities for poor and low-income rural
households in particular to benefit from the economic
growth process in such a way that their average
incomes grow at a higher rate than the growth of
average incomes in the sector as a whole. The
economic dimension also includes measures to reduce
intra- and inter-sectoral income inequalities to
reasonable levels.
The social dimension of inclusive rural
development encompasses supporting social
development of the poor and low-income households
and underprivileged groups, minimizing inequalities in
various social indicators, promoting women
empowerment and gender equality, and providing
social safety nets for vulnerable groups.
The political dimension of inclusive rural
development encompasses enhancing opportunities
for the poor and low-income people in rural areas,
women and ethnic minorities in particular, to
participate in the political process at the village level
and beyond equally and effectively.
Among the three dimensions of inclusive rural
development, the RTC concept primarily incorporates
two of them, namely economic dimension and social
dimension, economic dimension being the main driver.
With regard to the economic dimension of social
development, the RTCs should be able to provide
capacity and opportunities for the surrounding rural
communities so that they are able to benefit from the
overall economic growth of the country by increasing
their average household incomes. It is expected that
the RTCs will enhance market access for agricultural
and agro-based commodities and products for the
surrounding rural communities that will have a
cascade down effect on members of these
communities through more employment opportunities,
business opportunities and income opportunities.
With regard to the political dimension of
inclusive rural development, the RTC programme is not
mandated to facilitate in better political participation at
the village level. The programme primarily offers
various socioeconomic benefits and opportunities for
the rural communities through which the community
members would get benefit and in turn, they will have a
better say in the political process within their
respective localities.

81

The major components of the RTC initiative
6 include:
• Training and capacity building of rural population
– Training opportunities to rural communities
Conceptualization and configuration of integrated ACPZ
with the objective of enhancing their knowledge,
skills and abilities so that they can earn more
money and improve their living standards. Some
of these training initiatives are in the areas of
cultivation aspects, post harvest handling,
packaging and branding, product performance,
(including RTC) & IAIP
animal feed management. In this regard, in
addition to the proposed training centre in RTC,
a network arrangement can be established with
the existing FTCs within the catchment area of
RTC so as to integrate the operations of RTC
with FTC.
• Market information centre - proposed as a one-
stop information centre that combines
information and services offered by various
ministries and government agencies, this centre
would provide information on the agro-food
business development, price Watch, market
trends, market demand in terms of products
and quality etc.
• Agriculture support services – Rural community
would derive the benefit for productivity
enhancement, premium vegetable production
including high demand vegetables like capsicum,
dairy aspects including raw milk marketing &
quality aspects through the proposed
components such as agriculture input services,
agriculture equipment support services, agri
clinic etc.
• Agro-food products processing – aims at
developing food processing enterprises in the
field level, emphasizes on the development and
improvement in agro-food product quality for
local and overseas markets. This would support
agro-based industry development through value
added activities and improvement of income for
the farming communities.
• Agricultural produce supply chain management -
planned to re-rationalize the marketing concept
of agricultural products through the
management of supply chain from farms to
consumers. This involves prudent planning,
efficient execution, and appropriate control in
82
RTC enables sustained
agribusiness
the supply chain of agricultural products,
particularly in movement and storage of raw
materials, inventories and finished products
from the points of production to the points of
consumption.
• Institutes cooperation by way of extension
centre – Institutes cooperation aims at creating
awareness through various programmes of the
industry development institutes and with the
objective of enhancing the socioeconomic status
of rural communities.
• Food safety, quality and certification services -
technical advisory services for food safety and
assurance would help the food industry –
especially for small and medium industries – to
produce safe food by employing hygiene
practices during the process. In addition,
certification services for promoting export would
also benefit the users.
• Rural population micro financing facilities -
financial institutions and government agencies
would be providing micro credit facilities to
borrowers at RTCs at low interest or profit rate
to help the entrepreneurs conducting their
business activities in RTC.
RTC can play a supportive role within its own
capacity with other governmental and non-
governmental programmes and initiatives that are
dealing with the rural communities. The RTC concept
should be a welcome move for the members of
surrounding rural communities, because it enables
them to avail skills training, receive numerous
governmental services, explore business opportunities,
and access needed information within the same
premises. RTC is not an umbrella initiative for inclusive
rural development, rather a programme to support
other governmental and non-governmental initiatives of
rural development.
RTC would also consider the existing facilities
such as FTCs, micro finances, agricultural marketing
agency etc. in order to have a complimenting effect.
Concept of RTC
As a part of ACPZ, the IAIP will be integrated
with the RTCs located in the catchment areas. The
schematic overview depicting the functioning of RTC is
depicted in Exhibit No. 6.10.
 Integrated ACPZ and IAIP
shall benchmark its
configuration and processes

Exhibit No. 6.10: Schematic overview of RTC

6

Conceptualization and configuration of integrated ACPZ

(including RTC) & IAIP
Source: MACE analysis

RTC is a place where rural communities as primary processing hub and storage apart from its
come with their produce (crop and livestock) and sell it capacity building, knowledge dissemination, market
to RTC as an aggregating source and for forwarding to intelligence and other rural intervention hub. The
IAIP. The primary function of the RTC is, therefore, product movement model can be one or more of the
collection or procurement of agricultural and allied following combinations.
produce. Apart from their primary function, RTCs
would also have infrastructure for a rural market, agri- a. Individual growers – collection centres – RTC -
clinics and social infrastructure and creating capacity IAIP
building. b. Individual growers – RTC – IAIP
c. Individual growers – IAIP
As can be seen from the above, the collection d. Farmer groups – collection centres – RTC – IAIP
centres strategically located in the effective e. Farmer groups – RTC – IAIP
procurement zone of RTCs will receive the f. Farmer groups – IAIP
commodities from various farmer, farmer groups and g. RTC1 – RTC4 – RTCn – IAIP (as a process of load
cooperatives located in the zone of procurement. The pickup)
collected raw material would be preserved and shall be
subjected to basic processing before it is moved out to The integrated approach towards sustainable
RTC or to IAIP as appropriate. The products in the agribusiness was studied based on product movement
RTCs are subject to primary processing according to from farm to consumer markets and this is presented
the need of the specific products, stored and in Exhibit No. 6.11 and the findings are dovetailed
dispatched on the consignment mode to the while arriving at the infrastructure requirements.
respective occupant units of IAIP. Thus RTC functions

83
 Integrated approach adopted for
product movement and value
addition

Exhibit No. 6.11: Integrated approach – product movement and value addition
6
Conceptualization and configuration of integrated ACPZ
(including RTC) & IAIP

Source: MACE analysis

Benchmarking of integrated ACPZ and IAIP As a part of business plan, the benchmarking
exercise for the integrated ACPZ and IAIP is carried
The proposed integrated ACPZ and IAIP shall out considering the following parameters:
focus on benchmarking its facility configuration and
processes to international standards to improve - Scale
performance, governance standards, efficiency, - Sector coverage
market value, affordable price structure, etc. that shall, - Key success factors
in turn, enhance the competitiveness of agribusiness - Facilities
sector of Ethiopia. A few successful examples of agri - Rationale
clusters across the globe are detailed in Annexure –
- Development model
6B.
- Regulation and quality assurance
Apart UNIDO & MACE had organized a high - Regulatory framework
level delegation to Malaysia, Vietnam and Thailand to - Collaboration
study the existing agro and food industrial parks along
with their supply value chains and forward linkages in Several success stories can be cited for
order to understand end to end approach in agro cluster development across the globe. The key
processing sector on a cluster / congregate model. inferences from this benchmarking exercise reveal
certain fundamental characteristics as shown in
Exhibit No. 6.12

84
 The characteristics of
successful agri clusters
are factored

Exhibit No. 6.12: Key inferences from benchmarking exercise 6

Conceptualization and configuration of integrated ACPZ

Agro clusters - fundamental characteristics

Economy of
Excellent

(including RTC) & IAIP

scale that Private sector
forward and World class
facilitates the Technology playing a
backward State of the art operation and
Large scale occupant innovation meaningful role
linkages with infrastructure maintenance
development industry to driven in the entire
synergy among facilities strategies and
achieve the development development
the occupants support
required cycle
and suppliers
threshold

Source: MACE analysis

The proposed integrated ACPZ & IAIP is
configured considering the key aspects and lessons
learnt during secondary research and study tour
besides factoring country specific and regional specific
issues.
Agro industrial growth corridor
As an effort to develop sustainable
agricultural development in Ethiopia, ensure balanced
agriculture and food industrialization across the
country, enhanced revenues to farmers and
employment opportunities to local population, multiple
integrated ACPZs and IAIPs are contemplated. This
would eventually lead to development of agri – horti –
animal husbandry – fisheries – agro and food
processing corridor of excellence, collectively coined
Agro Industrial Growth Corridor (AIGC) in a phased
manner as depicted in Exhibit No. 6.13. The enlarged
version of integrated development of AIGC, ACPZ &
IAIP is presented as Annexure – 6C.
This corridor will create enabling platform for:
• Sustainable agro horti development of entire
regions of Ethiopia
• Balanced agro and food industrialization
spread across the country
• Enhanced revenues to farmers and
employment potential to local population
• To increase the agro industrial output and
effective utilization of raw materials amount
the regions
• Export led growth and better unit value
realization
• Leadership in innovation & high end cultivation
and modern processing technologies
• To raise the competitiveness and efficiency of
SME
• IAIP’s in the identified regions will complement
each other and the country as a whole will
become the procurement zone for IAIP’s

85
 Evolution of agro corridor

Exhibit No. 6.13: Integrated development of AIGC, ACPZ & IAIP

6
Conceptualization and configuration of integrated ACPZ
(including RTC) & IAIP

Source: MACE analysis

Social inclusion strategy Exhibit No. 6.14: Rural community and social
inclusion
Engaging actively with the rural community
and social inclusion
Rural support centres
The project shall have strong linkage to rural •Agri clinic
communities in an urban setting environment as •Collection centre
depicted in Exhibit No. 6.14. •Primary processing hubs
•RTCs
•Training centers
•Youth development cell
•Women empowerment cell
•Micro finance
•Rural market office
•Market information cell
•Knowledge support cell

Source: MACE analysis

86
 Better realization to rural
community enabled
The integrated ACPZ & IAIP shall actively
engage with rural community for promoting
sustainable agricultural activity, enhanced productivity
Table No. 6.1: Strategies for rural community engagement
o Sustainable management of natural resources for
achieving food, nutritional, environmental and
livelihood security
o Development of improved crop varieties / hybrids
suited to diverse agro-ecologies and micro conditions
o Genetic resources and development of improved
cultivars with high quality characteristics,
productivity, resistance to pest and disease and
tolerant to abiotic stresses
o Efficient, economic, eco-friendly and sustainable crop
production and protection technologies
o Refinement of seed-production technologies and
production of breeder seed with added emphasis on
hybrid cultivars
o Conservation and sustainable use of genetic
resources of plant and agriculturally important
microorganisms
o Knowledge dissemination and technology for
increasing the yield. This shall also include strategic
planning for production of commercial crops, crops
having export potential and high unit value realization
o Promote high density plantations, shade net
cultivation, poly house cultivation, green house
cultivation, precision farming, etc.
o Diversification from traditional crops to plantations,
orchards, vineyards, flowers and vegetable gardens
o Identification / collection, rapid multiplication &
popularization of indigenous crops and other flora of
importance with emphasis on domestic and export
promotion
o A shift from subsistent livestock farming to
sustainable & viable livestock & poultry farming
o Conservation and improvement of native animal
genetic resources to maintain diversity of breeds
o Genetic up gradation of indigenous/native cattle
o Enhance fodder and feed production through well
devised strategies
o Improving productivity of animal husbandry sector
along with quality of products, productivity per animal,
organized marketing, prevention of new diseases
o Development of technologies to support production
enhancement, profitability, competitiveness and
sustainability of livestock and poultry sector
Source: MACE analysis
and better realization to farming community as shown
in the Table No. 6.1. 6
Conceptualization and configuration of integrated ACPZ
o Collaborative interaction of small scale farmers with
livestock processors and input suppliers
o Emphasis on milk production and milk processing
capacity and production of dairy products
o Promoting indigenous poultry breeds including
(including RTC) & IAIP
improved strains that can survive with low quality
raw feed and better resistance to diseases for
creating employment in the rural sector
o Strengthening and augmenting the database and
information for standardization of methodologies
for estimation of catch from diverse aquatic
resources of the region
o Addressing the growing domestic and overseas
market for better price realization
o Meeting international sanitary and hygiene
standards and norms on equipment’s and facilities
on exporting products
o Sustainable, profitable and competitive enterprise
through engineering interventions of farm
mechanization, value addition & energy
management in production & post-harvest
operations
o Adoption of precision machinery and strategies for
carrying out timely and efficient agricultural
operations in irrigated, rain-fed and hilly areas for
agriculture, horticulture, livestock and fisheries
production
o Popularization of new technologies/ tools /
techniques for commercialization / adoption
o Energy management and utilization of conventional
and non-conventional energy sources in agricultural
production and processing activities
o Ensuring the timely availability of agri inputs of right
quality and quantity
o Enhance access to capital, technology, effective
management and supporting services such as
credit, marketing, research and extension
o Establish linkages amongst stakeholders such as
farmers, industry, research, and extension
mechanisms
o Minimize post-harvest losses, reduce wastages
resulting in higher value realization to farmers
87
 Chapter – 7
Land for IAIP & RTCs
Location detailing and salient features
A detailed insight into the site and its analysis
is absolutely necessary in order to suggest planning
and developmental framework for the integrated ACPZ
and IAIP in Western Tigray zone of Tigray region. The
site has to be analyzed with respect to location
parameters, physical parameters and the existing
constraints have to be respected while planning the
developmental activities and wherever possible the
constraints have to be converted into opportunities.
With the above objectives a team from MACE
visited the site along with UNIDO officials on 27th
December 2014 and collected various information
and data regarding the physical and location details. In
order to obtain the site specific details from local area,
a team of national experts was appointed to collect the
agricultural production details, crop pattern,
agronomical practices, market details, existing
infrastructure details and policy, legal and institutional
framework. MACE team had close interactions with
national experts, various department officials, and
officials from regional government to have a firsthand
information and knowledge about the site and its
features.
General profile of the Tigray region
Tigray region is within the structure of the
Federal Democratic Republic of Ethiopia. It was
established in 1993 as one of the nine regions of
Ethiopia. It is located in the northern part of the
country bordering with Eritrea in the north, Sudan in
the west, Afar in the east and Amhara in the
southwest. The region extends from 120° 13' to 140°
54' N and from 36° 27' to 40° 18' E. It has autonomy
to manage overall political, social and economic
development of the region.
It is a very historic region noted for its
custodianship of one of the powerful civilizations of the
ancient world, which was centred here from at least
400 BC to the 10th century AD. Spreading far beyond
modern Tigray, it moulded the earliest culture of
Ethiopia and left many historical treasures: towering
finely carved stele, the remains of extensive palaces,
and the ancient places of worship are still vibrant with
culture and pageantry.
Exhibit No. 7.1: Tigray region - geographical
position
Source: CSA, Ethiopia
Tigray is a region in transition having suffered
the brunt of the 30 year war between Ethiopia and its
former province of Eriterea which gained
independence in the early 1990s. It suffered more
from a renewed fighting in the year 2000 that led to
further dislocation of the rural population in the border
regions. This in addition to the seemingly unending
impacts of drought, famine, and the serious impacts of
environmental damage had an implication on the
development.
Administratively, the region is divided into six
zones: western zone, north-western, central, eastern,
south-eastern, and southern zones and one city
administration, Mekelle, special zone. The region has
34 woreda administrations, 12 town woredas and
each woreda is sub-divided into 692 lowest
administrative levels called, kebelles. The delineation is
made based on natural boundaries like rivers,
escarpments and mountain peaks; settlement,
population size, agro-ecology and convenience and
proximity to administer centers. The council which is
the highest administrative body of the state is made up
of 152 members; the executive body consists of 16
personalities. The region has an estimated area of
88
 Meticulous criteria
adopted for land selection

80,000 square kilometers. 1.5 million hectares of land
in the region is cultivable, of which one million hectares
is being cultivated, while 420,877 hectares of land is
terraced. The region has about 300,000 ha suitable
for irrigation.
48.8% are without municipalities. Besides, sixteen
towns including Mekele have development plans. 7
The population details of the major urban
centres in the region are given in Table No. 7.1.

Land for IAIP & RTCs

Exhibit No. 7.2: Tigray region – Administrative Table No. 7.1: Population details of major urban
zones centres

Name of Name of
urban Population urban Population
center center
Mekele 184973 Adishenu 8107
Adigrat 71314 Selehleha 8078
Axum 51727 Hagere 7429
Selam
Alamata 49883 Atsbi Enda 6403
Selasie
Endaselasie 48335 Hawzen 6162
Adwa 46645 Agula 5068
Maychew 37581 Aynalem 4793
Korem 32072 Addi 4743
Remets
Source: CSA, Ethiopia Wukro 31245 Debub 4582
Humera 27807 Bizet 4075
Two agro industrial growth corridors are Kuha 18739 Samre 4058
selected for the establishment of Integrated Agro- Shirado 16032 Debrekerbe 3888
Industrial Park in the region, namely, Western Tigray Abiyadi 14996 Addi Hirdi 3790
AIGC, that comprises Western and North West Tigray Adigudem 12979 Gijet 3601
administrative zones and Southern Tigray AIGC, that
Mersa 11745 Addi 3509
encompasses the Southern administrative zone of
Hageray
which western Tigray and north-western Tigray are
selected as a pilot study. Zalambesa 11533 Maygaba 3446
Waja 11510 Edaga Arbi 3388
The Western Tigray Agro Industrial Growth Freweyni 10735 Maykinetal 3208
Corridor includes nine administrative woredas of which Endabaguna 10464 Addi 3074
three woredas (Kafta-Humera, Wolkaite and Tsegede) Awuala
belong to the western administrative zone and six Enticho 9890 Yechila 2959
woredas (Tahtay-Adiabo, Laelay-Adiabo, Tselemti, Edaga 9264 Kisadgaba 2944
Asgede-Tsimbila, Tahtay-Koraro and Medebay-Zana) Hamus
belong to the northwest administrative zone. Maytsebri 9099 Addi 2925
Nebreid
Major urban centers in the region Rama 8552 Haik 2606
Mesahil
In Tigray there are 86 urban centers that are Wukkro 8431 Feresmay 2465
identified as towns by the Bureau of Construction and Maray
Urban Development. Out of these towns 15 are found Addi Daero 8335
in the North western zone, 11 in Western zone, 22 in
central, 15 in the Eastern, 22 in the Southern zone, Source: Report on Ethiopian demography and health
and of course the remaining one is Mekele. Out of the
existing towns of the region, 44 towns (51.2%) have
already established municipalities and the remaining

89

Demography and socio-economic settings of the
7 region
The population of Tigray is over 4.3 million,
with an average family size of five persons per house
Land for IAIP & RTCs
hold (Central Statistics Agency 2008). About 19.5% of
the population lives in urban areas and about 1.45
million people in rural areas benefit from the safety net
programme. According to the 2007 census, the
population is growing at 2.5% per year and population
density in the region is 63 persons per square
kilometer (Central Statistics Agency 2008). However,
other studies indicate that in the highland areas the
average density is 137 persons per square kilometer,
showing that there is high population pressure in these
areas. Eastern Zone is relatively densely populated
while Western part of the region is a sparsely
populated zone. Woreda density varies from 31.9
persons per square kilometer in Kafta Humera to over
250 persons per square kilometer in Adwa, upper
Maichew and Alamata (CSA, 2008).
Exhibit No. 7.3: Population density in Tigray region
Source: CSA
The proportion of population under the age of
15 years is 43.7 percent of the total population in the
region. On the other hand the proportion of population
aged 65 and above is only 4.4 percent while the
proportion of active labour force (16 – 64 years) is
51.9 percent. Both fertility and mortality in the region
are very high. On average a woman bears 5 children in
her productive lifetime. The average life expectancy at
birth is below 50 years.
90
Due diligence on both raw
material availability and
engineering aspects
Agriculture is the mainstay of the region’s
economy which contributes about 57 percent of the
gross domestic product (GDP), of which 36% is from
crop production and about 17% and 4% is from
livestock and forestry respectively. Rain fed crop
production is the main economic activity for over 80%
of the population, supplemented by livestock rearing
under mixed-subsistent system. The major crops
produced in the region are teff, sorghum, wheat and
maize. Other crops such as sesame, horse bean, lentil,
niger seed, cotton and spices are also produced. It has
3.04 million cattle, 2.4 million shoats, 2.3 million
poultry, 187,000 beehives and good potential of lakes
and river fishery. The region is endowed with natural
resources such as natural gum, marble, gold,
sandstone, gypsum, quartz and others.
The agriculture sub-sector’s growth rate is
estimated to be 4 percent per annum while that of the
GDP is 5.3 percent per annum. It is the major source
of food, raw materials for local industries and export
earnings. Over 90 percent of the crop output is
produced by the peasant sector, which is
characterized by a low-level of technology and largely
rain-fed. Because of the frequent drought and low
agricultural productivity, food deficit is the central
challenge of the region. Even in a good year, peasants
cannot produce enough foods to cover their
subsistence requirements. Poverty and food insecurity
are, therefore, very severe in the region.
According to the report of Bureau of Finance
and Economic Development, the region has poor and
insufficient health services with health service
coverage of 55%. The health service to population
ratio in the region is one hospital for 1.3 million people,
one health station for 337,400 people and one clinic
for 28,500 people. In terms of education, the Tigray
region has a high level of enrolment ratio even as
compared to national level.
Primary schools gross enrolment ratio in the
region is 97 percent. Infrastructural services like
telecommunications, road network and transport
services are very much limited.
Tigray is highly vulnerable to recurrent
droughts and with reducing trend of natural resources.
Currently, the regional government together with other
development partners is working to reverse this
situation. Multifaceted efforts are being undertaken to
improve the living conditions of the people in the region
and the nation as a whole with the assistance of donor
 Tigray region contains three
main traditional divisions of
arable Ethiopia
agencies and international communities. Though the
region has potential resources that can minimize the
food insecurity situation and improve socioeconomic
development of the region, among others there is still
financial, skill and management gaps of implementing
institutions, which are the major development
challenges of the region.
According to estimates by Bureau of Finance and
Economic Development of the region, average real
GDP per capita at constant price for the years 1992
EC (1999/00) to 1999 EC (2006/07) was Birr
1000.38. This figure was slightly lower than the
national poverty line indicated in the PASDEP
document (Birr 1075.00). Though per capita income
was not disaggregated by urban and rural areas, it is
expected that the urban population would be affected
by the recent price increases, hence impacting on the
expenditure pattern of the poor urban dwellers.
Agro – ecological zones and climate
Tigray is located at the northern limit of the
central highlands of Ethiopia. The landform is complex
composed of highlands (in the range of 2300.3200
meters above sea level, (masl), lowland plains (with an
altitude range of <500.1500 masl) mountain peaks
(as high as 3935 masl) and high to moderate relief
hills (1600.2200 masl). Thus Tigray has diversified
ago-ecological zones and niches each with distinct soil,
geology, vegetation cover and other natural resources.
The topography of Tigray region contains
three main traditional divisions of arable Ethiopia: the
kola – lowlands (1400 – 1800 meters above sea
level) with relatively low rainfall and high temperatures;
the woina dega – middle highlands (1800 – 2400
meters above sea level) with medium rainfall and
medium temperatures; dega – highlands (2400-3400
meters above sea level) with somewhat higher rainfall
and cooler temperatures. In general the region has a
diverse topography, with peak highlands (8%),
midlands (39%) and lowlands (53%), which together
create diversified agro ecological conditions. The wide
range of variation in altitude (2000 – 4000m above
sea level) governs the temperature range and climatic
conditions in the region. On the basis of altitude six
major agro-ecological zones are identified: Upper
Dega, Dega, Weyena Dega, Upper Kola, Lower Kolla
and Wurch.
The climatic condition of the region is a direct
reflection of its altitude. The recorded annual mean
temperature of the region ranges from 12°c in some
highland areas to 37°c in Humera, which is Arid Kolla. 7
The climate is generally sub-tropical with an extended
dry period of nine to ten months and a maximum
effective rainy season of 50 to 60 days. The rainfall
Land for IAIP & RTCs
pattern is predominantly uni-modal (June to early
September). Exceptions to the rainfall pattern are
areas in the southern zone and the highlands of the
eastern zone, where there is a little shower during the
months of March to mid May. Considering rainfall,
atmospheric temperature and evapotranspiration,
more than 90 percent of the region is categorized as
semi-arid. The remaining areas in the region can be
categorized as dry sub moist (near the central south
highlands and the Wolkite highlands) and arid (the
lower areas of Erob and Hintalo Wajerat woredas).
There are also some moist zone patches in the Kisad
Gudo, Mugulat and the Tsegedie highlands.
Tigray region belongs to the African Dry lands,
which is often called the Sudano-Sahelian region. It is
characterized by sparse and highly uneven distribution
of seasonal rainfall, and by frequent drought. The
amount of rainfall increases with altitude and from
east to west, and decreases from south to north.
Average rainfall varies from about 200 mm in the
northeast lowlands to over 1000 mm in the south
western highlands. The coefficient of variation in
annual rainfall for the region is about 28 percent,
compared to the national variation of 8 percent.
The highest rainfall in the region occurs during
summer season which starts in mid June and ends up
in early September. Rainfall distribution in the region is
characterized by high temporal and spatial variability
with annual precipitation ranging from 500 to 1000
mm. The major problems and challenges facing the
region are the inter-annual and inter-seasonal
variability of rainfall volume and distribution. Based on
rainfall, the agro-ecology of the region can be classified
in to three major classes namely Dry, Wet and moist.
Dry climatic element covers the highest portion of the
region (66.8%) and the moist and wet climatic
elements cover 24.2% and 9% respectively as it is
depicted in Table No. 7.2 below.
Table No. 7.2: Agro-ecological zone classification
and their area coverage
Agro ecological
Area covered Percentage
zone based on
in sq.km (%)
rainfall
Dry 36467.9 66.8
91
 Cultivable land is the
dominant land use in the
highlands of Tigray

Agro ecological Table No. 7.3: Land use – Tigray (in percentage)
7 zone based on
Area covered Percentage
in sq.km (%)
rainfall Type of land Percentage (%)
Moist 13179.6 24.2 Bush & shrub 36.2
Wet 4925.1 9.0 Cultivated land 28.2
Land for IAIP & RTCs

Total 54572.6 100 Grass lands 22.8

Source: Case study on effect of climate changes in Tigray
Land use pattern
The distribution of land use/land cover type in
Tigray is given in Table No. 7.3. The major types of
land use are bush and shrub land (36.2%), cultivated
land (28.2%), and grass lands (22.8%). Other forms of
land use account for 12.8% of the land mass (Bureau
of Finance and Economic Development 2007).
Other forms 12.8
Total 100.0
Cultivable land is the dominant land use in the
highlands of Tigray where there is high population
density. The natural forest resource of the region is
overexploited and covers only about 0.2% of the total
land area. The decline in forest cover is closely linked
with human economic activities and population
pressure. Community survey undertaken by the
International Food Policy Research Institute has
broadly classified the lands into eight groups as it is
depicted in Table No. 7.4 below.

Table No. 7.4: Zonal land use pattern in Tigray (in ha)

Type of land Southern Eastern Central Western Total

Cultivated rain-fed present 225494 121681 537276 1093405 1977856
Cultivated irrigated 3783 902 1264 413 6361
Cultivated rain-fed potential 17815 1204 1509 306453 326980
Cultivated irrigated potential 216 231 75 1580 2103
Grazing land 63067 40823 279345 542264 925499
Natural forest 39090 142405 240622 425841 847958
Plantation 10579 9114 14639 3579 37911
Wasteland 44147 120760 320506 294884 780297
Total 404192 437119 1395235 2668419 4904965
Source: Community survey

o Rivers and lakes development efforts being made in the different

Tekeze and Mereb are international rivers
that pass through the region with their sources in the
Amhara and Eritrean Mountains, respectively. There
are small rivers such as Geba, Worii, Berber, Arqoa,
Teter, Seysa which are suitable for irrigation
development. Tekeze is a promising source of
hydroelectric power. Lake Ashenge, which is found in
the state, is an interesting area for observing birds and
for fishing.
o Road network and density
sectors of the economy. Without road network
socioeconomic development seems impractical. Due
to the protracted war that took place in the region and
the then oppressive policies in the past decades, no
road maintenance was carried out and as a result
almost all existing roads were extensively damaged, or
out of use. The total road available in the region in
2001 E.C. was 2850 km, where 450 km was asphalt
and the rest 2400 km was all weather roads. This
brings the density to 53 km per 1000 km2. Taking the
population size of the region (data of 2007), road
density was 0.7 km per 1000 population.

Availability of standard road is one of the basic

necessities and precondition for development. The
expansion of road construction can greatly support the

92
 Infrastructure provision in
the area is moderate and
efforts are on to improve
the service delivery
Water supply
o
The current coverage of water supply of
Tigray region is still at its lowest level. The demand for
clean water and appropriate sanitation facilities is
increasing from time to time. Different stakeholders
intervening in the sector are striving to meet these
demands by constructing water supply schemes of
different scale. As a key player in the overall efforts
being made to meet the peoples’ demand for these
basic and righteous services, the regional government
water resources bureau has constructed a large
number of water facilities of different scales.
The major source of potable water for the
region is mainly from groundwater resource including
hand dug well construction, shallow well drilling up to
60 meter depth, spring development and deep water
well drilling mainly for urban and semi urban towns
The use of surface water for domestic water
supply is not so much practiced in the region. Adwa
water supply and currently Axum water supply are the
only schemes in the region that uses surface water
source from Dam source built at Adwa area.
The total water supply coverage in the region
is 62 per cent.
o Electric power
Electric power supply is one of the most
important components of development. The region has
hydroelectric power supply. Power supply until recently
was dependent on generators, however, by the 1998
summer, the scheme to connect the region to the
national grid was completed. The Tekeze hydroelectric
project which was completed in 2009 is Ethiopia’s
largest public works project. The powerhouse contains
four 75 MW (101,000 hp) turbines generating 300
MW (400,000 hp) of electricity. A 105 kilometers
transmission line connects it to the national grid at
Mekele.
o Health infrastructure distribution
Recent data from Health Bureau shows that
the hierarchy of health institutions changed with the
recent civil service reforms that enable efficient
service delivery and wider community health coverage.
Accordingly, reports of 2000 E.C. reveal that the
number of health posts was 590 in the proportion of
one health post per tabia (peasant association); 117
nucleus health centers; 52 health centers; 12 district
hospitals; and 1 referral hospital. 7
The ratio of bed to population was 1:2376.
The health performance indicators of the region
Land for IAIP & RTCs
(2000 E.C.) depicts that infant mortality rate in the
region was 67 per 1000 live births; child (under 5
year) mortality rate was 106 per 1000 live births;
maternal mortality rate was 551 per 100,000; and
HIV/AIDS prevalence rate was about 2.8. The
2002/03 information obtained from Health Bureau
(BoH) indicated that health service coverage of the
region was 55%.
o Education
Education services are improving since the
war ended in 1991. As of 2006 there were 1,725
schools in total of which 113 preschool, 1598
primary, and 64 secondary high schools; 54
Community colleges including 1 teacher training
institute; 2 technical schools; 1 business college; I
nursing school, 1 agricultural college and 2
universities. Mekelle University has three campuses
which include a medical school at Ayder campus,
business school at adi haki campus and the main
campus at enda Iyesooss which can accommodate
15000 students. Axum University and Adigrat
University are other main centers of education.
o Major economic activities
The region has created favourable conditions
and incentives in order to attract investors. Many
projects were initiated in the region with focus mainly
on agriculture, industry, hotel and tourism, social
services, mining, construction and transport. More
than 200,000 persons are benefitted from the job
opportunity created by these projects. The state also
has large farming areas suitable for the production of
cash crops such as cotton and different kinds of
oilseeds.
About 83% of the population is farmers. Teff,
wheat, corn, sorghum, niger seed, flaxseed and
sesame are the main crops. Other agricultural
products include pulses, beans, lentils, onions,
vegetables and fruits and potatoes. Irrigation and
terrace farming are used on the steep slopes. The
region is also known for its export items of cotton,
incense, sesame and minerals. 1.5 million hectares of
land in the region is cultivable, of which one million
hectares is being cultivated, while 420,877 hectares
93

of land is terraced. Handicraft (gold smith, painting and
7 wood sculptures) is another area of activity observed
in the historic cities of the state.
o Industry
Land for IAIP & RTCs
Industry is still minimal but growing, some of
the industry include an equipment manufacturing and
industrial engineering company called Mesfin Industrial
Engineering (MIE) where a wide range of products is
manufactured at its industrial complex (35,000 m²
covered premises on a 120,000 m² site), which is fully
equipped with the state-of-the art machinery. It
employs 600 well-trained industrial workers including
designers, technologists, welders and quality
assurance experts.
It designs, manufactures and installs
equipment and components for the energy, mining,
manufacturing transport and agriculture sectors. With
an annual capacity of 3,000 trailers and semi-trailers,
MIE is the biggest trailer manufacturer in East Africa.
MIE designs and manufactures vehicle bodies,
trailers, as well as high & low-bed semi-trailers. Heavy-
duty trucks are assembled at the Truck Assembly
Plant in Mekelle. These trucks are especially suited for
the road conditions in Africa and are competitively
priced. MIE's product range includes inter-city and city
buses, skip-loaders, and waste and sewer cleaners for
the municipal services.
There is also a pharmaceutical factory, a
textiles factory, a cement factory, a leather tanning
factory, a marble cutting factory, a flour mill factory, a
nail factory, a water purification factory, and a small
shoe factory are some of them. Most new enterprises
are small and medium scale.
The industrial including Mining and quarry
manufacturing has grown in four years by 24.7%,
which incorporates water, electric and construction
activities.
Telecommunications have improved over the
past few years.
o Environmental issues
 Cultivable land is scarce with growing
population
 All land is owned by state but user rights given
to farmers and pastoralists
94
Tigray region has created
favourable conditions and
incentives in order to
attract investors
 The majority of the population in Tigray relies
largely on peasant agriculture, but becoming
(slowly) more market oriented.
 The pressing environmental issues include soil
erosion as well as reduced fertility and
productivity, gully formation, deforestation,
pressure to cultivate slopping land, and use of
dung for fuel rather than as organic fertilizer
 Unable to afford inputs (because of high risk
of crop failure)
 Vicious circle of over-use of land in order to
meet basic food security causing decreased
fertility
o Economic issues
 Difficulty of transportation due to the rugged
terrain
 Rapid population growth
 Limited off-farm incomes
o Ongoing efforts to remedy these problems
 Soil/water conservation (SWC) measures
supported by NGOs as well as the regional
government technical officers, promotion of
“area closures” to allow environmental
regeneration, communal resource
management including state managed forest
enclosures.
 Agriculture-Led Industrial Development (ALID)
strategy adopted by the current government
in power to create strong linkages between
the agricultural sector and the nascent
industrial sector of the regional economy,
thereby, alleviating chronic poverty, ensuring
food security, and reducing the level of
unemployment.
 Improved regional transportation access has
contributed to agricultural development and
improved resource management and human
welfare as has the overall improvement in
education.
 Measures have been taken to “liberalize the
input and output markets and increase
institutional support for agricultural research
and extension services” as well as “land
registration aimed at improving farmer’s land
tenure security”.
 Multi criteria analysis for
land selection

Development of criteria for selection of land for
integrated ACPZ and IAIP
Identification of land is the first and foremost
activity in any development process. The importance of
suitability of land are identified and each parameter
has been assigned a weightage for conducting a 7
rationale evaluation to finalize the land for the
development. The critical success factors influencing
the land selection criteria are:

Land for IAIP & RTCs

identifying suitable land for the development of
integrated ACPZ and IAIP can be appreciated by the • Status
fact that the identified land should be able to support • Connectivity
the development by virtue of its physical features and • Physical features
complement the successful development and
• Infrastructure availability
sustained operation of integrated ACPZ and IAIP.
• Environment and social considerations
For the identification and assessment of • Business considerations
suitability of land for the proposed integrated ACPZ
and IAIP in Western Tigray region, a structured The land selection exercise based on the
approach is adopted. The key parameters for each above approach is depicted as Table No. 7.5.
critical success factor influencing the selection and

Table No. 7.5: Assessment criteria for land selection

S. Critical success CSF Weight age

Parameters to evaluate the CSF
No. factor (CSF) weight (%) (%)
1 Status 30% Land acquisition status 6%
Time required for land allocation 9%
Land price 15%
2 Connectivity 25% Resource availability with specific reference to 10%
agro and allied sector
Nearest rail head and its distance from the 2%
identified site
Distance from nearest highway 5%
Nearest airport and its distance from the 2%
identified site
Nearest urban settlement and its distance from 6%
the identified site
3 Physical features 20% Size & shape 5%
Topography 5%
Soil conditions 5%
Accessibility 5%
4 Infrastructure 10% Industrial power & network 5%
availability Water for industrial use 4%
Sewerage disposal & storm water disposal point 1%
5 Environment and 10% Environment regulations 4%
social Building regulations 3%
considerations Surrounding areas 3%
6 Business 5% Presence of competing facilities 3%
considerations Supporting business environment 2%
100% 100%

Source: MACE analysis

95

Site for IAIP
7  Land use / land cover
An area of 1000 hectares of land is identified
in Western Tigray administrative zone, Tigray region
out of which 258.62 hectares considered for initial
Land for IAIP & RTCs
development.
The proposed site falls under the jurisdiction
of Ba’eker town. The site is abutting the federal
highway connecting Gondar and Humera. The site is
located approximately 35 kms from the major town of
the zone, Humera which allows it to tap on the well
developed social infrastructure in terms of banking,
financial, recreational and logistics support. Ba’eker
town which is at a distance of approximately 10 kms
can also provide support to a limited extent.
The site is surrounded by federal highway on
the north, hillock on the south, agriculture lands on
east and west side.
96
IAIP site offers excellent
and conducive elements
for planning
The proposed site is a fairly even land with a
gentle slope and without any significant undulations.
The present land use of the entire area is mainly for
agricultural use and during the site visit it was noticed
that the harvesting activities were completed and the
land was being prepared for next sowing.
 Topography
The topography of the site varies from +716
m to +689 m with no significant undulations, gently
sloping from south to north. Refer Exhibit No. 7.4 for
contour profile of the site. The larger version of the
contour profile is enclosed as Annexure – 7A.
 Application of modern
planning tools

Exhibit No. 7.4: Topography & site analysis map 7

Land for IAIP & RTCs

Source: MACE analysis

 Drainage  Earthquake data

Storm water drainage arrangement is not The area falls under medium seismic hazard
available at present and the same is addressed in the zone. Refer Exhibit No. 7.5.
planning exercise.

97

Exhibit No. 7.5: Seismic hazard distribution map of
7 Ethiopia
Land for IAIP & RTCs
Source: World Health Organization, 2010.
 Site features
The site features of the site are highlighted
below and depicted as an Exhibit No. 7.6. The larger
version of general features drawing is enclosed as
Annexure – 7B. The features of the site are fully
studied, understood and are factored in the planning
exercise of the IAIP. Further as a value engineering
approach the core and supplementary offerings are
fully leveraged.
The site features of the site are:
Exhibit No. 7.6: Site features
Source: MACE analysis
98
Land suitability for IAIP
examined
• Government land – no acquisition constraints
• Presently used for agricultural activity – needs to
be compensated for acquisition
• Availability of optimum size of land
• Fairly plain land without undulations – minimum
development cost
• Regular shape of the land considered for
development
• Absence of habitations in the selected area – no
resettlement and rehabilitation issues
• Abutting the Gondar to Humera highway –
excellent connectivity and visibility
• Power source available – Humera substation –
34.8 kms
• Nearest water source River Samina (1.6 km) is
rain fed and it is proposed to provide intake well
for drawing river water to meet the requirements
of IAIP. In addition, water requirement can be
supplemented by providing deep tube bore wells.
• No ecologically sensitive areas in near vicinity
except for River Samina which is rain fed.
• The soil is black cotton which necessitates design
of suitable foundation for the structures and a
marginal increase in the development cost of the
project. However, this shall not be a concern
considering the savings in terms of money and
time in development due to the advantage of the
site in terms of its terrain and shape.
 External linkages identified
and examined

 Infrastructure o Water
7
o Power Surface water source for the proposed IAIP is
river Samina which flows on the eastern side at a
Power requirement for the proposed IAIP distance of 1.6 kms. It is proposed to provide

Land for IAIP & RTCs

development can be met from the substation located
at Humera town, at a distance of approximately 34.8
kms from the site.
infiltration well, collection well and pump house near
the river basin for drawing water to meet the
requirements of IAIP. Since the river is rain fed, the
water requirement for the proposed IAIP shall also be
supplemented by providing deep tube bore wells. Refer
Exhibit No. 7.7.

Exhibit No. 7.7: Water source – Samina River

o Telecom  Connectivity

Communication facilities are available in
Humera town and the facilities need to be extended to
the proposed park.
Roadways are the only means of accessing
the place.
The site enjoys excellent connectivity by virtue
of its location abutting the road connecting Gondar
and Humera. In addition, the site has excellent

99
 Computation of composite
score

connectivity to Sudan being in close proximity to the distance of 25 kms from IAIP site and Alula Aba Nega
7 sudan border. Airport is at Mekele at a distance of 630 kms from the
site.
o Airport
Composite score of the site
Land for IAIP & RTCs

The nearest international and domestic

airport to the site is Bole International Airport, Addis The site has been assessed based on the
Ababa which is at a distance of approximately 951 various criteria as depicted as Table No. 7.6.
kms from the site. Domestic – Humera airport at a

Table No. 7.6: Composite score of the site

Critical CSF
S. Parameters to Weight
success weight Status Score
No. evaluate the CSF age (%)
factor (CSF) (%)
1 Status 30% Land identification 5% Identified 5%
Tenure 5% 100% government owned 5%
Land acquisition 5% To be acquired 0%
Land price 15% Comparatively competitive 14%
2 Connectivity 25% Resource availability 5% Located in the midst of 5%
with specific reference growing area
to agro and allied
sector
Nearest rail head and 5% The site has no connectivity by 1%
its distance from the railway
identified site
Distance from nearest 5% Abutting the federal highway 5%
Federal expressway / connecting Gondar and
state highway Humera
Nearest airport and its 2% International airport at Addis 1%
distance from the Ababa - 951 kms
identified site Domestic airport at Humera –
25 kms
Nearest sea port and 5% Djibouti and Mombassa Port 3%
its distance from the
identified site
Nearest urban 3% Ba’eker and Humera 2%
settlement and its 10 and 35 kms respectively
distance from the
identified site
3 Physical 20% Size & shape 5% Adequate size 5%
features regular in shape
Topography 5% Gentle slope towards north 4%
which can be leveraged while
planning drainage system
Soil conditions 5% Black cotton soil. Planning, 3%
engineering requirements and
costing exercise has been
carried out considering the
same.
Accessibility 5% Federal highway connecting 5%

100
 Land qualifies for
undertaking agro
processing activities

Critical CSF
S.
success weight
Parameters to Weight
Status Score 7
No. evaluate the CSF age (%)
factor (CSF) (%)
Gondar and Humera abutting
the site

Land for IAIP & RTCs

4 Infrastructure 10% Industrial power & 5% Available at Humera 3%
availability network substation located at a
distance of 34.8 km from site.
Water for industrial 4% Presently no water supply 3%
use system is available. However,
infiltration well and pump
house is proposed near river
Samina which is within 2 kms
from the site. In addition, deep
tube bore wells are also
proposed.
Sewerage disposal & 1% Sewerage will be treated and 0%
storm water disposal recycled. Drain facility needs
point to be planned to facilitate
storm water disposal
5 Environment 13% Environment 5% The selected site has the 3%
and social regulations advantage in terms of
considerations absence of ecologically
sensitive areas in near vicinity.
However, River Samina is in
close proximity to the site
which is rain fed and
necessary measures need to
be taken not to pollute the
water.
Building regulations 4% Development can be planned 4%
in compliance with the
regulations
Surrounding areas 4% The site has no settlements/ 4%
habitations – no resettlement
and rehabilitation issues
6 Business 2% Presence of competing 1% NIL 1%
considerations facilities
Supporting business 1% Available in near vicinity 1%
environment
100% 100% 77%
Source: MACE analysis

As can be seen from the above exercise, the 77%. Further, the areas where the site has scored low
identified land for the integrated ACPZ and IAIP in can be augmented by initiating proper interventions.
Tigray region qualifies by securing a decent score of

101
 Land views

7 Exhibit No. 7.8: Site photos

Land for IAIP & RTCs

102
 RTC facilitates aggregation
of raw materials

Land for IAIP & RTCs

RTC site selection Sl. RTC
Woreda Zone
no. location
The site selection exercise for RTC was 5 Maygaba Wolkait Western
carried out considering the following vital parameters 6 Dansheha Tsegede Western
7 Shire- Shire- N/west
• Availability of raw material resource in terms Indaselassie Indaselassie
of agriculture products, live stock and other
allied agriculture sector products The description of locations of the identified
• General Infrastructure availability such as RTCs is given below:
roads, power, water, communication
• Connectivity to IAIP  Maykadra

Based on the above criteria, assessment and Maykadra RTC is located in Western zone of
evaluation of each site was carried out through Tigray in Kafta-humera woreda at Maykadra town and
reconnaissance survey of the sites, extensive is located at a distance of 44.5 kms from the
discussions with regional, zone level, woreda level and proposed IAIP. Eight hectare of land is delineated for
municipal administrations and the secondary data Maykadra RTC at distance of about 36 km away from
regarding the raw material potential of the catchment Setit humera town or one kilometre away from
area of the RTC. Mykadra town to the south west direction. The land
delineated for Mykadra RTC is under the ownership of
Initially, 18 RTC locations were selected in the Mykadra town municipality and need no compensation.
region and upon evaluation of each RTC with respect The topography of the site is flat and with no human
to the above parameters, prioritization was made and settlement and vegetation. The type of soil is black
the number was scaled down in to seven. The name which needs laboratory based analysis before
and locations of the seven RTCs finally shortlisted are planning/starting constructions. As the selected site
as shown in Table No. 7.7. is adjacent to the asphalt highway road connecting
Mykadra and Sudan, it has good road access. Mykadra
Table No. 7.7: Shortlisted locations for RTC town is getting 24 hours hydroelectric power supply
from the Setit-humera sub-station and electric power
Sl. RTC distribution line is found at about 500metere distance
Woreda Zone
no. location from the site. Mykadra town has adequate water
1 Maykadra Kafta humera Western supply and it is endowed with high ground water
2 Setit-humera Setit-humera Western potential which is important for the development of the
3 Adigoshu K/humera Western RTC. There is water distribution line in Maykadra town
4 Adi-hirdi K/humera Western at 1km distance from the RTC site. Its catchment

103

kebeles (May-kadra, Central and Bereket) are very
7 potential in Sesame and sorghum production both by
smallholders and private investors. It is also potential in
livestock mainly cattle, sheep and goat. In Maykadra
town, there are warehouses and sesame cleaning
Land for IAIP & RTCs
machineries owned by private investors.
 Setit-Humera
Setit-Humera RTC is located in Western zone
of Tigray in Setit-Humera town woreda and is located
at a distance of 38.5 kms from the proposed IAIP.
More than Eight hectare of land is delineated for Setit-
Humera RTC at distance of about 1.5 km away from
Setit-Humera town to the south west direction. The
land delineated for the RTC is under the ownership of
Humera town municipality and need no compensation.
Majority of land of the RTC site is flat except some
undulations at its south west edge. There are bushes
and some trees need to be cleared but no human
settlement. The type of soil is black which needs
laboratory based analysis before planning/starting
constructions. As the selected site is adjacent to the
asphalt highway connecting Setit-Humera and Gondar
and community road taking to the site, the site is good
in terms of access to road. Setit-Humera town is
getting 24 hours hydroelectric power supply having its
own sub-station. However, power line is not crossing
the site or is found at a distance of 1.5 km. Humera
town has adequate water supply and it is endowed
high ground water potential which is also opportunity
for the RTC. The water distribution line is found at
1.5km distance away from the site. Its catchment
kebeles (Adebay, Rawyan, Hilet-Koka and
Hagereselam) are very potential in Sesame and
sorghum production both by smallholders and private
investors. Furthermore, there is good potential in
livestock mainly cattle, sheep and goat. In Setitt-
Humera town, there are many and big and
warehouses owned by private investors and Setit-
Humera Union served to collect and store sesame and
sorghum crops. Furthermore, there are also sesame
cleaning enterprises again owned by both private and
the Setit-Humera union. One milk processing plant
established by Setit-Humera milk union available in
Setit-Humera but is not yet functioning for different
reasons.
 Adigoshu
Adigoshu RTC is located in Western zone of
Tigray in K/humera woreda at Adigoshu town and is
located at a distance of 123 kms from the proposed
104
RTC location features
described
IAIP. About eight hectare of land is delineated for the
RTC at distance of about 70 km away from Setit
humera town to the east or one kilometre away from
Adigoshu town to the west direction. The land
delineated for Adigoshu RTC is under the town land
management plan but is owned by individual farmers.
Thus, there is a need for compensation. The
topography of site is flat and with no human settlement
and vegetation. The type of soil is black which needs
laboratory based analysis before planning/starting
constructions. As the selected site is adjacent to the
asphalt highway road connecting Setit-humera and
Shire-endasilassie, it has good road access. There are
power distribution lines crossing Adigoshu town and
the site but there is hydroelectric power supply in the
town. The nearest power sub-station is found at a
distance of 70 km in Setit-humera. Mykadra town has
ground water potential. The existing water supply
however is in adequate. The catchment kebeles
(K/adigoshu, Mayweyni, Wihdet, H/adigoshu, Wihdet
and Maykeyah) are potential in livestock, sesame and
sorghum production.
 Adi-Hirdi
Adihirdi RTC is located in Western zone of
Tigray in Kafta-Humera woreda and is located at a
distance of 50 kms from the proposed IAIP. Eight
hectare of land is delineated for the RTC at distance of
about 37 km away from Baeker town to the East along
the Baker - Adiremets gravel road. Out of the eight
hectare of land delineated for Adi-Hirdi RTC, five
hectare is in the hand of Adihirdi town. The remaining
is individuals holding which is possible to include by
giving compensating to the owners. The topography of
site is almost flat but is covered with bushes and trees
that need clearing. The type of soil is red and strong
supposed to be good for construction. The site is
adjacent to the all whether gravel road that connects
Baeker and Adiremets towns. Power line is available in
the school adjacent to the site. The current water
supply and ground water potential of Adihirdi town is
very good, which is also good opportunity for the RTC.
The kebeles under its catchment (Aditsetser, Adihirdi,
Sola and Tirkan) are potential in livestock (cattle,
sheep, goat and poultry) and honey. Adihirdi RTC is not
limited to kebeles of Kafta-Humera woreda but also
some potential kebeles of Wolkait woreda.
 Maygaba
Maygaba RTC is located in Western zone of
Tigray in Wolkaite Woreda in Maygab town and is
 Attributes identified for
RTC location evaluation
located at a distance of 171 kms from the proposed
IAIP. More than Eight hectare of land is delineated for
the RTC at distance of 300 metre away from Maygaba
town to the east direction. The land delineated for the
RTC is under farmers holding but is included in the
Maygaba town land management plan. Therefore, it
can be easily available for the RTC purpose by giving
compensation to the holders. With regard to
topography, some part of it especially the eastern side
is up 10% slope. There are bushes and some trees
that need to be cleared but there is no human
settlement in the site. The type of soil is red and strong
which is good for construction. There is gravel road
connecting Mygaba town to Setit-humera and Shere-
endasilassie asphalt highway. The highway connecting
Shere-endasilassie and Wolkaite Woreda passes
through Wolkaite Sugar factory which is also closer to
the site. Maygaba town has 24 hours hydroelectric
power supply from Shere-endasilassie sub-station.
Maygaba town has adequate water supply and is
endowed with high ground water potential. The water
distribution line is found at some 300 metre away
from the site. The catchment kebeles of Maygaba RTC
(all kebelles except four from Wolkait woreda and two
kebeles from Tsegede Woreda) are potential in
Sesame, sorghum and livestock production mainly by
smallholders.
 Dansha
Dansha RTC is located in the Western zone
of Tigray in Tsegede Woreda in Dansha town and is
located at a distance of 63 kms from the proposed
IAIP. Eight hectare of land is delineated for the RTC at
distance of about 1.5 km away from Dansha town to
the north east. The land delineated for the RTC is
owned by the Dansha town administration and ready
to be used for RTC purpose. The site has good road
access as it is found at about 1 – 1.5 km away from
the Humera – Gondar highway. The topography of the
site has some undulations and it is rocky. It is thinly
vegetated with bushes but there is no human
settlement. The type of soil is red and rocky suitable
for construction. Dansha town has adequate water
supply and it is endowed with high ground water
potential which is also good opportunity for the RTC.
The water distribution line is found at 1.5km distance
away from the site. Its catchment kebeles (all kebelles
except May-agam and Adi selam from Tsegede and
Ruba lomin, Selam, E/dabo & Awra from Wolkait
woreda) are potential in Sesame and sorghum
production both by smallholders and private investors.
Furthermore, there is good potential in livestock mainly
cattle, sheep and goat. There are warehouses and
cleaning plants in Dansha town owned by private 7
investors.
 Shire-endasilassie
Land for IAIP & RTCs
Shire-endasilassie RTC is located in North-
west zone of Tigray region in Shire Endasilassie town
and is located at a distance of 311 kms from the
proposed IAIP. Eight hectare of land is delineated for
the RTC of which 6 hectare is under the town
administration and the remaining 2 hectare is
individuals’ holding that needs compensation. The
topography of the site is almost flat with red and
strong soil which is good for construction. The site is
500 meters away from the Shire-endasilassie and
Humera asphalt highway. Therefore, it is good in terms
of access to road. Shire-endasilassie town is getting
24 hours hydroelectric power supply having its own
sub-station. There are power lines crossing the site.
The current water supply in Shire-endasilassie town is
poor. However, efforts are being made by the
government and the town administration to solve the
problem in the near future. The catchment Woredas
of Shire-endasilassie RTC (T/adiabo, L/adiabo,
T/koraro, M/zana, A/tsimbila and Tselemti) are
potential areas in cattle, sheep, goat, dairy, honey and
sorghum. Tadiabo, Asgede-tsimbila and Tseleti
woredas are also potential in Sesame production.
Further each RTC location was analysed and
assessed with reference to the following attributes
which would not only strengthen the decision of the
selection of the location in terms of its suitability for
undertaking the development but also would aid in
planning the facility configuration of the RTC.
• Status of land acquisition – in possession of
local body or needs to be compensated
• Extent of vegetation (whether it is covered
with trees/bushes)
• Type of soil (sandy, clay, rock, loamy, etc.)
• Whether the site is plain or has undulations
• Extent of site having undulations in terms of
percentage of total area
• Nearest federal highway
• Distance of approach road from site
• Type of approach road - Mud/gravel
• Condition of approach road and whether the
road needs refurbishment (If yes, to what
length does the road need refurbishment)
105
 RTC connects rural and
industrial zones

• Water source - ground water or any other
7 water body
• Distance of water body from site
• Ground water availability - depth in meters
• Any existing storm water drain adjacent to
Land for IAIP & RTCs
• Any power lines crossing adjacent to site (If
not, distance of nearest substation from the
site).
Each RTC location was evaluated for the

site above attributes and the compliance of each location

with respect to the attributes is summarised as Table
No. 7.8.

Table No. 7.8: Summary of RTC location attributes

Sl.
Description Maykadra Setit Humera Adi Goshu Adi Hirdi
no.
1 Zone Western Western Western Western
2 Woreda K/humera K/humera K/humera K/humera
3 Kebele Maykadra Setithumera Adigoshu Adihirdi
4 Area of the > 8 ha > 8 ha > 8 ha > 8 ha
site in hectares
5 Name of the K/Humera woreda Mayor of Setit K/Humera K/Humera
local body office of industry & Humera town woreda - office of woreda - office
urban development industry & urban of industry &
development urban
development
6 Status of land Under municipality Under Included in the Adi 5 ha secured
acquisition - in no need of municipality no Goshu town plan and is possible
possession of local compensation need of but need to expand by
body or needs to be compensation compensation compensation
compensated
7 Is the site thickly No it is clear farm No it is almost No it is almost Yes
vegetated with land clear farm land clear and farm
trees/bushes land
8 Type of soil (sandy, Black Black Black Red color
clay, rock, loamy, (*good for
etc.) construction)
9 Whether the site is Flat, plain Mainly flat and in Plain Flat
plain or has some edges
undulations gentle slope
10 Extent of site having Flat Flat Flat Flat
undulations in terms
of percentage of
total area
11 Details of No settlement No settlement No settlement
settlements /
constraints /
development issues,
etc.
12 Nearest federal Adjacent to Setit Humera - Adjacent to the 37 km apart
highway and Humera - Sudan Gondar highway Shire - Setit from the
distance from site highway at about 1.5km Humera highway Humera -
Gondar highway
13 Distance of NA NA NA <100 m

106
 RTC promotes rural
connectivity

Sl.
no.
Description Maykadra Setit Humera Adi Goshu Adi Hirdi 7
approach road from
site
14 Type of approach NA NA NA Gravel road

Land for IAIP & RTCs

road - Mud/gravel (connecting
Baeker -
Adiremets)
15 Condition of NA NA NA Need follow up
approach road and
whether the
road needs
refurbishment
16 If yes, to NA NA NA 37km
what length does the
road needs
refurbishment
17 Water source - High ground water High ground Potential but Has very good
ground water or any potential and there water potential currently poor water potential
other water body is adequate tap and there is supply
water distribution in adequate tap
Maykadra town water distribution
in Setit Humera
town
18 Distance of water 1 km from water 1.5 km from About 500 km About 250
body from site line water line from Adigosh metere from
town supply line the Adihirdi
school
Ground water
19 availability - depth in
meters
20 Any existing NA There is adjacent
storm water drain to the site
adjacent to site
21 Any power lines There is power There is power There is Power is
crossing adjacent to supply line at the supply from setit hydroelectric available in the
site nearest distance humera sub- power line school adjucent
may be 500 station but no adjacent the site to the site
metere appart lines crossing the (Adi Goshu town)
site but not
functioning)
22 If not, Setit Humera Setit Humera Setit Humera 70
distance of nearest substation is the substation is the km
substation from the source source
site
23 Cost of land per 55,000.00
hectare ETB (based on 5.5
ETB beginning
lease price for
Industries)
24 Any other Cleaning

107
 RTC is not mere collection
centre

Sl.
7 no.
Description Maykadra Setit Humera Adi Goshu Adi Hirdi
specific inputs on the machines and
site regarding multiple
adjacent warehouses
Land for IAIP & RTCs

development,
proposed
development s,
environmental
considerations, etc.
25 General Very good Very good Good Good
infrastructure
required - road,
water, power,
culverts, etc.
Contd...
Contd...
Sl.
Description Mygaba Dansha Shire endasilasie
no
1 Zone Western Western North-west
2 Woreda Wolkite Tsegede T/koraro
3 Kebele May Gaba Dansha 01 Kebelle
4 Area of the site in > 8 ha > 8 ha 8 ha
hectares
5 Name of the local body W/ zone office of Mayor of Dansha town Shire Endasilassie
industry & urban town Mayor
development )
6 Status of land acquisition - It is included in Maygaba It is under Dansha town 6 ha is
in possession of local body town plan but needs municipality under municipality and
or needs to be compensation the remaining need
compensated compensation
7 Is the site thickly No Partly thinly vegetated There are some trees
vegetated with trees / with bush and bushes
bushes
8 Type of soil (sandy, clay, Red good Rocky Rocky after 1.5 m
rock, loamy, etc.) for construction depth
9 Whether the site is plain Not undulated Slightly undulated Plain
or has undulations
10 Extent of site having Partly slopy upto 10 % Gentle slope Plain
undulations in terms of
percentage of total area
11 details of settlements / No
constraints /
development issues, etc.
12 Nearest federal highway 68 km apart from shire- 1- 2 km apart from the 500m apart from the
Indasilassie - Setit Humera - Gondar Shireendasi Lassie -
Humera highway highway Setit Humera highway
13 Distance of approach about 1km 1- 1.5 km
road from site
14 Type of approach road – Gravel road Community
Mud / gravel connecting (Mytemen-

108
 RTC is a multifold rural
hub

Sl.
no
Description Mygaba Dansha Shire endasilasie 7
Maygaba)
15 Condition of approach Need follow up Need refurbishment
road and whether the

Land for IAIP & RTCs

road needs refurbishment
16 If yes, to what length does 68 km 1 – 1.5 km
the road needs
refurbishment
17 Water source – ground Has very good ground Has very good water Currently is poor but
water or any other water water potential potential efforts are being done
body to address the
shortage on a
sustainable basis
18 Distance of water body About 300 meters from 1.5 km from Dansheha There is water supply
from site the May Gaba town town water supply lines line adjacent to the
water distribution lines site
19 Ground water availability -
depth in meters
20 Any existing storm water
drain adjacent to site
21 Any power lines crossing At about 300 meter 1 km from Dansheha There is power line
adjacent to site apart (in May Gaba town power supply lines from shire substation
town), source
substation is at shire
Indasilassie town
22 If not, distance of nearest It is from Humera
substation from the site substation
23 Cost of land per hectare
24 Any other specific inputs Cleaning machines and
on the site regarding multiple warehouses
adjacent development,
proposed developments,
environmental
considerations, etc.
25 General infrastructure Good Good Good
required - road, water,
power, culverts, etc.

Further, each RTC location coordinates were
superimposed on the GIS imagery and spatial location
of each RTC location was developed clearly indicating:
• Location identification in the region
• Connectivity linkages of the location
• Demarcation of the area required for the
development – 10 hectares
The spatial location of the RTCs is presented
as Exhibit Nos. 7.9 – 7.15 and the larger versions of
the same is enclosed as Annexure 7C to 7I.

109
 Meticulous selection of
RTC locations

7 Exhibit No. 7.9: Spatial location of proposed RTC site at Adi Goshu - Western Tigray
Land for IAIP & RTCs

Source: MACE analysis

Exhibit No. 7.10: Spatial location of proposed RTC site at Adi Hirdi - Western Tigray

Source: MACE analysis

110
Backward and forward
integration

Exhibit No. 7.11: Spatial location of proposed RTC site at Dansheha - Western Tigray 7

Land for IAIP & RTCs

Source: MACE analysis

Exhibit No. 7.12: Spatial location of proposed RTC site at Humera - Western Tigray

Source: MACE analysis

111
 RTC facilitates sustained
supply

Exhibit No. 7.13: Spatial location of proposed RTC site at May Gaba - Western Tigray
7
Land for IAIP & RTCs

Source: MACE analysis

Exhibit No. 7.14: Spatial location of proposed RTC site at Maykadra - Western Tigray

Source: MACE analysis

112
RTC to enhance capacity
building

Exhibit No. 7.15: Spatial location of proposed RTC site at Shire Indaselassie - Western Tigray
7

Land for IAIP & RTCs

Source: MACE analysis

Exhibit No. 7.16: RTC site photos

113
 Chapter – 8
Zone definition
Need for zone demarcation
Further to the completion of land identification
exercise, it would be imperative to prepare an
indicative ‘thematic’ map showing the areas and
features which could influence the development of
integrated ACPZ and IAIP. This map would also render
support in terms of providing details on the
connectivity issues and infrastructure linkages vital for
the sustained operation of the proposed development
activities planned in the integrated ACPZ and IAIP.
The method of planning the physical layout of
the integrated ACPZ and IAIP is fundamental to
sustainability. This would entail proliferation of land use
practices that create and maintain efficient
infrastructure, well – planned neighbourhoods and
preservation of natural systems. Hence the need for
demarcation of integrated ACPZ and IAIP assumes
greater significance.
Existing land uses become one of the most
important considerations in deciding future land use
requirements. Reviewing and evaluating the land use
within the influence zone is one of the most important
tasks in determining the physical plan and ultimately
the characteristics of the development and quality of
facilities proposed within the core area. Land use
options must be carefully analyzed to insure new uses
are supportive and complementary to the existing land
use patterns in the area. The relationship between
uses such as agricultural, industrial, residential,
commercial, institutional, educational and recreational,
and the expanse and intensity of each use, directly
impacts the characteristics of the proposed
development.
Methodology
The methodology adopted for demarcation of
physical boundary of integrated ACPZ and IAIP is
detailed below:
o GIS data of the influence area up to 30 km
radius of the identified site was collected from
the following sources:
• Shuttle radar topographic mission data
for contour delineation
• Landsat 8 operational land imager,
thermal infrared sensor and
interpretation with Google earth
o The collected GIS data was studied in detail to
generate information on the existing land use
pattern of the influence area covering the
following features:
• Administrative boundaries
• Major cities, towns/villages
• Settlements in the influence zone
• Industries
• Federal highway, major roads and minor
roads, railway lines, airport, sea port etc.
• General topography
• Hydrology – rivers, streams and water
bodies
• Land use – agriculture, wet lands, barren,
other classified lands etc
• Mixed vegetation, scattered shrubs
• Forest area
• Institutes
• Location of power source (substation)
• Location of water source (Intake well)
Influence zone – key features
Exhibit No. 8.1 shows existing key features in
the project influence area. For clarity purpose,
enlarged version is enclosed as Annexure - 8A.
114
 Extensive GIS planning
tools adopted

Exhibit No. 8.1: Influence zone – key features

8

Zone definition
Source: MACE analysis

Land use S. Land use Area in

%age
No. classification hectares
This part of the study focuses in depth on the 3 Mixed vegetation 2881.60 36.70%
detailed land use of the area adjoining IAIP (5 km
4 Settlements 2.65 0.03%
radius) and influence zone for IAIP (30 km radius).
5 Barren land 1860.20 23.70%
Study of land use in the adjoining areas within 5 km of
the identified IAIP indicates predominant land use of 6 Roads 8.56 0.11%
38.72% for agriculture, 36.70% for mixed cultivation, Total area 7850.00 100.00%
settlements, water bodies and roads account for Source: MACE analysis
0.03%, 0.74% and 0.11% respectively. There is a
river Samina running closed to the site which is Study of land use in the effective influence
ecologically sensitive. Table No. 8.1 provides the land zone within 30 km of the identified IAIP indicates
use pattern in prevailing in 5 km influence zone. predominant land use of 38.77% for agriculture and
23.53% for mixed cultivation accounting for 62.30%
Table No. 8.1: Land use pattern in the adjoining of agriculture usage indicating that the proposed IAIP
area – 5 kms radius is in the midst of agriculture belt. Settlements, water
bodies and roads account for 0.50%, 6.27% and
S. Land use Area in 0.05% respectively. There are ecologically sensitive
%age areas in the near vicinity. Table No. 8.2 provides the
No. classification hectares
land use pattern in prevailing in 30 kms influence zone.
1 Water body 57.70 0.74%
2 Agriculture 3039.29 38.72%

115
 Land use patterns
analysed for production
architecture

Table No. 8.2: Land use pattern in the influence The closer look of landuse pattern reveals
8 zone – 30 kms radius that the area under 30 km radius is fully supportive of
agriculture activity besides the need to protect the
S. Land use Area in %age water body. Based on the agriculture landuse the
No. classification hectares potential of the area in sourcing the raw material for
1 Water body 17732 6.27% IAIP is examined and presented in subsequent sections
in this chapter.
Zone definition

2 Agriculture 109553 38.77%

3 Mixed vegetation 66501 23.53%
Exhibit Nos. 8.2 and 8.3 shows existing land
4 Settlements 1416 0.50% use pattern in the influence area (5 kms and 30 kms
5 Barren land 87254 30.88% radius). Enlarged version of the same is enclosed as
6 Roads 144 0.05% Annexure - 8B and 8C.
Total area 282600 100.00%
Source: MACE analysis

Exhibit No. 8.2: Land use pattern – 5kms influence zone

Source: MACE analysis

116
 Raw material movement
network analysed
Exhibit No. 8.3: Land use pattern – 30 kms influence zone
Source: MACE analysis
Transportation network
Based on the GIS data, transport pattern was
studied to identify major and minor roads traversing
the influence area. This information was used in
preparing spider diagram depicting network of
motorable roads of lengths 10, 20 and 30 kms for
assessing the cost of transportation and transaction
cost of raw materials to the occupant unit of the IAIP.
8
Zone definition
In addition, information on existing airport, major
settlements and infrastructure linkages is also
provided. Further the data was utilized as a guiding tool
for proposing the transportation network to support
the proposed development. Exhibit Nos. 8.4 to 8.6
depicts the road network of motorable roads of
lengths 10kms, 20kms and 30kms respectively.
Enlarged versions are presented in Annexure - 8D, 8E
and 8F.
117
 IAIP supported through
well conceived backward
linkage

Exhibit No. 8.4: Transportation network – 10 kms radius

8
Zone definition

Source: MACE analysis

Exhibit No. 8.5: Transportation network – 20 kms radius

Source: MACE analysis

118
 Extensive spatial analysis

Exhibit No. 8.6: Transportation network and spider diagram – 30 km radius

8

Zone definition
Source: MACE analysis

Topography map will enable the planning process to have an

In order to understand the topography of the
area with respect to the constraints and opportunities
presented by the site, a contour map (10 km and 30
km radius with 10 m and 25 m contours respectively)
are presented as an Exhibit Nos. 8.7 and 8.8. The
assessment of the high and low contours of the site in
terms of ridges, hilly areas and streams for designing
the infrastructure systems and positioning of the
components. Enlarged version is presented in
Annexure – 8G & 8H.

Exhibit No. 8.7: Contour map (10 km radius at 10m contour intervals)

Source: MACE analysis

119

Exhibit No. 8.8: Contour map (30 km radius at 25 m contour intervals)
8
Zone definition
Source: MACE analysis
Determination of effective zone of procurement
of focus crops and other crops
The effective zone of procurement is a
function of net marketable surplus, quantities that
are likely to be processed in the IAIP, cost of
procurement and transportation cost. The various
procurement sub zones will have different
competiveness in terms of supply to the IAIP. In
addition to logistics considerations, legal issues of
procuring the commodities from other jurisdiction
need to be considered.
120
Effective zone of
procurement identified
Various sub zones are categorized within
the procurement zone in terms of its
competitiveness as a feeder zone to the IAIP. The
effective zone of procurement is analysed in the
context of legal issues like region boundaries,
establishment of collection centres and RTCs etc.
The finished products from each subzone
of the IAIP based on the generalized norm of
production per hectare are determined. Based on
the output to input norms, the quantities of raw
materials required for each sub zone of the IAIP are
computed as shown in Table No. 8.3.
 ACPZ to provide required
raw materials

Table No. 8.3: Raw materials required for the IAIP

8
Growing
Approximate Raw
IAIP area Finished Ratio of area
Sl. Components of Source of raw output per materials
in product input/ required
No. processing material hectare, in required
hectares in MTPA output in
MTPA in MTPA

Zone definition
hectares
1 Focus crop - I Open farming in 30.69 15000 460399 1.06 488023 212184
cereals ACPZ
2 Focus crop - II Open farming in 7.90 6000 47386 1.30 61602 32422
sorghum ACPZ
3 Focus crop - III Open farming in 37.22 6000 223314 1.10 245645 188958
sesame ACPZ
4 Other fruits and Controlled 1.44 600 864 5 4320 54
vegetables environment
growing, poly house
cultivation and
shade net
cultivation
5 Dairy 0.60 5400 3240 1 3321 111
Open breeding and
rearing in ACPZ
6 Dairy Integrated dairy 5.40 5400 29164 1 29893 498
farming
7 Meat and other 20.68 137 2831 4 11323 89863
animal products Traditional livestock
(numbers rearing practices in
converted in MT) ACPZ
8 Meat and other Intensive farming 20.68 137 2831 4 11323 90
animal products with modern
(numbers livestock
converted in MT) management
techniques
9 Other food Open farming in 14.02 600 8414 5 42071 526
processing areas ACPZ
138.64 778443 897522 524706
Source: CSA data, FAO, MACE analysis and other field data

The raw materials are expected to be transported through the existing road network and hence road
distance for 10km, 20km and 30km radius are computed with respect to IAIP. This analysis assumes
significance since IAIP is located in the amidst of agricultural production area and the potential movement of
produce from the neighbouring farms to IAIP. Refer Exhibit Nos. 8.4 to 8.6 and Table No. 8.4.

Table No. 8.4: Road network for raw material movement

Corresponding road
S. No. Description Road name
distance, km road
1 Raw material procurement 10.6
influence zone of 10 km radius
2 Raw material procurement 22.8
Himora – Rubasa road
influence zone of 20 km radius
3 Raw material procurement 34.4
influence zone of 30 km radius
Source: MACE analysis

121
 Transportation logistics
analysed

8 The average cost of transportation of raw materials from various zones is computed as shown in the
Table No. 8.5 based on the road distance and unit transport cost.

Table No. 8.5: Transportation cost

Transportation Transportation Transportation

Zone definition

cost of raw cost of raw cost of raw

material per material per material per
Corresponding Road
Sl. MT procured MT procured MT procured
Description road distance, reference
No. from influence from influence from influence
km road number
zone of 10 zone of 20 zone of 30
kms radius, kms radius, kms radius,
ETB ETB ETB
1 Raw material 10.6 32.71
procurement
influence zone of
10 kms radius
2 Raw material 22.8 70.37
procurement Himora –
influence zone of Rubasa
20 kms radius road
3 Raw material 34.4 106.17
procurement
influence zone of
30 kms radius
Source: MACE analysis

The average landed cost of the raw materials from various zones is computed as shown in the Table No.
8.6 based on the farm gate price, road distance and unit transport cost.

Table No. 8.6: Average landed cost of raw material from various zones

Landed cost Landed cost Landed cost

of raw of raw of raw
Cost of
material material material
raw
Raw procured procured procured
materials
Sl. materials from from from
Crops Source at farm
No. required influence influence zone influence
gate,
in MT zone of 10 of 20 Km zone of 30
ETB per
Km radius, radius, ETB Km radius,
MT
ETB per MT per MT ETB per MT
(*) (*) (*)
1 Focus crop - I Open farming in 488023 10288 10303 10358 10394
cereals ACPZ
2 Focus crop - II Open farming in 61602 10905 10921 10975 11011
sorghum ACPZ
3 Focus crop - III Open farming in 245645 14423 14439 14493 14529
sesame ACPZ
4 Other fruits and Controlled 4320 4115 4131 4185 4221
vegetables environment

122
 Landed cost of raw
materials from various
procurement zones analysed

Landed cost Landed cost Landed cost

of raw of raw of raw 8
Cost of
material material material
raw
Raw procured procured procured
materials
Sl. materials from from from
Crops Source at farm
No. required influence influence zone influence
gate,
in MT zone of 10 of 20 Km zone of 30

Zone definition
ETB per
Km radius, radius, ETB Km radius,
MT
ETB per MT per MT ETB per MT
(*) (*) (*)
growing, poly
house cultivation
and shade net
cultivation
5 Dairy Open breeding 3321 8847 8863 8918 8953
and rearing in
ACPZ
6 Dairy Integrated dairy 29893 10905 10921 10975 11011
farming
7 Meat and other Traditional 11323 58639 58655 58709 58745
animal products livestock rearing
(numbers practices in ACPZ
converted in
MT)
8 Meat and other Intensive farming 11323 8230 8246 8300 8336
animal products with modern
(numbers livestock
converted in management
MT) techniques
9 Other food Open farming in 42071 8230 8246 8300 8336
processing ACPZ
areas
(*) If materials are to be moved through RTC utilising its infrastructure facilities, approximate cost of handling will be
ETB 111 per MT.

Source: FAO data and MACE analysis

The production area required to feed the raw requirement of raw material in proportion to the
material is computed considering the interventions development and capacity utilization of IAIP as shown
plan in ACPZ, increased productivity due to in Table No. 8.7.
technologies and modern cultivation practices, phased

Table No. 8.7: Production area requirements

Raw Production
Sl. materials area
Components of processing Source of raw material
No. required in required in
MTPA hectares
1 Focus crop - I cereals Open farming in ACPZ 488023 212184
2 Focus crop - II sorghum Open farming in ACPZ 61602 32422
3 Focus crop - III sesame Open farming in ACPZ 245645 188958
4 Other fruits and vegetables Controlled environment growing, poly 4320 54
house cultivation and shade net cultivation
123
 Demarcation of the RTC
and legal definition of the
zones

Raw Production
8 Sl. materials area
Components of processing Source of raw material
No. required in required in
MTPA hectares
5 Dairy Open breeding and rearing in ACPZ 3321 111
6 Dairy Integrated dairy farming 29893 498
Zone definition

7 Meat and other animal Traditional livestock rearing practices in 11323 89863
products (numbers ACPZ
converted in MT)
8 Meat and other animal Intensive farming with modern livestock 11323 90
products (numbers management techniques
converted in MT)
9 Other food processing areas Open farming in ACPZ 42071 526
Total 897522 524706
Source: MACE analysis

The required production area is more than
the area under 30 kms radius. Hence this
necessitates the need to establish RTCs beyond 30
km radius for ensuring raw material availability to IAIP
for processing. Considering that the agricultural land
and mixed cultivation land within 30 km radius is put
into feeder zone for IAIP, it can support IAIP to the
extent of 34% of the total raw material requirement.
This is based on following specific assumptions.
In general, the effective procurement zone is
considered as 30 kms radius. However effective zone
of procurement zone shall be restricted to the regional
boundaries for administrative purposes, unless
otherwise specifically declared through appropriate
instruments by the competent authorities.
Demarcation of the RTC and legal definition of the
zones

The agriculture land and mixed cultivation land
within 30 km radius are put into agro production of
commodities exclusively catering to IAIP and the same
manner of production and existing productivity norms.
a. The materials produced from agriculture land
and mixed cultivation land will be moved to
IAIP for processing.
Hence it is evident that the 30 km radius is
not adequate to give feed to 100% requirement of IAIP
even if above two assumptions are met with.
Accordingly, the RTCs are strategically located to
augment the raw material inflow to IAIPs 100%
requirements.
However, it is important to note that IAIP is
located in agriculture activity area and considering the
potential of supply from the neighbouring farms, the
effective zone of procurement of focus crop and other
crops can be considered as 30 kms radius and
breakeven levels for the occupant units can be
configured based on raw materials procured within 30
kms radius.
RTC may be established either jointly or
severally by the FDRE, Regional government, or any
person as an integrated project with IAIP or as an
independent standalone entity or as a cluster to
facilitate agribusiness activities, primary processing,
storage or rendering services or for both for domestic
and or export market.
The development of RTC can be one or more
combination of the following:
a. Entirely as a GoE / regional government
initiative
b. Farmer cooperatives
c. Private sector initiative
d. PPP initiative (Independent concession, joint
concession with IAIP, IAIP & RTC having
common developer, IAIP & RTC having
independent developers)
e. Captive RTCs for specific occupant unit of IAIP
f. Cooperative formed by two or more occupant
units of IAIP

124
 Demarcation of the IAIP
and legal definition of the
zones
Demarcation of the IAIP and legal definition of the
zones
IAIP may be established either jointly or
severally by the GoE, Regional government, or any
person to facilitate high tech cultivation of agro
products, processing of agro products, food
processing, manufacture of agro and food products, or
rendering services or for both for domestic and or
export market.
Integrated Agro Industrial Park means any
premises or area which is approved by the GoE by
statutory instrument and in which two or more
persons, independently of the Integrated Agro
Industrial Park Developer, carry on the business of:
(a) Manufacturing or processing or value addition 8
of crops for domestic consumption in
Ethiopia or export from Ethiopia and/ or
(b) Manufacturing or processing or value addition
of other and food commodities for domestic
consumption in Ethiopia or export from
Zone definition
Ethiopia and / or
(c) Manufacturing or processing or value addition
of components of agro related products or
services which are intended for domestic
market or export from Ethiopia and/ or
(d) Other manufacturing or processing or
services or other permitted activities as
notified by the GoE / regional government
from time to time.
125
 Chapter - 9

Master planning of IAIP & RTC

Planning principles account the geographic, demographic, raw material

The aim is to develop IAIP for livestock and
other agro commodities in Western Tigray zone,
Tigray region with an excellent state-of-the art
infrastructure facilities and professional management
to attract and support investments in agri and allied
sectors.
Hence, IAIP in the form of prepared land is
proposed with general and specialized infrastructure
facilities. It focuses on development of large, medium
and small scale industries, as also trading and
services. All facilities required for target industries are
planned for in this IAIP. Thus, the proposed IAIP will
function as an integrated package having the required
facilities and service activities with sufficient provision
for future growth and expansion.
Given the industrial base and the concept of
IAIP for taking regional advantage, the proposed
project will further strengthen Tigray region’s position
in the agri and allied sectors map of Ethiopia and will
contribute to the economy. A careful planning exercise
has been done to position the project taking into
resources, industrial, economic and social
characteristics of region and it is in this context
master planning of the project assumes significance.
The purpose is to create a thriving place
where agro based and food processing industrialists,
entrepreneurs, venture capitalists, investment bankers
can work, live, learn and play.
It is important to develop the master plan to
accommodate both the user industries area
requirements and requirements of the various
identified development components of the proposed
IAIP.
In order to implement this uniquely conceived
IAIP into a fully integrated functionally best facility and
to promote a new 'industrial cluster image in Ethiopia,
as well as to develop confidence for foreign and local
investors to undertake the development of the project
and subsequent operation of their businesses, certain
planning objectives / principles are envisioned as
depicted in Exhibit No. 9.1.

Exhibit No. 9.1: Planning principles and objectives

Laying down broad policies Propose a set of planning Designate broad land use
and directions for growth standards to be adopted distribution of the whole site

Evolve land use mix – industrial

plots for the identified focus crop
and other crops, social amenities,
general infrastructure, specialized
& specific infrastructure, road,
open & green space, etc.
Position the zone to Provide an integrated
accommodate various types infrastructure system
of target industries and to network to support the
ensure compatibility development

Develop requirements of Compliance to various

various public utilities Evolve phasing of the project planning norms & guidelines

Source: MACE analysis

126
 IAIP shall be a self-
contained region with a
salubrious surrounding
Planning concept
The planning concepts for the proposed
IAIP are as depicted in the Exhibit No. 9.2. The IAIP
Exhibit No. 9.2: IAIP planning concepts
Source: MACE analysis
IAIP planning considerations
The planning for the proposed IAIP is based
on the broad objective of establishing a world class
business environment targeted essentially at high
growth agri industrial & agri infrastructure sectors.
Each zone within the IAIP shall be planned to
be dedicated to the specific sub sector and would be a
self-sufficient unit in terms of facilities, ability to attract
investors and revenue generation.
From the planning point of view, the IAIP is a
package of number of land uses. The processing
activities are prime activities and the efficiency of
production is enhanced by a number of other activity
zones. These include post harvest activities, linking
infrastructures, marketing infrastructure, R & D
services, community facilities and green spaces.
Social and commercial amenities are also
planned to provide convenience to visitors as well as to
the working population within the IAIP. The project is
planned to be housed in a lush green environment and
accordingly, landscaping and greenery are planned.
shall be a self-contained region with a salubrious
surrounding and is envisaged to be developed as 9
“Sustainable – holistic – smart intelligent – eco –
agri processing zone”.
Master planning of IAIP & RTC
While planning the IAIP, the following vital
issues were addressed along with strategies for
successful implementation and sustained operation of
IAIP:
o Land use and layout: The whole area is suitably
divided into a number of identified activity centres
of different sizes. The layout is developed with
complete understanding of the phasing program.
Integration of the financial aspects with physical
planning aspects is the most important factor for
success in implementation.
o Constraints and core offering of the site: As
enumerated earlier, all the site-specific
constraints are fully respected and mitigation
measures are fully taken into consideration while
developing the master plan. Similarly, the planning
fully leverages the core and supplementary
offering of the site.
o Services and amenities: The master plan takes
into account planning for services and amenities.
o Addressing shortage of housing for the workforce:
Provision is made for sustainable integrated
127
 A well-balanced land use is
perceived

township with multi-format development enabling a Zones spotting

9 strong work live play concept.
The whole area is divided into various zones.
o Lack of enforcement / control on land use and The zoning design is done in order to have a smooth
Master planning of IAIP & RTC

growth of unapproved housing / layouts: Well- pedestrian circulation by simplifying the movement
conceived IAIP implementation framework shall be patterns and allow the inter-zone movement. Parking is
suggested to address these issues. planned at strategic locations catering to the visitor’s
vehicles
o Non uniform distribution / concentration of
industrial growth pockets: A structured industrial Following site parameters are considered
zoning in terms of raw material, effluent while positioning the zones.
generations, pollution level category, end product
distribution etc. is done and accordingly sub zones • Boundary shape
in IAIP are suggested. • Physical site features
• Area availability
o Shortage of skilled / trained manpower: The IAIP
• Environmental considerations
shall house training centres, skill development
centres, educational and employability • Micro climatic conditions
improvement centres. • Compatibility issues
• Surrounding areas
o Conservation of ground water & surface water • Accessibility
resources: Sustainable infrastructure planning, • Transportation issues
incorporation of eco friendly concepts and • Visibility
environment sustainability, water conservation
schemes, environmental infrastructure, recycling In addition, availability of surplus quantity of
and reuse options etc. are incorporated in the IAIP focus crops for undertaking the processing activities in
development program. IAIP has a bearing on the identification of processing
opportunities, sizing of processing units and judicious
o Transportation: The master plan looks at the demarcation of zones.
transport linkages. As the IAIP will have regional,
national as well as international linkages for freight The survey conducted by national experts has
movement, it generates lot of traffic. A well- revealed that sizeable amount of raw material surplus
developed logistic hub for both raw material and is available for IAIP and the summary of surplus
finished product is planned to cater to the quantity for the focus crops is given in Table No. 9.1.
transport systems.
Table No. 9.1: Summary of net marketable surplus
o Poor quality of roads & unplanned road junctions
leading to traffic congestions: IAIP development
plan identifies the constraints and appropriate Net marketable surplus
Commodity
road network including the approach roads, road (tons)
congestion removal by the provision of grade Sesame 112243.1
separators and hinterland connectivity, Sorghum 171579.7
augmentation / widening of existing roads are Meat 17148.7
being suggested. Milk 233094.2
Egg ( million) 1278.76
o Environmental management: Various aspects Honey 10111.46
such as adherence to pollution control norms &
standards, control over goods, storage and Source: National consultants
handling of industrial waste, common treatment,
etc. are given paramount importance while The details of the surplus quantity RTC wise,
planning. commodity wise along with the production details are
given in the subsequent sections of this chapter.

128
 Zoning compatible with
input and output
requirements

Zoning, product mix and facility configuration residential zones as illustrated in the Exhibit No. 9.3
and 9.4. 9
A well-balanced land use is perceived with a
judicial mix of business, commercial, social and

Master planning of IAIP & RTC

Exhibit No. 9.3: Zoning, product mix and facility configuration

Source: MACE analysis

Exhibit No. 9.4: Description of IAIP zones, product mix and facility configuration

Source: MACE analysis

129
 State-of-the art industrial
zone

The summary of considerations for master planning is depicted in Exhibit No. 9.5.
9
Exhibit No. 9.5: Master planning considerations
Master planning of IAIP & RTC

Focus Zoning

•Master planning –
1 objectives, guiding Layout
factors planning

2 •Land use pattern Components of

zones based on
concept and
functional
•IAIP–product mix requirement
3 configuration

Zone area
•IAIP– infrastructure requirement,
4 need assessments demarcation

•External
5 infrastructure Utilization of
natural site
opportunities
•General infrastructure
6 and support facilities

Facilities and
amenities planning
7 •Green concept

Source: MACE analysis

The zoning and parcellation plan of IAIP is given in Exhibit No. 9.6 & 9.7. The larger version of the
zoning and parcellation plan is enclosed as Annexure – 9A & 9B.

130
Planning for conducive
business environment

Exhibit No. 9.6: Zoning plan of IAIP

9

Master planning of IAIP & RTC

Source: MACE

131
 Balanced land usage for
processing and non
processing activities

Exhibit No. 9.7: Parcellation plan of IAIP

9
Master planning of IAIP & RTC

Source: MACE

IAIP land use pattern hubs, capacity development, skill development,

The land use pattern of the IAIP is determined
considering the land requirement for various
processing units, logistics requirements, research,
post harvest infrastructure, education & knowledge
agribusiness management, residential facilities,
schools and various social amenities, etc.
Table No. 9.2 provides the land use pattern
for the proposed IAIP.

Table No. 9.2: Land use pattern for the proposed IAIP

Total area Leasable area Non leasable area

Land use pattern
Hectares in % Hectares in % Hectares in %
Processing area
Industrial area
Focus crop - cereals
Anchor units 8.09 3.13% 8.09 3.13%
Processing units 14.57 5.63% 14.57 5.63%
Ancillary units 8.04 3.11% 8.04 3.11%
Subtotal focus crop - cereals 30.69 11.87% 30.69 11.87%

132
 Land use plan maximizing
the potential

Total area Leasable area Non leasable area

Land use pattern
Hectares in % Hectares in % Hectares in %
9
Focus crop - sesame
Anchor units 11.57 4.47% 11.57 4.47%

Master planning of IAIP & RTC

Processing units 17.62 6.81% 17.62 6.81%
Ancillary units 8.04 3.11% 8.04 3.11%
Subtotal focus crop - sesame 37.22 14.39% 37.22 14.39%
Focus commodity - livestock
Anchor units 5.75 2.22% 5.75 2.22%
Processing units 25.49 9.86% 25.49 9.86%
Ancillary units 11.02 4.26% 11.02 4.26%
Subtotal focus commodity – 42.26 16.34% 42.26 16.34%
livestock
Fruits and vegetables processing 1.44 0.56% 1.44 0.56%
unit
Brewery processing industry 7.90 3.05% 7.90 3.05%
Collection, storage, finished goods 19.12 7.39% 19.12 7.39%
storage, etc
Total industrial area 138.64 53.61% 138.64 53.61%
Specialized infrastructure 6.12 2.37% 6.12 2.37%
Amenities 20.86 8.07% 20.86 8.07%
Utilities 16.77 6.48% 8.38 3.24% 8.38 3.24%
Road 21.92 8.47% 21.92 8.47%
Greenery and open space 28.88 11.17% 28.88 11.17%
Total processing area 233.18 90.16% 174.01 67.28% 59.18 22.88%
Non processing area
Commercial 2.23 0.86% 2.23 0.86%
Residential 5.28 2.04% 5.28 2.04%
Polyclinic 1.11 0.43% 1.11 0.43%
School 3.31 1.28% 3.31 1.28%
Places of worship 1.11 0.43% 1.11 0.43%
Utilities 0.72 0.28% 0.36 0.14% 0.36 0.14%
Road 3.78 1.46% 3.78 1.46%
Greenery and open space 7.90 3.05% 7.90 3.05%
Total non processing area 25.44 9.84% 8.98 3.47% 16.45 6.36%
Total area 258.62 100.00% 182.99 70.76% 75.63 29.24%
Source: MACE analysis

Based on the above land use pattern 70.76%
of land area accounts for saleable area and remaining
29.24% of land area accounts for non saleable area.
Out of 70.76% total saleable area, 11.87 %, 14.39%,
16.34%, 0.56% and 3.05% accounts for industrial
use for focus crop-cereals, crop-sesame, livestock,
Fruits and vegetable processing unit and brewery
respectively. 7.39% of total saleable land area is
earmarked for raw material and finished goods
collection, storage and packaging in processing area.
Minimum of 10% green space required as
per international planning norms in practice is being
earmarked at strategic locations in the master plan.
Private green within the industrial plots is not included
in the computation of overall green area of IAIP. The
greenery will be concentrated at the boundary of zones
and at pocket parks.
• Industrial land
From the proposed land use distribution it can
be seen that industrial usage is the predominant land
use.
Besides offering pleasant environment for
people to work, the development will offer a variety of
prepared land plots complete with infrastructure for
clients to build their own factories. Industrial land will

133
 Sustainability initiatives
at the planning stage
itself

be marketed as prepared land sites complete with A variety of small and large plots are provided
9 infrastructure. to meet the varied needs of the industrialists.

The parcellation of plots is done depending Sustainability initiatives

Master planning of IAIP & RTC

upon the types of industries to be accommodated.

Occupant units can merge or sub-divide the prepared
land into appropriate sizes to meet their own
requirements. Conversely, the larger plots can be
subdivided by introducing some minor roads if the
demand is for small plots. Prominent sites which
normally command a slightly higher land premium are
reserved for industrial brand names and multinational
companies (MNCs) who desire these prime locations
for enhancement of their corporate image and are
ready to pay a premium price for the same. Apart
from general infrastructure, specialised infrastructure
required for a particular zone is also envisaged.
The development of the IAIP is driven on
strong foundation of sustainability concepts and these
needs were built right in the conceptualization stage
itself. The sustainable elements conceived in the
concept plan include use of eco friendly materials,
recyclable material, avoidance of toxic chemicals,
usage of environmental friendly products, waste
minimization technologies, scientific treatment of
waste and energy recovery possibilities to reduce
power consumption etc. as shown in Exhibit No. 9.8.

Exhibit No. 9.8: Sustainability initiatives

Rain water
harvesting

Energy Zero
efficiency discharge

Implementation
of sustainability
ideas
Waste Waste
minimization recycling

Scientific
management 3-R
of waste concepts
disposal

Source: MACE analysis

Master plan components • Land use plan

o Detailing the locations and sizes of
Detailed master planning is done cluster wise various land uses
covering the following components: • Land parcel plan
o Showing the subdivision of industrial
• Micro level zoning land

134
Modular and flexible
master plan

• Phasing • Industrial cluster plan

• Utilities mapping and schematic plans • Zoning (industrial, residential, commercial
9
• Greenery and open space plan and other supporting facilities)
•

Master planning of IAIP & RTC

Road category
• Views The master plan and internal road network of
IAIP is given in Exhibit No. 9.9 & 9.10. The larger
The major outputs of the master plan are: version of the master plan and internal road network
is enclosed as Annexure – 9C & 9D.
• Road network plan
• Land use plan

Exhibit No. 9.9: Master plan

Source: MACE analysis

135
 Well planned road layout

9 Exhibit No. 9.10: Internal road network

Master planning of IAIP & RTC

Source: MACE analysis

The bird’s eye view of IAIP is given in Exhibit No. 9.11. The larger version of the IAIP bird’s eye view is
enclosed as Annexure – 9E.

136
 IAIP shall be developed in
phases
Exhibit No. 9.11: Bird’s eye view of IAIP
Source: MACE analysis
RTC master plan
The master planning exercise for RTC was
conducted based on the following considerations:
• ACPZ area demarcation and the configuration
of IAIP in the region including the
requirements of the occupant units within IAIP
• Commodities handled within RTC
• Commodity volume anticipated considering
the production and surplus available in the
catchment area of the RTC including
seasonality of storage and storage
requirements
• Availability of agribusiness, social and
commercial infrastructure
• Availability of support facilities
9
Master planning of IAIP & RTC
Commodities handled within RTC
As the proposed RTC is envisaged to provide
backward linkage to IAIP, the commodities handled
within RTC would be agriculture and allied sector
products. The analysis of the agriculture products
within the catchment area of the RTC revealed that
the following products could be the potential
commodities handled within RTC.
• Cereals and pulses
• Livestock
• Dairy products including milk
• Vegetables
Commodity volume anticipated
The production details and net marketable
surplus of each commodity for each of the identified
RTC locations was arrived on the basis of extensive
primary and secondary data collected by the FAO/MOI
National consultants and is presented as Table No.
9.3.
137
 RTC to handle varied agro
products of the region

Table No. 9.3: RTC raw materials inflow scenario

9
Quantity of
Name of List of Kebelles under Types of commodities Total production
marketable
Master planning of IAIP & RTC

RTC the RTC catchment to be supplied in tons

surplus (tons)
Maykadra Mykadra, Bereket and Meat 270.4 53.03
Centrl Dairy/milk 487.52 8.29
Honey 0 0
Egg 0 0
Sesame 49089.4 40737.4
Sorghum 111790.38 58151.8
Setit Adebay, Hagereselam, Meat 1043.5 204.63
Humera Hiletkoka and Rawyan Dairy/milk 3306.9 56.22
Honey -
Egg 113.6 17.87
Sesame 17577 14589.12
Sorghum 139107.06 18083.92
Adi Goshu K/adigoshu, Mayweyni, Meat 2323.32 455.6
Wihdet, H/adigoshu and Dairy/milk 611 103.87
Maykeyah Honey 195.54 79.31
Egg 47.9 7.19
Sesame 5066.59 4205.27
Sorghum 23512.12 3056.56
Adi Hirdi Adi-tsetser, Adihirdi, Sola Meat 1420.5 278.56
and Tirkan Dairy/milk 5969.26 101.5
Poultry 357.8 56.28
Honey 356.7 144.68
Sesame 8093.3 6717.44
Sorghum 62961.07 8184.97
May Gaba All kebelles, except- R/ Meat 1926.18 377.8
lomin, Selam, E/dabo & Dairy/milk 8299.8 141.1
Awra from Wolkait Poultry 442.29 69.57
woreda, and May-agam Honey 80.58 32.68
and Adi selam from Sesame 16656.21 13824.61
Tsegede woreda
Sorghum 20504 16019
Dansheha All kebelles, except- Meat 2071.85 406.29
May-agam and Adi selam Dairy/milk 12496.86 212.45
from Tsegede and Ruba Poultry/eggs 259.61 40.84
lomin, Selam, E/dabo & Honey 161.16 65.37
Awra from Wolkait Sesame 19458.19 16150.29
woreda Sorghum 137393.29 17861.13
Shire- M/zana, T/koraro, Meat 19197 15372.79
Indaselassie Tselemti, /tsimbila, Dairy/milk 243459.4 232470.78
L/adiabo, T/adiabo Poultry/eggs 1416.7 1131.09
Honey 24011.33 9789.42
Sesame 20504 16019
Sorghum 347078.8 50222.3
Source: FAO / MoI national consultants

138
 Facility configuration
factors the need based
requirements

The anticipated volume of commodities inflow the availability of infrastructure and supporting
to the RTC was arrived considering a conservative facilities in the identified locations, which formed the 9
percentage of the surplus available and accordingly the basis for arriving at an appropriate and prudent facility
sizing of the facilities planned in the RTC was done. configuration for the RTC. The infrastructure available

Master planning of IAIP & RTC

Facility configuration
As a part of the RTC location identification
exercise, FAO/MOI National consultants had surveyed
at each of the RTC locations and the proposed
infrastructure for the RTC based on the discussions
with the stakeholders are presented as Table No. 9.4
& 9.5 respectively.

Table No. 9.4: Infrastructure and support facilities available at RTC locations

Facilities Farmer Input supply mechanism - Agriculture

Rural Terminal Self help Micro
training
RTC markets market groups financing Seed Fertilizer Chemicals
institute
Maykadra 3 Maykadra, Addis 3 primary Debit, Through Through Government
Bereket and Ababa farmers Credit Seed government and private
Central cooperatives and enterprises, and coops sector
(one in each Saving coops and
Kebelle) Institution private
operators
Setit 4 Adebay, setit- Addis 4 primary Debit , Through Through Government
Humera humera, Ababa farmers Credit Seed government and private
hagereselam cooperatives and enterprises, and coops sector
(one in each Saving coops and
Kebelle) Institution private
operators
Adi Goshu 5 Kunama- Addis SHG and Debit , Through Through Government
adigoshu, Ababa CIGs Credit Seed government and private
Maykeyah, available and enterprises, and coops sector
Saving coops and
Institution private
operators
Adi Hirdi 6 Adihirdi, Addis 6 primary Debit , Through Through Government
Aditsetser Ababa farmers Credit Seed government and private
cooperatives and enterprises, and coops sector
(one in each Saving coops and
Kebelle) Institution private
operators
May Gaba 18 Maykadra, Addis 18 primary Debit , Through Through Government
Bereket and Ababa farmers Credit Seed government and private
Central cooperatives and enterprises, and coops sector
(one in each Saving coops and
Kebelle) Institution private
operators
Dansheha 16 Adebay, setit- Addis 16 primary Debit , . Through . Through Government
humera, Ababa & farmers Credit Seed government and private
hagereselam, setit- cooperatives and enterprises, and coops sector
Dansha, humera (one in each Saving coops and
Awra, Kebelle) Institution private
Ketema operators
Nigus
Shire- 112 Sheraro, Adi- Addis 112 primary Debit , Through Through Government
Indaselassie daero, Ababa farmers Credit Seed government and private
Indasilassie, cooperatives and enterprises, and coops sector
Endabaguna, (one in each Saving coops and

139
 RTC infrastructure ensures
sustenance of rural sector
and occupants of IAIP

Facilities Farmer Input supply mechanism - Agriculture

9 training
Rural Terminal Self help Micro
RTC markets market groups financing Seed Fertilizer Chemicals
institute
Maytsebri & Kebelle) Institution private
Master planning of IAIP & RTC

Selekleka operators
Contd...
Contd...
Facilities Farm Input supply mechanism - livestock Market Storage
Commodity
mechanization Feed & Veterinary intelligence facilities,
exchange
RTC & access to mineral Fodder Vaccines services cell / warehouse
centres
machineries mixture centre / silos
Maykadra Tractors are - - - - - There is -
available in the ECX branch
area and some office at
capable Humera at
investors and about
farmers are 28km
using for distance
plowing mainly from
through rental mykadra
- Small holder
farmers have
no access due
to financial
constraints
and use oxen
for plowing.
Generally
mechanization
is poor
Setit Not available Through Through Through Available - There is -
Humera bureau of bureau of bureau of ECX branch
agriculture agriculture agriculture office at
and NGOs and NGOs within the
town
Adi Goshu Poor access - - - Available - There is -
ECX branch
office at
Humera at
about 91
km distance
from
Adigoshu
Adi Hirdi Not available - - - Available - There is -
ECX branch
office at
Humera at
about 87
km distance
from
adihirdi
May Gaba Tractors are Through Through Through Available - There is -
available in the bureau of bureau of bureau of ECX branch
area and some agriculture agriculture agriculture office at
capable and NGOs and NGOs and NGOs Humera at
investors and about 212
farmers are km distance

140
 RTC to function as
capacity enhancement unit

Facilities Input supply mechanism - livestock

Farm
mechanization Feed & Veterinary
Market
intelligence
Commodity
Storage
facilities,
9
exchange
RTC & access to mineral Fodder Vaccines services cell / warehouse
centres
machineries mixture centre / silos

Master planning of IAIP & RTC

using for from
plowing mainly Maygaba
through rental
- Small holder
farmers have
no access due
to financial
constraints
and use oxen
for plowing.
Generally
mechanization
is poor
Dansheha Not available Through Through Through Available - There is
bureau of bureau of bureau of ECX branch
agriculture agriculture agriculture office at
and NGOs and NGOs Humera at
about
102km
distance
from
Dansha
Shire- Not available Through Through Through Available - There is -
Indaselassie bureau of bureau of bureau of ECX branch
agriculture agriculture agriculture office at
and NGOs and NGOs and NGOs Humera at
about
351km
distance
from Shire
Indaselassie

Source: FAO/MoI national consultants & MACE analysis

Table No. 9.5: Proposed infrastructure and support facilities for each RTC location

Social
RTC Support infrastructure Specialized infrastructure
infrastructure
Maykadra Quality control lab, auction Warehouse, cold storage, drying Office, sanitary
house, agri clinic, yard, auction centre, silo, facilities
certification lab, training mechanized agri equipments,
centre fertilizer storage, pesticide, other
agri inputs, soil testing
Setit Humera Quality control lab, auction Warehouse, cold storage, drying Office, sanitary
house, agri clinic, yard, auction centre, silo, facilities
certification lab, training mechanized agri equipments,
centre fertilizer storage, pesticide, other
agri inputs, soil testing
Adi Goshu Quality control lab, auction Warehouse, cold storage, drying Office, sanitary
house, agri clinic, yard, auction centre, silo, facilities
certification lab, training mechanized agri equipments,

141
 RTC provides comprehensive
infrastructure and support
facilities

9 RTC Support infrastructure Specialized infrastructure

Social
infrastructure
centre fertilizer storage, pesticide, other
Master planning of IAIP & RTC

agri inputs, soil testing

Adi Hirdi Quality control lab, auction Warehouse, cold storage, drying Office, sanitary
house, agri clinic, yard, auction centre, silo, facilities
certification lab, training mechanized agri equipments,
centre fertilizer storage, pesticide, other
agri inputs, soil testing
May Gaba Quality control lab, auction Warehouse, cold storage, drying Office, sanitary
house, agri clinic, yard, auction centre, silo, facilities
certification lab, training mechanized agri equipments,
centre fertilizer storage, pesticide, other
agri inputs, soil testing
Dansheha Quality control lab, auction Warehouse, cold storage, drying Office, sanitary
house, agri clinic, yard, auction centre, silo, facilities
certification lab, training mechanized agri equipments,
centre fertilizer storage, pesticide, other
agri inputs, soil testing
Shire-Indaselassie Quality control lab, auction Warehouse, cold storage, drying Office, sanitary
house, agri clinic, yard, auction centre, silo, facilities
certification lab, training mechanized agri equipments,
centre fertilizer storage, pesticide, other
agri inputs, soil testing

Source: FAO/MoI national consultants & MACE analysis

The zoning plan of RTC (typical) is given in Exhibit No. 9.12 and the larger version of the same
is enclosed as Annexure – 9F.

142
 RTC serve as integrated
rural hub
Exhibit No. 9.12: Zoning plan of RTC (typical)
Source: MACE analysis
A typical facility configuration for the RTC
on a fully developed scenario has been arrived
considering the maximum surplus quantity available
at all the identified RTCs and providing
comprehensive infrastructure and support facilities
as a best template model. An analysis of the
9
Master planning of IAIP & RTC
infrastructure available and proposed at each RTC
location was carried out and a configuration was
decided based on a pragmatic approach. The typical
master plan for the RTC (typical) is presented as an
Exhibit No. 9.13 and the larger version of the same
is enclosed as Annexure 9G.
143
 Well planned RTC retard
migration of rural work
force to urban nodes

Exhibit No. 9.13: Master plan for RTC (typical)

9
Master planning of IAIP & RTC

Source: MACE analysis

The general details of the master plan are given below in Table No. 9.6. Land use description is provided
in Table No. 9.7 and percentage land use pattern is provided in Exhibit No. 9.14.

Table No. 9.6: General details of the master plan

Area considered for development 10 hectares

Master plan components  Livestock zone  Specialized infrastructure
 Milk, egg & honey zone  Amenities
 Sesame zone  Utilities
 Cereals zone  Roads
 Storage facility  Open space / greenery

Table No. 9.7: Land use pattern - RTC

Live stock zone Total area – 1.02 hectares

Percentage of total area – 10.16
Components – quarantine advisory cell, inspection area, receiving area, animal
storage sheds
Milk, egg & honey zone Total area – 0.37 hectares
Percentage of total area – 3.66
Components - milk collection centre & testing area, milk storage, honey & wax
collection centre

144
 Well planned RTC retard
migration of rural work
force to urban nodes

Sesame zone Total area – 1.07 hectares

Percentage of total area – 10.70
9
Components - receiving warehouse
Cereals zone Total area – 0.58 hectares

Master planning of IAIP & RTC

Percentage of total area – 5.85
Components - receiving warehouse, grading & sorting shed, washing and drying
Storage facility Total area – 1.29 hectares
Percentage of total area – 12.93
Components - egg grading, sorting & storage, bulk storage – sesame and bulk
storage - cereals
Specialized Total area – 1.46 hectares
infrastructure zone Percentage of total area – 14.58
Components - rural market, admin building, micro finance, bank, ATM, forex facility,
market intelligence cell, agri equipment centre, agri input centre & agri clinic, training
centre & rural BPO, women self help group, QA & QC labs
Amenities zone Total area – 1.90 hectares
Percentage of total area – 19.01
Components - truck parking, public parking space, crèche, & nursing mothers area,
health centre, food court & restroom
Utilities zone Total area – 0.63 hectares
Percentage of total area – 6.29
Components – common effluent treatment plant & sewage treatment plant, solid
waste management, OHT - over head storage tank, substation
Roads Total area – 1.32 hectares
Percentage of total area - 13.19
Components – 15 m & 10 m wide road, paved foot paths
Open space / Total area – 0.36 hectares
greenery Percentage of total area – 3.62
Components – Open space / greenery, landscape
Source: MACE analysis

Exhibit No. 9.14: Land use pattern of RTC

Open space / greenery, Live stock zone, 10.16

Roads, 13.19 3.62
Milk, egg & honey zone,
3.66

Utilities zone, 6.29

Sesame zone, 10.70

Cereals zone, 5.85

Amenities zone, 19.01

Storage facility, 12.93

Specialized infrastructure
zone , 14.58
Source: MACE analysis

145
 Modular, flexible RTC
planning

The bird’s eye view of RTC is given in Exhibit No. 9.15 and the larger version of the same is enclosed as
9 Annexure – 9H.
Master planning of IAIP & RTC

Exhibit No. 9.15: Bird’s eye view of RTC

Source: MACE analysis

RTC linkage with existing abattoirs
As can be seen from the master plan,
abattoirs/slaughtering houses are not provided either
in the RTC or in the IAIP due the environmental
considerations and possible contamination spread to
other processing areas. However, based on the
interactions with the stakeholders, provision is only
made for aggregation of livestock in RTC considering
the challenges in accomplishing this task for abattoirs
in view of the geographical spread of the livestock
holders. The aggregated livestock from RTC would
then be transported to existing / proposed abattoirs
for slaughtering and then to IAIP for processing.
The information on the existing abattoirs
along with the location details is given in Table No.
9.8.

146
 Existing abattoir serve as
input center to processing
units in IAIP

Table No. 9.8: Existing abattoirs

9
Type of Type of
Abattoir name Certifications Location Remark
process export

Master planning of IAIP & RTC

Abergelle Slaughter Sheep and Mekele, Tigray Currently not
and Chill goat carcass operational

Source: US AID – Agricultural Growth project – Live stock market development report

As can be seen from the above Table No.
9.8, Tigray region has one abattoir in Mekele (at a
distance of 622 kms from proposed IAIP) which is not
operational at present and needs to be revamped,
refurbished and augmented. Further to rendering the
abattoir operational, the abattoir at Mekale can be
linked to RTCs at Shire Indaselassie & May Gaba.
For other RTCs at Humera, Maykadra,
Dansheha, Adi Hirdi and Adi Goshu two abattoirs are
proposed and the cost for the same along with
refurbishing cost of existing abattoir has been
considered in the infrastructure cost within ACPZ. The
development of these abattoirs can be either through
GoE intervention or private sector involvement.

147
 Chapter – 10
Infrastructure and facilities within IAIP & RTC

Coverage areas and objectives

The industrial, environmental, physical &
The integrated ACPZ and IAIP essentially social infrastructure objectives of integrated ACPZ and
create the critical infrastructure to fill the gaps in the IAIP are described in Exhibit No. 10.1.
agri supply chain from farm to end consumer.

Exhibit No. 10.1: Integrated ACPZ and IAIP infrastructure objectives

•Integrated development of agri & allied sector hub with backward and forward linkages and other
allied infrastructure
•Establishing agri infrastructure in the production zones
•Establishing agri industrial and manufacturing zones with compatible township and other social
infrastructure development
•Development of logistics and agri marketing hubs
•Development of perishable air cargo infrastructure
Industrial •Establishment of greenfield agri jetty & other marine infrastructure
infrastructure •Development of agri knowledge hubs, education hubs, research hubs
•Development of agri special tourism zones with requisite tourism infrastructure and allied facilities

•Development of municipal solid waste collection, transport and treatment

facilities
•Development of industrial waste management system - hazardous & non
hazardous, collection, transport and landfill
•Water infrastructure - source development treatment and recycling
Environmental •Development of wastewater treatment and recycling
infrastructure •Sustainable environmental management plan of the region

•Development of transportation infrastructure in an integrated manner

•Creation of road connectivity between production zone and processing zone
•Development of power infrastructure
•Renewable energy – large scale solar power generation facilities, other
renewable energy modes
Physical and social •Residential, commercial, institutional, social and tourism development for a
infrastructure holistic agri industrial investment and business environment

Source: MACE analysis

148
 IAIP to have best in class
infrastructure

The schematic description of the IAIP land use format and infrastructure is presented in Exhibit No. 10
10.2.

Infrastructure and facilities within IAIP & RTC

Exhibit No. 10.2: Schematic description of the IAIP land use format and infrastructure

Source: MACE analysis

The infrastructure is the key requirement for
sustainable operation of the IAIP. Infrastructure
requirements are categorized as follows:
1) Infrastructure within IAIP
2) Specialized agri infrastructure in the ACPZ
and
3) External connectivity and offsite infrastructure
for IAIP.
Specialized agri infrastructure in ACPZ and
IAIP external connectivity and offsite infrastructure are
covered separate chapter.
The infrastructure developments within IAIP
are dealt in detail in this chapter.
All the necessary infrastructure facilities for
the development are designed to create an ideal
ambience and best environment.
Detailing of IAIP infrastructure
Exhibit No. 10.3 elaborately detail the
infrastructure planned within IAIP.

149
 Compatible site development

Exhibit No. 10.3: Detailing of IAIP infrastructure

10
Components Detailing of utilities, infrastructure within IAIP
Infrastructure and facilities within IAIP & RTC

 Site grading o It is proposed to carryout site grading works only for the road and general
infrastructure area.
o The existing topography of the site is generally sloping with minor
undulations, gently sloping towards the river Samina, North direction with
variation of about + 689 m to +716 m
 Boundary wall and o A compound wall all along the processing area of IAIP boundary to a
fencing height of 2.0 m above NGL is proposed to be constructed and provided
with 0.6 m height barbed wire fencing on top.
o The total length of the compound wall is estimated to be 5551 m.
o Chain link fencing all along the non-processing area of IAIP boundary is
considered.
o The total length of the fencing is estimated to be 2049 m
 Roads – General o Arterial, primary, secondary and tertiary roads are planned to give access
considerations to the industries within IAIP apart from catering to residential and
commercial zones and shall be looped with inter connecting roads
o In order to maximize lead values and minimize land taken by major and
minor roads, a proper hierarchy of roads is proposed to ensure smooth
traffic movement inside IAIP
 Roads – categories o Different categories of roads are proposed for the internal road
transportation network
o The details are given in Table No. 10.1.
 Roads – pedestrian o Routes and paths are provided for easy movement of visitors with
walkways sufficient care so that no transport system comes in the way of
pedestrians.
o Aesthetically designed walkways are provided along with lush green
environment on either side of road.
o Pedestrian walkways are provided for all categories of roads.
o All services for drains, sewers, water, power and telecom are contained
within the road right of way.
o Necessary signage, street name boards, zone guiding maps and visitors
guidance map etc. are planned to be positioned at necessary locations,
such as intersections and at various strategic locations in each zone.
o No access is planned to be allowed near the road junctions and it is
recommended that ingress / egress points will be with a set back at
least 30 m from the road junction
 Roads - pavement o In the proposed IAIP, flexible pavement structure is recommended for the
structure following reasons:
• Ease of rehabilitation in consideration for anticipated long-term
settlement.
• Lower reinstatement cost to accommodate future laying of utility
services
o The typical composition of flexible pavement structure is detailed in Table
No. 10.2 considering California Bearing Ratio (CBR) value of 2% and 5
Million Standard Axles (MSA)
o Wherever necessary, the unsuitable soil at sub grade/below sub grade
level shall be replaced with suitable materials as per standard
specifications. The sub grade soil shall have CBR value of 2%. If the CBR
value of the sub grade is less than 2%, a capping layer of 150 mm

150
 Excellent drainage
network

Components Detailing of utilities, infrastructure within IAIP 10

thickness of material with a minimum CBR of 10% shall be provided in
addition to the sub-base.

Infrastructure and facilities within IAIP & RTC

 Surface drainage –
general considerations
 Surface drainage – Peak
runoff
 Surface drainage – sizing
o A single layer of dense bituminous base course (DBM) and bituminous-
wearing course should be delayed in the initial construction and could
instead be laid 12 months later or in the subsequent road development
program. This would minimize reinstatement costs during subsequent
underground services lying, road crossings, connections and settlement
in the filled areas.
o Based on the topography of the IAIP, the drainage pattern has been
decided.
o Strengthening and widening of the existing culverts along the Federal
highway 6 is considered to facilitate storm water drainage.
o The peak runoff and discharge capacities are computed based on the
following design parameters.
• The peak runoff is planned to be computed based on rational formula:-
Q = C * I * A / 360
Where, Q = Quantity of runoff, m3/s
C = Coefficient of runoff
I = Intensity of rainfall, mm/hr
A = Catchment area, hectare
• Considering the nature of soil/surface, the coefficient of runoff adopted
in the drainage computation are given below:
0.9 - for built-up area
0.5 - for road and other paved area
0.2 - for greenery and open areas
• Maximum annual rainfall intensity of 632.07 mm of Tigray region for
the year 1992 to 2004 is considered for storm drain design.
o The sizing of the drains are designed based on the discharge capacity of
Qc to cater adequately the estimated peak runoff using Manning's
formula: -

Qc = (1/n)* A * R 2/3 * S½ (m3/sec)

Where
A = Area of cross-section of drain (m²)
R = Hydraulic mean radius (m)
S = Hydraulic gradient
n = roughness coefficient
 Surface drainage – o The drainage system is planned to cater for the entire IAIP through
design & scheme gravity flow.
o Drains are proposed to be provided on both sides of the roads.
o Open trapezoidal drain is considered for the surface run off collection due
to easy maintenance for the primary road. Stone pitching is considered
for the side walls and PCC for the base.
o Covered rectangular brick masonry drain is considered for the remaining
areas for optimization of area under drainage.
o RCC box / pipe culverts of suitable sizes are considered for road
crossings.
o Rainwater harvesting structures are envisaged all along the drain at every
30 m interval.

151

10 Components
 Water demand
Infrastructure and facilities within IAIP & RTC
 Water losses
 Fire protection demand -
non potable
 Average water demand
 Water storage
 Water pumping station
 Water distribution
network
152
24x7 water supply
Detailing of utilities, infrastructure within IAIP
o The water demand estimation norms considered for arriving the water
demand is depicted in Table No. 10.3.
o Water losses occur in the distribution and transmission network. The
percentage of loss depends on the pipe material, jointing system, etc. As
this is a complete loss, it is attempted to keep these losses below 10% of
the total demand.
o Potable water has been considered to be used for processing, bathing
and washing clothes, cooking, drinking and washing vessels.
o Non potable water has been considered to be used for gardening,
cleaning, cooling and toilet flushing.
o The water consumption pattern assumed is given in Table No. 10.4.
o Fire demand in litres per minute has been calculated based on the
following formula:
QFD = 4000 x (P)0.5 x (1-0.01 x (P)0.5)
Where P = Population in thousands per hectare
QFD = 899.49 lpm
= 53.97 cum/hr
o Considering two hours fire demand requirement, the total quantity of
water required for fire protection is 107.94 cum.
o Demand for fire fighting has not been considered under daily demand as
one time storage of 107.94 cum i.e. 2 hours of fire demand will be
created and maintained.
o Based on the computation and analysis, the total average water demand
is estimated and presented in Table No. 10.5.
o The water demand estimation for different components in the processing
and non-processing area is depicted in Table No. 10.6.
o Based on the above estimates, the following infrastructure for the IAIP is
proposed.
o Underground storage tank
• The total storage capacity of the underground storage tank based on
8 hrs storage requirement is proposed is shown in Table No. 10.7
• Totally there will be 4 underground storage tanks for storing portable
and non-portable water including fire demand for processing and non-
processing area respectively.
o Elevated level service reservoir (ELSR)
• The total storage capacity of the overhead storage tank based on 2
hrs. storage requirement is shown in Table No. 10.8
• Totally there will be 4 ELSR for storing portable and non-portable
water including fire demand for processing and non-processing area
respectively.
• As per standard norms, the tail end should have a minimum residual
pressure of 7.0 m. To meet the norms, the staging height of ELSR
shall be fixed accordingly by the project implementation company.
o Water pumping station for potable and non-potable water is required for
pumping from the underground storage sump to respective ELSR.
o The water supply scheme including distribution is planned based on the
peak flow, minimum residual pressure and pipe material.
o It is proposed to provide separate water distribution network for potable
and non-potable supply.
 Extensive wastewater
network

Components Detailing of utilities, infrastructure within IAIP 10

o The design criteria for the design of water supply network are given below.
• Demand computed based on the analysis.

Infrastructure and facilities within IAIP & RTC

• Working hours per day - 24
• Pipe material
 For pumping main - DI (K9)
 For distribution up to 200 mm dia - HDPE (PE 100)
 For distribution above 200 mm dia - DI (K7)
 Pipe roughness coefficient - 140 for DI and - 150 for
HDPE
 Formula used for friction loss - Hazen Williams
 Minimum residual pressure at all tapping points - 7.0 m
 ELSR staging height - as per design requirement
o The proposed pipe size and pumping capacity are given in Table No. 10.9
and Table No. 10.10.
o Proposed pump capacity for pumping the water from underground sump
to ELSR is given in Table No. 10.11
 Sewage quantity o The sewerage system is planned to cater for the anticipated peak
estimation discharge requirements and to treat the waste to the required discharge
standards.
o The estimation of the sewage shall vary depending upon the land use
distribution.
o The domestic sewage to be generated has been assumed to be 80% of
the domestic water consumption in addition to an infiltration of 10%.
o Based on the general wastewater generation pattern, the quantity of
wastewater generated in domestic premises is presented in Table No.
10.12.
o Wastewater generated from toilets is considered as sewage and
wastewater generated from bath / shower, laundry, hand basin and
kitchen is considered as sullage (grey water).
o The wastewater generation pattern is depicted in Table No. 10.13
o The estimation of average daily sewage and sullage generation is detailed
in Table No. 10.14
o o Treated sewage water available @ 90% = 4193.71 cum/day
o o Non potable water demand = 838.36 cum/day
o o Balance treated sewage water to be discharged as non-potable
water = 3355.35 cum/day
o Following design criteria is proposed for sewerage, treated effluent
collection system
• Demand computed based on the analysis.
• Working hours per day - 24
• Pipe material - NP2 RCC for all areas except road crossing and NP3
RCC for road crossing
• Pipe roughness coefficient - 0.011
• Peak flow factor - 3
• Formula used to calculate friction loss - Manning’s
• Infiltration - 10%
• Self-cleansing velocity - 0.6 m/s
• Minimum cover - 1 m
• Manhole spacing – 30 m up to pipe size 900 mm

153

10 Components
Infrastructure and facilities within IAIP & RTC
 Quality of sewage
 Sewage treatment plant
(STP) considerations
 Sewage treatment plant
technology selection
154
Wastewater treatment
and recovery
Detailing of utilities, infrastructure within IAIP
o It is presumed that each industry will treat their effluent into sewage
standards prior to discharge into the sewerage network.
o It is proposed to collect treated effluent, sewage & sullage through a
single collection network which is planned based on the above design
criteria. Sewerage network shall be established by the project
implementation company considering the topography of the site.
o The network is divided into trunk main and sub mains according to the
natural topography and other site constraints. Minimum pipe size of 150
mm is considered for sewerage network.
o Proposed pipe size of sewerage network is provided in Table No. 10.15.
o In general, the quality of domestic sewage generation shall be as per
Table No. 10.16.
o However, this is based on the condition that occupant units treat
industrial trade effluent to required level of pre-treatment before
discharging to common system
o The design and treatment scheme has been worked out based on this
assumption of input quality. It is proposed to treat both sewage & sullage
in a single treatment system.
o Sewage treatment is the process of removing contaminants from
wastewater, comprising of storm run-off, domestic sewage and primary
treated effluent. It includes physical, chemical and biological processes to
remove various contaminants.
o Various sewerage treatment systems considered for selection of
treatment system for IAIP and are given in Table No. 10.17
o Factors considered for selection of appropriate treatment system:
• Reliability
• Vector nuisance
• Area availability
• Power requirement
• Capital cost
• Operation & maintenance cost
o The above process technologies are analysed in terms of the
performance and both capital and operating cost. Based on the above
analysis Sequencing Batch Reactor (SBR) system is proposed
o This system has been widely used for municipal and industrial wastewater
treatment applications to meet specific discharge requirements.
o SBR technology advantages/benefits
• Consistent high-quality, low nutrient level effluent
• Tolerates wide swings in flow and organic loading
• No clarifier required
• Better control over filamentous growth and settling problems
• Nutrient removal without chemicals - nitrification and de-
nitrification, phosphate removal
• The system can also work with sewage in flow of 20 to 30
percentage of designed capacity due to presence of variable
frequency drive (VFD)
o SBR system is a fill and draw activated sludge system. SBR process uses
high-efficiency oxygen transfer aeration equipment to satisfy the high-rate
oxygen consumption requirement at the beginning of the "fill" and
 Solid waste management

Components Detailing of utilities, infrastructure within IAIP 10

"aeration" cycles. SBR is efficient in carbonaceous pollutant removal, and
is easily modified to satisfy nutrient removal of nitrogen (N) and

Infrastructure and facilities within IAIP & RTC

phosphorous (P). Because the fill, aeration, settlement and draw take
place in the same reaction tank, SBR tank itself would serve as the
clarifier. Refer Exhibit No. 10.4 for process flow diagram.
o 2 numbers of sewage treatment plant of capacity 4.23 MLD & 0.43 MLD
for processing area and non-processing area respectively are proposed.
 Solid waste management o SWM is one of the most essential services for maintaining the quality of
(SWM) life in IAIP and for ensuring better standards of health and sanitation.
o If properly collected at source, SWM would reduce a number of
downstream problems related to transportation and disposal of the same.
Solid waste (SW) generated in IAIP can be broadly categorized as under:
• Industrial non-hazardous waste
• Industrial hazardous waste
• Domestic wastes: kitchen and wood waste, plastic, paper, floor
sweepings, etc.
• Road sweeping & sanitary waste: human waste, etc.
• Garden & agriculture waste: leaves, branches, plants etc.
• Roads/building construction waste: earth, asphalt, concrete, brick,
plaster, wood, glass, stones etc.
• E-Waste: Computer systems, peripheral equipment, mobile phone
sets, TVs, audio sets and also household appliances
• Hospital and biomedical waste
o The role of integrated SWM is to reduce the quantity of SW disposed of
to land by recovering materials and energy from SW as depicted in
Exhibit No. 10.5
o The generation rates of industries, logistics, commercial & residential
areas vary to such an extent that exact quantification of SW generation is
not feasible.
o However, an attempt has been made to quantify the municipal solid waste
(MSW) that may be generated from various zones of IAIP.
• Industries – 370 Kg / hectare / day
• Utilities – 100 gms /per person / day
• Residential area – 400 gms / person / day has been considered
• Road – 10 kg / hectare / day is considered as street sweeping.
• Greenery – 30 kg / hectare / day is considered.
• Commercial and recreation – 125 gms / per person / day is
considered
o Based on the above, MSW quantification has been carried out and
depicted in Table No. 10.18.
o Total estimated MSW quantity – 55.08 TPD
o Source segregation should be made mandatory and due care has to be
taken while planning the collection, transportation of waste within the site
area. Users will be required to segregate their waste in the following
categories and put in colour coded bins.
• Industrial non-hazardous waste
• Industrial hazardous waste
• Bio-degradable waste

155
 Adequate reliable power

10 Components Detailing of utilities, infrastructure within IAIP

• Non-biodegradable waste
• E-waste like parts of computer, floppies, monitor, cartridges,
Infrastructure and facilities within IAIP & RTC

ribbons etc.
• Construction debris, street sweepings etc.
• Hospital and biomedical waste
o From the above only bio-degradable waste can be treated in the SW
treatment facility
o The rate of MSW generation in the initial stages will be less than the
estimated quantity and hence during the initial stage, the MSW
generation rate can be considered as 50% of the estimated quantity.
o The entire MSW is planned to be collected and treated in the composting
plant within IAIP and the rejects shall be disposed to suitable landfill
outside the IAIP.
o Suitable area has been earmarked for development of composting plant
within IAIP to handle the MSW generated.
 Power supply & o The system parameters are as follows:
distribution • Transmission line - 132 kV
• Number of phases - 3
• System frequency - 50 Hz
• Consumer supply voltage 33 kV /15kV/415/240 Volt
o As peak demand may vary for each facility in IAIP, a diversity factor, which
relates peak demand to rated load demand or calculated demand, is
utilized in computation of maximum demand.
o A diversity factor of 60 - 70% is normally considered.
o Power losses generally occur in the distribution network depending upon
the type of conductors and equipment installed. As this is a complete loss
to the system, it is generally kept below 10% of the total load.
o Estimated power demand is depicted in Table No. 10.19.
o Total estimated power demand is 45.47 MVA.
o Distribution substation is proposed in a strategic location. Individual
facilitation and all power reticulation are to be carried out at 15 kV.
o The advantage with reticulation at 15 kV is that it is the standard voltage
and therefore electrical reticulation equipment for 15 kV systems would
be readily available including spares.
o Distribution network is the main backbone of the reticulation system. It is
most essential that the network must deliver uninterrupted power, in right
quantity & quality to individual facilities continuously.
o Power can be distributed by a network of overhead lines or underground
cables.
o An overhead distribution system is adopted for much more flexible for
extension and for connection of new consumers and less expensive than
an underground cable system.
 Street lighting o Street lighting has been conceived in 2 different forms.
• Street lights for the road network
• Solar street lighting
o All the road and streets are provided with street lighting not only to assist
pedestrians and traffic, but also to increase safety and security in the
area. It is recommended that all lighting should be by high-pressure
sodium lanterns mounted on power poles or on streetlight columns. For

156
 Specialized agri
infrastructure

Components Detailing of utilities, infrastructure within IAIP 10

major roads the average illumination should be about 20 lux.
 Telecommunication o All telecommunication services are expected to be provided through the

Infrastructure and facilities within IAIP & RTC

 Landscaping
 Specialized agri
infrastructure
 Environmental
sustainability
concerned officials of the ministry and other private operators.
o Value added telecom services are covered in infrastructure and internal
communications for the users are not covered under the general
infrastructure.
o This includes works associated with the landscaping within the IAIP
covering tree strips along the boundary, roads, public greenery etc.
o It is also envisaged to provide the specialized agri infrastructure within
IAIP catering to the specific requirements of the occupant units. This
would include
• R&D hub
• Innovation centre and knowledge hub
• Ware houses
• Centralised processing centre
• Multi chamber cold storages and deep freezing storage
• Procurement centres
• Packing & labelling
• Grading & sorting
• QA & QC lab
• Administrative building etc.
o The aspects of environmental sustainability considered while carrying out
the designing activities are enunciated in the following Exhibit No. 10.6.

Source: MACE analysis

Table No. 10.1: Hierarchy of roads

Length (m)
Road
Carriage Non
Category width Number of lanes Processing
way width (m) processing Total
(m) area
area
Arterial 45 11.0 + 11.0 6 lanes two way (with 1662 - 1662
road 2.0 m centre median)
Primary 30 7.0 + 7.0 4 lanes two way (with
4035 4035
road 2.0 m centre median)
Secondary 24 5.5 + 5.5 2 lanes two way (with
2374 248 2622
road 2.0 m centre median)
Tertiary 18 3.75 + 3.75 Single lane two way
road (with 1.20 m centre 2440 224 2664
median)
Local street 10 3.75 + 3.75 Two lanes 2888 2888
Total 10511 3360 13871

Source: MACE analysis

157
 Micro level utilities
planning

Table No. 10.2: Composition of flexible pavement structure

10
Layer Composition details
Infrastructure and facilities within IAIP & RTC

Wearing course Semi dense bituminous concrete of 25 mm thick laid with mechanical spreaders
Binding coat A tack coat of 0.25 kg / sq. m. of 60/70 grade bitumen
Binder course Dense bituminous macadam (DBM) 70 mm thick in 2 layers, laid with mechanical
spreaders
Binding coat A prime and tack coat of 1.5 kg / sq. m of 60/70 grade bitumen
Base course Wet mix macadam (WMM) 250 mm thick in 2 layers
Sub-base 450 mm thick granular sub base in 2 layers to a soaked CBR of min. 30%
Sub-grade Min. soaked CBR value of 2%
Source: MACE analysis

Table No. 10.3: Water demand estimation norms

Reference – published standards, guidelines and best

Description
industry norms
Processing area
Focus crop industries (Cereal) 25 cum / ha / day - process water demand
Focus crop industries (Sesame) 18 cum / ha / day - process water demand
Focus crop industries (Live stock) 36 cum / ha / day - process water demand
Focus crop industries (fruit and vegetable 36 cum / ha / day - process water demand
processing)
Focus crop industries (Brewery) 170 cum / ha / day - process water demand
Other crop industries 18 cum / ha / day - process water demand
Specialised infrastructure 18 cum / ha / day - process water demand
Storage – raw material, finished goods 45 litres per capita - offices
Utilities 45 litres per capita
Amenities (processing) 36 cum / ha / day
Road 1.8 cum / ha / day
Green 1.8 cum / ha / day
Non processing area
Residential 135 litres per capita
Commercial 15 litres per capita
Utilities 45 litres per capita
Schools 45 litres per capita
Road 1.8 cum / ha / day
Green 1.8 cum / ha / day
Source: MACE analysis, published standards, guidelines and best industry norms

Table No. 10.4: Water consumption pattern

For areas with bathing facilities

Potable water 70%
Non potable water 30%
For areas without bathing facilities
Potable water 45%
Non potable water 55%
Source: MACE analysis

158
 Phased development of
utilities

Table No. 10.5: Water demand

10
Processing Non processing
S. No. Description Total Unit
area area

Infrastructure and facilities within IAIP & RTC

1 Total average demand 6215 562 6777 cum/day
2 Total potable water demand 5572 367 5939 cum/day
3 Total non-potable water demand 643 196 839 cum/day
4 Fire demand 97 11 108 cum
Source: MACE analysis

Table No. 10.6: Estimation of average daily water demand

Water demand
Population density /sq. ft

Domestic water
Process water
Proposed FSI

Non-potable
percentage
Loss @ 10
Population
/ person

Potable
Land use Total area

Total
pattern (hectares)

In cum/day
Processing area
Focus crop -
Cereals
Anchor units 8.09 1.00 800 440 202.14 19.80 22.19 244.13 234.33 9.80
Processing units 14.57 1.00 800 793 364.29 35.69 40.00 439.97 422.31 17.66
Ancillary units 8.04 1.00 800 437 200.90 19.67 22.06 242.62 232.89 9.73
Focus crop -
Sesame
Anchor units 11.57 1.00 800 629 208.17 28.31 23.65 260.12 246.11 14.01
Processing units 17.62 1.00 800 959 317.12 43.16 36.03 396.31 374.94 21.36
Ancillary units 8.04 1.00 800 437 144.65 19.67 16.43 180.74 171.01 9.73
Focus
Commodity -
Livestock
Anchor units 5.75 1.00 800 313 207.08 14.09 22.12 243.28 236.30 6.97
Processing units 25.49 1.00 800 1387 917.69 62.42 98.01 1078.12 1047.22 30.90
Ancillary units 11.02 1.00 800 600 396.68 27.00 42.37 466.05 452.69 13.37
Fruits and 1.44 1.00 800 78 51.84 3.51 5.54 60.89 59.15 1.74
vegetables
processing unit
Brewery 7.90 1.00 800 430 1342.62 19.35 136.20 1498.16 1488.58 9.58
processing
industry
Collection, 19.12 1.00 1000 833 37.49 3.75 41.23 22.68 18.56
storage, finished
goods storage,
etc
Specialized 6.12 1.00 1000 267 110.19 12.02 12.22 134.43 128.48 5.95
infrastructure
Amenities 20.86 751.08 75.11 826.19 454.41 371.79
Utilities 16.77 40 1.80 0.18 1.98 1.09 0.89
Road 21.92 39.45 3.94 43.39 43.39
Greenery and 28.88 51.98 5.20 57.18 57.18
open space
Total processing 233.18 7643.00 4463.37 1186.45 564.98 6214.80 5572.19 642.60
area
Non processing area
Commercial 2.23 2.00 150.00 1602 24.03 2.40 26.43 14.54 11.89
Residential 5.28 1.50 200.00 2840 383.40 38.34 421.74 295.22 126.52

159
 Water demand
computations

10 Water demand

Population density /sq. ft

Domestic water
Process water
Proposed FSI

Non-potable
percentage
Loss @ 10
Population
/ person

Potable
Land use Total area

Total
Infrastructure and facilities within IAIP & RTC

pattern (hectares)

In cum/day
Polyclinic 1.11 1.00 1000.00 120 40.80 4.08 44.88 31.42 13.46
School 3.31 456 20.52 2.05 22.57 12.41 10.16
Places of worship 1.11 456 20.52 2.05 22.57 12.41 10.16
Utilities 0.72 20.00 0.90 0.09 0.99 0.54 0.45
Road 3.78 6.80 0.68 7.48 7.48
Greenery and 7.90 14.22 1.42 15.64 15.64
open space
Total non 25.44 5494.00 511.19 51.12 562.31 366.55 195.76
processing area
Total 258.62 13137.00 4463.37 1697.63 616.10 6777.10 5938.74 838.36
Source: MACE analysis

Table No. 10.7: Underground sump storage capacity

S. no. Description Processing area Non processing area Unit

1 Potable water 5572 367 cum
2 Non potable water including fire demand 740 206 cum
Total 6312 573 cum
Source: MACE analysis

Table No. 10.8: Overhead tank storage capacity

S. no. Description Processing area Non processing area Unit

1 Potable water 464 31 cum
2 Non potable water 54 16 cum
Total 518 47 cum
Source: MACE analysis

Table No. 10.9: Pipe sizing for processing area

Length in m
Pipe size in mm
Potable water Non potable water
110 5115 14613
140 1461
160 1461
200 1461
250 1461
300 1461
350 731
400 731
400 731
Total 14613 14613
Source: MACE analysis

160
 Water storage
infrastructure

Table No. 10.10: Pipe sizing for non-processing area

10
Length in m
Pipe size in mm
Potable water Non potable water

Infrastructure and facilities within IAIP & RTC

40 3236 647
50 1942 324
63 647 324
90 324
110 324
Total 6473 1295
Source: MACE analysis

Table No. 10.11: Pump capacity

Description Processing area Non processing area Unit

Potable Capacity 0.13 0.01 cum/sec
water Number of pumps 2 W+1S 2 W+1S
Power requirement of each pump 32.00 2.00 Kw
Non Capacity 0.01 0.005 cum/sec
potable Number of pumps 2 W+1S 2 W+1S
water Power requirement of each pump 4.00 1.00 Kw

Source: MACE analysis

Table No. 10.12: Wastewater generation pattern

Description Percentage
Bath / shower & laundry 55.97%
Hand basin, kitchen 12.29%
Toilet 31.74%

Source: MACE analysis, published standards, guidelines and best industry norms

Table No. 10.13: Sewage and sullage generation pattern

For areas without bathing and washing facility

Sewage = 72.09%
Grey water = 27.91%
Gardening = 19.53%
Cleaning = 8.37%
For areas with bathing and washing facility
Sewage = 31.74%
Grey water = 68.26%
Gardening = 47.78%
Cleaning = 20.48%
Source: MACE analysis, published standards, guidelines and best industry norms

161
 Wastewater collection

Table No. 10.14: Sewage & sullage generation estimation

10
Total
Water demand

sewage and sullage

Sewage generation
Effluent generation
area

Sullage generation

Infiltration @10%
Infrastructure and facilities within IAIP & RTC

Total effluent,

generation
Total
Land use sewage
pattern Process Domestic Non- quantity
Potable
Hectares water water potable

In cum/day
Processing area
Focus crop -
Cereals
Anchor units 8.09 202.14 19.80 234.33 9.80 101.07 7.07 27.37 135.50 24.41 159.91
Processing 14.57 364.29 35.69 422.31 17.66 182.15 12.73 49.32 244.20 44.00 288.20
units
Ancillary units 8.04 200.90 19.67 232.89 9.73 100.45 7.02 27.19 134.66 24.26 158.92
Focus crop -
Sesame
Anchor units 11.57 208.17 28.31 246.11 14.01 104.09 10.10 32.76 146.94 26.01 172.95
Processing 17.62 317.12 43.16 374.94 21.36 158.56 15.40 49.92 223.88 39.63 263.51
units
Ancillary units 8.04 144.65 19.67 171.01 9.73 72.32 7.02 22.76 102.10 18.07 120.18
Focus
Commodity -
Livestock
Anchor units 5.75 207.08 14.09 236.30 6.97 103.54 5.03 24.45 133.02 24.33 157.34
Processing 25.49 917.69 62.42 1047.22 30.90 458.84 22.27 108.36 589.48 107.81 697.29
units
Ancillary units 11.02 396.68 27.00 452.69 13.37 198.34 9.63 46.85 254.83 46.61 301.43
Fruit and 1.44 51.84 3.51 59.15 1.74 25.92 1.25 6.11 33.28 6.09 39.37
Vegetable
processing unit
Brewery 7.90 1342.62 19.35 1488.58 9.58 671.31 6.90 116.94 795.15 149.82 944.97
processing
industry
Collection, 19.12 37.49 22.68 18.56 - 13.38 21.66 35.04 4.12 39.16
Storage,
Finished goods
storage, etc
Specialized 6.12 110.19 12.02 128.48 5.95 55.10 4.29 15.62 75.01 13.44 88.45
infrastructure
Amenities 20.86 751.08 454.41 371.79 - 268.02 434.08 702.10 82.62 784.72
Utilities 16.77 1.80 1.09 0.89 - 0.64 1.04 1.68 0.20 1.88
Road 21.92 39.45 43.39 - - 4.34 4.34
Greenery and 28.88 51.98 57.18 - - 5.72 5.72
open space
Total 233.18 4463.37 1186.45 5572.19 642.60 2231.69 390.75 984.43 3606.87 621.48 4228.35
processing
area
Non processing area
Commercial 2.23 24.03 14.54 11.89 - 8.57 13.89 22.46 2.64 25.11
Residential 5.28 383.40 295.22 126.52 - 40.16 243.13 283.29 42.17 325.47
Polyclinic 1.11 40.80 31.42 13.46 - 4.27 25.87 30.15 4.49 34.63
School 3.31 20.52 12.41 10.16 - 7.32 11.86 19.18 2.26 21.44
Places of 1.11 20.52 12.41 10.16 - 7.32 11.86 19.18 2.26 21.44
worship
Utilities 0.72 0.90 0.54 0.45 - 0.32 0.52 0.84 0.10 0.94
Road 3.78 6.80 7.48 - - 0.75 0.75
Greenery and 7.90 14.22 15.64 - - 1.56 1.56
open space
Total non 25.44 511.19 366.55 195.76 67.97 307.13 375.11 56.23 431.34
processing
area
Total 258.62 4463.37 1697.63 5938.74 838.36 2231.69 458.73 1291.56 3981.97 677.71 4659.68
Source: MACE analysis

162
 Wastewater
characterisation

Table No. 10.15: Pipe size – sewerage network

10
Pipe size in mm Processing area length in m Non processing area length in m
150 4730 2688

Infrastructure and facilities within IAIP & RTC

200 2628 672
300 1577
400 1051
500 526
Total 10512 3360
Source: MACE analysis

Table No. 10.16: Sewage quality

S. no. Parameters Unit Concentration

1 PH - 5.5 – 9.0
2 Suspended solids mg /l 300– 600
3 Biochemical oxygen demand mg /l 250 – 350
4 Chemical oxygen demand mg /l 400 – 600
5 Oil & grease mg /l <20
Source: MACE analysis

Table No. 10.17: STP – process and components

S. No. Process Units required Accessories

1 Activated sludge – Aeration tank & secondary
extended aeration clarifier
2 Aerated lagoon Earthen bund basins
3 Up-flow Anaerobic Reactor with liquid, solid & gas
Sludge Blanket (UASB) separation facilities
4 Trickling filters Circular tanks with media, under
drain & secondary clarifier
5 Rotating Biological Trough with PVC/plastic discs,
Contactors (RBC) secondary clarifier
6 Fluidized aerobic bio Reactor tank with poly
reactor propylene media and diffusers
followed by secondary clarifier
7 Sequencing Batch It uses deep RCC basins, and
Reactor (SBR) very efficient oxygen transfer
equipment’s (diffused aeration
mechanism)
8 Membrane Bio Reactor Aeration tanks followed by
(MBR) balancing tank and membrane
bio reactor
Source: MACE analysis
Surface aerators or membrane
diffuser system for oxygen supply
Fixed or floating aerators for oxygen
supply
Gas collector, burner and influent
distribution system
Rotary distributor for influent and re-
circulation pumps
Drive mechanism for rotating the discs
Blowers for supply of oxygen through
membrane diffusers
Diffusers, blowers and aeration grid,
which provides highest aeration and
oxygen transfer efficiency. Decanter
assembly in Stainless steel equipped
with variable frequency drive to
automatically control rate of decanting
based on input feed condition
Diffusers, blowers to supply oxygen, air
compressors for backwashing,
chemical dosing for pre-treatment.

163
 Integrated solid waste
management

Exhibit No. 10.4: STP process flow diagram (SBR technology)

10
Digestion
Infrastructure and facilities within IAIP & RTC

Influent Thickening Effluent

Screening /
SBR Equalization Filtration Disinfection
grinding
Source: MACE analysis

Exhibit No. 10.5: Waste reduction by integrated SWM

Material recycling

Waste generation

Reduced waste
Material recycling

Separation & sorting

Reduced waste Useful products

Energy recovery
Waste processing

Reduced waste

Waste transformation

Landfilling
Source: MACE analysis

164
 Power demand estimation

Table No. 10.18: Estimation of MSW generation

10
Total area MSW generation
MSW

Infrastructure and facilities within IAIP & RTC

Land use pattern Population
Hectares generation Unit Kg/day
rate
Processing area
Focus crop - cereals
Anchor units 8.09 370.5 kg/ha/day 2995.72
Processing units 14.57 370.5 kg/ha/day 5398.80
Ancillary units 8.04 370.5 kg/ha/day 2977.35
Focus crop - sesame
Anchor units 11.57 370.5 kg/ha/day 4284.83
Processing units 17.62 370.5 kg/ha/day 6527.44
Ancillary units 8.04 370.5 kg/ha/day 2977.35
Focus commodity -
livestock
Anchor units 5.75 370.5 kg/ha/day 2131.15
Processing units 25.49 370.5 kg/ha/day 9444.56
Ancillary units 11.02 370.5 kg/ha/day 4082.53
Fruit and vegetable 1.44 370.5 kg/ha/day 533.52
processing unit
Brewery processing 7.90 370.5 kg/ha/day 2926.11
industry
Collection, storage, finished 19.12 100 kg/ha/day 1912.38
goods storage, etc
Specialized infrastructure 6.12 370.5 kg/ha/day 2268.12
Amenities 20.86 100 kg/ha/day 2086.35
Utilities 16.77 100 kg/ha/day 1676.78
Road 21.92 10.12 kg/ha/day 221.82
Greenery and open space 28.88 30.36 kg/ha/day 876.82
Total processing area 233.18 53321.62
Non processing area
Commercial 2.23 1602 125 gm/capita/day 200.25
Residential 5.28 2840 400 gm/capita/day 1136.00
Polyclinic 1.11 120 400 gm/capita/day 48.00
School 3.31 456 100 gm/capita/day 45.60
Places of worship 1.11 456 100 kg/ha/day 45.60
Utilities 0.72 20 100 kg/ha/day 2.00
Road 3.78 0 10.12 kg/ha/day 38.24
Greenery and open space 7.90 0 30.36 kg/ha/day 239.84
Total non processing area 25.44 5494 1756
Total 258.62 5494 55077
Source: MACE analysis

165
 Phased development of
power infrastructure

Table No. 10.19: Estimation of power demand

10
Total area Load in
KVA/ha & Diversity Loss Load in
Infrastructure and facilities within IAIP & RTC

Land use pattern

Hectares FSI Sq. m KVA/sqm of factor factor kVA
built up area
Processing area
Industrial area
Focus crop - cereals
Anchor units 8.09 300.00 70% 1.10 1867.77
Processing units 14.57 300.00 70% 1.10 3366.05
Ancillary units 8.04 250.00 70% 1.10 1546.93
Focus crop - sesame
Anchor units 11.57 300.00 70% 1.10 2671.52
Processing units 17.62 300.00 70% 1.10 4069.74
Ancillary units 8.04 250.00 70% 1.10 1546.93
Focus commodity -
livestock
Anchor units 5.75 300.00 70% 1.10 1328.74
Processing units 25.49 300.00 70% 1.10 5888.51
Ancillary units 11.02 250.00 70% 1.10 2121.15
Fruit and vegetable 1.44 300.00 70% 1.10 332.64
processing unit
Brewery processing 7.90 300.00 70% 1.10 1824.38
industry
Collection, storage, 19.12 300.00 50% 1.10 3155.43
finished goods storage,
etc
Specialized infrastructure 6.12 300.00 70% 1.10 1414.13
Amenities 20.86 299.00 50% 1.10 3431.00
Utilities 16.77 119.60 40% 1.10 882.39
Road 21.92 35.00 10% 1.10 84.37
Greenery and open space 28.88 4.00 40% 1.10 50.82
Total processing area 233.18 35582.51
Non processing area
Commercial 2.23 2.00 44676.88 0.12 70% 1.10 4114.38
Residential 5.28 1.50 79189.85 0.09 60% 1.10 4688.20
Polyclinic 1.11 1.00 11127.54 0.14 40% 1.10 702.69
School 3.31 179.40 40% 1.10 260.94
Places of worship 1.11 119.60 40% 1.10 58.56
Utilities 0.72 119.60 40% 1.10 37.77
Road 3.78 35.00 10% 1.10 14.54
Greenery and open space 7.90 4.00 40% 1.10 13.90
Total non processing 25.44 9890.98
area
Total area 258.62 45473.49

Source: MACE analysis

166
 RTC infrastructure
components

the RTC location identification exercise and the details

Infrastructure within RTC are given in the master planning chapter. 10
For the sustained and sustainable operations The infrastructure within RTC can be categorised as

Infrastructure and facilities within IAIP & RTC

of RTC, provision of appropriate infrastructure is a (Refer Exhibit No. 10.6):
prerequisite. The infrastructure presently available at
the identified RTC locations and the proposed o Agribusiness infrastructure
infrastructure for the sustained and sustainable o Social infrastructure
operations of the RTC has been identified as a part of o Commercial infrastructure

Exhibit No. 10.6: Infrastructure components of RTC

Source: MACE analysis

The components of specialised agribusiness infrastructure addressing the farmer’s specific

requirements are shown as Exhibit No. 10.7

167
 Social Infrastructure for the
convenience of trading fraternity

10 Exhibit No. 10.7: Agribusiness infrastructure

Infrastructure and facilities within IAIP & RTC

Quarantine
Testing centre Rural market Agri clinic Warehouses Cold stores
advisory cell

Market Vegetable Cereal Dairy Poultry Honey and wax

intelligence cell processing processing processing processing processing

Agri input Agri equipment

QA/QC lab Training centre
centre centre

Source: MACE analysis

The components of social infrastructure addressing the needs of working population especially women
and visiting population are shown as Exhibit No. 10.8.

Exhibit No. 10.8: Social infrastructure

Health center

Women self help Nursing mother area

group

Administrative block Creche

Rest rooms

Source: MACE analysis

168
 Commercial Infrastructure for the
convenience of trading fraternity

The components of commercial infrastructure for convenience of both working and visiting population 10
are shown as Exhibit No. 10.9.

Infrastructure and facilities within IAIP & RTC

Exhibit No. 10.9: Commercial infrastructure

Bank &
ATM

Micro
Food court finance
Commercial
infrastructure

Rural BPO

Source: MACE analysis

169
 Infrastructure for
environmental sustainability

10 Exhibit No. 10.10: Environmental sustainability

Infrastructure and facilities within IAIP & RTC

•Minimum usage
•Potable and non potable supply
Water •Rain water harvesting

•Treated sewage used as non potable water

•Minimum discharge
Sewage

•Minimum usage
•Solar /conventional street lights
•Loss reduction
Power
•Improvement of power factor

•Minimum 10% of the total area

•Adequate circulation and green belt corridors which include pedestrian walkways,
approach roads for activity zones as well as service corridors, green belt, plantation
Greenery schemes, path ways, public gardens

•Green building concept

Energy •Natural lighting during day time
efficient

•Utilisation of local construction materials

•Increasing local employment
Others •Switch to recycled paper & e-procurement

Source: MACE analysis

170
 Chapter – 11
Infrastructure gap analysis – RTC & IAIP off-
site, connectivity and linkages
Approach
Agro and food processing add value to the
agro commodities, enhances shelf-life and reduces
wastage. It provides remunerative prices to the
farmers, generates employment opportunities and
provides convenience to consumers. Agro and food
processing has tremendous export potential, enabling
the farmer to add value to the produce both in terms
of quantity and quality so that rural community can
meet the requirements and standards of the market
at all stages of value chain, processing and retail,
would be critical for improving the economic
sustainability and bargaining capacity. Considerable
specialized agri infrastructure are required in rural
infrastructure and components of the supply chain by
way of grading and packing centres, controlled
atmosphere facilities, reefer vans, cold storage for
perishable cargo at loading and unloading
destinations, a chain of testing laboratories to meet
international quality standards, etc. It is important to
create suitable infrastructural facilities to develop a
Exhibit No. 11.1: Specialised agri infrastructure within ACPZ, offsite infrastructure and connectivity to IAIP
& RTC and forward linkages
Production farm linkages in ACPZ
Technology dissemination, CoE and
capacity building - as a part of RTC
Knowledge cell and market information
centre - as a part of RTC
Network of collection centres and
primary processing hubs
Reefer and specialized transportation
systems
Source: MACE analysis
sustainable supply chain linking farmers to processing
centres and markets both domestic and foreign
markets both domestic and foreign.
As integrated ACPZ and IAIP shall be
equipped with several modern specialized
infrastructure facilities like agro processing units,
green houses for crops, temperature controlled
warehouses, storage facilities for the agro processing
activities, support services and training facilities.
In this chapter, the focus is on the
infrastructure beyond the physical boundaries of IAIP
and RTC.
For sustained business operation of IAIP and
RTC, it is pertinent that agri infrastructure in ACPZ,
off-site infrastructure and IAIP & RTC connectivity and
forward linkage to the processed commodities are
adequately addressed. The study areas covered are
depicted in the Exhibit No. 11.1.
Access road to RTCs & IAIP
Power supply to RTCs & IAIP
Water supply to RTCs & IAIP
Loading and unloading locations connectivity
Perishable air cargo complex
Market infrastructure
Agri education and knowledge hub - as a part
of RTC
171
 Production farm linkages

Production farm linkages to IAIP & RTC The CoE shall address regional specific issues
11 and interventions required. The CoE shall specifically
The production areas in the ACPZ need to be demonstrate the techniques of controlled
linked in terms of roads and electric power supply. The environment growing, modern agricultural practices,
areas requiring priority attention are shown in the precision farming, production of improved cultivars
Infrastructure gap analysis – RTC & IAIP off-site, connectivity and linkages

Table No. 11.1. through micro propagation, cost effective drainage

systems, impart technologies like drought resistance
Table No. 11.1: Production farm linkages - key cultivars, integrated watershed management, micro /
interventions drip / sprinkler irrigation systems, solar powered
pumping systems, remote sensing and IT applications,
Production Access roads to production zone farm mechanization, etc. with a primary objective of
farm linkages including strengthening of “use less and grow more with quality”. In addition,
to IAIP & RTCs existing roads with adequate capacity building activities will focus on the following:
cross drainage works, culverts,
bridges etc., • Training on shade net, poly house & hi-tech
Rural power It is proposed to develop 5 MW environment controlled greenhouse cultivation
supply in of solar power through PV • Customized training programs in crops,
production technology in various modules. horticulture and other sectors, bridging the gap
zones through This will be a combination of roof between theory and practice
solar PV top, on ground and mini grid • Showcasing best-in-class crops, other
generation solutions. The capacity shall agriculture and allied sector cultivation
range from 25 KWp to 1 MWp. techniques
Apart from this solar pump and • Dissemination of latest technology to the
other solar applications in farmers / public through extension education
agriculture sector shall be so as to increase the production per
effectively obtained. productivity and also the quality
Source: MACE analysis • Access to supply high quality planting materials
with a view to increase production and
Technology dissemination, CoE and capacity productivity
building • Supporting research & development on high
yielding varieties suited to different agro climatic
In the ACPZ, structured knowledge conditions of the country
intervention, technology dissemination and capacity • Familiarizing farmers on appropriate &
building initiatives need to be taken for ensuring raw emerging technology and in optimizing costs at
material supply to the IAIP apart from better revenues all points of the supply chain to derive effective
to the farming community. These activities will be competitiveness
channelized through establishment of centre of • Determination of optimum standards of
excellence (CoE) and demonstration of crop cultivation cultivation in relation to soil, variety, climate &
with modern techniques. In addition, integrated studies on post-harvest management of the
farming solutions for horticulture, dairy sector, animal produce to reduce losses and improve the
husbandry, aqua culture and apiculture will be availability
addressed. These interventions are strategically • Soil and water testing services
conceived to enhance the revenue to rural community • Identification and investigation of major diseases
especially women and youth. FTC are seamlessly and insect pest problems in the field & stores
integrated with RTC and a combination of FTC, CoE and to device suitable and economic control
under the umbrella of RTC are poised to provide measures.
necessary capacity building for the rural work force.
For a wider reach, a network of demonstration farms The CoE shall have facilities for training,
is proposed at strategic locations in an influence zone library, facilities for addressing specific queries of
of 30 km with CoE hub (part of RTC) as a focal point. farmers, besides having full-fledged controlled
environment greenhouses with various levels of
controls and instrumentation. The components of hi
tech greenhouse shall comprise of greenhouse

172
 Knowledge and market
information centre as part
of RTC & FTC

structure, water technical system including recycling
technologies, roof sprinkler system, air heating
system, electrical system, climate control system,
computer control system, substrate and planting
materials. Soil & water testing laboratory, knowledge
Thus capacity building programs for enhanced
productivity, technological interventions and nutritional 11
security shall be achieved through this well-structured
strategy.

dissemination centre, agri and allied services
information system, IT based agri and allied sector
application, IT based farm extension services, livestock
and animal husbandry extension, products, farm
implements display area, training course, publication,
awareness campaigns, project advisory & consultancy
shall form the integral part of CoE infrastructure,
facilities and activities. CoE shall also have common
service centre for farm machinery. These facilities
shall be made on a rental basis to farmer groups and
farmer clusters. Similarly mechanization of harvest
operation of the produce can be achieved in an
effective manner through this common service centre
facilities.
Infrastructure gap analysis – RTC & IAIP off-site, connectivity and linkages
Knowledge cell and market information centre
In order to facilitate agribusiness in ACPZ and
to keep abreast of latest technology and information
for the occupant units, central product information,
cultivation knowledge support cell (as a part of RTC)
are proposed in the ACPZ. The centre shall work on
hub and spokes model with collaboration agreements
with other universities/ research centres of national
and international repute. Several user friendly and
innovative methods like agri portal, web based
systems, individual interaction, on-farm services, field
visits are suggested for wider reach.
The knowledge support cell (as a part of RTC)
would cover areas mentioned in the Exhibit No. 11.2.

Exhibit No. 11.2: Activities of knowledge cell (as a part of RTC)

Creation of agri portal Soil and water testing services

University-farmer interaction Structured training in identified areas Protocols for

hygiene and Bio informatics and
sanitation and quality IT based solutions
Corporate knowledge and farmer Assessment for fisheries
control for fisheries
FAQ
Refinement and demonstration of technology
Guidance solution support / products Development of Developing
technologies for techniques for fish
Single window delivery system for technology controlling seepage farm construction in
Knowledge dissemination products in ponds for porous and loose soil
aquaculture
Technologies Diagnostic services and information through
hub and spokes model
Information on Reduce gap between
livestock and poultry
Schemes and services of Development of gender-specific technologies sector to denote potential and actual
government productivity increase yield
Creating awareness of improved agricultural
Key events technologies among the farmers Improvement in the Development and
reproductive improvement of
E-extension Promotion of IT in agriculture efficiency and technology for value
disease addition
management
Best practices and innovation Guidance to high-tech cultivation and precision
farming
Shelf life
Weather updates Imparting agri techniques for higher enhancement and Food processing
productivity quality assurance for
livestock and poultry technologies, etc.
Advisory and diagnostic services products
Farmer field schools
Distribution of literature
Developing sustainable technologies for
freshwater

Source: MACE analysis

173
 Post harvest infrastructure

ACPZ shall also house a comprehensive
11 market information cell with databank of information
on both domestic and global trends across product
chains and sectors. The information provided by this
Infrastructure gap analysis – RTC & IAIP off-site, connectivity and linkages
cell is depicted in Exhibit No. 11.3. The market
information cell can derive critical inputs and research
support from the agri education hubs and agri centre
of excellence.

Exhibit No. 11.3: Information provided in the market cell (as a part of RTCs)

• Market arrivals • Storage and marketing aspects

• Database of major traders • Commodity profiles
• Price behaviours • Crop budgeting
• Analysis of market trends • Global benchmarking
• Crop insurance • Brand development
• Agricultural produce related to global • Promotion
and domestic production area • Contract farming
• Supply forecasting • Organized retailing
• Price forecasting • Supply chain providers etc.

Source: MACE analysis

Network of collection centres and primary high humidity cold storage, deep freezers, controlled
processing hubs atmospheric storage, modified atmospheric storage,
grading & packing halls, pack houses, refrigerated
Extensive network in the form of collection transport, warehouses etc. are required for
centres, storage halls, pre cooling, cold storage, sustainable agribusiness as depicted in the Exhibit
primary processing hubs, mobile processing units, No. 11.4.

Exhibit No. 11.4: Post harvest network proposed (as a part of RTC)

Throughout the
Collection centres region

Storage halls At select locations

Pre-cooling & cold

storage At select locations

PHI network
Grading & packing Airports and other
halls locations

Mobile pre coolers

Reefer vans
Source: MACE analysis

174
 External connectivity to IAIP
plays key role for IAIP SPV and
occupant units sustenance
For ensuring the adequate supply of raw
material to the proposed IAIP & RTC, it is required to
create the network of collection centres, silos and
Exhibit No. 11.5: Network of collection centres and primary processing hubs
Source: MACE analysis
Reefer transportation systems
Specialized transport units for horticulture
and floriculture sector, fisheries and animal products
are also required. Considering the volume and nature
of business operation, adequate number of vehicles
for horticulture products, animal products and other
agro commodities are provided for effective
transportation. This provision is in addition to reefer
vans owned by occupant units and controlled
environment greenhouse producers.
primary processing hub beyond 30 km radius
production zone etc. as detailed in the Exhibit No. 11
11.5.
Infrastructure gap analysis – RTC & IAIP off-site, connectivity and linkages
Access road to IAIP & RTC
The site identified for IAIP is abutting the
federal highway connecting Addis Ababa and Awasa
and as such no specific infrastructure intervention in
this aspect is required. The RTCs are located in
proximity to production zone and the access roads
linkage is necessary depending upon the specific
needs of the each RTC.
Power supply to IAIP & RTC
The total estimated power demand of 45.47
MVA is to be met from Humera substation connected
to the national grid situated at a distance of 34.8 kms
from the proposed IAIP site.
For meeting the power requirements during
phase I development, it is proposed to draw power
from the 33 kV over head tension line running parallel
to the site in close proximity.
175
 An end to end infrastructure
intervention

For further development, it is suggested to
11 build a new 132 kV dedicated power transmission line
from Adami Tullu substation to IAIP site for catering to
the needs of industries occupying the IAIP.
Infrastructure gap analysis – RTC & IAIP off-site, connectivity and linkages
Based on the river water quality the proposed
water treatment system shall comprise of the
following components:
Primary treatment

o
For meeting the power requirements of RTC it  Flash mixer
is suggested to source power from the transmission  Clariflocculater
lines passing in close proximity to the site or nearest o Secondary treatment:
substation as required.  Rapid sand filter
 Filtered water tank
Water supply to IAIP & RTC o Sludge handling: thickener
o Auxiliary units: as required
The total estimated water demand is 6.77
MLD. It is proposed to provide infiltration well, A schematic diagram of the system is shown
collection well and pump house near the Samina river in the Exhibit No. 11.6.
basin (1.6 km from IAIP site) for drawing water to
meet the requirements of IAIP. Since the river is rain The pumping and treatment system shall be
fed, the water requirement for the proposed IAIP shall built up in a modular fashion and will be developed
also be supplemented by providing deep tube bore depending upon the IAIP requirements.
wells.
The water requirement of RTC shall be met
through ground water source.

Exhibit No. 11.6: Schematic diagram

Port connectivity Market infrastructure

The proposed site has linkages to the ports of Some of the market infrastructure includes:
neighbouring countries through network of federal and
regional highways apart from under construction rail • Facilities for pre-shipment treatment such
linkages. as fumigation, X-ray screening, hot water
dip treatment, water softening plant, vapour
Perishable air cargo complex heat treatment, electronic beam
processing, irradiation facilities etc.
Perishable air cargo complex shall be created • Terminal markets
to address the needs of export market and it shall be
located near to airport.
176
 Integration of industry
development institutes and
industrial infrastructure

• Integrated agri-logistics infrastructure and

hubs These facilities shall be provided by the 11
• Retail outlets for perishable & non- various industries and occupant units of IAIP for
perishable products effective marketing of their produce.

Infrastructure gap analysis – RTC & IAIP off-site, connectivity and linkages
Agri education and knowledge hubs

FBPIDI MDIDI

Source: MACE

It is suggested that dedicated zones for agri
education, research and knowledge support may be
created in the ACPZ. These knowledge based
infrastructure interventions can be a part of proposed
RTCs / existing FTCs or even standalone
establishments.
The occupant companies shall enjoy excellent
research and development, education and knowledge
support through creation of agri education &
knowledge hub in ACPZ as depicted in Exhibit No.
11.7. Some of the components of the agri education
& knowledge hub are covered under RTC/FTC, CoE,
market information centre, know-how dissemination
centres and common service centres.
IAIP shall effectively leverage the initiative of
GoE through the establishment of FBPIDI and EMDIDI.
Both the institutes shall have extension centres in IAIP
& RTC as well.

Exhibit No. 11.7: Agri education and knowledge hubs

Market Know-how Agriculture

Centre of R&D
information dissemination education hubs,
excellence institutions
centers centers agri universities

Institutional facilities,
Skill Agri and food
Common entrepreneur
development processing
service centers development
institutions program training center

Source: MACE analysis

177

Chapter 12
Environmental and social assessment
Objective
An environmental assessment is critical to
assess the suitability of the proposed project location
from an environmental perspective. The study area for
this preliminary environmental and social assessment
has been considered around the IAIP to ensure its
compatibility with the environment related guidelines.
The assessment of the IAIP at this stage is
done with the available secondary data and a detailed
environmental impact assessment (EIA) study needs
to be carried out before undertaking the development
process.
In addition to environmental assessment, the
need for a social assessment is equally important for
better understanding of the social consequences of
the development of the IAIP.
Location
The site lies between latitudes 14°0'56.08"N
and 14°3'42.77"N and longitudes 36°44'25.68"E and
36°47'18.66"E adjacent to Samina River a tributary of
Tekeze River & highway connecting Gondor & Humera
and at a distance of 35 kms from Humera.
The area available for development is 1000
ha and for initial development only 258.62 ha is
considered.
Climate & rainfall
The climate is generally sub-tropical with an
extended dry period of nine to ten months and a
maximum effective rainy season of 50 to 60 days.
The mean annual rainfall of the basin is
632.08 mm. The basin is characterized by two rainy
seasons and three dry seasons during the year. The
two rainy seasons and the three dry seasons in total
have six months. The total amount of rainfall during the
rainy season is 590.61 mm. Rainfall during the first
three months (March, April and May) is relatively
lesser amounting to 115.54 mm as compared to the
remaining three months (June, July and August) which
178
have a higher rainfall of 475.07 mm. The
concentration of rainfall during the month of June is
moderate with a scale of 54.11 mm whereas the
month July and August have a very high concentration
of 420.96 mm.
Exhibit No. 12.1: Precipitation & temperature
graph of Humera (°C)
Source: http://en.climate-data.org/location/31958
Precipitation is the lowest in January, with an
average of 0 mm. Most of the precipitation here falls
in August, averaging 189 mm. At an average
temperature of 31.0 °C, May is the hottest month of
the year. January is the coldest month, with
temperatures averaging 24.2 °C. Between the driest
and wettest months, the difference in precipitation is
189 mm. throughout the year, the temperatures
varies by 6.8 °C.
Considering rainfall, atmospheric
temperature and evapotranspiration, more than 90
percent of the region is categorized as semi-arid.
Topography
The site area consists of vast depressed
areas that extend from south west to north east
bounded by adjacent highlands. The average elevation
of the site is 660 m above sea level with peaks
reaching 720 m above sea level and drainage flow
direction in the site is from SW to NE direction.

  River samina is the main
surface water source for
IAIP
Exhibit No. 12.2: Topography of the site area around 30km radius
Source: MACE analysis
Soil characteristics
The land is dominated by heavy textured soil of
alluvial and colluvial nature derived from limestone,
shale and dolerites that are found dominantly
underlying the area. The thickness of the soil is not
uniform and alluviums are dominantly found on the left
and right side of Tekeze river channel having a
thickness ranging from 3-9m. The colour of the soil is
black. Mud crakes that have an average opening size
of about 1mm are a common structure that is found in
this soil. The characteristics of soil in the Western
Tigray region is that it is highly eroded and with low
fertility.
Geology
The major lithological units in the project area
are dolerite, shale, limestone, siltstone and thick
alluvial deposits. Stratigraphically, the limestone is
found at the base overlying by shale and then followed
by siltstone. Alluviums are found having different
thickness overlying all these successions in the
lowlands.
12
Environmental and social iassessment
The alluvial deposit occurs in the valley bottom
bounded by adjacent highlands. It covers large area of
the Tekeze basin and lies on top of the shale units.
Alluvial deposits in the area are composed of very fine
to coarse-grained materials, ranging from clay size to
boulders of different rocks and dolerites. In some
areas, it has sandy material in the deeper part, which
bears groundwater. Generally, it has up to 7m
thickness as exposed in river cuts and hand dug wells.
Hydrology
 Surface water
The sources of surface water of the region
include Samina and Tekeza rivers. Samina River is a
non perennial river which flows in a rainy season and
direction is from SE to NW and it connects to Tekeza
River. The major source of water availability in the
proposed site is ground water.
179
  
 

Surface water quality is

within acceptable limits

Refer Table No. 12.1 for chemical Parameter Limit value

12 characteristics of surface water quality of Tekeze basin Total nitrogen (as N) 80% removal or 40 mg/l,
whichever is less
Table No. 12.1: Chemical characteristics of
Environmental and social iassessment

Total phosphorus (as 80% removal or 5 mg/l,

Surface water quality of Tekeze basin P) whichever is less
Oils, fats, and grease 15 mg/l
Parameter Value (in mg/l) Mineral oils at the oil 20 mg/l
Electrical conductivity 622 trap or interceptor
Total dissolved solids 388 Total coliform bacteria 400 mg/l
pH 7.8 (number per 100ml
No3 2.632 (only for meat
No2 0.21 processing)
Cl 28.1 Source: Federal democratic republic of Ethiopia,
Co3 2.8 Environmental Protection Authority (EPA) guidelines by the
proclamation no 9/1995
HCO3 196.7
SO4 60.9
 Ground water
PO4 0.2
Na+ 27.5 The project area comes under Tekeze river
K+ 20.2 basin. This basin constitutes diversified rock types
Ca+ 56.1 ranging in age from Precambrian to Quaternary and
Mg++ 18.3 complex tectonic structures. Different sets of folds,
Source: (National Nile Basin water quality monitoring faults and lineaments with diverse orientations and
baseline report for Ethiopia) associated fractures prominently affect almost all the
rock formations in the Tekeze river basin. Climate and
 Standards of manufacture of dairy products , geomorphology of the basin are also diverse.
fruits and vegetable processing, meat
processing & rendering The major aquifers in the basin are confined in
the Tertiary volcanics, Antalo limestone, Adigrat
Table No. 12.2: Limit values for discharges of sandstone and Quaternary sediments. The most
water important large-scale groundwater basins in the north-
eastern highlands of the Tekeze river basin areas like
Parameter Limit value Abreha-atsbeha, Wukro, Agulae-Haikmesahil, Upper
Temperature 40 C Illala-Aynalem, Upper Chelekot, and around Adigudom.
pH 6–9 Few places in the lowlands of Humera area are also
90% removal or 60 mg/l, known for their localized groundwater potential.
BOD at 20C
whichever is less
According to the map showing Exhibit No.
COD 90% removal or 250
12.3 ground water availability level is under moderate
mg/l, whichever is less
which is suitable for agro processing industrial
Suspended solids 50 mg/l development.
Total ammonia (as N) 15 mg/l

180
 
 
 
  Air quality and noise levels
in the study area are within
acceptable limits

Exhibit No. 12.3: Map showing the ground water availability in Ethiopia
12

Environmental and social iassessment

Source: British geological survey Ground water quality report- Ethiopia

Ambient air quality working period. Refer Table No. 12.4 for noise
measurements within the project area.
The ambient air quality levels in the project
area are within the acceptable limit considering safe Table No. 12.4: Limit values for noise limits in dB
for Agro processing industrial development in Baeker (A) Leq
site, Tigray.
Area Day Night
Table No. 12.3: Limit values for emissions to air Category of area
code time time
A Industrial area 75 70
Limit value B Commercial area 65 55
Parameter
(mg/Nm3) C Residential area 55 45
Total particulates (at a mass 100 Source: Federal democratic republic of Ethiopia,
flow of 0.5 kg/h or above) Environmental Protection Authority (EPA) guidelines by the
Hydrogen chloride (as HCl), at a 30 proclamation no 9/1995
mass flow of 0.3 kg/h or more
Source: Federal democratic republic of Ethiopia, Ecology and biodiversity in the region
Environmental Protection Authority (EPA) guidelines by the
proclamation no 9/1995  Vegetation

Noise The western part of Tigray region is covered

The mean noise level in the project area is
<40 dB (A) within the acceptable limit & considered
safe for normal operations in Tigray. The EPA
guidelines regulatory limit is 75 dB (A) for an 8 hour
by junipers, olea and cordia, alternating with montane
Acacia-Andropogon savannah, and by edaphic grass
lands and swaps in the flat valley bottoms. As a result
of centuries of continuous use, these lush conditions
181
  
 

Surrounding ecosystem
is rich in bio diversity

have been converted into the almost barren plateau
12 which exists today. The remnants that still exist in
some localities also indicate that the region was
covered with lush vegetation in the not so distant past.
Environmental and social iassessment
The commonly occurring tree species in
these areas are Juniperus procera, Olea europea,
Cordia africana, Podocarpus gracilior and Acacia spp.

In the western zone of Tigray there are still some
areas with good stands of forests and woodlands.
Tekezze valley in the western Tigray has substantial
vegetation cover, accounting for 1.6% of the total land
area of western Tigray.
In addition to these tree species, incense
trees (Boswellia papyfifera) and gum Arabic trees
(Acacia senegal) covers large area of the region. The
bamboo which is also found in western Tigray is useful
for construction and paper manufacturing.

 Ecological sensitive areas of the region

Exhibit No. 12.4: Map showing the ecological sensitive areas of the site area around 30km

Source: MACE analysis

From the existing scenario around 10km of

the IAIP site Samina River is passing near to the site Socio economic conditions
boundary and it is a non perennial river. This river is an
Ecological sensitive area but it is less vulnerable for Humera is located 34.5km from the site area
Industrial development. with a population of 21653 according to 2007
census.
As per the EPA Guidelines, the ecological
sensitive areas within 10km radius are considered as
protected zones and necessary mitigation measures
should be taken while undertaking IAIP development.

182

  EMP needs to be formulated
and continuously monitored
Table No. 12.5: Population distribution – Humera site, W.Tigray
Age
Male Female
categories
1994
Humera 7649 6802
Source: Census Statistical Agency of Ethiopia (CSA)
Based on the 2007 Census conducted by the
Central Statistical Agency of Ethiopia (CSA), this town
has a total population of 21,653, of which 11,395 are
men and 10,258 women; this is an increase of
14,451 over the 1994 national census. With an area
of 153.03 square kilometers, Humera has a
population density of 141.50. A total of 49.84%
households were counted in this Woreda, resulting in
an average of 6,360 persons to a household, and 3.40
housing units. The majority of the inhabitants practice
Ethiopian Orthodox Christianity, with 93.18% reporting
that as their religion, while 6.45% of the population
practice Islam.
The people speak mainly Tigrinya, although
Amharic and Sudanese Arabic are also spoken.
Farming is the major livelihood activity in
Tigray region. Not only is the state abundantly blessed
with suitable arable land, good climatic condition for
cultivation of diverse crops; the state government is
also concerned with growth in the sector and has
been taking initiatives to promote agricultural
development.
The population increases dramatically each
year during the farming season, when migrant workers
arrive from all over the country. Sesame, teff and
sorghum are among the most common crops.
Identification of project affected people (PAP),
project affected families (PAF), specific compliance
to the resettlement action plan of the FDRE
As per the existing scenario and as witnessed
and confirmed by the local officials during the field
visits, there are no settlements within the designated
IAIP boundary. Hence there is no requirement for
social impact assessment.
Environment management plan (EMP)
In the process of planning, it is essential for
every project to formulate an EMP to ensure that
12
Population
Total Male Female Total
Environmental and social iassessment
2007
14451 11395 10258 21653
resources are used with maximum efficiency and that
each of the adverse impacts, identified and evaluated
as significant be prevented, attenuated or where
required compensated. Possible mitigation measures
generally include:
Changing project sites, routes, production
technology, raw materials, disposal methods,
engineering designs, safety requirements.
Introducing pollution controls measures,
recycling and conservation of resources, waste
treatment, monitoring, phased implementation,
personnel training, special social services or
community awareness and education.
Devising compensatory measures for
restoration of damaged resources, monetary
compensations for project affected persons, off-site
programs to enhance some other aspects of the
environment or quality of site for the community.
The environmental management plan needs
to be implemented through the setting up of an
environment monitoring cell which will be responsible
for the EMP and all environment related activities at
the IAIP.
For the IAIP, an environmental management
plan is formulated and needs to be continuously
implemented during the construction phase as well as
after the commencement of operations.
 EMP during construction phase
Measures to mitigate the adverse impacts due
to the following during construction phase.
 Site preparation
 Soil erosion
 Air environment
 Noise environment
 Sanitation
 Construction equipment
183

 Construction waste
12  Storage of hazardous material /
dumping materials
 Site security and safety
Environmental and social assessment
o During operation phase
 Operation of various collection, and disposal
facilities for emission, wastewater and solid
waste
 Routine monitoring of selected parameters
 Data handling, reporting, storage and retrieval
facilities, feedback to facilitate future planning.
 Emergency action procedures and disaster
management procedures
 Manpower for environmental management
o Construction phase
Adequate and effective environmental
protection measures need to be adopted to minimize
the impacts due to activities related to pre-
construction, preparatory construction, machinery
installation and commissioning stages. The impacts on
environment during the construction phase will
basically be of transient nature and are expected to
reduce soon on completion of construction activities.
Environmental impacts during construction
phase will be mainly due to civil works such as site
preparation comprising levelling, excavation work,
plotting, construction of internal roads, construction of
utilities (water treatment plant, sewage & effluent
treatment plant, electrical sub-stations etc.), RCC
foundation, buildings, etc.; material and machinery
transportation, storage and handling of different kinds
of flammable hazardous materials etc. The
construction phase impacts are temporary and
localized phenomena except the permanent change in
local landscape and land use pattern at the project
area. However, they require due consideration with
importance during project execution and also
wherever applicable detailed protocol procedures shall
be implemented to prevent and mitigate adverse
impacts and occupational hazards. The mitigation
measures to control adverse impacts during
construction phase are discussed below.
o Site preparation
The development of site will involve the
movement of top soil, removal of shrubs, soils, debris
184
During construction phase,
impact on the environment
will basically be of
transient nature
etc. The site grading operation will also involve stock
piling of backfill material. All the distorted slopes need
to be stabilized suitably. Measures for top soil
preservation, soil erosion & sedimentation control are
given below:
 When opening the site, care needs to be taken
to keep vegetation clearing as minimum.
 To keep the damage to topsoil minimum,
excavators need to be used for construction.
The excavated material such as topsoil and
stones will be stacked at safe places for reuse
at a later stage of construction.
 To prevent soil erosion during construction
phase, temporary seeding, sedimentation
basins, contour trenching, mulching etc. can be
done based on the net imperviousness of the
site.
 Preserving existing vegetation or re-vegetating
disturbed soils is one of the most effective ways
to control soil erosion.
 During dry weather, control of the dust created
by excavation, levelling, and transportation
activities needs to be carried out by water
sprinkling.
 Spill prevention and control plans need to be
made, clearly stating measures to stop the
source of the spill, to contain the spill, to dispose
the contaminated material and hazardous
wastes including pesticides, paints, cleaners,
and petroleum products.
o Air environment
Erosion due to wind is a natural phenomenon
in areas adjoining a river, lake or sea and in areas
where the ground is virtually bare and devoid of
vegetation. The factors which influence the degree and
kind of wind erosion are as follows
 Features of wind: speed, direction, temperature,
humidity, burden carried
 Character of surface: roughness, plant cover,
obstruction
 Topography: flat or undulating
 Character of soil: texture, moisture content
 Based on the above factors with respect to the
project site, the following measures are
suggested;
 A dense belt provides greater shelter
immediately to leeward side but the sheltered

Disruption of natural
hydrology needs to be
averted
area will not be as extensive as compared to a
more permeable zone of vegetation provided.
 Effectiveness of shelter planting depends more
on height and permeability than on width
 A greenbelt which rises and falls abruptly on
windward and leeward sides is more effective.
Smaller trees and shrubs shall occupy the inter-
spaces between the tall trees
 The depth of the shelterbelt shall be
approximately ten times its height.
 Plant leaves function as efficient gas exchange
system. Their internal structure allows rapid
diffusion of water soluble gases. These
characteristics allow the plant to respire and
photosynthesize and they can also remove
pollutant from the air.
Some of the beneficial results of plantations
are as follows:
 They are good absorbers of sulphur dioxide
 Roadside hedges can reduce traffic generated
air borne pollutants on leeward side
 Complete dust interception can be achieved by
a 30 m belt of trees. Even a single row of trees
may bring about 25% reductions in airborne
particulates
 The three main criteria for selection of plants
are
 Trees, shrubs shall have dense foliage
with a large surface area, because leaves
absorb pollutants
 Evergreen trees are more effective
 The species chosen must be resistant to
pollutants, particularly in the early stages
of their growth.
o Dust control
 Paving is an appropriate solution for access
roads to the project, as the roads will
eventually be incorporated in the overall plan
for the area. Another appropriate use of
paving is for parking lots and for material
storage areas, where gravel cover is not
adequate for dust control or erosion.
 Locally found gravels can also be applied to
access roads and lots to add a protective
layer over the exposed soil and which can also
help to control dust generation. However,
gravels shall contain a minimal percentage of
fines, and clean gravel shall be added 12
periodically, as the fines migrate to the
surface and create dust.
Environmental and social assessment
 Water spray, through water trucks is an
effective way to keep dust under control.
Misting systems and sprinklers can also be
employed to deliver continuous moisture in
dust prone areas.
 High vehicle speeds increase the amount of
fugitive dust created from unpaved areas.
Reducing the speed of a vehicle to 20 km/hr
can reduce emissions by a large extent.
 Care shall be taken to keep all material
storages adequately covered and contained
so that they are not exposed to situations,
where winds on site could lead to dust /
particulate emissions. Fabrics and plastics for
covering piles of soils and debris are an
effective means to reduce fugitive dust from
the material stores / warehouses.
 Spills of dirt or dusty materials need to be
cleaned up promptly so that the spilled
materials do not become a source of fugitive
emission.
 Spilled concrete slurries or liquid wastes need
to be contained / cleaned up immediately
before they can infiltrate into the soil ground
or runoff in nearby areas.
o Water conservation
Disruption of natural hydrology needs to be
limited by reducing impervious cover, increasing on
site infiltration and managing storm water runoff.
 Storm water needs to be managed to prevent
the post development peak discharge quantity
from exceeding the pre-development peak
discharge quantity.
 Storm water drainage system will protect the
drains and receiving channels from eroded soil.
 Storm water runoff outside the site will be
significantly reduced by reuse of storm water
volumes generated for rainwater harvesting
both in processing and non-processing zones.
o Construction wastewater management
Wastewater generated from the site during
the construction contains suspended materials,
spillage and washings from the various areas which
185

can be hazardous and should not be mixed with the
12 storm water / sewage water or allowed to percolate
into the ground. A separate drainage needs to be
provided for the construction wastewater and diverted
Environmental and social assessment
to a separate basin. The water needs to be discharged
into the drain after pre treatment including filtration
and removal of contaminants to the standards
prescribed for disposal, if required.
o Noise environment
There will be an intense movement of trucks,
passenger vehicles, earthmovers etc. in and around
the project site during the construction phase. These
will create noise pollution. There will be marginal
increase in ambient noise levels during the
construction phase due to all the activities during the
construction phase, which will be temporary in nature.
The measures described below need to be taken to
mitigate the noise levels generated at site:
 Provision of rubber padding / noise isolators.
 Provision of silencers to modulate the noise
generated by machines.
 Provision of protective devices like ear
muff/plugs to the workers.
 As far as possible no construction activities to
be carried out during night time.
 Maintenance of construction equipments to be
done properly
 Vehicular movement towards the construction
sites to be properly regulated to minimize the
air and noise pollution consequences.
 Movement of cargo trucks to be controlled
during night time.
o Sanitation
 The construction work force needs to be
provided with sufficient sanitation facilities in
order to maintain adequate hygienic
conditions
 Low cost sanitation system like septic tanks
followed by soak pits needs to be provided.
 Sanitation facility needs to be provided by
provisions in contracts with the contractors.
o Construction equipment
The project would involve lot of construction
activities for infrastructural facilities and thereby
186
Use of local
construction materials
to be advocated
structures are likely to come up on the proposed site
and would thus involve the use of construction
equipment / instruments. These at times would
require on-site maintenance and repairing. It should be
ensured that both petrol and diesel powered
construction vehicles are properly maintained by the
contractors to minimize pollutant emission from
exhaust. The vehicle maintenance area needs to be so
located that contamination of surface water bodies by
accidental spillage is avoided. Unauthorized dumping of
waste oil needs to be prohibited. Local building
materials, such as, sand, gravel, aggregates, bricks,
need to be used in the project. In addition to that,
cement will also need to be taken from the nearby
cement plants.
o Construction waste
Construction waste is one of the major
components of solid waste during the construction
phase, which is bulky and heavy and is mostly
unsuitable for disposal by thermal or biological
processes such as incineration or composting. The
best option for its management is to reduce its
generation at source with the help of following good
practices in construction management:
 Hazardous materials should not be stored near
surface waters and shall be stored near plastic
sheeting to prevent leaks and spills
 Delivery of material on site needs to be done
over a durable, impervious and level surface, so
that the first batch of material does not mix with
the site surface. Availability of covered storage
should be assured.
 Demolished brick masonry and concrete is a
good material for filling. Steel from RCC must be
carefully segregated and rest of the material
shall be crushed on site only.
 The recyclable items like metal, plastic need to
be sent to recyclable industry, and rest of this
scrap shall be stored in a covered area.
 Dry processes of construction are effective for
reduction of water requirements and even the
waste generation.
 Wherever materials (aggregates, sand, etc.) are
more likely to generate fine airborne particles
during operations, nominal wetting by water
needs to be practiced. Workers / labourers
shall be given proper air masks and helmets.
 Skilled labour and good workmanship is must for
judicial utilization of materials and for minimizing

Health and safety of working
staff to be ensured
the waste.
 Contaminated runoff from storage needs to be
captured in ditches or ponds with an oil trap at
the outlet. Contaminated plastic sheeting shall
be packed and disposed off site.
 Bitumen emulsion shall be used wherever
feasible. Contractors need to be encouraged to
heat with kerosene or diesel to gradually
substitute fuel wood. Fuel wood usage for
heating needs to be limited to unsound log i.e.
dead and fallen trees.
 Bitumen emulsion shall not be used in rains. No
bitumen must be allowed to flow into the side
drain. The bitumen drums need to be stored in a
designated place and not be scattered along the
roadside.
 Rubbish, debris and bitumen wastes remaining
after blacktop works need to be cleaned and
disposed off in a safe place.
 Materials wasted on site shall be reused at the
same place.
o Storage of hazardous materials / dumping
materials
Petrol, diesel, lubricating oil etc. need to be
stored at site. These materials shall be stored as per
the stipulated safety standards. Also a lot of material
may be generated for disposal during construction
activity. These, if disposed of haphazardly can pollute
the nearby water bodies adversely. They would
increase the accidents also. Utmost care needs to be
taken to store these materials at a suitable place and
then disposed of at a place in consultation with and as
per the guidelines of the Ethiopian Environmental
protection Authority.
o Site security and safety
 A construction site forms a potentially
hazardous environment. To ensure that the
surrounding population is not exposed to
these hazards, the site needs to be properly
secured by fencing or by construction of a
boundary wall and also guards need to be
posted at entry points.
 First aid facilities need to be created at
different locations for immediate assistance in
case of emergencies and accidents.
 Important information about nearby hospitals,
fire stations, police station etc. should be kept
available in the first aid centers for speedy
action at the time of emergency.
 In case inflammable materials are to be kept 12
at the site, they need to be stored and
Environmental and social assessment
handled in accordance with guidelines of
inspectorate of safety and health of the EPA
and Ethiopian government.
 Fire hydrants and extinguishers need to be
located at all vulnerable sites.
o Health and well-being of construction workers
The objective is to ensure health and safety of
the workers during construction, with provisions for
the basic facilities of sanitation, drinking water, safety
of equipments or machinery etc. Following are the
measures, which needs to be followed for a better
working environment:
Comply with the safety procedures, norms and
guidelines (as applicable) as outlined below:
 Clean drinking water to be provided to all the
workers.
 Adequate number of decentralized latrines and
urinals to be provided to construction workers.
 All parts of the dangerous machinery to be
guarded.
 Protective equipments, helmets etc. to be
provided to the construction workers.
 Sufficient and suitable light for working during
the night to be provided.
 Dangers, health hazards, and measures to
protect workers from materials for
construction, transportation, storage etc. to be
briefed to the workers and also information
about these to be displayed in the areas.
 Sufficient and suitable light for working during
the night to be provided.
Operation phase
It will be pertinent to mention that adherence
to recycling of emission and / or waste materials to
the following dictum would go a long way to mitigate
the pollution hazard due to any industry.
 Formulation of in-plant waste minimization
programmes can save energy and raw materials.
Recycling of emission and / or waste materials at
source i.e. linked to the production process in the
plant is considered important. Water which is a
187

valuable resource used by various industries
12 during their processes can be treated, recycled
and reused for some secondary utilities thus
effectively conserving water.
Environmental and social assessment
 Research and development programs on clean
technologies have underlined that clean
technology implementation is an effective
mechanism to abate pollution, which works in
addition to and independent of the regulatory
process.
 Furthermore this approach appears to open up
possibilities for obtaining other benefits like
savings in energy and raw materials. The following
measures are suggested to mitigate the different
kind of pollution with regard to this project.
o Air pollution
Though the air pollution potential of the target
list of industries for this IAIP looks low, the individual
industries need to be advised to install pollution control
measures to ensure the emission levels are well within
the permissible norms prescribed by the Ethiopian
Environmental Protection Authority.
o Water pollution
The wastewater generated in the site needs
to be treated in the effluent treatment plant by
discharging in to a common conveyance channel. All
the industries, which will come up in the proposed site
need to comply with the standards based on their
capacity. The provision for guard pond needs to be
made by individual industries near their ETP locations
for safety against failure in the operation of
wastewater treatment facilities.
o Sanitation
All factory premises need to have adequate
and well-operated sanitation facilities in the project
area. The performance of STPs at processing and non-
processing zones shall be monitored in regular
intervals to ensure proper treatment.
o Sludge disposal
The sources of sludge include sludge from
STP and ETP operated by the occupant industries. This
sludge needs to be disposed of by land filling operated
by the approved agency of the government at a
specially earmarked area.
188
Clean technology
implementation is an
effective mechanism to
abate pollution
o Disposal of non hazardous solid waste
The scrap materials generated would include
packaging materials, scrap wood, cardboard, plastics,
unused metal pieces, garbage in the form of papers,
cloth fibres, polythene bags, electric components, wire,
scrap metal, glass bottles, thermocol etc. Most of the
above material is useful. A single external agency of
the Tigray regional government needs to be employed
for the whole of the IAIP area to collect the non
hazardous solid waste generated, which can be
recycled.
The domestic waste generated mainly from
canteen shall be mostly biodegradable in nature.
Established scientific disposal of domestic
biodegradable waste is in practice and one such
method is bio composting. This would involve setting up
of a bioconversion plant by the local competent
authorities.
The type of industrial waste, biodegradable or
non-biodegradable, depends upon the nature of
processing and industry. In the IAIP, the solid waste
generated from the industries is expected to be both
biodegradable and non-biodegradable in nature.
A comprehensive system needs to be evolved
to scientifically dispose the biodegradable waste and
inert waste in accordance with the municipal solid
waste rules of EPA. This activity needs to be handled
by the local competent authorities.
o Disposal of hazardous solid waste
Units generating hazardous waste will not
store, treat; dispose off, transport or offer for
transportation without having received consent from
the relevant authority of the Ethiopian Environmental
protection Authority. The hazardous industrial waste
needs to be disposed of by individual industries as per
the rules and regulations prescribed by the Federal
democratic republic of Ethiopia.
o Storm water drainage for the site
Storm water runoff contains acknowledgeable
pollution through dust, garbage and unprotected solid
waste. The storm water discharge points need to be
identified based on the terrain and levels of the site.
The proposed IAIP will attempt to retain the drainage /
disposal pattern, which exists presently in the project

The in-situ waste
classification and “load-and-
go” approach will reduce the
amount of odour generation
area. It is designed to cater for the entire project area
by gravity flow. Open rectangular drains are proposed
to be provided. The storm water needs to be isolated
to prevent contamination from process spills, floor
washings etc. This is essential to prevent
contamination of the water bodies into which the
storm water would drain.
o Noise pollution
The proposed noise control measures include
a noise level restriction of 85 dB (A) at 1 m for
equipment such as blowers, compressors, pumps and
fans. The industries need to be asked to maintain the
indoor noise levels below the limit of 85 dB (A)
prescribed for a distance of 1 meter from any
machinery in the factory. This limit is referred as the
‘alert threshold’ value below which there is a negligible
risk of any damage to hearing capabilities as a result of
8 hours exposure per day. Industries are required to
implement proper and regular maintenance of
machinery. Noise levels in the work place can also be
reduced by engineering control methods and
industries would be required to follow measures as
detailed below:
 Keeping the total noise emission from all noise
sources below the base limit in the work area.
 Regulating spacing between noise sources and
between sources and operations. In free field
conditions the sound level roughly varies with the
square of the distance.
 Enclosing the noise sources by a sound reducing
i.e. attenuating structure that prevents airborne
transmission.
 Reducing structure borne transmission by
isolation of the source using resilient mountings
 Damping of vibrating metal structures or by
replacement with materials such as wood.
 All the operating personnel working in the zone of
noise pollution to be provided with earmuffs or
earplugs and it is recommended to provide
training to the operators to use the same.
Reducing reflected noise by use of absorbent
materials on surfaces such as roof, walls and
floors is recommended.
 Duty hours of employees working in high noise
area to be rotated systematically and proper
maintenance to be given to earmuffs and silencers
of noise generating equipment.
 Placing attenuating screens between the
operations and the source
 Correcting imbalance and vibration by preventive
maintenance. 12
 Green belt should be developed around the
Environmental and social assessment
identified noise generating zones to reduce
ambient noise level below the standards
prescribed.
o Health care centre
Medical facilities, first aid centre and health
centre near the site, which need to be provided by
project authorities, will help to protect the health of the
project staff and the nearby villages.
o Odour mitigation plan
Highly odoriferous processes need to be
limited to specific times of day, temperatures or wind
conditions.
 The in-situ waste classification and “load-and-go”
approach will reduce the amount of odour
generation associated with the area and duration
of refuse exposure from stockpiles and from the
handling of the wastes.
 Refuse that is not being actively excavated needs
to be covered.
 Stockpiles need to be covered with plastic.
 The waste haul route to not pass through the
residential area.
 Trucks transporting wastes off-site to be covered.
o Green space
An additional mitigation measure that has a
broad definition in as much as it can be used to
alleviate a number of adverse impacts due to air and
noise emissions is the development of a green space
around the facility. It has been proposed to develop
green belt in the IAIP as per the master planning
guidelines. These would not only absorb air and water
pollutants but also help in arresting noise and soil
erosion and creating favourable aesthetic condition.
Pollutants in air settle on the ground and vegetation of
surrounding area. Plants interact with the pollutants,
absorb them and thus remove them from the
atmosphere. The interactions of particulate and
gaseous pollutants with diverse vegetative surfaces,
under conditions of variable micro climatic and
pollutant source characteristics are extremely
complex. But still the utility of plants in curbing pollution
cannot be denied. By their photosynthetic activity, the
189

plants fix carbon dioxide from the atmosphere with
12 concurrent release of oxygen thus purifying the air.
Trees also absorb noise and serve as acoustic screen
between busy highways, noisy industrial installations
Environmental and social assessment
and human settlements. The importance of forests in
modifying the hydrology of watersheds and in soil
conservation has been well recognized. Plants
intercept incoming and outgoing radiation,
precipitation and wind and thus have a marked effect
on the microclimate. They filter dust from the air and
absorb it. The importance of plants in reducing the
pollution hazard is therefore of considerable
significance.
The selection of plant species for the green
space is an important feature. It should be based on
consideration of soil and agro climatic conditions, the
types of pollutants emitted by the industry, mean wind
velocity and dry deposition velocity of plants.
o Energy conservation
During the operation phase of the project,
energy resources are to be required for operating
various pumping machineries for water & wastewater,
internal road lighting, residential & commercial
facilities, common utilities etc. The following options
need to be used for energy conservation:
 Energy efficient machineries to be used during
operation phase.
 Member units to be encouraged to utilize
renewable sources of energy for conservation of
non-renewable sources of energy.
 Sufficient care to be taken to prevent & minimize
energy losses at each stage of development.
 Energy audit needs to be used as a tool for
monitoring purpose.
o Safety provisions
All the provisions need to be followed by each
industry as per the relevant national legal framework.
o Socio-economic environment
It is imperative that a concrete and feasible
plan be made to promote employment to the local
people with equal opportunities to people.
Training needs to be provided to the local
people to acquire skill in various fields.
190
Development of green
space alleviates number
of adverse impacts
If possible and feasible, the educational facilities
established at the site should be extended to the
nearby villagers.
 Emergency and disaster management
o Emergencies
An unexpected emergency could cause
serious damage to people, livestock and property in
the area. This naturally calls for the necessity for
evolving an off-site emergency preparedness
programme so as to combat any such possible
eventuality.
Many agencies are involved in combating an
emergency. These include government departments
like fire services, police, civil defense, medical services,
and other voluntary organizations. The offsite
emergency programme (or plan) should aim at
reducing the probability and severity of the sufferings
of the people and the damage to property by clearly
identifying the role of each of the agencies involved in
combating an emergency.
The possibilities of emergencies and the
proposed measures to be taken are highlighted in
Table No. 12.6.
Table No. 12.6: Emergency possibilities and
measures
Emergencies possibility Measures taken
Water supply
Stoppage of water supply Minimum one day
from the adjoining river water requirement
source owing to failure of needs to be stored
supply mains
Pollution control
Failure of air pollution Plant should be
control equipment / stopped till equipment
sewerage treatment plant is repaired.
o Scope of the off-site plan
The scope of the off-site plan is to:
 Protect the inhabitation around the
hazardous areas and evacuating them if
necessary
 Ensure their subsistence during the stay
in camp

Emergency possibilities
and measures
highlighted
 To protect and safeguard the property
and belongings of the evacuated sections
of the population until their return

To take adequate measures for their
rehabilitation.
Sectoral division or emergency planning
zone
The emergency planning zone shall be divided
into convenient sectors. Depending upon the prevailing
wind direction at the time of the emergency and the
assessed extent of fire / explosion hazard, the
protective measures will be implemented first in the
sector downwind. Sectors adjacent to this sector on
either side will come next.
Emergency information system
The first person, who observes/ identifies the
incident, shall inform it as per emergency reporting
system.
Emergency siren tone
 Fire: Wailing sound for two minutes.
 All clear: Continuous sound for three
minutes.
Post emergency recovery
The post-emergency procedures discussed
below are designed to successfully manage the
damages / losses of an emergency event. The focus
of these procedures is to move the plant back into
normal operating mode as quickly and efficiently as
possible.
Accident investigation
The guidelines given in Table No. 12.7 will be
followed to carry out accident investigation:
Table No. 12.7: Accident investigation guideline
i. As soon as possible after the emergency is
over and plant operation has become
normal, the investigation will be carried out
to determine the cause of the event.
ii. Representatives from various disciplines
will be members of the investigating team.
iii. The area of the event will be sealed off so
that tampering or alteration of the physical 12
evidence will not occur.
Environmental and social assessment
iv. Key components will be photographed and
logged with time, place, direction etc.
v. Statements will be taken from those who
were involved with the operation or who
witnessed the event.
Damage assessment
This phase of recovery establishes the
quantum of replacement machinery considered
necessary for bringing back the plant to normal
operation, property and personnel losses, and
culminates in a list of necessary repair, replacement
and reconstruction work. Insurance companies will be
informed of the damage and requested to pay the
compensation as per claim.
Cleanup and restoration
This phase will only begin after the
investigation is complete and will involve the following:
 Reporting documentation will be prepared
and forwarded to appropriate authorities.
 Repairs, restoration and cleanup will begin.
Insurance claims will be prepared and
submitted
Fire and disaster management
The possibility of fire and hazard for the
proposed IAIP cannot be ruled out. To safeguard
against any such eventuality an emergency plan needs
to be prepared to tackle the situations. For this, the
rules and regulations of appropriate authorities need
to be complied with. To prepare an emergency plan,
prior knowledge of the following is considered
essential:
 Fire water system layout and available
alternative water supplies in different parts of
the IAIP.
 Firefighting equipment their type and location.
 Works entrances and road system for
approach.
 Inventories of the types of flammable, explosive
and other hazardous materials kept in the
industrial units inside the IAIP.
191

 Electrical network location and potential
12 hazards.
 Emergency declaration procedures and
evacuation of personnel
Environmental and social assessment
 Designate personnel to take charge of
emergency actions.
 Accident investigation and reporting system.
Thus the typical duties in case of fire and
explosion need to be overall control of all fire fighting
operations, evacuation of public from threatened
areas, use of appropriate fire fighting methods (water,
foam, sand etc.) depending on type of construction
materials and chemicals involved, location of electrical,
water supply and other services in the area. Advance
knowledge of nature and scale of possible
emergencies is essential.
Disaster management plan
In order to be in a state of readiness to face
adverse effects of accidents caused by hazardous
substances, a disaster management plan (DMP) is
prepared which includes on-site and off-site emergency
plan by the individual industry as required.
Disaster management plan: key elements
The following are the key elements of a
disaster management plan:
 Basis of the plan
 Accident prevention procedure /
measure
 Accident / emergency response
procedure / measure; and
 Recovery procedure
Fire water storage
Own sources of water supply and storage
facility for fire protection is recommended for the
facility. The amount of water flow rate that needs to be
made available for firefighting varies with individual
hazardous conditions. The water flow rate should be
adequate enough for cooling a burning tank and also
adjacent tanks. Total demand on the fire water system
should also consider the water requirement for spray
system for each tank. Hydrants are also desirable on
the roadways and around the periphery of the tank
farm. The tanks for firewater storage should be
reserved for this service only.
192
Own sources of water
supply and storage facility
desirable for fire
protection
Foam system
Foam as employed for fire extinguishing is a
dispersion of minute bubble within tough films of a
water solution containing materials which stabilize its
foam making properties. The bubbles may be filled with
either carbon dioxide or air. The action of foam in fire
extinguishing is primarily one of blanketing or
smothering the flame. It is light and will flow upon the
surface of liquids, and thereby furnishes the most
practical effective means of fire extinguishing in large
liquid reservoirs such as tanks.
Accident / emergency response planning
procedure
To deal with an emergency, the arrangement
for immediate deployment or appointment of key
personnel with their specific duties should be clearly
described and mentioned.
The emergency planning includes anticipatory
action for emergency, maintenance and streamlining
of emergency preparedness and ability for sudden
mobilization of all forces to meet any calamity.
Communication links that can be established with local
bodies such as factory inspectorate, police station, fire
brigade, hospital etc., and relevant government
authorities would be able to meet the challenges of
emergencies and ensure reliability of functions of
communication system. Adequacy and efficiency of fire
fighting and fire detection equipment, personal
protective appliances, medical services and safety and
emergency training is to be ensured.
An in-plant road map showing linkage with
different units, exit points should be prepared. The
power plant management should display the chemical
properties and antidotes of materials stored and
handled and their locations and inventory. The
management should also maintain data on weather
conditions of each season of plant area (temperature,
wind speed, wind direction), for reference during
emergency for evacuation purposes.
Communication
An essential component of a DMP in the
communication links necessary for gathering
information needed for overall co-ordination.
Emergency control centre links with incident scene
and with in-house as well as outside emergency
services. Too much reliance on the telephone system

Establishment of
emergency control centre
is essential
is risky as it can soon be overloaded in an emergency
situation. Radio links with a special emergency wave
length failing which at least hot line between the
emergency control centre and various critical services
(fire-fighting, control rooms, medical services etc.) and
hazardous locations need to be considered. A multi-
user wireless paging system with selective call facility
is also useful for promptly locating key operating
personnel in the plant, both during normal times and
during emergencies. A public address (PA) system
with loud speakers installed at vital installations or
corners or on jeeps can be extremely useful for guiding
plant (on-site) personnel to some safe locations within
the plant during emergencies. The details of the
communication arrangements should include having a
direct line to the fire brigade. A periodic check of this
system is recommended.
The description of the tasks and
responsibilities, reporting place, etc. for each key
functionary should be, as far as possible, so drafted as
to reduce the communication needs between the
interacting groups.
Emergency control centre
As mentioned earlier, the establishment of an
‘emergency control centre’ at each unit to co-ordinate
emergency response activities within a relevant area is
essential.
The emergency control centre should be sited
in an area of minimum risk and should have easy and
fast access to all major hazardous installations. It is
undesirable to have alternative control centres unless
it is anticipated that the control centre is likely to be
affected by heat load toxic cloud or other hazards and
hence an alternative.
Emergency control centres (including the
alternative one) should be equipped with the following:
 Adequate number of external telephones. If
possible, one should accept incoming calls
only, in order to bypass jammed switchboards
during an emergency.
 An adequate number of internal telephones.
 Radio equipment.
 A plan of the works showing:
 Areas where there are large
inventories of hazardous materials.
 Sources of safety equipment.
 The fire-fighting system and additional
sources of water. 12
 Site entrance and roadways, including
up-to-date information on road works.
Environmental and social assessment
 The location of the works in relation to
the surrounding community.
 Lorry parks and rail sidings, (additional
works plans should be available to show
affected areas, etc. during an
emergency).
 Notepads, pens & pencils.
 A nominal roll of employees.
 A list of key personnel with addresses,
telephone numbers, etc.
 An adequate number of personal
protective/safety equipment in case of
hampering of smooth rescue operations.
Recovery procedure
It is extremely difficult to formulate a recovery
procedure by another organization. Therefore, the
contents of this section are indicative for the
formulation of detailed recovery procedure.
The duration of recovery phase will depend
upon the extent of damage caused due to disaster and
the interventions initiated, thereafter. The
management could restore normalcy only when
speedy actions on the earlier phases are initiated.
Some of the issues to be included in recovery phase
are:
 Treatment of patients after the disaster due to
psychological breakdown (operators/resident
around facility).
 Assessment of damages and rectification.
 Lacuna experienced in intervention phase,
suggestions on improvement in DMP.
Psychological breakdown
It has been the experience that some of the
workers cannot sustain trauma due to disaster.
Psychological disorder of these operators / residents
is a common scene. Should the situation arise, the
project management should immediately arrange for
assistance from professionals.
193

Assessment of damages and rectification
12
The issue of insurance liability and speedy
rectification of the engineering system followed by
Environmental and social assessment
technical checks from the experts needs attention of
the management which should help in bringing
normalcy. DMP and its execution should be reviewed in
case of any such eventualities.
Disaster management plan: on-site crisis
Identification of personnel and assessment of
responsibilities on specific functions of co-ordinating
authority. In order to combat the emergencies, an
organizational chart for on-site emergency should be
periodically reviewed and updated. Usually, for any
plant the following co-coordinators are required for
various activities during the emergency.
In plant co-ordinators
A chief co-ordinator shall be appointed out of
the staff working at the site. The chief coordinator shall
be assisted by,
1. Incident control coordinator
2. Fire fighting co-ordinator
3. Safety co-ordinator
4. Security co-ordinator
5. Medical co-ordinator
6. Special job or engineer
7. Material management coordinator
8. Relief services co-ordinator
9. Transport coordinator
10. Communication coordinator
11. Public relation officer
 Role of chief co-ordinator
He shall be the main guiding force in directing
the emergency operations and will be in charge of
overall control of the disaster. The actions include:
 On hearing the fire siren (factory hooter) or
on receiving information from the shift in
charge or fire station panel operator about
the disaster, the person should immediately
rush to the emergency control centre.
 To declare the category of the emergency
after discussing with the main coordinators
as mentioned above.
 To instruct all the internal co-ordinators to be
194
Organizational chart for on-
site emergency should be
periodically reviewed and
updated
prepared for the next category and make
necessary arrangements.
 To inform higher authorities of the
organization about the disaster.
To inform the local/district/state or central
authority about the disaster and help to be
required, depending upon the nature of the
disaster.
 To give technical advice to deal with the
situation. In case of a disaster of high
magnitude evacuation of the residents near
the plant may be needed.
The chief co-ordinator should then inform the
local police station, civil defense authorities, etc. for
immediate evacuation. He should then inform the
collector about the magnitude, expected duration and
likely impact of the accident. He should see that
alternative location proposed by civic authorities is at a
safe distance from the affected plant.
He will take an ultimate decision on the
following aspects and execute the same.
 Essential communication
 Public relations
 To deal with statutory authorities
 Inspectorate
 Emergency plant shutdown.
 Transportation
 Investigation
 Repairs
 Fire fighting & rescue work
 Role of incident control co-ordinator
 On hearing/receiving emergency signal
message he shall immediately report at the
emergency control centre.
 Ensure constant feed back to chief co-
ordinator and take his decision/ advice
regarding plant operation / shut down.
 Accordingly the person can convey the
decision to shift in charge regarding the plant
operation / shutdown.
 To direct available personnel to rush to the
site for assisting in the emergency
management operation.
 To direct the stoppage of all work inside the
plant premises.

Compliance to sustainable
environmental guidelines is
essential
 To co-ordinate the activities of the affected
plants and other plants.
 To direct the fire fighting and rescue
operation.
 Keep liaison with other coordinators for the
requirements of other services, material,
security arrangements, transportation,
medical, canteen facilities etc.,
 Preserve records and other evidence which
may be required for inquiry.
 Carry out preliminary inquiry into the accident
with the help of concerned personnel.
 To take charge as chief co-coordinator in his
absence as decided in. the organization chart.
The incident control coordinator will be
assisted by second - line/succession co-coordinators
& other officers. There should be no gray areas or
overlapping responsibilities for this officers/
coordinators.
 Manpower for environmental management
For proper environmental management of the
IAIP including operation & maintenance of all facilities
outlined earlier, a regular ‘Environment Cell’ will be set
up with trained staff. The cell will have core staff of
following type of personnel.
 Environmental engineer with civil /chemical
engineering background-2 Nos.
 If required assistance from external
consultant would also be considered
 Chemist and lab assistants - 2 Nos.
To monitor the implementation of the
proposed EMP a core committee involving project
management proponents, representatives from
nearby villages, citizen’s committee and NGO`s would
be formed.
Compliance to sustainable environmental guidelines
Compliance to sustainable environmental
guidelines for the IAIP is given below.
 No forest land has been converted into non-
forest activity for the sustenance of the industry.
 Adequate measures have been taken to
maintain and replenish green cover in the area.
 The land has been identified for the
development of the IAIP by the FDRE.
 The master plan has been prepared considering 12
that the industry units shall be located at the
Environmental and social assessment
lowest elevation to remain hidden from general
vision.
 The land acquired is sufficiently large to provide
space for appropriate treatment of wastewater.
The treated wastewater is being used for
irrigating the greenbelt in the development.
 The master plan has been developed taking into
consideration to create a water body for ground
water recharge and if possible for aquaculture.
 A greenbelt of adequate area has been
developed between two adjoining large scale
industries.
 Master plan has been prepared taking into
account that sufficiently large area has been
provided for the disposal of solid waste after
treatment for land filling and development of
green belt over the filled area. This has been
earmarked in the utility area.
The IAIP development is based on
international planning norms and upcoming industries
in the area and do not affect the scenic features of the
place.
 The associated township has been created at a
place having physiographic barriers between the
industry and the township.
 In the implementation stage, each industry shall
maintain three ambient air quality measuring
stations within 120 degrees angle, between the
stations.
 It has been ensured that the IAIP is not developed
in Ecological Sensitive areas, coastal areas, flood
plains, transport systems, communication
systems and major settlement areas.
Inference
From an eco – environmental point of view, it
is assessed that the area is quite suitable for agri and
allied business industrial developmental activities.
The secondary data show that the setting up
of the project is less likely to have an adverse impact
on the geo–ecological balance.
The IAIP and surrounding areas soil is highly
erodable and of low fertility. So, proper measures
should be considered for the construction phase.
195
  

IAIP development will less

likely to have adverse
impact on the geo–
ecological balance

The IAIP will enhance fairness as the project
12 beneficiaries include the poor rural farmers, who
would get value for their produce in addition to other
benefits like development of adequate social
Environmental and social assessment
 Advantages of scale through industrial production
and processing
 Significant cost reductions and increased profit
margins

infrastructure. Since women play a significant role in  Optimization through proven advanced economic
agricultural production, the proposed project will also modelling
enhance gender neutrality by easing the burden and
 Increased output
providing value to women folk. In general, the potential
benefits of the IAIP can be summarized as follows:  High value products

Therefore, the development of the IAIP is

recommended at the proposed site.

196
 Chapter – 13
Development strategy
implementation structure
Development approach
This project is first of its kind in Ethiopia
conceptualized for the sustainable and holistic
development of agri infrastructure, agro industrial
projects and sustainable agribusiness in Ethiopia and
hence appropriate model needs to be developed.
IAIP can be developed entirely by the
government or in public private partnership (PPP)
mode or by private sector. Irrespective of the
development approach, the land for the IAIP
development shall be provided by GoE and regional
government and the consideration for the same may
vary from approach to approach. Due checks and
balances are dovetailed for ensuring the envisaged end
use and value creation in agribusiness sector.
The development and management of the IAIP
shall be under the control of Special Purpose Vehicle
(IAIP SPV). The concepts of SPVs are extensively
practiced in PPP mode of development of
infrastructure projects involving different actors. SPVs
are formed specifically for the identified projects and
are the legal entities implementing and operating the
project.
The strategic partners shall subscribe to the
equity stake in the IAIP SPV and the concessionaire
shall execute shareholders cum development cum
marketing cum operation agreement with the nodal
agency. The GoE and regional government may also
consider participation in the equity of the IAIP SPV. The
necessary checks and balances and instruments are
devised to ensure the performance of the
concessionaire.
PPP in IAIP development context means a
contractual arrangement between GoE & regional
government / government owned entity on one side
and a private sector entity on the other, for the
provision of developed industrial plots, ready built
facilities, general infrastructure, specialized agri
infrastructure through investments being made and
management being undertaken by the private sector
entity, for a specified period of time, where there is
well defined allocation of risk between the private
sector and GoE & regional government and the private
and project
entity receives performance linked payments that
conform (or are benchmarked) to specified and pre-
determined performance standards, measurable by
the occupant units of IAIP and representatives of GoE
& regional government. In the IAIP concession form of
PPP, the GoE and the respective regional defines and
grants specific rights to the private sector to build and
operate the IAIP for a fixed period of time.
The consortium agreement shall clearly
delineate the roles and responsibilities of each of the
consortium member including the financial
commitment to the IAIP SPV.
Strategic partners / developers
Being a private sector driven initiative, it is
suggested that GoE and the regional government shall
induct strategic partners comprising of consortium of
developers having excellent exposure and high record
of accomplishment in the development and
management of agro clusters / agro processing
zones/ industrial and business zone management. The
profile of the strategic partners would be in synergy
with the requirements of developing and operating a
world-class industrial hub. It is also preferable to select
a consortium having an anchor tenant to ensure the
speedy implementation of the first phase and to
amortize the initial cost of common infrastructure.
Alternatively, the project development model could also
consider EPC and O&M approach.
IAIP development option and strategy
The various scenario options for the
development of IAIP clusters were studied and
recommended after critical review and benchmarking
of successful models of meaningful participation of
private sector.
Exhibit No. 13.1 depicts various development
options for development of IAIP.
The scenarios were analysed with respect to
extent of participation from GoE, regional government,
and participation from private sector including roles
and responsibilities in development and operations of
the proposed project.
197

Exhibit No. 13.1: IAIP development options
13
Development strategy & project implementation structure
Source: MACE analysis
Strategic partners / developers selection process
The selection of the private sector strategic
partner holds the key to the success of IAIP since the
cost and quality of service to occupant units over a
long period would depend on the performance of the
private sector strategic partner. The nodal agency
shall invite and select, through a bidding process, the
strategic partners (a developer / consortium of
developers) having adequate financial and managerial
capability to invest, achieve financial closure, develop,
market and operate IAIP to international standards.
The facilitation role of GoE and regional government is
very crucial in the success of the proposed IAIP. It will
also play a pivotal role in the selection of strategic
partners, monitoring and the implementation of IAIP.
The bidding process for IAIP under PPP
Design – Build – Finance – Operate – Transfer
(DBFOT) mode of implementation is proposed in two
stages. The first stage is Request for Qualification
(RFQ) or Expression of Interest (EoI). The objective is to
pre-qualify and short-list eligible bidders for stage two
of the process. In the second and final stage, referred
to as the Request for Proposal (RFP) or invitation of
financial bids, the bidders engage in a comprehensive
198
Various IAIP development
options are recommended
scrutiny of the project before submitting their financial
offers. The RFP process is aimed at obtaining financial
offers from the bidders pre-qualified at the RFQ stage.
The information sought in the RFP would normally be
restricted to financial offers only.
Two approaches are suggested for selection
of private sector for the development and operation of
IAIP as detailed in Table No. 13.1 to 13.5.
In the approach A, only financial bid shall
constitute the sole criteria for award of contract after
technical qualification. Experience score, technical
threshold capacity of the bidder are based on past
projects. The technical weightage gained by bidder
after the RFQ stage in the technical evaluation is not a
deciding factor for the award of the contract. This
approach is adopted to ensure that there is no
revenue loss either in terms of receipt to the
government or outflow from the government arising
out of differential technical score among the
technically shortlisted ranked bidders. This approach is
adopted in India for PPP and in UK.
In the approach B, quality cost based
selection method (QCBS) is adopted. The multi criteria
 Multiple approaches are suggested
for selection of private sector for
development and operation of IAIP

analysis shall be adopted for finalization of the least financial commitments to GoE and regional
successful bidder. The technical evaluation and ranking government. The technical score duly factors the past 13
parameters would include experience in similar experience and bidders proposal for the IAIP. The
developments, operation and management, net worth technical scores are assigned and are carried as a

Development strategy & project implementation structure

and other financial resources, capability in
agribusiness sector, guaranteed volume of products
handled, employment creation, tie up or anchor tenant
as a consortium member, marketing commitments,
capacity and commitment to develop the sector in
terms of knowledge dissemination, capacity building,
CSR initiatives and linkages etc. The financial
evaluation parameters could be based upon either
maximum revenue to GoE and regional government or
decisive factor in addition to the financial score in
award of final contract. The combined technical and
financial score of the bidder will be considered for
evaluation. In this model the bidder derives the benefit
of committing lower payment to the government or
enjoys additional payment from the government due to
its technical dominance among the short listed
technically qualified bidders.

Table No. 13.1: Developer selection – approach A

Approach A: Financial bid to constitute the sole criteria for selection

Technical For demonstrating technical capacity and experience (the “technical capacity”), the applicant
capacity shall, over the past 5 (five) financial years preceding the application due date, have:
i. paid for, or received payments for construction of eligible project; and /or
ii. paid for development of eligible project(s) in category 1 and / or category 2; and / or
iii. collected and appropriated revenues from eligible project(s) in category 1 and / or
category 2,
o such that the sum total of the above is more than twice the estimated cost of
the project expressed in million Birr (the “threshold technical capacity”).
o Provided that at least one fourth of the threshold technical capacity shall be
from the eligible projects in category 1 and / or category 3.
Financial capacity The applicant shall have a minimum net worth (the “financial capacity”) of 25% of the
estimated project cost expressed in million Birr as at the close of preceding financial year.

In case of a consortium, the combined technical capacity and net worth of those members,
who have and shall continue to have an equity share of at least 26% (twenty six per cent) each
in the IAIP SPV, should satisfy the above conditions of eligibility; provided that each such
member shall, for a period of 2 (two) years from the date of commercial operation of the
project, hold equity share capital not less than: (i) 26% (twenty six per cent) of the subscribed
and paid up equity of the IAIP SPV; and (ii) 5% (five per cent) of the total project cost specified
in the concession agreement.
O&M experience The applicant shall, in the case of a consortium, include a member who shall subscribe and
continue to hold at least 10% (ten per cent) of the subscribed and paid up equity of the IAIP
SPV for a period of 5 (five) years from the date of commercial operation of the project, and
has either by itself or through its associate, experience of 5 (five) years or more in operation
and maintenance (O&M) of category 1 projects, which have an aggregate capital cost equal
to the estimated project cost. In case the applicant is not a consortium, it shall be eligible only
if it has equivalent experience of its own or through its associates. In the event that the
applicant does not have such experience, it should furnish an undertaking that if selected to
undertake the project, it shall for a period of at least 5 (five) years from the date of
commercial operation of the project, enter into an agreement for entrusting its operation &
maintenance (O&M) obligations to an entity having the aforesaid experience, failing which the
concession agreement shall be liable to termination.
Criteria for Only those applicants who meet the eligibility criteria shall qualify for evaluation in this stage.
evaluation in RFP Applications of firms / consortia who do not meet these criteria shall be rejected.
stage

199
 Technical capacity and
eligible experience are
articulated

Approach A: Financial bid to constitute the sole criteria for selection

13
The applicant’s competence and capability shall be established by the following parameters:
(a) Technical capacity; and
(b) Financial capacity
Development strategy & project implementation structure

Technical The following categories of experience would qualify as technical capacity and eligible
capacity for experience (the "eligible experience") in relation to eligible projects (the "eligible projects"):
purpose of
evaluation Category 1: Project experience on eligible projects in industrial parks / industrial estates
/ agro parks / growth centres / agri infrastructure developments / food
parks

Category 2: Project experience on eligible projects in core sector (core sector would be
deemed to include highways and bridges, power, telecom, ports, airports,
railways, metro rail, logistics parks, pipelines, irrigation, water supply,
sewerage and real estate development, tourism)

Category 3: Construction experience on eligible projects in industrial parks / industrial

estates / agro parks / growth centres / agri infrastructure developments
/ food parks

Category 4: Construction experience on eligible projects in core sector (core sector would
be deemed to include highways and bridges, power, telecom, ports, airports,
railways, metro rail, logistics parks, pipelines, irrigation, water supply,
sewerage and real estate development, tourism)

Eligible experience in respect of each category shall be measured only for eligible projects.

For a project to qualify as an eligible project under categories 1 and 2:

(a) It should have been undertaken as a PPP project on BOT, BOLT, BOO, BOOT or other
similar basis for providing its output or services to a public sector entity or for providing
non-discriminatory access to users in pursuance of its charter, concession or contract,
as the case may be; for the avoidance of doubt, a project which constitutes a natural
monopoly such as an airport or port should normally be included in this category even if
it is not based on a long-term agreement with a public entity;

(b) The entity claiming experience should have held, in the company owing the eligible
project, a minimum of 26% (twenty six per cent) equity during the entire year for which
eligible experience is being claimed;

(c) The capital cost of the project should be more than 20% of the estimated project cost;
and

(d) The entity claiming experience shall, during the last 5 (five) financial years preceding the
application due date, have (i) paid for development of the project (excluding the cost of
land), and / or (ii) collected and appropriated the revenues from users availing of non-
discriminatory access to or use of fixed project assets, such as revenues from industrial
parks, estates, agro parks, food parks, tourism facilities, highways, airports, ports and
railway infrastructure, but shall not include revenues from sale or provision of goods or
services such as electricity, telecommunications or fare / freight revenues and other
incomes of the company owning the project.

200
 Well structured method of
procurement is devised

Approach A: Financial bid to constitute the sole criteria for selection

13
For a project to qualify as an eligible project under categories 3 and 4, the applicant should
have paid for execution of its construction works or received payments from its client(s) for
construction works executed, fully or partially, during the 5 (five) financial years immediately

Development strategy & project implementation structure

preceding the application due date, and only the payments (gross) actually made or received,
as the case may be, during such 5 (five) financial years shall qualify for purposes of computing
the experience score. However, payments / receipts of less than 25% of the estimated
project cost expressed in million Birr shall not be reckoned as payments / receipts for the
eligible projects. For the avoidance of doubt, construction works shall not include supply of
goods or equipment except when such goods or equipment form part of a turn-key
construction contract / EPC contract for the project. Further, the cost of land shall not be
included hereunder.

The applicant shall quote experience in respect of a particular eligible project under any one
category only, even though the applicant (either individually or along with a member of the
consortium) may have played multiple roles in the cited project. Double counting for a
particular eligible project shall not be permitted in any form.

Applicant’s experience shall be measured and stated in terms of a score (the "experience
score"). The experience score for an eligible project in a given category would be the eligible
payments and/or receipts, divided by one million Birr and then multiplied by the applicable
factor as per Table No. 13.2 below. In case the applicant has experience across different
categories, the score for each category would be computed as above and then aggregated to
arrive at his experience score.

Table No. 13.2: Factors for experience across categories

Categories Factor
Category 1 1.25
Category 2 1.00
Category 3 0.75
Category 4 0.50

The experience score determined in respect of an eligible project situated in a developed

country which is a member of OECD shall be further multiplied by a factor of 0.5 (zero point
five) and the product thereof shall be the experience score for such eligible project.

Experience for any activity relating to an eligible project shall not be claimed by two or more
members of the consortium. In other words, no double counting by a consortium in respect of
the same experience shall be permitted in any manner whatsoever.
Short-listing of The credentials of eligible applicants shall be measured in terms of their experience score.
applicants The sum total of the experience scores for all eligible projects shall be the ‘aggregate
experience score’ of a particular applicant. In case of a consortium, the aggregate experience
score of each of its members, who have an equity share of at least 26% (twenty six percent )
in such consortium, shall be summed up for arriving at the combined aggregate experience
score of the consortium.

The applicants shall then be ranked on the basis of their respective aggregate experience
scores and short-listed for submission of bids. The authority expects to short-list up to 7
(seven) pre-qualified applicants for participation in the bid stage. The authority, however,
reserves the right to increase the number of short listed pre-qualified applicants by adding
additional applicant.

201
 QCBS mode of selection is
also examined

Approach A: Financial bid to constitute the sole criteria for selection

13
Evaluation of bids The bidder whose bid is adjudged as responsive in terms of the document and who quotes the
in RFP stage highest upfront lease amount for the IAIP land offered to the authority, and in the event that
no bidder offers upfront lease amount, then the bidder quoting the lowest grant to be paid by
Development strategy & project implementation structure

the authority shall be declared as the selected bidder (the “selected bidder”).

In the event that two or more bidders quote the same amount of [upfront amount or grant, as
the case may be] the authority shall identify the selected bidder by draw of lots, which shall be
conducted, with prior notice, in the presence of the tie bidders who choose to attend.

Source: MACE analysis

Table No. 13.3: Developer selection – approach B technical evaluation

Marks Mark allocation

Category 1: Project experience on 20
eligible projects in industrial parks / (determined by Projects of Each project Minimum
industrial estates / agro parks / PC1n x wpc1n, ≯20) similar carries 5 marks of 1
growth centres / agri infrastructure nature with with a maximum project is
developments / food parks capital cost capping of 20 required
of the marks for under this
For a project to get qualify as an eligible project > bidders claiming category
project under this category 20% of the more than 4 for
estimated projects under technical
(a) It should have been undertaken project cost this category qualification
as a PPP project on BOT, BOLT,
BOO, BOOT or other similar
basis for providing its output or
services to a public sector entity
or for providing non-
discriminatory access to users in
pursuance of its charter,
concession or contract, as the
case may be.

(b) The entity claiming experience

should have held, in the company
owing the eligible project, a
minimum of 26% (twenty six per
cent) equity during the entire
year for which eligible experience
is being claimed;

(c) The capital cost of the project

should be more than 20% of the
estimated project cost; and

(d) The entity claiming experience

shall, during the last 5 (five)
financial years preceding the
application due date, have (i) paid
for development of the project

202
 Projects of similar nature gets
priority in experience
counting

Marks Mark allocation

13
(excluding the cost of land), and
/ or (ii) collected and
appropriated the revenues from

Development strategy & project implementation structure

users availing of non-
discriminatory access to or use
of fixed project assets, such as
revenues from industrial parks,
estates, agro parks, food parks,
tourism facilities, highways,
airports, ports and railway
infrastructure facilities but shall
not include revenues from sale
or provision of goods or services
such as electricity,
telecommunications or
fare/freight revenues and other
incomes of the company owning
the project.
Category 2: Project experience on 16
eligible projects in core sector (core (determined by Projects of similar Each project carries 4
sector would be deemed to include PC2n x wpc2n≯ 16) nature with capital marks with a maximum
highways and bridges, power, telecom, cost of the project capping of 16 marks for
ports, airports, railways, metro rail, > 20% of the bidders claiming more
logistics parks, pipelines, irrigation, estimated project than 4 projects under
water supply, sewerage and real estate cost this category
development, tourism)

For a project to get qualify as an eligible

project under this category

(a) It should have been undertaken as

a PPP project on BOT, BOLT, BOO,
BOOT or other similar basis for
providing its output or services to
a public sector entity or for
providing non-discriminatory
access to users in pursuance of
its charter, concession or
contract, as the case may be; for
the avoidance of doubt, a project
which constitutes a natural
monopoly such as an airport or
port should normally be included in
this category even if it is not based
on a long-term agreement with a
public entity;

(b) The entity claiming experience

should have held, in the company
owing the eligible project, a
minimum of 26% (twenty six per

203
 Well distributed scoring
system is suggested

Marks Mark allocation

13
cent) equity during the entire year
for which eligible experience is
being claimed;
Development strategy & project implementation structure

(c) The capital cost of the project

should be more than 20% of the
estimated project cost; and

(d) The entity claiming experience

shall, during the last 5 (five)
financial years preceding the
application due date, have (i) paid
for development of the project
(excluding the cost of land), and /
or (ii) collected and appropriated
the revenues from users availing
of non-discriminatory access to or
use of fixed project assets, such
as revenues from tourism
facilities, highways, airports, ports
and railway infrastructure, but
shall not include revenues from
sale or provision of goods or
services such as electricity, gas,
telecommunications or fare /
freight revenues and other
incomes of the company owning
the project.
Category 3: Construction 12
experience on eligible projects in (determined by Projects of similar Each project carries 3
industrial parks / industrial estates / PC3n x wpc3n≯ 12) nature with capital marks with a
agro parks / growth centres / agri cost of the project > maximum capping of
infrastructure developments / food 20% of the 12 marks for bidders
parks. estimated project claiming more than 4
cost projects under this
For a project to qualify as an eligible category
project under this category, the
applicant should have paid for
execution of its construction works or
received payments from its client(s) for
construction works executed, fully or
partially, during the 5 (five) financial
years immediately preceding the
application due date, and only the
payments (gross) actually made or
received, as the case may be, during
such 5 (five) financial years shall qualify
for purposes of computing the
experience score. However, payments
/ receipts of less than 25% of the
estimated project cost expressed in

204
 Multiple criteria are
considered in QCBS mode

Marks Mark allocation

13
million Birr shall not be reckoned as
payments / receipts for the eligible
projects. For the avoidance of doubt,

Development strategy & project implementation structure

construction works shall not include
supply of goods or equipment except
when such goods or equipment form
part of a turn-key construction contract
/ EPC contract for the project. Further,
the cost of land shall not be included
hereunder
Category 4: Construction experience 8
on eligible projects in core sector (core (determined by Projects of similar Each project carries 2
sector would be deemed to include PC4n x wpc4n≯ 8) nature with capital marks with a
highways and bridges, power, telecom, cost of the project > maximum capping of 8
ports, airports, railways, metro rail, 20% of the marks for bidders
logistics parks, pipelines, irrigation, estimated project claiming more than 4
water supply, sewerage and real estate cost projects under this
development, tourism) category

For a project to qualify as an eligible

project under this category, the
applicant should have paid for
execution of its construction works or
received payments from its client(s) for
construction works executed, fully or
partially, during the 5 (five) financial
years immediately preceding the
application due date, and only the
payments (gross) actually made or
received, as the case may be, during
such 5 (five) financial years shall qualify
for purposes of computing the
experience score. However, payments
/ receipts of less than 25% of the
estimated project cost expressed in
million Birr shall not be reckoned as
payments / receipts for the eligible
projects. For the avoidance of doubt,
construction works shall not include
supply of goods or equipment except
when such goods or equipment form
part of a turn-key construction contract
/ EPC contract for the project. Further,
the cost of land shall not be included
hereunder
Net worth 24
(determined by F0 Minimum net worth Net worth beyond 25%
The applicant shall have a minimum net + Fn x wfn≯ 24) of 25% of estimated of estimated project
worth (the “financial capacity”) of 25% project cost shall cost shall have an
of the estimated project cost carry 10 marks additional 7 marks for
expressed in million Birr as at the close every 10% increase in

205

13
of preceding financial year
In case of a consortium, the combined
Development strategy & project implementation structure
technical capacity and net worth of
those members, who have and shall
continue to have an equity share of at
least 26% (twenty six per cent) each in
the IAIP SPV, should satisfy the above
conditions of eligibility; provided that
each such member shall, for a period
of 2 (two) years from the date of
commercial operation of the project,
hold equity share capital not less than:
(i) 26% (twenty six per cent) of the
subscribed and paid up equity of the
IAIP SPV; and (ii) 5% (five per cent) of
the total project cost specified in the
concession agreement
Guaranteed volume of products
handled, employment creation, tie up or
anchor tenant as a consortium
member, marketing commitments,
capacity and commitment to develop
the sector in terms of knowledge
dissemination, capacity building, CSR
initiatives and linkages etc.
Total
Source: MACE analysis
Notes:
1. For demonstrating technical capacity and
experience (the “technical capacity”), the
applicant shall, over the past 5 (five) financial
years preceding the application due date, have:
206
Selection linked to guaranteed
performance in terms of volume,
employment, marketing etc.
Marks Mark allocation
the estimated project
cost subject to
maximum of 24 marks
20
(determined by Commitment from anchor units for 10
Marn+Voln+CSRn) the establishment of the processing marks
units occupying at least of 25% of
the IAIP area within pre agreed
months from effective date
Guaranteed volume of products to 5
be handled in IAIP by the occupant marks
units demonstrated through input /
output calculations within pre
agreed time frame from effective
date
Commitment towards knowledge 5
dissemination, capacity building, marks
CSR initiatives and linkages to the
pre agreed mandatory amount
determined on the percentage
revenue or minimum guaranteed
amount per annum
100
i. paid for, or received payments for
construction of eligible project; and /or
ii. paid for development of eligible project(s)
in category 1 and / or category 2; and /
or
iii. collected and appropriated revenues
from eligible project(s) in category 1 and
/ or category 2,
 The bid offering highest upfront
lease payment will be given a
financial score of 100 points
such that the sum total of the above
is more than twice the estimated
cost of the project expressed in
million Birr (the “threshold technical
capacity”).
Provided that at least one fourth of the
threshold technical capacity shall be from
the eligible projects in category 1 and / 3.
or category 3
2. The applicant shall, in the case of a consortium,
include a member who shall subscribe and
continue to hold at least 10% (ten per cent) of
the subscribed and paid up equity of the IAIP
SPV for a period of 5 (five) years from the date
of commercial operation of the project, and has
either by itself or through its associate,
experience of 5 (five) years or more in operation
and maintenance (O&M) of category 1 projects,
which have an aggregate capital cost equal to 4.
the estimated project cost. In case the applicant
is not a consortium, it shall be eligible only if it
has equivalent experience of its own or through
its associates. in the event that the applicant
does not have such experience, it should furnish
an undertaking that if selected to undertake the
Table No. 13.4: Developer selection – approach B financial evaluation
The financial proposals of only Bidder quoting upfront lease
technically qualified bidder payment to the government
whose bid is adjudged as
responsive shall be opened.
The bidders will be asked to
quote the highest upfront
lease amount for the IAIP land
offered to the authority.
Those bids offering upfront
lease amount will
considered for evaluation.
Each financial proposal will be
assigned a financial score
(SF).
The bid offering highest
upfront lease payment (FM)
will be given a financial score
(SF) of 100 points.
project, it shall for a period of at least 5 (five)
years from the date of commercial operation of 13
the project, enter into an agreement for
entrusting its operation & maintenance (O&M)
Development strategy & project implementation structure
obligations to an entity having the aforesaid
experience, failing which the concession
agreement shall be liable to termination.
Only those applicants who meet the eligibility
criteria shall qualify for evaluation in the
technical stage. Applications of firms /
consortia who do not meet these criteria shall
be rejected.
The applicant’s competence and capability shall
be established by the following parameters:
(a) Technical capacity; and
(b) Financial capacity
The technical scores of bidders ST shall be
computed and the threshold for short listing
bidders for technical evaluation will be 70 marks
and the authority shall shortlist all the bidders
who secure the minimum cut off of 70 marks
for taking the evaluation to next stage.
Bidders quoting grant from the government
In the event that no bidder offers upfront
lease amount, then the bidders quoting the
grant to be paid by the authority are
considered for evaluation.
be
In a situation, where there is no bid offering
upfront lease amount and where the bidder
quotes grant to be paid by the authority,
then the bids are evaluated as follows:
Each financial proposal will be assigned a
financial score (SF).
The bid quoting least grant payment (FM) will
be given a financial score (SF) of 100 points
207
 Proposals will finally be ranked
according to their combined
technical and financial scores

The financial scores of other (provided there is no bidder quoting up front

13 proposals will be computed lease amount). The financial scores of other
as follows: proposals (only that quoting grant) will be
computed as follows:
Development strategy & project implementation structure

SF = 100 x F/FM
(F = amount of financial
proposal)
Weightages The financial proposals will be
allotted a weightage of 30%.
SF = 100 x FM/F
(F = amount of financial proposal)
The financial proposals will be allotted a
weightage of 30%.

Source: MACE analysis

Table No. 13.5: Developer selection – approach B - QCBS evaluation

Proposals will finally be ranked Combined S = ST x TW+ SF x FW TW and FW are weights

according to their combined Whereas assigned to technical proposal
technical (ST) and financial (SF) 1) ST = (PC1n x wpc1n, ≯ 20) + and financial proposal and
scores (PC2n x wpc2n, ≯ 16) + (PC3n x shall be 0.70 and 0.30
wpc3n, ≯ 12) + (PC4n x wpc4n, ≯ respectively
8)+ (F0 + Fn x wfn, ≯ 24)+
(Marn+ Voln+ CSRn)
2) TW = 0.70
3) SF = 100 x F/FM
F = amount of financial
proposal
FM = bid offering highest
upfront lease payment
carrying 100 points
or
4) SF = 100 x FM/F
F = amount of financial
proposal
FM = bid quoting least grant
payment carrying 100 points
5) FW = 0.30
The selected applicant shall be the first ranked applicant (having the highest combined score). The second
ranked applicant shall be kept in reserve and may be invited for negotiations in case the first ranked applicant
withdraws, or fails to comply with the requirements.

Source: MACE analysis

Project structuring and special purpose vehicle -

IAIP
The project structuring under different options are
detailed in Table No. 13.6.
The nodal agency nominated by GoE for this
venture, may create IAIP SPV for options 1 to 3.
However, in the case of option 4 the IAIP SPV will be
created by concessionaire after award of concession
contract.
GoE and regional government shall make
available the required extent of the land for the IAIP, as
a general practice unless the project is proposed in a
land under possession by the private sector (this
scenario may arise only in case of option 4 where
private sector shows keen interest as an alternative
proposal in response to the RFP documents or come
forward on its own initiative in creating private sector
owned IAIP).

208
 Project structuring options are
analysed

The development of various zones, general be done by the SPV in a phased manner.
infrastructure and specialized agri infrastructure shall 13
Table No. 13.6: Project structuring options

Development strategy & project implementation structure

Option 3 - Involvement of
Option 1 - 100 % owned GoE, regional government,
Option 2 - PPP structure
and managed by GoE or financial institution &
with GoE and regional Option 4 – 100 %
regional government banks, consortium of
government with 26% under private sector
through designated nodal private investors - EPC
equity participation
agency and O&M through
professional agencies
Project IAIP SPV may be created by IAIP SPV may be created IAIP SPV will be created for IAIP SPV may be
vehicle nodal agency for this by Nodal agency implementing this project created by
venture and the project nominated by GoE and and it shall be professionally concessionaire after
shall be under the control regional government for managed. award of concession
of IAIP SPV. this venture and the contract for this
project shall be under the venture and the
control of IAIP SPV. project shall be under
the control of IAIP
SPV.
Role of GoE The project shall be The role of GoE and The role of the GoE
and regional completely developed and regional government in and regional
government maintained by the GoE and this option would include government shall be to
regional government equity participation, monitor the project as
through one of its allotment of land to the per milestones and
designated nodal agency. IAIP SPV, collection of one performance
time lease premium, standards laid down in
collection of yearly lease the concession
rental. agreement.
Selection of Not applicable The nodal agency shall The developer may
private invite and select, through form a consortium
sector for a bidding process, a with its constituent
development developer / consortium of members having
and developers having excellent exposure and
management adequate financial and high record of
of IAIP managerial capability to accomplishment in the
invest, achieve financial development and
closure, develop and management of agro
operate IAIP to clusters / agro
international standards. processing zones /
industrial and business
The developer may form a zone management.
consortium with its The profile of the
constituent members strategic partners
having excellent exposure would be in synergy
and high record of with the requirements
accomplishment in the of developing and
development and operating a world-
management of agro class industrial hub. It
clusters / agro is also preferable to
processing zones / select a consortium
industrial and business having an anchor
zone management. The tenant to ensure the
profile of the strategic speedy
partners would be in implementation of the
synergy with the first phase and to

209

13 Option 1 - 100 % owned
Option 2 - PPP structure
and managed by GoE or
with GoE and regional
regional government
government with 26%
Development strategy & project implementation structure
through designated nodal
equity participation
agency
requirements of
developing and operating a
world-class industrial hub.
It is also preferable to
select a consortium having
an anchor tenant to
ensure the speedy
implementation of the first
phase and to amortize the
initial cost of common
infrastructure.
Selection of
private
equity
investors
Role of Nil Involvement of private
private sector management is
sector high.
The consortium
agreement shall clearly
delineate the roles and
responsibilities of each of
the consortium member
including the financial
commitment to the IAIP
SPV.
Land for IAIP Based on development Based on concession
development agreement, the GoE and agreement the GoE and
regional government shall regional government shall
lease out the land for IAIP lease out the land for IAIP
to the IAIP SPV and IAIP to the IAIP SPV and the
SPV shall pay annual lease private sector shall pay
rental. one time lease payment
and annual lease rental.
210
Four development options are
analysed
Option 3 - Involvement of
GoE, regional government,
financial institution &
Option 4 – 100 %
banks, consortium of
under private sector
private investors - EPC
and O&M through
professional agencies
amortize the initial
cost of common
infrastructure.
GoE and regional The GoE and regional
government can invite government through a
through transparent competitive bidding
selection process private process shall select
equity investors to the tune private sector
of 36% equity contribution. developer comprising
of firm / company or
consortium of private
firms / companies.
The selected agency
shall form IAIP SPV to
implement the project
and subsequent
operation &
management.
The entire
responsibility of
implementing the
project is on the
private sector.
The consortium
agreement shall
clearly delineate the
roles and
responsibilities of each
of the consortium
member including the
financial commitment
to the IAIP SPV.
Based on development Based on concession
agreement, the GoE and agreement, the GoE
regional government shall and regional
lease out the land for IAIP government shall lease
to the IAIP SPV and the IAIP out the land for IAIP to
SPV shall pay one time the IAIP SPV and the
lease payment and annual private sector shall
lease rental. pay one time lease
 Financial commitment of GoE,
regional government and private
sector are analysed

Option 3 - Involvement of
Option 1 - 100 % owned
Option 2 - PPP structure
GoE, regional government, 13
and managed by GoE or financial institution &
with GoE and regional Option 4 – 100 %
regional government banks, consortium of
government with 26% under private sector
through designated nodal private investors - EPC

Development strategy & project implementation structure

equity participation
agency and O&M through
professional agencies
payment and annual
lease rental.
Financial The GoE and regional The GoE and regional The GoE and regional
commitment government financial government financial government financial
commitment and control commitment and control commitment is high in this
are high in this is medium in this developmental approach.
developmental approach. developmental approach
The IAIP SPV shall achieve
The private sector financial closure through
strategic partner shall balance equity contribution
subscribe majority equity and term loan from
stake in the IAIP SPV to financial institution and
the extent of 74%, and the banks.
concessionaire shall
execute shareholders cum
development cum
operation agreement with
the nodal agency.
Equity 100% equity by GoE and 1. Equity share capital of 1. The equity amount 100% equity by
regional government IAIP SPV shall be shall be subscribed by private sector
subscribed / allotted GoE and regional
to various agencies government, financial
involved in the institution & banks,
development of the consortium of private
IAIP equity investors.
2. 26% equity by GoE 2. It is suggested that
and regional GoE and regional
government and 74% government to hold
equity by private 35% equity and the
sector. consortium of private
3. As far as cash outflow equity investors to hold
from GoE and regional 36% and rest by
government is financial institutions
concerned, the equity and banks.
contribution from GoE 3. The equity amount to
and regional be subscribed by GoE
government can be in and regional
the form of land government shall be in
contribution to the the form of land
IAIP SPV against the contribution to the IAIP
upfront lease SPV against the
premium payable by upfront lease premium
the private sector. If payable by the IAIP SPV
concessionaire opts and the balance
for larger debt amount shall be
component resulting subscribed over the
in lower equity development period.
amount, the IAIP SPV can also work
difference between towards larger debt
one time upfront component thereby
lease premium and capping 35% of equity

211
 Risk allocation and mitigation under
different options analysed

Option 3 - Involvement of
13 Option 1 - 100 % owned GoE, regional government,
Option 2 - PPP structure
and managed by GoE or financial institution &
with GoE and regional Option 4 – 100 %
regional government banks, consortium of
government with 26% under private sector
Development strategy & project implementation structure

through designated nodal private investors - EPC

equity participation
agency and O&M through
professional agencies
26% equity amount contribution of GoE and
shall be paid by the regional government.
private sector to GoE
and regional
government.
4. With 26% equity GoE
shall have reasonable
control on the
management of the
company
5. It may also be noted
that 26% has a
special significance in
company law as to get
a special resolution
passed, one requires
at least ¾ majority in
a general meeting.
Therefore, the 26%
block acts as a check.
Risk The project development The project development The project development In this developmental
allocation risk and subsequent risk and subsequent risk and subsequent approach the
operation and management operation and operation and management substantial risk will be
shall be borne by the nodal management shall be shall be borne by the IAIP on the private sector.
agency. borne by the IAIP SPV. SPV.
This IAIP SPV shall be
GoE and regional This IAIP SPV shall be completely responsible
government shall take the entirely responsible for for project
risks of project project conceptualization, conceptualization,
developmental design & detailed financial closure,
components, project engineering, project design & detailed
completion, marketing of developmental engineering, project
developed plots and ready components, construction, development,
built facilities and operation project completion construction, project
of utilities and marketing of developed completion, marketing
infrastructural facilities. plots, ready built space, of developed plots,
specialized agri ready built space,
infrastructure, operation & specialized agri
maintenance. infrastructure,
operation &
maintenance.

The concession
agreement shall
clearly specify these
activities.
Risk In order to create the state In order to create the state
mitigation of the art IAIP with of the art IAIP with
and international operational international operational
addressing standards, it is desirable to standards, it is desirable to
the infuse a professional infuse a professional

212
 Merits and demerits of each option
are analysed
Option 1 - 100 % owned
and managed by GoE or
regional government
through designated nodal
agency
constraints management by involving a
private sector experienced
in developing such world
class industrial parks /
agribusiness parks / food
parks and specialized in
operating the similar
facilities. Hence it is
suggested in this
development approach, the
designated nodal agency
may engage the services of
EPC contractor cum O & M
operator or separately EPC
contractor and O&M
agency. This engagement
shall be a performance
based fee based services
contract. These agencies
shall in turn take the risks
of design & detailed
engineering, project
development, project
commissioning, day to day
operation & maintenance of
various components
Merits Least cost to the occupant
units
Demerits Investment fully by GoE and
regional government and
not fully leveraging the
private sector financial
strength and expertise
Project Refer Exhibit No. 13.2
structure
Source: MACE analysis
Option 2 - PPP structure
with GoE and regional
government with 26%
equity participation
Merit of this
developmental option is
that the technical
expertise and operating
skills of the private sector
shall be made available to
the GoE and regional
government.
Moderately higher cost to
the occupant units
Refer Exhibit Nos. 13.3
& 13.4
Option 3 - Involvement of
GoE, regional government, 13
financial institution &
Option 4 – 100 %
banks, consortium of
under private sector
private investors - EPC
Development strategy & project implementation structure
and O&M through
professional agencies
management by involving a
private sector experienced
in developing such world
class industrial parks /
agribusiness parks / food
parks and specialized in
operating the similar
facilities. Hence it is
suggested in this
development approach, the
designated nodal agency
may engage the services of
EPC contractor cum O & M
operator or separately EPC
contractor and O&M
agency. This engagement
shall be a performance
based fee based services
contract. These agencies
shall in turn take the risks
of design & detailed
engineering, project
development, project
commissioning, day to day
operation & maintenance of
various components
Merit of this developmental Minimum risks to GoE
option is that the technical and regional
expertise and operating government.
skills of the private sector
shall be made available to
the GoE and regional
government.
Leverages the synergy
between the GoE, regional
government, private
investors, EPC and O & M
agencies.
Moderately higher cost to Likely to result in
the occupant units higher cost of service
deliveries
Refer Exhibit No. 13.5 Refer Exhibit Nos.
13.6 & 13.7
213
 Project structure and contractual
framework analysed

Exhibit No. 13.2: Project structure under option 1 - 100 % owned and managed by GoE or regional
13 government through designated nodal agency
Development strategy & project implementation structure

Source: MACE analysis

Exhibit No. 13.3: Developer consortium under option 2 - PPP structure with GoE and regional government
with 26% equity participation

Source: MACE analysis

214
 PPP project structure analysed

Exhibit No. 13.4: Project structure under option 2 - PPP structure with GoE and regional government with
26% equity participation 13

Development strategy & project implementation structure

Source: MACE analysis

Exhibit No. 13.5: Project structure under option 3 - Involvement of GoE, regional government, financial
institution & banks, consortium of private investors - EPC and O&M through professional agencies

Source: MACE analysis

215
 Project structure with 100% private
sector participation analysed

Exhibit No. 13.6: Developer consortium under option 4 - 100 % under private sector
13
Development strategy & project implementation structure

Source: MACE analysis

Exhibit No. 13.7: Project structure under option 4 - 100 % under private sector

Source: MACE analysis

216
 IAIP SPV shall be a body corporate,
a company incorporated under the
relevant laws of Ethiopia

Governance & management structure financing, marketing, availing external connectivities,

marketing of space, raw material availability, operation 13
IAIP SPV shall be a body corporate, a “Share & maintenance,.
Company” established as per the 1960 Commercial

Development strategy & project implementation structure

Code of Ethiopia and the Ethiopian Investment Laws. Exhibit No. 13.8 shows the contractual
structure of IAIP and RTC and these are detailed in
The project company shall have several legal Table No. 13.7.
and contractual agreements towards concession,

Exhibit No. 13 8: Contractual structure of IAIP & RTC

Source: MACE analysis

Table No. 13.7: Legal framework for integrated ACPZ and IAIP

Supply of agri produce to the occupant units

Purchase • The processing unit or its associate shall procure raw material of required quality and
through RTC quantity through RTC network.
network • RTC shall act as a facilitator, aggregator and ensure the contractual commitments.
• Legal document – MoU/ agreement stipulating terms and conditions of
a. Purchase price

217
 Supply of agri produce to the
occupant units through multiple
legal frameworks

b. Quality control
13 c. Product delivery, quality and quantity certifications
d. Liabilities
e. Force majeure
Development strategy & project implementation structure

f. Clauses to protect farmers interest

g. Clauses to ensure sustained supply of raw materials
• The variants of the MoU / agreements are also contemplated based on the ownership
structure of the RTC. If RTC is established and operated by the occupant unit, then
basically the legal document will be an internal document between the occupant unit
and RTC.
Purchase • Formal and informal documentation for procurement
through open
market
Purchase • The physical possession of land shall continue to rest with the farmer and the RTC /
through producer unit shall enter limited period contract supply of predetermined variety and
contract for the standards with or without price fixation.
farming either • Legal document – MoU/ agreement stipulating terms and conditions of
through RTC or
directly by the a. Input supply arrangements
occupant unit b. Technology and cultivation support
c. Purchase price
d. Quality control
e. Product delivery, quality and quantity certifications
f. Liabilities
g. Force majeure
h. Clauses to protect farmers interest
i. Clauses to ensure sustained supply of raw materials
Feed through • In this approach, RTC unit shall also explore the possibilities of entry into management
management contract either directly or it’s designated agency.
contract either • The physical possession of land shall continue to rest with the farmer and the farmer
through RTC or shall lease out the land (within the framework of GoE and regional government
directly by the regulations) to the RTC / producer unit for the defined purpose of cultivating the agri
occupant unit commodities for limited period of time and on the expiry of lease period the land shall
be handed over to the farmer in full useable condition. The RTC /producer unit shall
endeavour to utilize the local population for the farming activities. The entire farming
and agronomical practices shall be the responsibility of the RTC or its designated
agency / producer company.
• Legal document – MoU/ agreement stipulating terms and conditions of

a. Lease of land for cultivation by the producer unit

b. Creation of local employment and training
c. Rural improvement support services
d. Clauses to protect farmers interest
e. Clauses to ensure uninterrupted agricultural activities
Captive growing • The processing unit or its associate shall procure land for the sole purpose of captive
in open farming growing in open farming to the extent of 25% of its raw material requirements and
by the occupant shall endeavour to utilize the local population for the farming activities. The entire
units farming and agronomical practices shall be the responsibility of the producer company
or its associate company as the case may be.
• Legal document – This is basically an internal working arrangement and hence the
allotment of land for cultivation to the producer unit or its associate shall clearly specify
the end use purpose and engagement of local population for farming activities

218
 Long term occupancy in IAIP
is enabled

Captive growing • The processing unit or its associate shall procure land for the sole purpose of captive
in controlled growing in controlled environmental conditions to the extent of 25% of its raw material
13
environmental requirements and shall endeavour to train the skilled labours in hi-tech cultivation
conditions practices.

Development strategy & project implementation structure

• Legal document – This is basically an internal working arrangement and hence the
allotment of land for controlled environmental cultivation to the producer unit or its
associate shall clearly specify the end use purpose including imparting training to skilled
labours in hi-tech cultivation practices.
Long-term leasehold and short-term lease occupancy in IAIP & RTC
Developed • IAIP SPV shall allocate developed industrial plots to the occupant unit for the pre-
industrial plots defined agri industrial or other agri related activities on a long term leasehold and
of IAIP short-term lease basis. The land possession shall continue to rest with the IAIP SPV
and the producer unit shall establish the industrial unit as per the development control
regulations. The tenure of the lease shall be in accordance with GoE and regional
government stipulations and occupant unit shall avail the common infrastructure
facilities created by IAIP SPV for a consideration.
• Legal document – Long-term leasehold and short-term lease agreement stipulating
terms and conditions of
a. Land area, location
b. Designated industrial usage and production capacity
c. Environment compliance and discharge standards
d. Adherence to IAIP development control regulations and acts
e. Compliance to timelines for establishment of units.
f. Lease terms and conditions including aspects on subletting or creating on charge
or lien on the lease property.
g. Clauses to protect occupant unit interest in IAIP
h. Clauses to protect IAIP SPV interest
i. Clauses to ensure sustained delivery of services by the IAIP SPV
• In RTC, long-term leasehold and short-term lease for developed industrial plots
are not contemplated in the business model.
Ready built • IAIP SPV / RTC SPV shall allocate ready built industrial space to the occupant unit of
industrial space IAIP/ RTC as appropriate for the pre-defined agri industrial or other agri related
of IAIP & RTC activities on a long-term leasehold and short-term lease basis. The land possession
shall continue to rest with the IAIP SPV / RTC SPV and the producer unit shall
establish the industrial unit in IAIP or occupant unit shall establish its functional office in
RTC as per the development control regulations. The tenure of the lease shall be in
accordance with GoE and regional government stipulations and occupant unit shall avail
the common infrastructure facilities created by IAIP SPV / RTC SPV as appropriate for
a consideration.
• Legal document – Long-term leasehold and short-term lease agreement stipulating
terms and conditions of
a. Built-up space and location
b. Designated industrial usage and production capacity
c. Environment compliance and discharge standards
d. Adherence to IAIP / RTC development control regulations and acts
e. Compliance to timelines for establishment of units / functional offices
f. Lease terms and conditions including aspects on subletting or creating on charge
or lien on the lease property.
g. Clauses to protect occupant unit interest in IAIP /RTC
h. Clauses to protect IAIP SPV / RTC SPV interest
i. Clauses to ensure sustained delivery of services by the IAIP SPV / RTC SPV

219
 Short term occupancy legal
framework facilitates
marketing potential

Specialized agri • IAIP SPV / RTC SPV shall provide specialized agri infrastructure to the occupant units
13 infrastructure in of IAIP / RTC in accordance with the pre-defined configuration for agri industrial or
IAIP / RTC other agri related activities on a long-term leasehold and short-term lease basis. IAIP
SPV / RTC SPV shall own & maintain the specialized agri infrastructure and ensure an
Development strategy & project implementation structure

uninterrupted and reliable delivery of services. The tenure of the lease shall be in
accordance with GoE and regional government stipulations and occupant unit shall avail
the common specialized agri infrastructure facilities created by IAIP SPV / RTC SPV for
a consideration.
• Legal document – Long-term leasehold and short-term lease agreement stipulating
terms and conditions of

a. Usage regulations and occupancy

b. Environment compliance and compliance to safety standards
c. Adherence to IAIP/RTC development control regulations and acts
d. Compliance to timelines for establishment of specialized agri infrastructure
e. Lease terms and conditions
f. Clauses to protect occupant unit interest in IAIP / RTC
g. Clauses to protect IAIP SPV /RTC SPV interest
h. Clauses to ensure sustained delivery of services by the IAIP SPV /RTC SPV
Yearly lease and monthly lease rental occupancy in IAIP & RTC
Developed • IAIP SPV shall allocate developed industrial plots to the occupant unit for the pre-
industrial plots defined agri industrial or other agri related activities on a monthly rental basis. The land
in IAIP possession shall continue to rest with the IAIP SPV and the producer unit shall
establish the industrial unit as per the development control regulations. The tenure of
the rental agreement shall be for 3 years in stretch (yearly lease) or 11 months
(monthly lease) with options for extension on mutually accepted terms. The occupant
unit shall avail the common infrastructure facilities created by IAIP SPV for a
consideration.
• Legal document – Yearly lease and monthly lease rental agreement stipulating terms
and conditions of
a. Land area, location
b. Designated industrial usage and production capacity
c. Environment compliance and discharge standards
d. Adherence to IAIP development control regulations and acts
e. Compliance to timelines for establishment of units.
f. Rental terms and conditions including aspects on subletting or creating on charge
or lien on the lease property.
g. Clauses to protect occupant unit interest
h. Clauses to protect IAIP SPV interest
i. Clauses to ensure sustained delivery of services by the IAIP SPV
• In RTC, yearly lease and monthly lease rental for developed industrial plots are
not contemplated in the business model.
Ready built • IAIP SPV / RTC SPV shall allocate ready built industrial space to the occupant unit of
industrial space IAIP/ RTC as appropriate for the pre-defined agri industrial or other agri related
activities on a yearly lease and monthly lease rental basis. The land possession shall
continue to rest with the IAIP SPV / RTC SPV and the producer unit shall establish the
industrial unit in IAIP or occupant unit shall establish its functional office in RTC as per
the development control regulations. The tenure of the rental agreement shall be for 3
years in stretch (yearly lease) or 11 months (monthly lease) with options for extension
on mutually accepted terms. The occupant unit shall avail the common infrastructure
facilities created by IAIP SPV / RTC SPV for a consideration.
• Legal document – Yearly lease and monthly lease rental agreement stipulating terms

220
 Operation & maintenance enabled
through well structured legal
framework

and conditions of
a. Built-up space and location
13
b. Designated industrial usage and production capacity
c. Environment compliance and discharge standards

Development strategy & project implementation structure

d. Adherence to IAIP / RTC development control regulations and acts
e. Compliance to timelines for establishment of units.
f. Rental terms and conditions including aspects on subletting or creating on
charge or lien on the lease property
g. Clauses to protect occupant unit interest in IAIP / RTC
h. Clauses to protect IAIP SPV / RTC SPV interest
i. Clauses to ensure sustained delivery of services by the IAIP SPV / RTC SPV
Specialized agri • IAIP SPV / RTC SPV shall provide specialized agri infrastructure to the occupant units
infrastructure of IAIP / RTC in accordance with the pre-defined configuration for agri industrial or
other agri related activities on a yearly lease and monthly lease rental basis. IAIP SPV /
RTC SPV shall own & maintain the specialized agri infrastructure and ensure an
uninterrupted and reliable delivery of services. The tenure of the rental agreement shall
be for 3 years in stretch (yearly lease) or 11 months (monthly lease) with options for
extension on mutually accepted terms and occupant unit shall avail the common
specialized agri infrastructure facilities created by IAIP SPV / RTC SPV for a
consideration.
• Legal document –Yearly lease and monthly lease rental agreement stipulating terms
and conditions of
a. Usage regulations and occupancy
b. Environment compliance and compliance to safety standards.
c. Adherence to IAIP / RTC development control regulations and acts
d. Compliance to timelines for establishment of specialized agri infrastructure.
e. Rental terms and conditions
f. Clauses to protect occupant unit interest in IAIP / RTC
g. Clauses to protect IAIP SPV / RTC SPV interest
h. Clauses to ensure sustained delivery of services by the IAIP SPV / RTC SPV
Operation & maintenance of RTC & IAIP
Common • In RTC, spaces are provided for allotting to occupant units of RTC for captive function
infrastructure of requirements.
RTC & IAIP • IAIP SPV / RTC SPV shall operate and maintain the common infrastructure facilities to
the stipulated standards and shall provide services as per the pre agreed levels to the
occupant units of IAIP / RTC as appropriate to the respective SPV. The ownership of
the common infrastructure shall continue to rest with the IAIP SPV / RTC SPV. The
tenure of the O & M agreement shall be for 1 year with an automatic clause for
extension with an increase in the service charges. The occupant unit shall avail the
common infrastructure facilities created by IAIP SPV / RTC SPV for a consideration.
• Legal document –operation and maintenance agreement stipulating terms and
conditions of
a. Utilities usage
b. Environment compliance and discharge standards
c. Service levels of various infrastructure facilities
d. Adherence to IAIP / RTC development control regulations and acts
e. Compliance to timelines for repair and refurbishment
f. Clauses to protect occupant unit interest in IAIP / RTC
g. Clauses to protect IAIP SPV / RTC SPV interest
h. Clauses to ensure sustained delivery of services by the IAIP SPV / RTC SPV
Specialized agri • IAIP SPV / RTC SPV shall operate and maintain the specialized agri infrastructure
infrastructure of facilities to the stipulated standards and shall provide services as per the pre agreed

221
 The role of IAIP SPV is not just
limited to development and
management of the agri cluster

RTC & IAIP levels to the occupant units of the respective hub. The ownership of the specialized agri
13 infrastructure shall continue to rest with the IAIP SPV / RTC SPV. The tenure of the O
& M agreement shall be for 1 year with an automatic clause for extension with an
increase in the service charges. The occupant unit shall avail the specialized agri
Development strategy & project implementation structure

infrastructure facilities created by IAIP SPV / RTC SPV for a consideration.

• Legal document – operation and maintenance agreement stipulating terms and
conditions of
a. Specialized agri infrastructure usage
b. Environment compliance and discharge standards
c. Service levels of various infrastructure facilities
d. Adherence to IAIP / RTC development control regulations and acts
e. Compliance to timelines for repair and refurbishment
f. Clauses to protect occupant unit interest
g. Clauses to protect IAIP SPV / RTC SPV interest
h. Clauses to ensure sustained delivery of services by the IAIP SPV / RTC SPV
Input service providers to IAIP SPV / RTC SPV
Power and • IAIP SPV / RTC SPV shall enter long term arrangement with designated agencies for
water bulk availing of power and water that in turn shall provide these utilities to the occupant
unit at pre-defined levels of usage. The assets created by the IAIP SPV / RTC SPV
within the boundaries of IAIP / RTC shall be owned by IAIP SPV / RTC SPV respectively.
The utilities up to the battery limits shall be the responsibility of designated agencies.
• Legal document –Service provider agreement stipulating terms and conditions of
a. Quantity and phasing
b. Service levels
c. Compliance to timelines for feeder lines.
d. Terms and conditions for utility providing and amortizing the cost of feeder lines
e. Clauses to protect IAIP SPV / RTC SPV interest
f. Clauses to protect utility provider interest
g. Clauses to ensure sustained delivery of services by the service provider
Source: MACE analysis

Roles and responsibilities of various agencies Nos. 13.9 & 13.10. The role of IAIP SPV is not just
limited to development and management of the agri
The role and responsibilities of the concessionaire, cluster but the IAIP SPV need to play an important role
government and other agencies are depicted in Exhibit of business facilitator to the occupant industries.

222
Well defined roles and
responsibilities conceptualized
for business sustenance

Exhibit No. 13.9: Activities and responsibilities between GoE and the IAIP development agency
13

Development strategy & project implementation structure

Source: MACE analysis

Exhibit No. 13.10: IAIP – roles and linkages

Source: MACE analysis

223
 The activities of IAIP SPV include
both onetime implementation and
ongoing operation

Activities of the IAIP SPV

13
The activities of the IAIP SPV are outlined in Table No. 13.8.
Development strategy & project implementation structure

Table No. 13.8: Activities of IAIP SPV

Implementation activities – one time Post-implementation activities – on-going

• Project development components finalization and • Day to day operation of the development
technology / partner countries / university / node and overall administration
research institution tie up (as applicable) finalization
• Land acquisition – GoE and regional government to • Phased development of the node
facilitate the process
• Statutory approvals, EIA approval and follow up • Ensuring efficient operations of all general
and specialized infrastructure facilities
• Topography and contour survey • Facility management and maintenance of the
development node
• Geotechnical investigation • Enforcement of development regulations
• Finalization of external water supply source, • Up gradation of the facilities meeting the
arrangement for external water supply, gas, power changing requirements and needs
supply and distribution (GoE and regional government
to provide through its designated agencies as per
applicable policies and regulations)
• Arrangement of telecommunication facilities through • Collection of maintenance revenue
external sources (GoE and regional government to
coordinate)
• Finalizing development guidelines and control • Brand image building of the development
regulations node
• Master planning • Maintenance of the general, specialized and
specific infrastructure
• Raise equity and loans to commission IAIP • Maintenance of the environmental
infrastructure and compliance to various
standards and requirements
• Financial closure
• Establishment of project development components
• Establishment of general infrastructure facilities and
supporting infrastructure facilities - internal roads, site
grading, drainage system, water supply, sewerage
network, industrial trade effluent network, sewage
treatment plant, effluent treatment plant, solid waste
management, power distribution, gas, street lighting,
communication network, greenery, rainwater
harvesting, sustainability infrastructure elements,
utilities, common amenities etc.
• Sub zones development- industrial and business etc.
• Administration zone
• Multi facility complex, amenities, utilities
• Residential zone for executives and workers
• Sports zone

224
 Three-way cooperation is
considered as key for agro and
food processing projects

Implementation activities – one time Post-implementation activities – on-going

13
• Establishment of specialized agri infrastructure
facilities

Development strategy & project implementation structure

• Contractual agreement(s) with occupant industries,
• Contractual agreement(s) for other institutional area
developments
• Marketing of the developed plots, ready built space,
residential area, commercial area and institutional
area
Source: MACE analysis

Formation of various SPVs
The options of forming various SPVs
leveraging the business opportunities are depicted in
the Exhibit No. 13.11. The legal structure can be
either these SPVs can be subsidiary of the main IAIP
SPV or can be completely independent with an arm’s
length transaction between the main IAIP SPV and
other SPVs.

Exhibit No. 13.11: Various SPV options

Source: MACE analysis

225
 Project and governance
structure for RTC defined and
evaluated

Project and governance structure for RTC
13
The RTCs can be established as an integrated
project with IAIP or as an independent standalone
Development strategy & project implementation structure
j. PPP initiative (Independent concession, joint
concession with IAIP, IAIP & RTC having
common developer, IAIP & RTC having
independent developers)

entity or as a cluster. Accordingly, the development of k. Captive RTCs for specific occupant unit of IAIP
RTC can be one or more combination of the following: l. Cooperative formed by two or more occupant
units of IAIP
g. Entirely as a GoE / regional government
initiative The Table No. 13.9 gives various scenarios
h. Farmer cooperatives for RTC development and governance structure.
i. Private sector initiative

Table No. 13.9: RTC development and governance structure

RTC
Legal structure,
development Implementation structure Business model
business organization
mode
Entirely as a 1. Public enterprise 1. Funded by GoE / regional 1. User fee charges on a
GoE / regional established for government pass through basis
government indefinite duration 2. Can be established and 2. Subsidized fee level
initiative through Regulation operated by GoE / regional for facilitation and
No......... government irrespective capacity building
whether IAIP is developed by activities
GoE / regional government
or by private sector or
through PPP model
Merits and demerits

1. Affordable fee structure to occupant units of IAIP

2. Convergence of government schemes and initiatives
3. Protection of farmer interest
4. Deficiencies associated with purely government managed institutions
5. Delayed response system
Farmer 1. Farmer cooperative 1. Funded by GoE / regional 1. User fee charges on a
cooperatives societies government pass through basis
established under 2. Can be established and 2. Subsidized fee level
Proclamation No..... operated by farmer for facilitation and
cooperative societies capacity building
irrespective whether IAIP is activities
developed by GoE / regional 3. Non recovery of
government or by private capital cost
sector or through PPP model
Merits and demerits

1. Affordable fee structure to occupant units of IAIP

2. Convergence of government schemes and initiatives
3. Protection of farmer interest through cooperative model
4. Deficiencies associated with cooperative society managed institutions
5. Delayed response system
Private sector 1. Ordinary 1. Funded by private sector 1. User fee charges with
initiative partnership 2. Can be established and full cost recovery
2. Joint venture operated by private sector model including

226
 PPP initiative for RTC
governance examined

RTC
development
Legal structure,
Implementation structure Business model
13
business organization
mode
3. General irrespective whether IAIP is capital and

Development strategy & project implementation structure

partnership developed by GoE / regional operational expenses
4. Limited partnership government or by private 2. Market linked fee level
5. Share company sector or through PPP model for facilitation and
6. Private limited capacity building
company activities
7. Sole proprietorship
Merits and demerits

1. Enhanced level of services

2. Driven by private sector business interest
3. Enhanced and market driven fee structure to occupant units of IAIP
4. Difficulties in implementing checks and balances to protect farmer interest
5. Difficulties in implementing mechanism to prevent holding of raw materials, excessive
pricing of RTC services to both farmer and occupant units
PPP initiative 1. Joint venture 1. Funded by GoE / regional 1. Affordable user fee
2. Share company government and private charges with full cost
3. Private limited sector recovery model
company 2. Can be established and including capital and
operated under PPP mode operational expenses
irrespective whether IAIP is 2. Differential fee
developed by GoE / regional structure for
government or by private facilitation and
sector or through PPP model capacity building
3. Can be established by IAIP activities
developer as single
concession or through
independent PPP concession
Merits and demerits

1. Enhanced level of services

2. Integration of private sector capabilities and convergence of government schemes and
interventions
3. Robust business structure
4. Enhanced and market driven fee structure to occupant units of IAIP
5. Driven on a business model with checks and balances to protect farmer interest
6. GoE / regional government to devise mechanism to prevent holding of raw materials,
excessive pricing of RTC services to both farmer and occupant units

Captive RTC 1. Ordinary 1. Funded by the occupant unit 1. Captive model

for specific partnership of IAIP 2. Operations driven by
occupant units 2. Joint venture 2. Can be established and captive requirements
of IAIP 3. General operated as captive RTC 3. Procurement and
partnership irrespective whether IAIP is aggregating services
4. Limited partnership developed by GoE / regional driven by viability of
5. Share company government or by private the individual
6. Private limited sector or through PPP model occupant unit
company
7. Sole proprietorship

227
 IAIP to explore strategic
alliances to leverage global
opportunities

RTC
13 development
Legal structure,
Implementation structure Business model
business organization
mode
Merits and demerits
Development strategy & project implementation structure

1. Driven by private sector occupant unit business interest

2. Effective business model from occupant unit perspective
3. Not realizing the full objectives of RTC
4. Difficulties in implementing checks and balances to protect farmer interest
5. Difficulties in implementing mechanism to prevent holding of raw materials, excessive
pricing of RTC services to farmer
Cooperative 1. Occupant units 1. Funded by occupant units and 1. Affordable user fee
formed by two cooperatives GoE / regional government charges with full cost
or more societies 2. Can be established and recovery model
occupant units established under operated as cooperative RTC including capital and
of IAIP Proclamation No..... irrespective whether IAIP is operational expenses
developed by GoE / regional on a pass through
government or by private basis
sector or through PPP model 2. Differential fee
structure for
facilitation and
capacity building
activities
Merits and demerits
1. Enhanced level of services since the model is driven by end users
2. Affordable fee structure to occupant units of IAIP
3. Moderate level of integration of private sector capabilities and convergence of
government schemes and interventions
4. Driven by private sector occupant units business interest and hence need to introduce
checks and balances to protect farmer interest
5. Moderate level of protection of farmer interest through cooperative model
6. Deficiencies associated with cooperative society managed institutions
7. GoE / regional government to devise mechanism to prevent holding of raw materials,
excessive pricing of RTC services to farmer
8. Effective business model from occupant units perspective
9. Not realizing the full objectives of RTC
10. Difficulties in implementing checks and balances to protect farmer interest
11. Difficulties in implementing mechanism to prevent holding of raw materials, excessive
pricing of RTC services to farmer
Source: MACE analysis

Procurement, bidding document and negotiation
procedures
The procurement, bidding documents and
negotiation procedures shall be done in accordance
with the procedures laid by GoE.
Strategic linkages
The integrated ACPZ and IAIP shall focus on
the strategic linkages with farmers, industries and
other institutes / organization of repute in Ethiopia
and abroad. The IAIP SPV shall explore and enter into
strategic alliances with leading international
institutions / organizations in order to leverage global
opportunities.
Integrated ACPZ and IAIPs would essentially
be a confluence of enabling nodes, the development of
which would supplement and complement the core
objectives of sustainable agribusiness. The enabling
nodes would cover a horizon of activities fundamentally

228
 The IAIP SPV shall explore and
enter into strategic alliances to
leverage global opportunities
of importance to propel the conceived development of
agri and allied sectors in the country. The IAIP SPV
shall not only play the role of project developer,
infrastructure provider but also play a significant role
Exhibit No. 13.12: Strategic linkages and social inclusion
Source: MACE analysis
Inclusive and Sustainable Agri Infrastructure &
Agro Industrial Development Policy, 2015
A detailed study and analysis of the agro and
food-processing sector in Ethiopia was carried out and
the various key interventions have been identified in the
study. Further, in an initiative to create sustainable
agro industrialization, a farmer centric and investor
friendly policy Inclusive and sustainable agri
infrastructure & agro industrial development (ISAI2D)
Policy, 2015 has been conceived to give impetus for
the development of integrated ACPZ and IAIP across
the country.
This ISAI2D policy 2015 would form the
foundation for implementing a constructive integrated
of business facilitator by effectively providing linkage
between production, processing, value addition and 13
distribution & marketing as shown in Exhibit No.
13.12.
Development strategy & project implementation structure
ACPZ and IAIP apart from providing a well-defined
guideline in the agriculture and allied sectors which
would enhance the income of farmers, increase the
country’s GDP and more importantly provide basic
food security to the citizens of Ethiopia.
The ISAI2D policy 2015 aims to create an
enabling institutional structure for addressing the
thrust areas requiring intervention, facilitating flow of
investment, technologies, skill sets and modern
management practices.
The ISAI2D policy 2015 addresses supply
chain alignment with domestic and international
requirements, improvement of market access through
market intelligence. Further, some of the regulatory
229

hurdles that have been affecting growth in the sector
13 have been refined.
The ISAI2D policy 2015 hopes to provide an
Development strategy & project implementation structure
enabling framework leading to increase in yield,
sustainable farming practices, reduction in post-
harvest losses, increased penetration of technology,
reduction in consumer prices in the domestic front,
grading and food safety practices, increased level of
processing & value addition and increase in exports.
The ISAI2D policy 2015 facilitates state of the
art technology, knowhow and avenues for international
Exhibit No. 13.13: Framework for development of ISAI2D policy, 2015
Source: MACE analysis
230
Holistic development of inclusive
and sustainable agri
infrastructure & agro
industrialization
marketing of the produce apart from investments by
private sector in developing the much needed agri
infrastructure & agro based industry units in a fair and
transparent manner for ensuring sustainable
agribusiness development in Ethiopia.
The coverage of the ISAI2D policy 2015 is on
end to end basis as shown in Exhibit No. 13.13.
The draft of the “ISAI2D policy 2015”
prepared as a part of the study is enclosed as an
Annexure – 13A.
 Need for partnership with
other countries
established
Exhibit No. 13.14: First of its kind policy for holistic development of inclusive and sustainable agri
infrastructure & agro industrialization
Source: MACE analysis
Need for partnership with other countries
To improve the yield / productivity of
agriculture and allied sectors in Ethiopia, it is
necessary to adopt state of the art technologies,
investments and modern management practices in
both agribusiness units and agri-infrastructure
sectors, with due consideration to protect the
interests of the farmers and rural communities.
The success of agro and food processing
projects require strong domestic presence, availability
of quality and sufficient quantity of raw materials,
technology and innovation and branding of produce.
Judicious use of technology, tailored appropriately for
specific location and product specific interventions will
13
Development strategy & project implementation structure
improve farmers’ income and boost economic
development in rural areas.
Unlike other industrial sectors, to capture
high-end global market, three-way cooperation is
considered as key for agro and food processing
projects. An ideal combination therefore could include
interested Ethiopian players + technology / state of
the art equipment / service provider who could be
strategic international partner + leading marketing
and brand organization, as depicted in the Exhibit No.
13.15.
Hence partnering with other countries is
viewed as an important element to provide the missing
links.
231
 Host of partnering countries is
suggested in the business model

Exhibit No. 13.15: Cooperation strategies leveraging synergy

13
Development strategy & project implementation structure

Interested Leading
domestic marketing /
player “brand”
organization

International partner -
state of the art
equipment / service
provider strategic
international partner

Source: MACE analysis

Need for host of partnering countries
Having realized the need for partnership with
other countries, it is suggested to have a host of
partnering countries for taking forward this initiative.
The rationale for involving host of partnering countries
is enumerated below:
Ethiopia because of its unique agro-climatic
conditions offers distinctive agro and food processing
opportunities across the sectors like agri / horti /
animal husbandry / livestock / food processing and
allied sector and integrated ACPZ and IAIP clusters
need to accommodate companies across the sub
sectors for harnessing the full potential.
It may not be appropriate to develop business
strategies with technologies and market dependence
on a particular country. As a prudent strategy, it is
imperative for the IAIP developer to bring the best of
knowhow and technology across the globe for
sustained development and also as a risk mitigation
measure.
Also, as a well-conceived marketing strategy
and to attract the occupant units, it is justifiable to
have a basket of technologies of varied applications
and diverse market focus.
Huge investment outlay is being contemplated
for the agro & food processing sector and this call for
participation of many players across the globe. In order
to improve the unit value realization of the produce,
new/untapped/alternate market entry strategies
need to be devised besides addressing huge export
markets.
By providing a wide basket of globally
competitive technologies and marketing channels for a
given project, the Ethiopian player (occupant units) can
select a technology of its choice and select the target
market, and devise strategies for successful
partnering.
Partnerships with certain countries are
considered important from the view point of cutting
edge technologies and state of the art research
activities on some of the promising areas. Certain
countries possess technology for high end
equipment’s and machinery. On the other hand, there
are countries which are considered important from
the view point of export markets for produce from IAIP
occupant units. Further, there are few countries

232
 Mapping of likely
partnering countries
where the regional conditions are not favourable for
agriculture and allied sectors production. Hence
exclusives zones can be identified for these countries
to facilitate the investment and marketing of the
produce.
Likely partnering countries
Considering the multi-dimensional issues, it is
suggested that the proposed integrated ACPZ and
IAIP clusters have the benefit of partnerships with
many countries.
Exhibit No. 13.16: A list of potential shortlisted countries
Source: MACE analysis
MoUs with potential partners and countries
A separate body corporate, The Ethiopian Agri
Infrastructure and Agro Industry Development
Corporation (EAIAIDCo) as public enterprise shall be
established for indefinite duration through regulation
No.…. and conferred with the powers and duties of the
implementing Inclusive and Sustainable Agri
The selection of countries is based on criteria
such as large presence in agri / horti / animal 13
husbandry / fisheries / food processing and allied
sectors, sector dominance in terms of technology,
Development strategy & project implementation structure
equipment’s, cluster development, markets, technology
for food processing, the location as a market-hub,
presence of large relevant consumer market,
presence of food cluster, possibility of creating
dedicated zones, past interest in Ethiopian market and
recent developments and other reasons such as
presence of Ethiopian Diaspora.
After due analysis, a list of potential
shortlisted countries are given in Exhibit No. 13.16.
Infrastructure and Agro Industrial Development Policy,
2015.
The purpose of the corporation is to engage
in the business of facilitating development of
integrated ACPZs and IAIPs in accordance with
economic and social development policies and
priorities of the government and to carry out any other
233

related activities that would enable it achieve its
13 purpose.
Being the nodal agency, EAIAIDCo’s activities
Development strategy & project implementation structure
shall encompass the following:
Identifying project opportunities and
facilitating investment in integrated ACPZ and IAIP.
Conducting investors meets road shows etc.
Appointment of agencies and experts for
facilitating investment promotion
Periodical follow up of investment queries,
conclusion of MoUs, definitive agreements etc.
Selection of developers for establishment of
IAIPs
Acts as single window for all the clearances
Record the progress of investments and
reporting
Table No. 13.10: Model MoUs
MoU No. Parties
MoU – I EAIAIDCo and resource providers
MoU – II EAIAIDCo and international investors
MoU – III EAIAIDCo and research and innovation partners
MoU – IV EAIAIDCo and product marketing support
providers
MoU – V EAIAIDCo and domestic investors
MoU – VI EAIAIDCo and financial institutions & banks
Source: MACE analysis
The three model MoUs (I, III and IV) are towards
facilitating international collaboration and MoU – II is
for international investment.
The following section explains the three MoUs
(MoU–I, MoU-III & MoU–IV) for facilitation of
international collaborations and one MoU (MoU–II) for
international investment at a conceptual level.
Annexure – 13B to 13E gives the draft of these four
MoUs.
Apart, there are two more MoUs i.e. the
MoU–V between EAIAIDCo and domestic investors for
facilitating domestic investment and MoU–VI between
234
Ethiopian Agri Infrastructure
and Agro Industry Development
Corporation is expected to play
a key role
Conduct such other activities to realize the
vision of the policy
EAIAIDCo shall explore and enter into
strategic alliances with leading international
institutions/ organizations in order to leverage global
opportunities.
EAIAIDCo shall endeavour to bring state of the
art technologies & equipment’s, promote cutting edge
research and education collaborations and initiate tie-
ups with global marketing channels apart from
bringing investments to the proposed integrated
ACPZs and IAIPs in Ethiopia.
Towards this, EAIAIDCo shall intend to
promote collaborations by entering into facilitation
agreements with various players through signing of
MoUs.
Six model MoUs are contemplated for
facilitating agreements in agribusiness including food
processing and related sectors as highlighted in Table
No. 13.10.
Purpose
For facilitating international collaborations
For facilitating international investments
For facilitating international collaborations
For facilitating international collaborations
For facilitating domestic investments
For facilitating finance to agribusiness and
food processing units
EAIAIDCo and financial institutions & banks for
facilitating financing agribusiness and food processing
units. Further, these two MoUs are made context
specific and hence the standard template approach
may not be applicable.
Model MoU between EAIAIDCo and resource
providers
EAIAIDCo proposes to make available a host
of technologies, state of the art machinery &
equipment’s and turnkey project installation support,
marketing support for produce, knowledge support,
and strategic partnership support (collectively referred
 Promote collaborations
through facilitation
agreements
as “Resource Provider”) across segments that could
be offered to the Potential Investors for establishing
agro, crop processing and food industries in the
proposed integrated ACPZs and IAIPs.
EAIAIDCo through B2B meetings, road shows,
investors meet may invite project / investment
proposals in the proposed integrated ACPZs and IAIPs
citing its understanding with various Resource
Provider(s).
If a Prospective Investor is keen on Resource
Provider(s) services, EAIAIDCo shall inform Resource
Provider accordingly. Resource Provider and the
Prospective Investor shall take forward the initiative. In
an alternate scenario, Prospective Investors are also
entitled to directly contact Resource Provider.
The Prospective Investors are also at liberty
either to avail the services, expertise and resources of
Resource Providers, or they can make their own
arrangement for development of the project including
sourcing of technology, machinery, equipment and
marketing of produce, joint venture partnerships
besides other project related needs.
The Prospective Investors are expected to
conduct due diligence of Resource Providers on
aspects like technology, product performance, service
& delivery standards evaluation, its ability to market
the produce (if applicable) and their financial ability.
Similarly Resource Providers are expected to do due
diligence about Prospective Investors.
Resource Provider and Prospective Investor
shall enter into separate agreement and this separate
agreement shall not commit EAIAIDCo in whatsoever
manner.
EAIAIDCo is free to enter into any number of
Resource Provider agreements / understanding on
the identical / similar field or in other fields with any
agency and these MoUs are entered on a non-
exclusive basis.
Subsequent to signing of the MoU, in the
event of receipt of any information regarding poor
performance of Resource Provider or doubt on the
capability and/or its financial standings, EAIAIDCo shall
be entitled to remove the concerned party from the list
of potential Resource Providers without consent of the
concerned party and the MoU shall become null and
void.
This MoU and the separate agreement(s) to 13
be entered by the Prospective Investor(s) and
Resource Provider are governed by the laws of FDRE
Development strategy & project implementation structure
and other applicable laws of respective regional
governments of Ethiopia.
Model MoU between EAIAIDCo and international
investors
EAIAIDCo through B2B meetings, road shows,
investors meet, proposes to attract technology driven
initiatives and investments by Ethiopian players and
other prospective international agencies (collectively
referred as ‘Prospective Investors’).
EAIAIDCo proposes to enter into MoUs with
Resource Providers (through MoU-I), Research and
Innovation Partners (through MoU-III) and Product
Marketing Support Providers (MoU-IV) (collectively
referred to as ‘Project Support Providers’).
Prospective Investor will confirm the likely
investment in the projects
If a Prospective Investor is keen to avail
Project Support Provider’s services, EAIAIDCo shall
inform Resource Provider accordingly. Project Support
Provider and the Prospective Investor shall take
forward the initiative. In an alternate scenario,
Prospective Investor’s are also entitled to directly
contact Project Support Providers.
Prospective Investors are at liberty either to
avail the services, expertise and resources of Project
Support Providers from the list provided by EAIAIDCo,
or they can make their own arrangement for
development of the project including sourcing of
technology, machinery, equipment, knowhow and
marketing of produce, joint venture partnerships
besides other project related needs.
Prospective Investors are expected to
conduct due diligence of Project Support Providers on
aspects like technology, product performance, service
& delivery standards evaluation, its ability to market
the produce and their financial ability. Similarly Project
Support Providers are expected to do due diligence
about Prospective Investor(s).
Project support Provider and Prospective
Investor shall enter into separate agreement and this
235

agreement shall not commit EAIAIDCo in whatsoever
13 manner.
EAIAIDCo is free to enter into any number of
Development strategy & project implementation structure
investment / technology, machinery; equipment’s,
turnkey project installation support / marketing
support / strategic partnership support agreements
/ understanding on the identical / similar field or in
other fields with any agency and these MoUs are
entered on nonexclusive basis.
Subsequent to the signing of the MoU, in the
event of receipt of any information regarding poor
performance of concerned Prospective Investor or
doubt on the capability and/or its financial standings,
EAIAIDCo shall be entitled to remove the concerned
party from the list of Potential Investors without
consent of concerned party and the MoU shall become
null and void.
This MoU and the separate agreement(s) to
be entered by the Prospective Investor(s) and Project
Support Provider are governed by the laws of FDRE
and other applicable laws of respective regional
governments of Ethiopia.
Model MoU between EAIAIDCo and research and
innovation partners
EAIAIDCo proposes to make available a host
of education, research and knowledge support
provider and strategic partnership providers
(collectively referred to as ‘Research and Innovation
Partners’) across segments. The expertise of such
Research and Innovation Partners can be availed by
prospective investors, educational and research
institutes, growers’ association (collectively referred to
as ‘Prospective Users’) etc.
If a Prospective User is keen on Research and
Innovation Partners services, EAIAIDCo shall inform
Research and Innovation Partners accordingly.
Research and Innovation Partner and the Prospective
User shall take forward the initiative. In an alternate
scenario, Prospective User is also entitled to directly
contact Research and Innovation Partner.
The Prospective Investors and/or
Prospective Users are at liberty either to avail the
services, expertise and resources of Research and
Innovation providers, or they can make their own
arrangement for development of the project including
236
MoUs to facilitate
international collaborations
and international investments
availing knowhow, sourcing of technology, machinery,
equipment and marketing of produce, joint venture
partnerships besides other project related needs.
The Prospective Investors and/ or
Prospective Users are expected to conduct due
diligence of Research and Innovation Partners
including technology, product performance, service &
delivery standards evaluation and their financial ability.
Similarly Research and Innovation Partners are
expected to do due diligence about Prospective
Investor(s) and/or Prospective User(s).
Research and Innovation Partner and
Prospective Investor shall enter into separate
agreement and this agreement shall not commit
EAIAIDCo in whatsoever manner.
Further, to explore cooperation possibilities
between EAIAIDCo and Research and Innovation
Partner, the parties shall discuss in detail the areas of
cooperation, resources required, statutory and
regulatory framework, etc., and a definitive agreement
towards cooperation between EAIAIDCo and Resource
and Innovation Partner shall be finalized within a period
of 12 months. (This clause is a differentiator
compared to other two facilitation MoUs)
EAIAIDCo is free to enter into any number of
Research and Innovation Partnership agreements /
understanding on the identical / similar field or in
other fields with any agency and these MoU are
entered on a nonexclusive basis.
Subsequent to the signing of this MoU, in the
event of receipt of any information regarding poor
performance of Research and Innovation Partner or
doubt on the capability and/or its financial standings,
EAIAIDCo shall be entitled to remove the concerned
party from the list of potential Research and Innovation
Partners without consent of concerned party and the
MoU shall become null and void.
This MoU and the separate agreement(s) to
be entered by the Prospective Investor(s) and
Research and Innovation Partner are governed by the
laws of FDRE and other applicable laws of respective
regional governments of Ethiopia.
 MoUs to facilitate financing to
agribusiness and food
processing units, product
marketing support
Model MoU between EAIAIDCo and product
marketing support providers
EAIAIDCo proposes to make available a host
of institutional/large retail buyers and marketing
support provider (‘Product Marketing Support
Provider’) across segments that could be offered to
Prospective Investors for marketing/purchasing of
produce.
Product Marketing Support Provider will
market the produce from the proposed integrated
ACPZs and IAIPs, through direct arrangement with
leading purchasers, auction houses or other related
associates. Product Marketing Support Provider will
confirm a likely quantum of purchase/ marketing of
produce to in the next five years.
If a Prospective Investor is keen to avail
Product Marketing Support Provider’s services,
EAIAIDCo shall inform Product Marketing Support
Provider accordingly. Product Marketing Support
Provider and the Prospective Investor shall take
forward the initiative. In an alternate scenario,
Prospective Investors are also entitled to directly
contact Product Marketing Support Providers
The Prospective Investors are expected to
conduct due diligence of Product Marketing Support
Providers including service & delivery standards, its
ability to market the produce and their financial ability.
Similarly Product Marketing Support Providers are
expected to do due diligence about Prospective
Investor(s).
Product Marketing Support Provider and
Prospective Investor shall enter into separate
agreement and this agreement shall not commit
EAIAIDCo in whatsoever manner.
EAIAIDCo is free to enter into any number of
Product Marketing Support Provider agreements /
understanding on the identical / similar field or in
other fields with any agency and these MoUs are
entered on a nonexclusive basis.
Subsequent to the signing of this MoU, in the 13
event of receipt of any information regarding poor
performance of Product Marketing Support Provider
Development strategy & project implementation structure
or doubt on the capability of the party and/or its
financial standings, EAIAIDCo shall be entitled to
remove the concerned party from the list of potential
Product Marketing Support Providers without consent
of concerned party and this MoU shall be become null
and void
This MoU and the separate agreement(s) to
be entered by the Prospective Investor(s) and Product
Marketing Support Provider are governed by the laws
of FDRE and other applicable laws of respective
regional governments of Ethiopia.
Model MoU between agri processing units and
farmers
Annexure – 13F gives the template of model
MoU between agri processing units and farmers.
Opportunities for private sector participation in
developing integrated ACPZ and IAIP and for the
occupant units
The areas of private sector involvement could
be categorized under 3 broad segments viz.
sustainable production in agri & allied sector, agri
infrastructure and agro & food processing. The
companies engaged in agribusiness in terms of open
farming, precision farming, hi tech cultivation under
controlled environment, agro processing, food
processing, innovative, sustainable and clean
technologies in agro & food processing, research
activities and sustainable solution providers, agri
infrastructure and other related areas can work
seamlessly in the integrated ACPZ and IAIPs to bring
together high productive processing in industrial mode
combined with the input of high levels of knowledge
and technology.
The possible cooperation areas with the
private sector are listed in the Table No. 13.11.
237
 Possible cooperation areas
with the private sector
identified

Table No. 13.11: Possible cooperation areas with the private sector
13
Agri Capacity
Agriculture
Agri Agri industry building, skill
and farm Agri logistics Others
Development strategy & project implementation structure

engineering infrastructure and food development &

sector
processing training
Agri input Green house Post-harvest Agro based Hi-tech and Handling of Agri and
manufacturing infrastructure industry biotechnology perishable and non- rural
based perishable financing
agriculture and commodities
research
Irrigation Energy Mechanized Tissue Agri education & Transportation and Agri tourism
sector – management handling culture knowledge hub warehousing
micro in agriculture facilities solutions
irrigation and
processing
Hi-tech and Farm Modern silo Food Soil, water and Bulk material Renewable
precision mechanization, storage technology nutrient testing handling and energy
agriculture conveying, system & food conveyor systems
and transport and engineering,
horticulture storage food
facilities processing
Bio energy Field handling Agribusiness Fruits and Dissemination of People IT
and storage investment vegetables market transportation from application
systems region, processing information data and within in water
investment development nodes resources,
areas, irrigation,
knowledge agriculture
hubs
Seeds Mechanization Grain Agri portal Crop
of the harvest processing insurance
operation
Tissue culture Knowledge
based agri-
solutions
Agri Agriculture
chemicals, extension
organic services
fertilizers and
organic
pesticides
Soil Agri clinics
conservation
Plant growth
regulators
and micro
nutrients
Greenhouse
cultivation
Source: MACE analysis

Opportunities for SME sectors Exhibit No. 13.17. The products are configured to
serve not only domestic market but to address
The opportunities for SME sectors in the diversified international market.
integrated ACPZ and IAIP are mapped and shown in

238
 Investment opportunities
for SME sector
Exhibit No. 13.17: Project investment opportunities for SME sector
Source: MACE analysis
Standards, quality control recommendations
The development of dynamic and competitive
agribusiness and agro-industry sectors needs
standardized products. Similarly, food safety is a must
for public welfare and consumer confidence. The
expectations, standards and assurance systems for
basic quality and safety increasingly are becoming
similar for national, regional and global markets. There
is therefore a need to develop and build capacity
relating to food standards that are responsive to
domestic needs and, as needed, comply with
international requirements and standards. In the light
of the rapid proliferation of public and private food
13
Development strategy & project implementation structure
standards, there is growing interest in harmonization
of standards.
It is required to support development and
harmonization of standards, and strengthening of
capacity for compliance with and enforcement of
norms and standards – including internationally
recognized ones such as the ISO series (ISO 22000 in
particular) and Global Gap.
In order to ensure acceptable safety and hygiene
standards, especially in the corridor and in the cluster
formation, GOE through its designated agencies shall
enforce stringent procedure and practices apart from
the statutory and act requirements.
239
 Chapter – 14
Project cost – IAIP & RTC
Approach for project cost estimation – IAIP
The cost of developing the IAIP covering both
EPC and non EPC costs are computed
The proposed development components for
the IAIP include:
a) Processing, manufacturing and business zone
b) Common agri specialized infrastructure zone
c) Social infrastructure zone
d) Residential zone
e) Commercial infrastructure zone
f) Utility and support Infrastructure zone
Based on the project requirements, the cost
of establishing the above mentioned zones are
computed.
Besides the cost for the project components,
there are certain preliminary and pre-operative
240
expenses, know-how fees, design and detail
engineering fees, project management expenses,
training expenses that are to be incurred in
procurement and installation of these assets. These
are also considered as part of the project cost. The
contingency provision is also estimated to arrive at the
total project cost.
The estimates are made based on the
schedule of rates published by the competent public
authorities, prevailing market prices, in-house data
bank and experience gained over similar / comparable
development commensurate with the nature of
development and the target market segment.
The project development phasing has been
analysed and accordingly the investment requirement
during each phase of development is estimated.
The process of cost computation is depicted
in Exhibit No. 14.1.
 Detailed project cost
computation

Exhibit No. 14.1: Computation of project cost – IAIP

14
Project cost estimates

Project cost – IAIP & RTC

Zoning, product mix, facility Detailing of various cost involved in the
configuration options – segmental cost development including phasing requirement
analysis to address the target business plan

Merits and EPC Non EPC

demerits of
different options
including cost
analysis Specialized
Environmental Land lease
Civil MEP infrastructure
infrastructure cost
facilities
Evolving
strategies for
sustainable Buildings,
Plant and Post harvest Water, Pre operative
operation of the structural
machinery infrastructure wastewater, cost
development works
and associated solid waste
cost
Architectural
Interiors Agri logistics Contingency
works
Eco
restoration
Roads and Miscellaneou Linkage works and
drains s assets infrastructure sustainable
infrastructure
elements
HVAC
systems

Electrical
works

Plumbing

Fire fighting

Source: MACE analysis

241
 Phase wise IAIP
development cost
estimation

Details of cost estimates – IAIP
14
The cost of IAIP phase I development is
estimated to be ETB 1495.22 million.
Project cost – IAIP & RTC
wise percentage of project cost and project cost
build up pattern pertaining to the phase I of IAIP
development. It may be noted that the some of the
developments need to be carried out in the phase I

of IAIP itself considering the project as a whole.

Table No. 14.1 and Exhibit No. 14.2
below gives the project cost details, component

Table No. 14.1: Project cost – IAIP phase I development

Sl. Cost (ETB Cost (US $ in

Description
No. million) million)*
1 Cost of land (land lease amount) 0.03 0.00
2 Site grading and other land development expenses 1.99 0.10
3 Compound wall, fencing and gates 4.20 0.20
4 Roads, culverts & drainage 92.43 4.49
5 Decentralized water supply, treatment and distribution 29.10 1.41
6 Electrical, street lighting & fire fighting 8.60 0.42
7 Telecom & communication systems 1.74 0.08
8 Sustainable infrastructure elements, RW harvesting, summer 4.19 0.20
storage tank & greenery
9 Decentralized wastewater, network and solid waste management 31.11 1.51
10 Buildings - industrial / business 811.02 39.42
11 Buildings - commercial 60.98 2.96
12 Buildings - residential 154.42 7.51
13 Buildings - MEP 4.09 0.20
14 Buildings - social infrastructure development 1.51 0.07
15 Specialized agri infrastructure facilities within IAIP 12.68 0.62
16 Miscellaneous fixed assets 1.95 0.09
17 Manpower cost during pre operative period 3.05 0.15
18 Preliminary expenses & company formation expenses 9.15 0.44
19 Project consultancy, detailed engineering and project supervision 18.30 0.89
cost
20 Initial marketing and project launch expenses 27.45 1.33
21 Pre operative and other expenses 27.45 1.33
22 Contingency 122.00 5.93
23 Interest during construction 67.76 3.29
Total 1495.22 72.67

*@ Exchange rate of 1 US $ = ETB 20.575

Source: MACE analysis

242
 
ETB million

0
200
400
600
800
1000
1200
1400
1600
Phase

Cost of land ( land lease amount) 0.03

I

Site grading and other land development expenses 1.99

Source: MACE analysis

Components
Compound wall, fencing and gates 4.20

General considerations
Roads, culverts & drainage 92.43
Decentralized water supply, treatment and 29.10
provides threshold level

distribution
development

Electrical, street lighting & fire fighting 8.60

Total cost of IAIP

Telecom & communication systems 1.74

Phase I development
ETB 1495.22 million

Sustainable infrastructure elements, RW

4.19
harvesting, summer storage tank & greenery
Decentralized wastewater, network and solid
waste management
31.11

Buildings - industrial / business 811.02

distribution network
Buildings - commercial 60.98

The details of IAIP phase I costing is provided in Table No. 14.2

Buildings - residential 154.42

Buildings - MEP 4.09

Buildings - social infrastructure development 1.51

o Special provisions for food safety norms

Specialized agri infrastructure facilities within IAIP 12.68

o Specialized agri infrastructure within IAIP

development components of IAIP would include
Miscellaneous fixed assets 1.95

Manpower cost during pre operative period 3.05

Details of IAIP project cost

Table No. 14.2: Project cost details of IAIP phase I development
Preliminary expenses & company formation 9.15
expenses
Exhibit No. 14.2: Cost of IAIP build up pattern for phase I development

Project consultancy, detailed engineering and

o Utilities provisions as per applicable codes and standards

18.30
project supervision cost

o Specification for developments and type of finishes required

Initial marketing and project launch expenses 27.45

Pre operative and other expenses 27.45

Contingency

o Type of construction for each project component and identified facilities

122.00

243
o Electro-mechanical utilities with power back-up for essentials and
The factors considered for project cost estimates for the identified
Interest during construction 67.76

Project cost – IAIP & RTC

14

Components
14
Project cost – IAIP & RTC
 Land and site development
 Buildings & civil works
 Plant, machinery and
equipment’s
 Specialized and specific
agri infrastructure
 Miscellaneous fixed assets
 Provision for marketing and
consultancy expenses
244
IAIP SPV investment on
infrastructure
Details of IAIP project cost
o Environmental infrastructure covering water, wastewater and solid waste
management
o Sustainability elements and green infrastructure, etc.
o An area of 258.62 hectares is proposed for IAIP. The land lease cost per
hectare is considered as ETB 135 per hectare per annum.
o The land compensation cost (if applicable) to be spent by the regional
government is not considered as part of the project cost.
o For subsequent years, the land lease rental is covered in the operational
administrative cost.
o It is required to create the necessary site development as detailed in the
earlier part of the report.
o Work on the site development would include cost of development of overall
land area, laying roads, internal pathways, fencing, landscaping, main
entrance & security, etc.
o The various agro processing zones, social, commercial, residential zones and
utilities are suitably earmarked taking into account various technological
aspects and regulations.
o The total land & site development expenditure for phase I is estimated to be
ETB 98.65 million.
o The buildings & civil works consist of developing various social, residential,
commercial, administrative buildings, other buildings, open area facilities and
other miscellaneous civil works.
o Ready built factories are considered to facilitate plug and play operation.
o The total cost of building and civil works for IAIP phase I is estimated at ETB
1032.03 million.
o The plant, machinery and equipment’s consist of environmental
infrastructure, water treatment plants, water supply lines, waste
management, sewerage lines, electrical and communication networks
comprising of transformer and captive back up power generation sets for
the essentials, LT switchboards and cables, special light fittings, electrical
installation, air conditioning and ventilation system, utilities like ducting,
piping, compressed air etc., solid waste management system, fire fighting
equipment’s and other such infrastructure / utilities.
o The total estimated cost for plant, machinery and equipment for IAIP phase
I work out to ETB 74.75 million.
o Specialized agri infrastructure within IAIP covering R&D hub, innovation
centre and knowledge hub, ware houses, procurement centres, packing &
labelling, grading & sorting, QA & QC lab, administrative building, R&D
centre etc.
o The estimated value of specialized agri infrastructure within IAIP for IAIP
phase I is ETB 12.68 million
o The miscellaneous fixed assets would include furniture & fittings, office
equipment’s, audio visual equipment’s and computer system etc.
o The estimated value of miscellaneous fixed assets for phase I is ETB 1.95
million
o The project consultancy expenses are provided for meeting the design and
detailed engineering expenses, project supervision and project
management activity. In addition, expenses towards project launch and
marketing are also need to be met out from the project cost.
 Hard and soft cost
computed

Components Details of IAIP project cost

o An amount of ETB 18.30 million is provided to meet the consultancy
14
expenditure.
The marketing and project launch expenses are estimated to be at ETB

Project cost – IAIP & RTC

 Preliminary expenses &
entity formation expenses
 Preoperative expenses
 Provision for contingencies
 Interest during
construction
o
27.45 million and these costs are considered as a part of the IAIP project
cost.
o Apart from the cost of tangible assets described above, a provision has also
been made towards other categories of expenditure necessary for the
establishment of the IAIP. The preliminary expenses cover expenses involved
in creating SPVs and sub SPVs related expenditures.
o The company formation expenses include incorporation, memorandum of
association, legal expense, and formation of governing bodies. The total
preliminary expenses work out to ETB 9.15 million
o The preoperative expenses relate to site establishment expenses during the
project implementation period, travelling and conveyance, insurance and
other start-up expenses.
o The manpower cost during the preoperative period works out to ETB 3.05
million.
o Apart, the other preoperative expenses during IAIP phase I development work
to ETB 27.45 million.
o A provision at the rate of 10% on the non-firm cost of the estimated project
cost such as site development, buildings, equipment’s and support
machinery, pre-operative expenses and miscellaneous fixed assets are made
to meet the escalation in the prices of these items during the implementation
period.
o ETB 122.00 million is provided as contingency for IAIP phase I
development.
o Interest during construction is calculated based on deployment of debt
towards capital expenditure. Interest at the rate of 8.50% is considered.
o ETB 67.76 million is computed as interest during construction period.

Phase wise project cost - IAIP
It is proposed to implement IAIP in a
phased manner as detailed earlier and accordingly
the investment plans are detailed in Table No.
14.3.
The total investment outlay for all phases is
ETB 3727.86 million over the development period
of 4 years.

Table No. 14.3: Project cost estimates - IAIP, phase wise, ETB in million

Phase I Phase II Phase III Grand Grand

Year total in total in
Sl. 1 2 3 4
ETB US $
No. Year ending 31-Dec- 31-Dec- 31-Dec- 31-Dec- million million*
Description 2017 2018 2019 2020
1 Cost of land (land lease 0.03 0.03 0.00
amount)
2 Site grading and other land 1.99 1.43 1.68 5.09 0.25
development expenses
3 Compound wall, fencing and 4.20 3.01 3.55 10.76 0.52
gates

245
 Three phase development
of IAIP

Phase I Phase II Phase III Grand Grand

14 Year
1 2 3 4 total in total in
Sl.
ETB US $
No. Year ending 31-Dec- 31-Dec- 31-Dec- 31-Dec- million million*
Project cost – IAIP & RTC

Description 2017 2018 2019 2020

4 Roads, culverts & drainage 92.43 66.36 78.21 237.00 11.52
5 Decentralized water supply, 29.10 20.89 24.62 74.62 3.63
treatment and distribution
6 Electrical, street lighting & 8.60 6.17 7.28 22.05 1.07
fire fighting
7 Telecom & communication 1.74 1.25 1.48 4.47 0.22
systems
8 Sustainable infrastructure 4.19 3.01 3.55 10.75 0.52
elements, RW harvesting,
summer storage tank &
greenery
9 Decentralized wastewater, 31.11 22.34 26.33 79.78 3.88
network and solid waste
management
10 Buildings - industrial / 811.02 582.27 686.25 2079.54 101.07
business
11 Buildings - commercial 60.98 43.78 51.60 156.37 7.60
12 Buildings - residential 154.42 110.87 130.66 395.95 19.24
13 Buildings - MEP 4.09 2.94 3.46 10.49 0.51
14 Buildings - social 1.51 1.08 1.28 3.87 0.19
infrastructure development
15 Specialized agri 12.68 9.10 10.73 32.50 1.58
infrastructure facilities within
IAIP
16 Miscellaneous fixed assets 1.95 1.40 1.65 5.00 0.24
17 Manpower cost during pre- 3.05 2.19 2.58 7.82 0.38
operative period
18 Preliminary expenses & 9.15 6.57 7.74 23.46 1.14
company formation expenses
19 Project consultancy, detailed 18.30 13.14 15.49 46.92 2.28
engineering and project
supervision cost
20 Initial marketing and project 27.45 19.71 23.23 70.39 3.42
launch expenses
21 Pre-operative and other 27.45 19.71 23.23 70.39 3.42
expenses
22 Contingency 122.00 87.59 103.23 312.83 15.20
23 Interest during construction 67.76 67.76 3.29
Total 1495.22 1024.82 1207.82 3727.86 181.18
* @ Exchange rate of 1 US $ = ETB 20.575

Source: MACE analysis

246
 Typical cost of RTC
analysed

Details of cost estimates – RTC wise percentage of project cost and project cost
build up pattern pertaining to the phase I of RTC 14
The cost of RTC phase I development is development. It may be noted that the some of the
estimated to be ETB 24.11 million. developments need to be carried out in the phase I

Project cost – IAIP & RTC

of RTC itself considering the project as a whole.
Table No. 14.4 and Exhibit No. 14.3
below gives the project cost details, component

Table No. 14.4: Project cost – RTC phase I development

Sl. Cost (ETB Cost (US $ in

Description
No. million) million)*
1 Cost of land (land lease amount) (**) 0.00 0.00
2 Site grading and other land development expenses 0.09 0.00
3 Compound wall, fencing and gates 0.93 0.05
4 Roads, culverts & drainage 3.76 0.18
5 Decentralized water supply, treatment and distribution 1.88 0.09
6 Electrical, street lighting & fire fighting 0.95 0.05
7 Telecom & communication systems 0.15 0.01
8 Sustainable infrastructure elements, RW harvesting, summer 0.21 0.01
storage tank & greenery
9 Decentralized wastewater, network and solid waste management 1.42 0.07
10 Buildings - industrial / business 4.23 0.21
11 Buildings 1.12 0.05
12 Specialized agri infrastructure facilities within RTC 3.92 0.19
13 Miscellaneous fixed assets 1.18 0.06
14 Manpower cost during pre operative period 0.05 0.00
15 Preliminary expenses & company formation expenses 0.15 0.01
16 Project consultancy, detailed engineering and project supervision 0.30 0.01
cost
17 Initial marketing and project launch expenses 0.45 0.02
18 Pre operative and other expenses 0.45 0.02
19 Contingency 1.98 0.10
20 Interest during construction 0.89 0.04
Total 24.11 1.17

*@ Exchange rate of 1 US $ = ETB 20.575

(**) The land lease cost per hectare is considered as ETB 135 per hectare per annum. For subsequent years, the land lease
rental is covered in the operational administrative cost. However, due to small value, the land lease cost is not reflected in the above
table considering two decimal figures.
Source: MACE analysis

247
 14
Project cost – IAIP & RTC

ETB million

248
10
15
20
25
30

0
5
Cost of land ( land lease amount) 0.00
Site grading and other land development
expenses 0.09

Source: MACE analysis

Compound wall, fencing and gates 0.93

Roads, culverts & drainage 3.76

Decentralized water supply, treatment and
distribution
1.88

Electrical, street lighting & fire fighting 0.95

Total cost of RTC

Telecom & communication systems

ETB 24.11 million

0.15
Phase I development

Sustainable infrastructure elements, RW

0.21
harvesting, summer storage tank & greenery
Decentralized wastewater, network and solid 1.42
waste management

Buildings - industrial / business 4.23

Buildings 1.12
Specialized agri infrastructure facilities within
RTC 3.92

Miscellaneous fixed assets 1.18

Manpower cost during pre operative period 0.05

Micro

Preliminary expenses & company formation

0.15
expenses
Project consultancy, detailed engineering and 0.30
Exhibit No. 14.3: Cost of RTC build up pattern for phase I development

project supervision cost

Initial marketing and project launch expenses 0.45

level
investment analysis

Pre operative and other expenses 0.45

Contingency 1.98
RTC

Interest during construction 0.89

 Three phase development
of RTC

Phase wise project cost - RTC

The total investment outlay for all phases is 14
It is proposed to implement RTC in a phased ETB 50.28 million over the development period of 4

Project cost – IAIP & RTC

manner as detailed earlier and accordingly the years.
investment plans are detailed in Table No. 14.5.

Table No. 14.5: Project cost estimates - RTC, phase wise, ETB in million

Phase I Phase II Phase III Grand Grand

Year total in total in
Sl. 1 2 3 4
ETB US $
No. Year ending 31-Dec- 31-Dec- 31-Dec- 31-Dec-
million million
Description 2017 2018 2019 2020
(*)
1 Cost of land (land lease 0.00 0.00 0.00
amount) (**)
2 Site grading and other land 0.09 0.06 0.03 0.20 0.01
development expenses
3 Compound wall, fencing and 0.93 0.63 0.28 1.98 0.10
gates
4 Roads, culverts & drainage 3.76 2.56 1.12 8.00 0.39
5 Decentralized water supply, 1.88 1.28 0.56 4.00 0.19
treatment and distribution
6 Electrical, street lighting & 0.95 0.65 0.28 2.03 0.10
fire fighting
7 Telecom & communication 0.15 0.10 0.04 0.32 0.02
systems
8 Sustainable infrastructure 0.21 0.14 0.06 0.44 0.02
elements, RW harvesting,
summer storage tank &
greenery
9 Decentralized wastewater, 1.42 0.97 0.42 3.02 0.15
network and solid waste
management
10 Buildings - industrial / 4.23 2.88 1.26 9.00 0.44
business
11 Buildings 1.12 0.76 0.33 2.39 0.12
12 Specialized agri 3.92 2.67 1.17 8.33 0.41
infrastructure facilities
within RTC
13 Miscellaneous fixed assets 1.18 0.80 0.35 2.50 0.12
14 Manpower cost during pre 0.05 0.03 0.01 0.11 0.01
operative period
15 Preliminary expenses & 0.15 0.10 0.04 0.32 0.02
company formation
expenses
16 Project consultancy, detailed 0.30 0.20 0.09 0.63 0.03
engineering and project
supervision cost
17 Initial marketing and project 0.45 0.30 0.13 0.95 0.05
launch expenses

249
 Specialized agri
infrastructure cost within
ACPZ computed

Phase I Phase II Phase III Grand Grand

14 Year
1 2 3 4 total in total in
Sl.
ETB US $
No. Year ending 31-Dec- 31-Dec- 31-Dec- 31-Dec-
million million
Project cost – IAIP & RTC

Description 2017 2018 2019 2020

(*)
18 Pre operative and other 0.45 0.30 0.13 0.95 0.05
expenses
19 Contingency 1.98 1.35 0.59 4.22 0.21
20 Interest during construction 0.89 0.89 0.04
Total 24.11 15.80 6.91 50.28 2.44
(*) @ Exchange rate of 1 US $ = ETB 20.575
(**) The land lease cost per hectare is considered as ETB 135 per hectare per annum. For subsequent years, the land lease
rental is covered in the operational administrative cost. However, due to small value, the land lease cost is not reflected in the
above table considering two decimal figures.
Source: MACE analysis

Specialized agri infrastructure cost within ACPZ

The specialized agri infrastructure within ACPZ are detailed in earlier chapters and the cost of providing
these specialized agri infrastructure are detailed in Table No. 14.6.

Table No. 14.6: Cost of specialized agri infrastructure within ACPZ

Cost ETB in Cost US $ in

Sl. No. Description Brief particulars
million million*
1 Rural power supply through 5 MW power in various capacity i.e.
166.67 8.10
solar PV generation 25 KWp to 2 MWp
2 Cost of refurbishing and
revamping existing Hub and spokes model 33.33 1.62
abattoirs - 1 number
3 Additional investment in
COE for livestock specific
pre processing Hub and spokes model 266.67 12.96
infrastructure linking RTCs
and IAIPs - 2 nos.
4 On farm processing Mobile precoolers and other
8.00 0.39
infrastructure equipments
5 RTC - 7 numbers 351.96 17.11
6 Collection centers 20 nos of collection centre with 4
nos, 7 sq m cold storage in one
18.67 0.91
collection centre, totalling to 28 sq m
space per collection centre
7 Reefer vans and specialised 6 numbers for horticulture products,
transport vehicles for 8 numbers for animal products and 8
linking RTCs, identified numbers for cereals 29.33 1.43
livestock specific pre
processing zones and IAIPs
Total of agri infrastructure required in ACPZ 874.63 42.51
* @ Exchange rate of 1 US $ = ETB 20.575

Source: MACE analysis

250
 External connectivity and
offsite infrastructure cost
computed

External connectivity and offsite infrastructure cost - IAIP

14
The external connectivity and offsite infrastructure to IAIP are detailed in earlier chapters and the cost of
providing these infrastructures are detailed in Table No. 14.7.

Project cost – IAIP & RTC

Table No. 14.7: Cost of external connectivity and offsite infrastructure

Sl. Cost ETB Cost US $ in

Description Brief particulars
No. in million million*
1 RTC approach roads 43.33 2.11
2 Power connectivity to IAIP 116.00 5.64
3 Power connectivity to RTC 10.83 0.53
4 Water intake system comprising
8.33 0.41
of infiltration gallery and others
5 Water transmission mains Water linkage pipelines 8.33 0.41
6 Water intake borewells and
1.17 0.06
supply to RTC
Total of external connectivity
188.00 9.14
and offsite infrastructure cost
* @ Exchange rate of 1 US $ = ETB 20.575
Source: MACE analysis

Summary of project cost for integrated ACPZ and IAIP

Table No. 14.8 provides summary of project cost for integrated ACPZ and IAIP with development mode.

Table No. 14.8: Summary of integrated ACPZ and IAIP project cost estimates and mode of development

Grand
Cost (ETB Grand total
Cost (ETB total cost
million) for cost (US $
Cost (ETB million) for (ETB
external million) for Mode of
Sl. No. Description million) ACPZ agri million) for
connectivity integrated development
for IAIP related integrated
and offsite ACPZ and
infrastructure ACPZ and
infrastructure IAIP
IAIP
1 Cost of land (land 0.03 0.03 0.00 IAIP PPP
lease amount)
2 Site grading and 5.09 5.09 0.25 IAIP PPP
other land
development
expenses
3 Compound wall, 10.76 10.76 0.52 IAIP PPP
fencing and gates
4 Roads, culverts & 237.00 237.00 11.52 IAIP PPP
drainage
5 Water intake 27.50 27.50 1.34 IAIP PPP or
system comprising separate SPV
of infiltration gallery or GoE and
and others regional
government
6 Decentralized 74.62 74.62 3.63 IAIP PPP
water supply,

251
 Multiple mode of
development identified

Grand
14 Cost (ETB
Cost (ETB
million) for
total cost
Grand total
cost (US $
Cost (ETB million) for (ETB
external million) for Mode of
Sl. No. Description million) ACPZ agri million) for
connectivity integrated development
Project cost – IAIP & RTC

for IAIP related integrated

and offsite ACPZ and
infrastructure ACPZ and
infrastructure IAIP
IAIP
treatment and
distribution
7 Power connectivity 116.00 116.00 5.64 IAIP PPP or
to IAIP separate SPV
or GoE and
regional
government
8 Electrical, street 22.05 22.05 1.07 IAIP PPP
lighting & fire
fighting
9 Rural power supply 166.67 166.67 8.10 GoE and
through solar PV regional
generation government
10 Telecom & 4.47 4.47 0.22 IAIP PPP
communication
systems
11 Sustainable 10.75 10.75 0.52 IAIP PPP
infrastructure
elements, RW
harvesting, summer
storage tank &
greenery
12 Decentralized 79.78 79.78 3.88 IAIP PPP
wastewater,
network and solid
waste management
13 Buildings - industrial 2079.54 2079.54 101.07 IAIP PPP
/ business
14 Buildings - 156.37 156.37 7.60 IAIP PPP
commercial
15 Buildings - 395.95 395.95 19.24 IAIP PPP
residential
16 Buildings - MEP 10.49 10.49 0.51 IAIP PPP
17 Buildings - social 3.87 3.87 0.19 IAIP PPP
infrastructure
development
18 Cost of refurbishing 33.33 33.33 1.62 IAIP PPP or
and revamping separate SPV
existing abattoirs - or GoE and
1 number regional
government
19 Additional 266.67 266.67 12.96 IAIP PPP or
investment in COE separate SPV
for livestock or GoE and
specific pre regional

252
 Multi development format

Grand
Cost (ETB
Cost (ETB
million) for
total cost
Grand total
cost (US $
14
Cost (ETB million) for (ETB
external million) for Mode of
Sl. No. Description million) ACPZ agri million) for

Project cost – IAIP & RTC

connectivity integrated development
for IAIP related integrated
and offsite ACPZ and
infrastructure ACPZ and
infrastructure IAIP
IAIP
processing government
infrastructure
linking RTCs and
IAIPs - 2 nos.
20 On farm processing 8.00 8.00 0.39 IAIP PPP or
infrastructure separate SPV
or GoE and
regional
government
21 RTC - 7 numbers 351.96 351.96 17.11 IAIP PPP or
separate SPV
or GoE and
regional
government,
occupant unit of
IAIP,
independent
private sector,
cooperative and
society and
cluster of end-
users
22 Collection centers 18.67 18.67 0.91 IAIP PPP or
separate SPV
or GoE and
regional
government
23 Reefer vans and 29.33 29.33 1.43 IAIP PPP or
specialised separate SPV
transport vehicles or GoE and
for linking RTCs, regional
identified livestock government
specific pre
processing zones
and IAIPs
24 Specialized agri 32.50 32.50 1.58 IAIP PPP
infrastructure
facilities within IAIP
25 Miscellaneous fixed 5.00 5.00 0.24 IAIP PPP
assets
26 Manpower cost 7.82 7.82 0.38 IAIP PPP
during pre
operative period
27 Preliminary 23.46 23.46 1.14 IAIP PPP
expenses &

253
 Investment levels of GoE
and regional government
identified

Grand
14 Cost (ETB
Cost (ETB
million) for
total cost
Grand total
cost (US $
Cost (ETB million) for (ETB
external million) for Mode of
Sl. No. Description million) ACPZ agri million) for
connectivity integrated development
Project cost – IAIP & RTC

for IAIP related integrated

and offsite ACPZ and
infrastructure ACPZ and
infrastructure IAIP
IAIP
company formation
expenses
28 Project 46.92 46.92 2.28 IAIP PPP
consultancy,
detailed
engineering and
project supervision
cost
29 Initial marketing 70.39 70.39 3.42 IAIP PPP
and project launch
expenses
30 Pre operative and 70.39 70.39 3.42 IAIP PPP
other expenses
31 Contingency 312.83 312.83 15.20 IAIP PPP
32 Interest during 67.76 67.76 3.29 IAIP PPP
construction
Total 3727.86 874.63 188.00 4790.48 232.83
* @ Exchange rate of 1 US $ = ETB 20.575
Source: MACE analysis

The Table No. 14.9 provides investment by 1) GoE and regional government, 2) IAIP PPP and 3) IAIP
PPP or separate SPV or GoE and regional government.

Table No. 14.9: Agency wise investment

Grand Investment
Grand
total cost by IAIP PPP
total cost Investment Investme
(ETB or separate
(US $ * by GoE and nt by IAIP
Sl. million) Mode of SPV or GoE
Description million) for regional PPP, in
No. for development and regional
integrated government, ETB
integrate government,
ACPZ and in ETB million million
d ACPZ in ETB
IAIP
and IAIP million
1 Cost of land ( land 0.03 0.00 IAIP PPP 0.03
lease amount)
2 Site grading and 5.09 0.25 IAIP PPP 5.09
other land
development
expenses
3 Compound wall, 10.76 0.52 IAIP PPP 10.76
fencing and gates
4 Roads, culverts & 237.00 11.52 IAIP PPP 237.00
drainage
5 Water intake 27.50 1.34 IAIP PPP or 27.50
system separate SPV or

254
 Investment levels of IAIP
PPP identified

Grand Investment
total cost
Grand
by IAIP PPP 14
total cost Investment Investme
(ETB or separate
(US $ * by GoE and nt by IAIP
Sl. million) Mode of SPV or GoE

Project cost – IAIP & RTC

Description million) for regional PPP, in
No. for development and regional
integrated government, ETB
integrate government,
ACPZ and in ETB million million
d ACPZ in ETB
IAIP
and IAIP million
comprising of GoE and regional
infiltration gallery government
and others
6 Decentralized 74.62 3.63 IAIP PPP 74.62
water supply,
treatment and
distribution
7 Power 116.00 5.64 IAIP PPP or 116.00
connectivity to separate SPV or
IAIP GoE and regional
government
8 Electrical, street 22.05 1.07 IAIP PPP 22.05
lighting & fire
fighting
9 Rural power 166.67 8.10 GoE and regional 166.67
supply through government
solar PV
generation
10 Telecom & 4.47 0.22 IAIP PPP 4.47
communication
systems
11 Sustainable 10.75 0.52 IAIP PPP 10.75
infrastructure
elements, RW
harvesting,
summer storage
tank & greenery
12 Decentralized 79.78 3.88 IAIP PPP 79.78
wastewater,
network and solid
waste
management
13 Buildings - 2079.54 101.07 IAIP PPP 2079.54
industrial /
business
14 Buildings - 156.37 7.60 IAIP PPP 156.37
commercial
15 Buildings - 395.95 19.24 IAIP PPP 395.95
residential
16 Buildings - MEP 10.49 0.51 IAIP PPP 10.49
17 Buildings - social 3.87 0.19 IAIP PPP 3.87
infrastructure
development

255
 Investment levels of IAIP PPP
or separate SPV or GoE and
regional government
identified

Grand Investment
14 total cost
Grand
by IAIP PPP
total cost Investment Investme
(ETB or separate
(US $ * by GoE and nt by IAIP
Sl. million) Mode of SPV or GoE
Project cost – IAIP & RTC

Description million) for regional PPP, in

No. for development and regional
integrated government, ETB
integrate government,
ACPZ and in ETB million million
d ACPZ in ETB
IAIP
and IAIP million
18 Cost of 33.33 1.62 IAIP PPP or 33.33
refurbishing and separate SPV or
revamping GoE and regional
existing abattoirs - government
1 number
19 Additional 266.67 12.96 IAIP PPP or 266.67
investment in separate SPV or
COE for livestock GoE and regional
specific pre government
processing
infrastructure
linking RTCs and
IAIPs - 2 nos.
20 On farm 8.00 0.39 IAIP PPP or 8.00
processing separate SPV or
infrastructure GoE and regional
government
21 RTC - 7 numbers 351.96 17.11 IAIP PPP or 351.96
separate SPV or
GoE and regional
government,
occupant unit of
IAIP, independent
private sector,
cooperative and
society and
cluster of end-
users
22 Collection centers 18.67 0.91 IAIP PPP or 18.67
separate SPV or
GoE and regional
government
23 Reefer vans and 29.33 1.43 IAIP PPP or 29.33
specialised separate SPV or
transport vehicles GoE and regional
for linking RTCs, government
identified livestock
specific pre
processing zones
and IAIPs
24 Specialized agri 32.50 1.58 IAIP PPP 32.50
infrastructure
facilities within
IAIP

256
 Flexible model of
investment allocation

Grand Investment
total cost
Grand
by IAIP PPP 14
total cost Investment Investme
(ETB or separate
(US $ * by GoE and nt by IAIP
Sl. million) Mode of SPV or GoE

Project cost – IAIP & RTC

Description million) for regional PPP, in
No. for development and regional
integrated government, ETB
integrate government,
ACPZ and in ETB million million
d ACPZ in ETB
IAIP
and IAIP million
25 Miscellaneous 5.00 0.24 IAIP PPP 5.00
fixed assets
26 Manpower cost 7.82 0.38 IAIP PPP 7.82
during pre
operative period
27 Preliminary 23.46 1.14 IAIP PPP 23.46
expenses &
company
formation
expenses
28 Project 46.92 2.28 IAIP PPP 46.92
consultancy,
detailed
engineering and
project
supervision cost
29 Initial marketing 70.39 3.42 IAIP PPP 70.39
and project
launch expenses
30 Pre operative and 70.39 3.42 IAIP PPP 70.39
other expenses
31 Contingency 312.83 15.20 IAIP PPP 312.83
32 Interest during 67.76 3.29 IAIP PPP 67.76
construction
Total 4790.48 232.83 166.67 3727.86 895.96

* @ Exchange rate of 1 US $ = ETB 20.575

Source: MACE analysis

257
 Chapter – 15

Revenue drivers – IAIP & RTC

Revenue streams for IAIP

The revenue drivers for IAIP are identified for ensuring self-sustaining operations and categorized into
different heads as detailed in Table No. 15.1.

Table No. 15.1: Details of IAIP revenue stream

Components Details of IAIP revenue stream

 Revenue from developed
plots - industrial,
residential, commercial
and social zones
 Revenue from built up
space – Industrial,
residential, commercial
and social zones
 Revenue from facility
management
 Income generation from
operations of specialized
agri infrastructure
facilities
 Income generation from
interest on deposits
o IAIP SPV shall actively market the multi formatted developed plots for
mixed use like industrial, residential, commercial and social zone.
o The IAIP SPV would enter into a long-term leasehold / short term lease /
yearly lease / monthly lease rental with the occupant industries /
residential / commercial / institutional area users.
o Income generation from undeveloped land long term leasehold /
developed land-long term leasehold, developed land-short term lease,
developed land-yearly lease, developed land-monthly lease rental are
computed.
o IAIP SPV shall also actively market the multi formatted built up space for
mixed use like industrial, residential, commercial and social zone.
o The IAIP SPV would enter into long-term leasehold / short-term lease /
monthly lease rental for usage of built up space with the occupant
industries / residential / commercial / institutional area users.
o Income generation from built up space - long term leasehold, built up
space – short term lease, built up space - monthly lease rental are
computed.
o Operation and maintenance of IAIP, utilities and specialized agri
infrastructure facilities to ensure delivery of design standards in service
shall be given paramount importance. IAIP’s operating principles shall
need to adhere to highest standards of workers safety, hygiene, and
environment and shall need to conform to various national / international
standards.
o The income from facility management is computed.
o Income from operations of specialized agri infrastructure within IAIP
covering R&D hub, innovation centre and knowledge hub, warehouses,
procurement centres, packing & labelling, grading & sorting, QA & QC
lab, administrative building, R&D centre etc. are computed.
o Interest income will also accrue to the IAIP SPV based on the deposits
collected from occupant units and other deposits and these incomes are
computed.

Source: MACE analysis

To realize the vision, concerted efforts are
required for development and marketing so as to
realize the revenue potential.
Out of various streams of revenue streams
for the IAIP, only few streams are considered for
258
viability analysis on a conservative basis as shown in
Exhibit No. 15.1.
The other revenues can be considered as a
part of separate IAIP SPV as activities are quite
different from the day to day activities of IAIP SPV.
 Revenue drivers identified
for sustenance of IAIP
Exhibit No. 15.1: Revenue sources - IAIP
Considered in the viability analysis
•Revenue from developed plots - industrial,
residential, commercial and social zones
•Revenue from developed built up space -
residential, commercial and social zones
•Facility management charges
•Revenue from operation of specialized agri
infrastructure services etc
•Interest on deposits
Source: MACE analysis
Phase wise revenue generation – IAIP
The Table No. 15.2 and Exhibit No. 15.2
presents the summary of phase wise revenue
generations over the projected operation period of 15
years (including 2 years of phase I development) and
also the income from each of the identified revenue
generation sources.
259
15
Revenue drivers – IAIP & RTC
Not considered in the viability analysis
•Margins from commercial and common social
Infrastructure
•Income from business support
•Income from EPC services for building
occupant units
•Income from various business facilitation, tie
ups, produce marketing support, branding
•Margins from food court and restaurant,
vending machines
•Revenue from advertisement
•Vehicle and truck parking
The total revenue is estimated to be ETB
2845.61 million during the first year of operation i.e.
3rd year from commencement of project activities,
ETB 1773.46 million in the second year of operation,
ETB 227.68 million in the third year of operation,
ETB 251.68 million and ETB 254.05 million in the
fourth and fifth year of operation.
 Phase wise revenue
generation computed

Table No. 15.2: Total phase wise revenue – IAIP

15
S.
Description 1 2 3 4 5 6 7 8
No.
Revenue drivers – IAIP & RTC

1 Undeveloped land long term 0.00 0.00

leasehold
2 Developed land long term 352.55 204.03
leasehold
3 Developed land short term 0.00 0.00
lease
4 Developed land yearly lease 6.13 10.75 10.75 10.75 12.63 12.63
5 Built up space long term 2375.40 1350.70
leasehold
6 Built up space short term 0.00 0.00
lease
7 Monthly lease rental 55.34 117.02 117.02 137.50 137.50 137.50
8 Facility management 39.36 59.00 64.62 65.06 65.52 66.00
9 Other income 5.65 11.94 11.94 14.02 14.02 14.02
10 Income from direct operation 11.18 20.02 23.35 24.35 24.38 24.38
of specialized services
Total revenue 2845.61 1773.46 227.68 251.68 254.05 254.52

Contd...
S.
Description 9 10 11 12 13 14 15 Total
No.
1 Undeveloped land 0.00
long term leasehold
2 Developed land long 556.59
term leasehold
3 Developed land 0.00
short term lease
4 Developed land 12.63 14.84 14.84 14.84 17.44 17.44 17.44 173.08
yearly lease
5 Built up space long 3726.10
term leasehold
6 Built up space short 0.00
term lease
7 Monthly lease rental 161.56 161.56 161.56 189.84 189.84 189.84 223.06 1979.14
8 Facility management 66.49 30.26 26.41 27.02 27.67 28.37 29.12 594.90
9 Other income 16.48 16.48 16.48 19.36 19.36 19.36 22.75 201.87
10 Income from direct 24.38 24.38 24.38 24.38 24.38 24.38 24.38 298.28
operation of
specialized services
Total revenue 281.53 247.52 243.67 275.43 278.68 279.38 316.74 7529.95

Source: MACE analysis

260
 Conservative estimates of
revenue

Exhibit No. 15.2: Total revenue – IAIP

15
3000 2845.61

Revenue drivers – IAIP & RTC

2500

2000
1773.46
ETB in million

1500

1000

500
316.74
281.53
227.68 251.68 254.05 254.52 247.52 243.67 275.43 278.68 279.38

0.00 0.00
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Year

Undeveloped land long term leasehold Developed land long term leasehold
Developed land short term lease Developed land yearly lease
Built up space long term leasehold Built up space short term lease
Monthly lease rental Facility management
Other income Income from direct operation of specialized services
Total revenue

Source: MACE analysis

Revenue streams for RTC

The revenue drivers for RTC are identified for ensuring self-sustaining operations and categorized into
different heads as detailed in Table No. 15.3.

261
 Revenue drivers identified
for sustenance of RTC

Table No. 15.3: Details of RTC revenue stream

15
Components Details of RTC revenue stream
 Revenue from built o RTC shall also actively market the multi formatted built up space.
Revenue drivers – IAIP & RTC

up space o The RTC SPV would enter into long-term leasehold / short-term lease /
monthly lease rental for usage of built up space with the occupant industries.
o Income generation from built up space - long term leasehold, built up space –
short term lease, built up space - monthly lease rental are computed.
 Revenue from facility o Operation and maintenance of RTC, utilities and specialized agri infrastructure
management facilities to ensure delivery of design standards in service shall be given
paramount importance. RTC’s operating principles shall need to adhere to
highest standards of workers safety, hygiene, and environment and shall need
to conform to various national / international standards.
o The income from facility management is computed.
 Income generation o Income from operations of specialized agri infrastructure within RTC are
from operations of computed.
specialized agri
infrastructure
facilities
 Income generation o Interest income will also accrue to the RTC SPV based on the deposits
from interest on collected from occupant units and other deposits and these incomes are
deposits computed.
Source: MACE analysis

Out of various streams of revenue streams for the RTC, only few streams are considered for viability
analysis on a conservative basis as shown in Exhibit No. 15.3.

The other revenues can be considered as a part of separate RTC SPV as activities are quite different
from the day to day activities of RTC SPV. Also as it is envisaged to keep affordable fee structure to farmers, it is
imperative to keep the other revenues as a pass through cost.

Exhibit No. 15.3: Revenue sources – RTC

Considered in the viability analysis Not considered in the viability analysis

•Revenue from developed built up space •Margins from commercial and common social
•Facility management charges Infrastructure
•Revenue from operation of specialized agri •Income from business support
infrastructure services etc •Income from various business facilitation, tie
•Interest on deposits ups, produce marketing support, branding
•Margins from food court and restaurant,
vending machines
•Revenue from advertisement
•Vehicle and truck parking

Source: MACE analysis

262
 Phase wise revenue
generation of RTC

Phase wise revenue generation – RTC The total revenue is estimated to be ETB
26.85 million during the first year of operation i.e. 3rd 15
The Table No. 15.4 and Exhibit No. 15.4 year from commencement of project activities, ETB
presents the summary of phase wise revenue 13.48 million in the second year of operation, ETB

Revenue drivers – IAIP & RTC

generations over the projected operation period of 15 12.85 million in the third year of operation, ETB
years (including 2 years of phase I development) and 11.73 million and ETB 12.52 million in the fourth
also the income from each of the identified revenue and fifth year of operation.
generation sources.

Table No. 15.4: Total phase wise revenue - RTC

S.
Description 1 2 3 4 5 6 7 8
No.
1 Built up space long term 19.60 3.99 2.00
leasehold
2 Built up space short term lease 0.17 0.13 0.02
3 Monthly lease rental 0.10 0.17 0.18 0.21 0.21 0.21
4 Facility management 3.85 5.03 5.62 5.86 5.95 6.04
5 Other income 0.01 0.02 0.02 0.02 0.02 0.02
6 Income from direct operation 3.12 4.14 5.01 5.63 6.34 7.13
of specialized services
Total revenue 26.85 13.48 12.85 11.73 12.52 13.40

Contd...
S.
Description 9 10 11 12 13 14 15 Total
No.
1 Built up space long 25.59
term leasehold
2 Built up space short 0.32
term lease
3 Monthly lease rental 0.25 0.25 0.25 0.29 0.29 0.29 0.35 3.07
4 Facility management 6.13 3.65 3.21 3.30 3.40 3.51 3.62 59.18
5 Other income 0.03 0.03 0.03 0.03 0.03 0.03 0.04 0.31
6 Income from direct 8.02 9.02 10.37 11.93 13.72 15.78 18.14 118.34
operation of
specialized services
Total revenue 14.42 12.95 13.86 15.56 17.45 19.61 22.14 206.82

Source: MACE analysis

263
 Conservative estimates of
revenue for RTC

Exhibit No. 15.4: Total revenue - RTC

15
30
Revenue drivers – IAIP & RTC

26.85

25

22.14

19.61
20
17.45

15.56
ETB in million

14.42
15 13.86
13.48 13.40
12.85 12.95
12.52
11.73

10

0.00 0.00
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Year

Built up space long term leasehold Built up space short term lease
Monthly lease rental Facility management
Other income Income from direct operation of specialized services
Total revenue

Source: MACE analysis

264
 Chapter – 16

Means of finance, financial and investment

model analysis

Model analysis salaries, administrative expenses, marketing

Financial resources constitute one of the key
inputs in realizing the objectives and achieving the
goals of the integrated ACPZ and IAIP
The IAIP specific financial model is developed
and the detailed financial analyses are presented.
Detailed computation of operation cost
covering raw materials, consumables, utilities, salaries
and compensation, outflow in terms of royalty /
technical knowhow / engagement or deputation of
experts / other fees towards partnering with external
institutions / organizations, repairs and maintenance,
insurance, operational overheads, administrative
expenses, financing charges, interest on term loan,
depreciation etc. is computed.
The estimates of financial results considering
the revenue projections, operational expenses,
sources of funding, financing cost, taxation etc. over
project horizon are worked out in detail. The cash flow
statement and the projected balance sheet for project
horizon are also prepared.
Financial indicators like IRR, DSCR and
payback are computed.
The above activities are presented in Table
No. 16.1 & Exhibit No. 16.1.

Exhibit No. 16.1: Financial and investment model analysis – IAIP

Financial analysis and

revenue options Operation results

Development of
project location Pricing structuring Estimates of financial
and revenue results over the
specific financial
model generators project horizon

Identification of Operation and

various revenue Benchmarking maintenance
streams expenses

Profit & loss

Development of statement, cash flow
revenue model over Self sustaining and
innovative model and balance sheet for
the project horizon the projected period

Financial ratios
computation – IRR,
DSCR, pay back, etc.
Source: MACE analysis

265
 Multiple funding options

Table No. 16.1: Details of financial analysis of IAIP

16
Description Details
Means of finance, financial and investment model analysis

 Means of finance o The project shall be funded through equity, term loan in the initial
phase and in the subsequent phases through the internal accrual.
o The means of finance is presented in Table No. 16.2 and Exhibit
No. 16.2.
o Equity component is ETB 598.09 million
o Equity funding options:

Option 1 - 100% Option 3 - Involvement of GoE,

Option 2 - PPP structure with
owned and managed
GoE and regional
by GoE or regional
government with 26% equity
government through
participation
designated nodal
agency
100% equity by GoE 1. Equity share capital of IAIP
and regional SPV shall be subscribed /
government allotted to various
agencies involved in the
development of the IAIP
2. 26% equity by GoE and
regional government and
74% equity by private
sector.
3. As far as cash outflow
from GoE and regional
government is concerned,
the equity contribution
from GoE and regional
government can be in the
form of land contribution to
the IAIP SPV against the
upfront lease premium
payable by the private
sector. If concessionaire
opts for larger debt
component resulting in
lower equity amount, the
difference between one
time upfront lease
premium and 26 % equity
amount shall be paid by the
private sector to GoE and
regional government.
regional government, financial
Option 4 -
institution & banks,
100% under
consortium of private
private sector
investors - EPC and O&M
through professional agencies
1. The equity amount shall be 100% equity by
subscribed by GoE and private sector
regional government,
financial institution & banks,
consortium of private equity
investors.
2. It is suggested that GoE and
regional government to hold
35% equity and the
consortium of private equity
investors to hold 36% and
rest by financial institutions
and banks.
3. The equity amount to be
subscribed by GoE and
regional government shall
be in the form of land
contribution to the IAIP SPV
against the upfront lease
premium payable by the IAIP
SPV and the balance
amount shall be subscribed
over the development
period. IAIP SPV can also
work towards larger debt
component thereby capping
35% of equity contribution
of GoE and regional
government.

o The term loan component is ETB 897.13 million. The term loan shall be raised against the land,
infrastructure, buildings and other fixed assets and shall be secured as the first charge.
o For the development in subsequent phases, the capital expenditure is met through internal accrual of ETB
2232.63 million.

266
 Detailed financial
modelling
Description
 Cost of operations
 Financial expenses
 Internal rate of return (IRR)
 Debt service coverage ratio /
repayment of term loan
 Projected cash flow statement
Details
o The major components involved in the cost of operation are utility
16
cost, technical and managerial personnel salaries, repairs and
Means of finance, financial and investment model analysis
maintenance, general operational expenses, other overheads and
administrative expenses.
o The main source of power is through external power supply from
national grid and in addition, provision for standby captive power
generation units are also provided. The cost for power, water and
fuel is considered in the cost of operation.
o The cost of operation is presented in Table No. 16.3 and Exhibit
No. 16.3
o The interest rate considered for term loan is 8.5% per annum and is
repaid in 1st, 2nd, 3rd and 4th year of operation i.e. 2 years after phase
I development period.
o The financial expenses work out to ETB 38.13 million in the first
year of operation.
o Depreciation is calculated on straight-line method and written down
value method (Income tax purpose) for working out the cost of
operation and profitability.
o The operating profit is positive right from the 1st year of operation.
The amount spent on preliminary expenses is written off over a
period of 13 years.
o The profit before tax works out to ETB 2487.55 million, ETB
1576.75 million and ETB 163.37 million during 1st, 2nd and 3rd
year of operation respectively.
o The provision for taxation is made as per the prevailing rate.
o The profit after tax works out to ETB 1737.45 million, ETB
1108.84 million and ETB 122.68 million during 1st, 2nd and 3rd
year of operation respectively.
o The net cash accrual works out to ETB 1752.043 million, ETB
1131.616 million and ETB 155.09 million during 1st, 2nd and 3rd
year of operation respectively
o Table No. 16.4 and Exhibit No. 16.4 gives details of profitability
analysis.
o By discounting the cash flows to the present value, the project
internal rate of return after tax works out to 16.10% based on 13
years operation period. The project equity and term loan are
required only for I phase and phase II and III are funded through the
internal accrual. The equity IRR (post tax) works out to 20.30%.
o The IRR calculation includes the cost of major maintenance and/or
rehabilitation expected to be incurred during the period of
assessment.
o The average ratio works out to 2.30 for the repayment period.
o The analysis indicates that the repaying capacity is satisfactory.
o A cash flow statement is basically an analysis of source of availability
of funds, extent of their utilization and availability of surplus funds or
their deficit at the end of each year of operation.
o During the construction period, funds are available as term loans
and equity capital. In the subsequent years, the cash inflow is from
the profits from operation and is utilized for increased working
capital requirements, payment of tax and repayment of long-term
loan. The surplus remains with the company as cash bank balance
267
 IAIP specific financial
model

Description Details
16 and is deployed for meeting the capital expenditure of subsequent
phases.
Means of finance, financial and investment model analysis

 Payback period
 Projected balance sheet
o It may be seen that the unit's cash position will be comfortable right
from the 1st year of operation. By the end of 15th year, the unit will
have a cash balance of ETB 1749.84 million after dividend outflow
of ETB 1930.71 million over 13 years of operation and capital
outflow for phase II and III to the tune of ETB 2232.63 million.
o The summary of projected cash flow statement is presented in
Table No. 16.5 and detailed projected cash flow statement is
presented in Table No. 16.6
o The payback period for the proposed IAIP would be 3 years for the
phase I investments, considering the investment for phase II and II
through internal accrual. The cumulative profit after tax plus
depreciation plus non cash expenditures is ETB 2033.62 million up
to 3rd year against the phase I cost of ETB 1495.22 million.
o The projected balance sheet of the proposed IAIP is shown in the
financial statements, which reflects the assets and liabilities of the
company each year.
o The projected balance sheet is presented in Table No. 16.7.

Source: MACE analysis

Table No. 16.2: Means of finance - IAIP

(ETB in million)
Phase I Phase II Phase III
Year
Cost (ETB in 1 2 3 4
million)
7-Jul- 7-Jul- 7-Jul- 7-Jul-2020
Year ending
2017 2018 2019
Upfront requirements
Upfront equity 598.09 598.09
Upfront debt 897.13 897.13
Short term borrowing
Internal accrual 0.00
Balance funds required 2232.63 1024.82 1207.82

Balance equity
Balance debt
Short term borrowing
Internal accrual 2232.63 1024.82 1207.82
Total equity 598.09 598.09
Total debt 897.13 897.13
Total short term borrowing
Internal accrual 2232.63 1024.82 1207.82
Total funds utilized 3727.86 1495.22 1017.45 1024.82

Source: MACE analysis

268
 Debt equity and internal
accrual

Exhibit No. 16.2: Means of finance - IAIP

16

Means of finance, financial and investment model analysis

598.09
897.13

2232.63

Total equity Total debt Internal accrual

Source: MACE analysis

Table No. 16.3: Cost of operation - IAIP

(ETB in million)
Year 1 2 3 4 5 6 7 8
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Year ending
2017 2018 2019 2020 2021 2022 2023 2024
Expenditure
Cost of sales - 158.02 77.83
developed land
Cost of sales - 123.55 60.85
built up space
Raw materials 0.56 1.05 1.29 1.42 1.49 1.57
and consumables
- specialized agri
infrastructure
Utilities - 1.67 3.14 3.84 4.23 4.44 4.66
specialized agri
infrastructure

269
 Operational expenses

Year 1 2 3 4 5 6 7 8
16
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Year ending
2017 2018 2019 2020 2021 2022 2023 2024
Means of finance, financial and investment model analysis

Salaries and 1.52 2.86 3.52 3.91 4.12 4.32

other overheads
Operations & 4.54 6.88 6.99 7.09 7.20 7.31
utilities
pertaining to the
developed
industrial plots
and social
infrastructure
R&M expenses 4.50 6.78 6.85 6.92 6.99 7.06
Wages & 1.37 1.47 1.58 1.70 1.83 1.97
salaries -
specialized
infrastructure
operations
Administration 5.14 7.74 7.82 7.90 7.98 8.06
expenses
Selling expenses 4.47 5.32
Total expenses 305.34 173.94 31.89 33.17 34.04 34.94
Contd...
Contd...
Year 9 10 11 12 13 14 15
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Year ending
2025 2026 2027 2028 2029 2030 2031
Expenditure
Cost of sales -
developed land
Cost of sales - built
up space
Raw materials and 1.65 1.73 1.86 2.00 2.15 2.31 2.48
consumables -
specialized agri
infrastructure
Utilities - 4.90 5.14 5.53 5.94 6.39 6.87 7.38
specialized agri
infrastructure
Salaries and other 4.54 4.76 5.12 5.51 5.92 6.36 6.84
overheads
Operations & 7.42 7.53 7.64 7.75 7.87 7.99 8.11
utilities pertaining
to the developed
industrial plots and
social
infrastructure
R&M expenses 7.13 7.20 7.27 7.34 7.42 7.49 7.57

270
 P&L analysis of IAIP

Year 9 10 11 12 13 14 15
16
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Year ending
2025 2026 2027 2028 2029 2030 2031

Means of finance, financial and investment model analysis

Wages & salaries 2.12 2.27 2.56 2.88 3.24 3.64 4.10
- specialized
infrastructure
operations
Administration 8.14 8.22 8.30 8.38 8.47 8.55 8.64
expenses
Selling expenses
Total expenses 35.88 36.85 38.28 39.81 41.45 43.21 45.11

Source: MACE analysis

Exhibit No. 16.3: Cost of operation - IAIP

350.00

300.00

250.00

200.00
ETB in million

150.00

100.00
Total expenses
50.00

0.00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Year

Cost of sales - developed land

Cost of sales - built up space
Raw materials and consumables - specialized agri infrastructure
Utilities - specialized agri infrastructure
Salaries and other overheads
Operations & utilities pertaining to the developed industrial plots and social infrastructure
R&M expenses
Wages & salaries - specialized infrastructure operations
Administration expenses
Selling expenses
Total expenses

Source: MACE analysis

271
 Revenue projections

Table No. 16.4: Profit & loss statement - IAIP

16
Initial Development Operation Period
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Means of finance, financial and investment model analysis

INCOME UOM
2017 2018 2019 2020 2021 2022 2023 2024
1 2 3 4 5 6 7 8
Undeveloped land - ETB million 0.00 0.00
long term lease
Developed land- long ETB million 352.55 204.03
term lease
Developed land short ETB million 0.00 0.00
term lease
Developed land yearly ETB million 6.13 10.75 10.75 10.75 12.63 12.63
lease
Long term lease ETB million 2375.40 1350.70
Monthly lease rental ETB million 55.34 117.02 117.02 137.50 137.50 137.50
Built up space short ETB million 0.00 0.00
term lease
Facility management ETB million 39.36 59.00 64.62 65.06 65.52 66.00
Other income ETB million 5.65 11.94 11.94 14.02 14.02 14.02
Income from direct ETB million 11.18 20.02 23.35 24.35 24.38 24.38
operation of
specialized services
Total income ETB million 2845.61 1773.46 227.68 251.68 254.05 254.52
EXPENDITURE
Cost of sales - ETB million 158.02 77.83
developed land
Cost of sales - built up ETB million 123.55 60.85
space - long term
lease
Refurbishment / ETB million 4.50 6.78 6.85 6.92 6.99 7.06
major renovation
cost
Other Operating ETB million 19.27 28.47 25.04 26.25 27.06 27.88
Expenses
Total operating ETB million 305.34 173.94 31.89 33.17 34.04 34.94
expenses
EBDITA ETB million 2540.27 1599.52 195.79 218.51 220.01 219.58
Depreciation ETB million 12.79 20.97 30.61 30.61 30.61 30.61
Preliminary expenses ETB million 1.80 1.80 1.80 1.80 1.80 1.80
written off
EBIT ETB million 2525.68 1576.75 163.37 186.10 187.59 187.17
Term loan Interest ETB million 38.13
cost during Operation
period
Working capital ETB million
Interest Cost
Short term ETB million
borrowing interest
Cost
Bank Charges ETB million
Financing charges ETB million 38.13
EBT ETB million 2487.55 1576.75 163.37 186.10 187.59 187.17
Provision for tax ETB million 750.10 467.91 40.69 40.71 43.58 45.51
Total expenditure ETB million 1108.16 664.61 105.00 106.29 110.04 112.87
Profit /(Loss) for the ETB million 1737.45 1108.84 122.68 145.39 144.01 141.66
year
Equity dividend ETB million 194.68 155.00 122.68 145.39 144.01 141.66
Retained Profit for ETB million 1542.77 953.85
the year

272
 Expenditure computations

Initial Development Operation Period

INCOME UOM
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 16
2017 2018 2019 2020 2021 2022 2023 2024
1 2 3 4 5 6 7 8

Means of finance, financial and investment model analysis

Profit /(Loss) ETB million 1542.77 2496.62 2496.62 2496.62 2496.62
brought forward
Profit / (Loss) ETB million 1542.77 2496.62 2496.62 2496.62 2496.62 2496.62
carried to balance
sheet
Contd ...
Contd ...
Operation Period
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
INCOME UOM Total
2025 2026 2027 2028 2029 2030 2031
9 10 11 12 13 14 15
Undeveloped land ETB million 0.00
- long term lease
Developed land- ETB million 556.59
long term lease
Developed land ETB million 0.00
short term lease
Developed land ETB million 12.63 14.84 14.84 14.84 17.44 17.44 17.44 173.08
yearly lease
Long term lease ETB million 3726.10
Monthly lease ETB million 161.56 161.56 161.56 189.84 189.84 189.84 223.06 1979.14
rental
Built up space ETB million 0.00
short term lease
Facility ETB million 66.49 30.26 26.41 27.02 27.67 28.37 29.12 594.90
management
Other income ETB million 16.48 16.48 16.48 19.36 19.36 19.36 22.75 201.87
Income from ETB million 24.38 24.38 24.38 24.38 24.38 24.38 24.38 298.28
direct operation
of specialized
services
Total income ETB million 281.53 247.52 243.67 275.43 278.68 279.38 316.74 7529.95
EXPENDITURE
Cost of sales - ETB million 235.86
developed land
Cost of sales - ETB million 184.40
built up space -
long term lease
Refurbishment / ETB million 7.13 7.20 7.27 7.34 7.42 7.49 7.57 90.52
major renovation
cost
Other Operating ETB million 28.75 29.65 31.01 32.46 34.03 35.72 37.55 383.13
Expenses
Total operating ETB million 35.88 36.85 38.28 39.81 41.45 43.21 45.11 893.91
expenses
EBDITA ETB million 245.65 210.66 205.39 235.63 237.23 236.16 271.63 6636.04
Depreciation ETB million 30.61 30.61 30.61 30.61 30.61 30.61 30.61 370.45
Preliminary ETB million 1.80 1.80 1.80 1.80 1.80 1.80 1.80 23.46
expenses written
off
EBIT ETB million 213.24 178.25 172.98 203.21 204.82 203.75 239.21 6242.13
Term loan ETB million 38.13
Interest cost
during Operation
period
Working capital ETB million
Interest cost

273
 Profitability of IAIP
established

Operation Period
16 INCOME UOM
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Total
2025 2026 2027 2028 2029 2030 2031
9 10 11 12 13 14 15
Means of finance, financial and investment model analysis

Short term ETB million

borrowing
interest cost
Bank charges ETB million
Financing ETB million 38.13
charges
EBT ETB million 213.24 178.25 172.98 203.21 204.82 203.75 239.21 6204.01
Provision for tax ETB million 55.09 46.10 45.82 56.03 57.52 58.09 69.53 1776.68
Total expenditure ETB million 123.38 115.36 116.51 128.25 131.38 133.72 147.06 3102.62
Profit /(Loss) for ETB million 158.16 132.16 127.16 147.18 147.30 145.66 169.68 4427.33
the year
Equity dividend ETB million 158.16 132.16 127.16 147.18 147.30 145.66 169.68
Retained Profit ETB million
for the year
Profit /(Loss) ETB million 2496.62 2496.62 2496.62 2496.62 2496.62 2496.62 2496.62
brought forward
Profit / (Loss) ETB million 2496.62 2496.62 2496.62 2496.62 2496.62 2496.62 2496.62
carried to
balance sheet
Source: MACE analysis

Exhibit No. 16.4: Profit & loss results - IAIP

3000.00

2500.00

2000.00

1500.00
ETB in million

1000.00

500.00

0.00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Year

Total income Total operating expenses Financing charges

EBT Total expenditure Profit /(Loss) for the year

Source: MACE analysis

274
 Business sustenance of IAIP

Table No. 16.5: Summary of cash flow statement - IAIP

16
(ETB in million)

Means of finance, financial and investment model analysis

Year No. 1 2 3 4 5 6 7 8
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Year ending
2017 2018 2019 2020 2021 2022 2023 2024
Cash inflows
PAT+non-cash 2033.62 1270.30 155.09 177.81 176.42 174.07
expenses
Equity 240.34 357.75
Debt 360.51 536.63
Short term
borrowing
Deposit from leased 83.02 92.52 83.02 123.23 83.02 123.23
property and advance
Total inflows 600.84 894.38 2116.63 1362.82 238.11 301.04 259.44 297.30

Cash outflows
Capital cost 600.84 894.38 1024.82 1207.82
Additional
Loan repayment 897.13
Short term
borrowing repayment
Equity dividend 194.68 155.00 122.68 145.39 144.01 141.66
Total outflows 600.84 894.38 2116.63 1362.82 122.68 145.39 144.01 141.66

Surplus/deficit 115.43 155.65 115.43 155.65

Opening balance 115.43 271.08 386.51

Closing balance 115.43 271.08 386.51 542.15
Contd ...
Contd ...
Year No. 9 10 11 12 13 14 15
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Year ending
2025 2026 2027 2028 2029 2030 2031
Cash inflows
PAT+non-cash expenses 190.57 164.57 159.57 179.60 179.71 178.07 202.10
Equity
Debt
Short term borrowing
Deposit from leased 119.11 123.23 119.11 165.64 119.11 165.64 168.94
property and advance
Total inflows 309.68 287.80 278.68 345.24 298.82 343.72 371.04

Cash outflows
Capital cost
Additional

275
 Positive closing balance

Year No. 9 10 11 12 13 14 15
16 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Year ending
2025 2026 2027 2028 2029 2030 2031
Means of finance, financial and investment model analysis

Loan repayment
Short term borrowing
repayment
Equity dividend 158.16 132.16 127.16 147.18 147.30 145.66 169.68
Total outflows 158.16 132.16 127.16 147.18 147.30 145.66 169.68

Surplus/deficit 151.52 155.65 151.52 198.06 151.52 198.06 201.35

Opening balance 542.15 693.68 849.32 1000.85 1198.90 1350.43 1548.48

Closing balance 693.68 849.32 1000.85 1198.90 1350.43 1548.48 1749.84
Source: MACE analysis

Table No. 16.6: Cash flow statement - IAIP

7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-

Year Ending
UOM 2017 2018 2019 2020 2021 2022 2023 2024
Particulars 1 2 3 4 5 6 7 8
Outflows:
Developed land ETB 43.15 61.99 75.47 88.95
long term lease million
category
Developed land ETB 4.79 6.89 8.39 9.88
yearly lease million
Captive ETB 23.22 33.36 40.61 47.87
development million
land earmarked
for captive built
up space
Buildings - ETB 332.73 478.30 582.27 686.25
Industrial / million
Business -
Captive
development
Buildings - ETB 25.02 35.96 43.78 51.60
Commercial - million
Captive
development
Buildings - ETB 63.35 91.07 110.87 130.66
Residential million
Captive
development
Buildings - MEP ETB 1.68 2.41 2.94 3.46
Captive million
development
Buildings - Club ETB 0.62 0.89 1.08 1.28
house and other million
social
infrastructure

276
 Detailed cash flow
analysis

7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-

Year Ending
UOM 2017 2018 2019 2020 2021 2022 2023 2024 16
Particulars 1 2 3 4 5 6 7 8

Means of finance, financial and investment model analysis

Captive
development
Specialized agri ETB 5.20 7.48 9.10 10.73
infrastructure million
facilities within
IAIP
Miscellaneous ETB 0.80 1.15 1.40 1.65
fixed assets million
Preliminary ETB 3.75 5.40 6.57 7.74
Expenses & million
Company
Formation
Expenses
Manpower Cost ETB 1.25 1.80 2.19 2.58
during pre million
operative period
Project ETB 7.51 10.79 13.14 15.49
Consultancy, million
Detailed
Engineering and
Project
Supervision Cost
Initial marketing ETB 11.26 16.19 19.71 23.23
and project million
launch expenses
Pre operative ETB 11.26 16.19 19.71 23.23
and other million
expenses
Contingency ETB 50.05 71.95 87.59 103.23
million
Interest during ETB 15.20 52.57
construction million
Refurbishment ETB 4.50 6.78 6.85 6.92 6.99 7.06
/ major million
renovation cost
Other Operating ETB 19.27 28.47 25.04 26.25 27.06 27.88
Expenses million
Debt repayment ETB 897.13
million
Equity dividend ETB 194.68 155.00 122.68 145.39 144.01 141.66
million
Term loan ETB 38.13
Interest cost million
during
Operation
period

Provision for tax ETB 750.10 467.91 40.69 40.71 43.58 45.51
million
Total outflow 600.84 894.38 2928.63 1865.97 195.26 219.27 221.64 222.11

277
 IAIP - IRR computation

7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-

16 Year Ending
UOM 2017 2018 2019 2020 2021 2022 2023 2024
Particulars 1 2 3 4 5 6 7 8
Means of finance, financial and investment model analysis

Inflows:
Equity ETB 240.34 357.75
million
Developed land ETB 352.55 204.03
long term million
leasehold
Developed land ETB 6.13 10.75 10.75 10.75 12.63 12.63
yearly lease million
Built up space ETB 2375.40 1350.70
long term million
leasehold
Monthly lease ETB 55.34 117.02 117.02 137.50 137.50 137.50
rental million
Facility ETB 39.36 59.00 64.62 65.06 65.52 66.00
management million
Deposit from ETB 83.02 92.52 83.02 123.23 83.02 123.23
Leased Property million
and advance
Interest earned ETB 5.65 11.94 11.94 14.02 14.02 14.02
from deposit million
from leased
property
Income from ETB 11.18 20.02 23.35 24.35 24.38 24.38
direct operation million
of specialized
services
Debt ETB 360.51 536.63
million
Total Inflows ETB 600.84 894.38 2928.63 1865.97 310.69 374.92 337.07 377.76
million
Net flows ETB 115.43 155.65 115.43 155.65
million
Cumulative ETB 115.43 271.08 386.51 542.15
flows million
Net flow to the ETB -600.84 -894.38 1046.93 62.48 155.09 177.81 176.42 174.07
project million
Capital value @ ETB
12 % million
Net available ETB -600.84 -894.38 1046.93 62.48 155.09 177.81 176.42 174.07
flow to the million
project
Project IRR % 16.10%
(Post Tax)
Net available -600.84 -894.38 1797.03 530.39 195.79 218.51 220.01 219.58
flow to the
project pre tax
Project IRR % 43.06%
(Pre Tax)
Contd ...

278
 IAIP – cash inflow

Contd ...
Year Ending
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Total
16
UOM 2025 2026 2027 2028 2029 2030 2031
Particulars 9 10 11 12 13 14 15

Means of finance, financial and investment model analysis

Outflows:
Developed land long ETB 269.55
term lease million
category
Developed land ETB 29.95
yearly lease million
Captive ETB 145.06
development land million
earmarked for
captive built up
space
Buildings - industrial ETB 2079.54
/ business - captive million
development
Buildings - ETB 156.37
Commercial - million
Captive
development
Buildings - ETB 395.95
Residential Captive million
development
Buildings - MEP ETB 10.49
Captive million
development
Buildings - Club ETB 3.87
house and other million
social
infrastructure
Captive
development
Specialized agri ETB 32.50
infrastructure million
facilities within IAIP
Miscellaneous fixed ETB 5.00
assets million
Preliminary ETB 23.46
expenses & million
Company
Formation
Expenses
Manpower Cost ETB 7.82
during pre million
operative period
Project ETB 46.92
Consultancy, million
Detailed
Engineering and
Project Supervision
Cost
Initial marketing and ETB 70.39
project launch million
expenses

279
 IAIP – cash flows

7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-

16 Year Ending
UOM 2025 2026 2027 2028 2029 2030 2031
Total

Particulars 9 10 11 12 13 14 15
Means of finance, financial and investment model analysis

Pre operative and ETB 70.39

other expenses million
Contingency ETB 312.83
million
Interest during ETB 67.76
construction million
Refurbishment / ETB 7.13 7.20 7.27 7.34 7.42 7.49 7.57 90.52
major renovation million
cost
Other Operating ETB 28.75 29.65 31.01 32.46 34.03 35.72 37.55 383.13
Expenses million
Debt repayment ETB 897.13
million
Equity dividend ETB 158.16 132.16 127.16 147.18 147.30 145.66 169.68 1930.71
million
Term loan interest ETB 38.13
cost during million
Operation period
Provision for tax ETB 55.09 46.10 45.82 56.03 57.52 58.09 69.53 1776.68
million
Total outflow 249.12 215.10 211.26 243.02 246.26 246.96 284.33 8844.16
Inflows:
Equity ETB 598.09
million
Developed land long ETB 556.59
term leasehold million
Developed land ETB 12.63 14.84 14.84 14.84 17.44 17.44 17.44 173.08
yearly lease million
Built up space long ETB 3726.10
term leasehold million
Monthly lease ETB 161.56 161.56 161.56 189.84 189.84 189.84 223.06 1979.14
rental million
Facility ETB 66.49 30.26 26.41 27.02 27.67 28.37 29.12 594.90
management million
Deposit from ETB 119.11 123.23 119.11 165.64 119.11 165.64 168.94 1568.82
Leased Property million
and advance
Interest earned ETB 16.48 16.48 16.48 19.36 19.36 19.36 22.75 201.87
from deposit from million
leased property
Income from direct ETB 24.38 24.38 24.38 24.38 24.38 24.38 24.38 298.28
operation of million
specialized services
Debt ETB 897.13
million
Total Inflows ETB 400.64 370.75 362.78 441.08 397.79 445.02 485.68 485.68
million
Net flows ETB 151.52 155.65 151.52 198.06 151.52 198.06 201.35
million
Cumulative flows ETB 693.68 849.32 1000.85 1198.90 1350.43 1548.48 1749.84
million
Net flow to the ETB 190.57 164.57 159.57 179.60 179.71 178.07 202.10

280
 IAIP - balance sheet

7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-

Year Ending
UOM 2025 2026 2027 2028 2029 2030 2031
Total 16
Particulars 9 10 11 12 13 14 15

Means of finance, financial and investment model analysis

project million
Net available flow to ETB 190.57 164.57 159.57 179.60 179.71 178.07 202.10
the project million
Project IRR (Post %
Tax)
Capital value @ 12
%
Net available flow to 245.65 210.66 205.39 235.63 237.23 236.16 271.63
the project pre tax
Project IRR (Pre %
Tax)
Source: MACE analysis

Table No. 16.7: Balance sheet - IAIP

(ETB in million)
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Year Ending
2017 2018 2019 2020 2021 2022 2023 2024
Year 1 2 3 4 5 6 7 8
SOURCES OF FUNDS
Share holder's funds
Share capital 240.34 598.09 598.09 598.09 598.09 598.09 598.09 598.09
Loan funds 360.51 897.13
Short term borrowing
Working Capital Borrowings
Loan funds 360.51 897.13
Profit and loss account 1542.77 2496.62 2496.62 2496.62 2496.62 2496.62
Total 600.84 1495.22 2140.86 3094.70 3094.70 3094.70 3094.70 3094.70
APPLICATION OF FUNDS
Fixed assets
Gross block 520.23 1341.89 2129.63 3168.85 3257.79 3257.79 3257.79 3257.79
Additions
Gross block 520.23 1341.89 2129.63 3168.85 3257.79 3257.79 3257.79 3257.79
Less: Depreciation 12.79 33.75 64.36 94.97 125.58 156.19
Net block 520.23 1341.89 2116.84 3135.10 3193.43 3162.82 3132.22 3101.61
Current assets, loans and
advances
Inventories 76.86 144.18 93.12 115.29 26.34 26.34 26.34 26.34
Cash and bank balances 115.43 271.08 386.51 542.15
Current assets, loans and 76.86 144.18 93.12 115.29 141.77 297.42 412.85 568.50
advances
Less: Current liabilities and 83.02 175.53 258.55 381.78 464.80 588.03
provisions
Current liabilities 83.02 175.53 258.55 381.78 464.80 588.03
Preliminary expenses 3.75 9.15 13.91 19.85 18.05 16.24 14.44 12.63
written off (to the extent not
written off)
Net current assets 80.62 153.33 24.02 -40.39 -98.73 -68.12 -37.51 -6.90
Profit and loss account
Total 600.84 1495.22 2140.86 3094.70 3094.70 3094.70 3094.70 3094.70
Contd ...
281
 Key financial indicators of
IAIP

16 Contd ...
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Year Ending
2025 2026 2027 2028 2029 2030 2031
Means of finance, financial and investment model analysis

Year 9 10 11 12 13 14 15
SOURCES OF FUNDS
Share holder's funds
Share capital 598.09 598.09 598.09 598.09 598.09 598.09 598.09
Loan funds
Short term borrowing
Working Capital Borrowings
Loan funds
Profit and loss account 2496.62 2496.62 2496.62 2496.62 2496.62 2496.62 2496.62
Total 3094.70 3094.70 3094.70 3094.70 3094.70 3094.70 3094.70

APPLICATION OF FUNDS
Fixed assets
Gross block 3257.79 3257.79 3257.79 3257.79 3257.79 3257.79 3257.79
Additions
Gross block 3257.79 3257.79 3257.79 3257.79 3257.79 3257.79 3257.79
Less: Depreciation 186.80 217.40 248.01 278.62 309.23 339.84 370.45
Net block 3071.00 3040.39 3009.78 2979.17 2948.56 2917.96 2887.35
Current assets, loans and
advances
Inventories 26.34 26.34 26.34 26.34 26.34 26.34 26.34
Cash and bank balances 693.68 849.32 1000.85 1198.90 1350.43 1548.48 1749.84
Current assets, loans and 720.02 875.67 1027.19 1225.25 1376.77 1574.83 1776.18
advances
Less: Current liabilities and 707.14 830.37 949.48 1115.13 1234.24 1399.88 1568.82
provisions
Current liabilities 707.14 830.37 949.48 1115.13 1234.24 1399.88 1568.82
Preliminary expenses 10.83 9.02 7.22 5.41 3.61 1.80 0.00
written off (to the extent not
written off )
Net current assets 23.71 54.31 84.92 115.53 146.14 176.75 207.36
Profit and loss account
Total 3094.70 3094.70 3094.70 3094.70 3094.70 3094.70 3094.70
Source: MACE analysis

Selective financial indicators

The selective financial indicators are presented in Table No. 16.8.

Table No. 16.8: Selective financial indicators - IAIP

Project cost ETB 3727.86 Million US $, Mil 181.18

Means of finance
Equity ETB 598.09 Million 29.07 US $, Mil
Term loan ETB 897.13 Million 43.60 US $, Mil
Short term ETB Million US $, Mil
borrowing
Internal accrual ETB 2232.63 Million 108.51 US $, Mil

282
 IAIP – activity ratios

Project cost ETB 3727.86 Million US $, Mil 181.18

Total area 258.62 hectare
16
DSCR

Means of finance, financial and investment model analysis

Minimum 2.30
Maximum 2.30
Average 2.30
Project IRR (Post tax) 16.10% (Without RTC)
Project IRR (Post tax) 16.00% (With RTC)
Equity IRR (Post tax) 20.30% (Without RTC)
Benefit to cost ratio 1.35:1
NPV @ 16% 3.99 (ETB million)
Source: MACE analysis
Ratio analysis

The ratio analysis are carried out under following 4 important categories as shown in Table No. 16.9 and
the results of the ratio analysis are presented in Table No. 16.10.

Table No. 16.9: Ratio analysis

Liquidity ratios Leverage ratios Activity ratios Profitability ratios

o Current ratio o Capital structure ratio o Net assets turnover o Gross profit margin
o Cash ratio o Debt ratio ratio o Operating profit margin
o Internal o Debt equity ratio o Total assets o Net profit margin
measure o Annual debt service turnover ratio o EBIT / sales ratio
coverage ratio o Fixed assets o Operating expense ratio
o Net present value turnover ratio o Return on investment
debt coverage ratio o Current assets o Return on equity
o Loan life cover ratio turnover ratio o Equity IRR
o Capital employed to o Net current assets o IRR
net worth ratio turnover ratio o Benefits cost ratio
o Total liabilities ratio o Payback period
o Long term debt ratio o Break-even point
o Interest coverage o Cash break-even point
ratio
o Fixed charge coverage
ratio
Source: MACE analysis

Table No. 16.10: Result of ratio analysis - IAIP

1 2 3 4 5 6 7 8
Ratios description 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
2017 2018 2019 2020 2021 2022 2023 2024
Liquidity ratios
Current ratio = current asset NA NA 3.63 1.65 1.09 1.20 1.23 1.23
/ current liabilities
Cash ratio = (Cash+ NA NA 2.35 0.88 0.92 1.09 1.14 1.16
marketable securities)
/current liabilities
Interval measure= (current NA NA NA 2380.42 1270.28 2985.29 4567.71 5662.79
assets- inventory) / (average

283
 IAIP – liquidity ratios

1 2 3 4 5 6 7 8
16 Ratios description 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
2017 2018 2019 2020 2021 2022 2023 2024
Means of finance, financial and investment model analysis

daily operating expenses +

interest)
Leverage ratios
Capital structure ratio (CSR) : 40.00 40.00 0.00% 0.00% NA NA NA NA
(equity + quasi-equity) ÷ % %
financial capital
Debt ratio= (Total debt 0.60 0.60 0.00 NA NA NA NA NA
(TD))/(Total debt(TD)+net
worth (NW)) or (total
debt(TD))/(net assets (NA))
Debt equity ratio during 1.50 1.50 0.00 NA NA NA NA NA
implementation and operation
period
Annual debt service coverage NA NA 2.30 NA NA NA NA NA
ratio (ADSCR) : Available cash
flow for servicing the debt
(profit after tax (PAT) +
interest + depreciation) ÷
annual debt service (interest +
principal repayment
instalment)
Net present value debt cover 0.00 0.00 1.58 NA NA NA NA NA
ratio (NPV DCR) : NPV of cash
flow available for servicing the
debt over the remaining loan
life ÷ outstanding debt
Loan life cover ratio : cash flow 0.00 0.00 2.40 NA NA NA NA NA
available for debt service over
the loan life ÷ outstanding
debt
Capital employed to net worth 2.50 2.50 1.00 1.00 1.00 1.00 1.00 1.00
ratio
Total liabilities ratio = (total 0.60 0.60 0.03 0.05 0.07 0.11 0.13 0.15
liability) /(total assets)
Long term debt ratio= (Long 0.60 0.60 0.00 NA NA NA NA NA
term debt/(long term debt+
net worth)
Interest coverage = (EBIDTA NA NA 66.62 NA NA NA NA NA
/ Interest)
Fixed - charges coverage ratio NA NA 1.92 NA NA NA NA NA
= EBIDTA/((Interest+(loan
repayment/(1-tax rate)))
Activity ratios
Net assets turnover ratio or 0.00 0.00 1.22 0.54 0.07 0.07 0.07 0.07
capital employed turnover
Total assets turnover ratio = 0.00 0.00 1.17 0.51 0.06 0.07 0.06 0.06
(sales / total assets)
Fixed assets turnover = (sales 0.00 0.00 1.34 0.56 0.07 0.08 0.08 0.08
/net fixed asset)
Current assets turnover = 0.00 0.00 9.87 6.52 0.82 0.54 0.43 0.34
(sales /current asset)
Net current assets turnover = 0.00 0.00 12.99 15.37 9.01 3.08 2.25 1.78
(sales /net current asset)

284
 IAIP – activity ratios

1 2 3 4 5 6 7 8
Ratios description 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
16
2017 2018 2019 2020 2021 2022 2023 2024

Means of finance, financial and investment model analysis

Profitability ratios
Gross profit margin =(sales- NA NA 89% 90% 80% 82% 82% 81%
cost of goods sold)/(sales)
Operating profit margin NA NA 89% 91% 91% 92% 92% 91%
(EBITDA margin) - operating
profit ÷ sales
Net profit margin =(profit NA NA 61% 63% 57% 61% 60% 59%
after tax)/(sales)
EBIT/sales ratio NA NA 89% 90% 76% 78% 78% 78%
Operating expense ratio NA NA 11% 10% 15% 14% 14% 15%
Return on investment (RoI)1= NA NA 105% 47% 6% 6% 6% 6%
EBITDA/Total assets
Return on investment (RoI)2= NA NA 109% 49% 6% 7% 7% 7%
EBITDA/Net assets
Return on investment (RoI)3= NA NA 108% 49% 6% 7% 7% 6%
EBITDA/(GFA+NCA)
Return on equity (RoE)= NA NA 116% 51% 5% 6% 6% 6%
PBT/NW
Return on capital employed NA NA 118% 51% 5% 6% 6% 6%
(ROCE)= EBIT / NA =
(SalesxGPxEBIT)/(NAxSalesxG
P)
Return on equity (ROE)= PAT NA NA 81% 36% 4% 5% 5% 5%
/ NW
Equity internal rate of return 20.30%
Internal rate of return (IRR) 16.10%
Benefit to cost ratio 1.35 : 1
Payback period 3 years+ 0.00 months
Breakeven point NA NA 2% 2% 21% 19% 19% 19%
Cash breakeven point NA NA 2% 1% 5% 5% 5% 5%
Contd ...
Contd ...
9 10 11 12 13 14 15
Ratios description 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
2025 2026 2027 2028 2029 2030 2031
Liquidity ratios
Current ratio = current asset / 1.26 1.22 1.22 1.24 1.24 1.23 1.24
current liabilities
Cash ratio = (Cash+ marketable 1.20 1.18 1.19 1.21 1.21 1.21 1.22
securities ) /current liabilities
Interval measure= (current 7315.59 8401.77 9671.18 10947.17 12344.04 13174.96 14512.39
assets- inventory) / (average
daily operating expenses +
interest )
Leverage ratios
Capital structure ratio (CSR) : NA NA NA NA NA NA NA
(equity + quasi-equity) ÷ financial
capital

285
 IAIP – leverage ratios

9 10 11 12 13 14 15
16 Ratios description 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
2025 2026 2027 2028 2029 2030 2031
Means of finance, financial and investment model analysis

Debt ratio= (Total debt NA NA NA NA NA NA NA

(TD))/(Total debt(TD)+net worth
(NW)) or (total debt(TD))/(net
assets (NA))
Debt equity ratio during NA NA NA NA NA NA NA
implementation and operation
period
Annual debt service coverage NA NA NA NA NA NA NA
ratio (ADSCR) : Available cash
flow for servicing the debt (profit
after tax (PAT) + interest +
depreciation) ÷ annual debt
service (interest + principal
repayment instalment)
Net present value debt cover NA NA NA NA NA NA NA
ratio (NPV DCR) : NPV of cash
flow available for servicing the
debt over the remaining loan life
÷ outstanding debt
Loan life cover ratio : cash flow NA NA NA NA NA NA NA
available for debt service over
the loan life ÷ outstanding debt
Capital employed to net worth 1.00 1.00 1.00 1.00 1.00 1.00 1.00
ratio
Total liabilities ratio = (total 0.18 0.20 0.23 0.26 0.28 0.30 0.32
liability) /(total assets)
Long term debt ratio= (Long NA NA NA NA NA NA NA
term debt/(long term debt+ net
worth)
Interest coverage = (EBIDTA / NA NA NA NA NA NA NA
Interest)
Fixed - charges coverage NA NA NA NA NA NA NA
ratio=EBIDTA/((Interest+(loan
repayment/(1-tax rate)))
Activity ratios
Net assets turnover ratio or 0.08 0.07 0.07 0.08 0.08 0.08 0.09
capital employed turnover
Total assets turnover ratio = 0.07 0.06 0.05 0.06 0.06 0.06 0.06
(sales / total assets)
Fixed assets turnover = (sales 0.09 0.08 0.08 0.09 0.09 0.09 0.10
/net fixed asset)
Current assets turnover = 0.30 0.23 0.20 0.19 0.17 0.15 0.15
(sales /current asset)
Net current assets turnover = 1.46 1.24 1.07 0.97 0.88 0.81 0.78
(sales /net current asset)
Profitability ratios
Gross profit margin =(sales- 83% 81% 80% 82% 82% 81% 84%
cost of goods sold)/(sales)
Operating profit margin (EBITDA 93% 91% 90% 92% 91% 91% 92%
margin) - operating profit ÷
sales
Net profit margin = (profit after 60% 57% 56% 57% 57% 56% 58%

286
 IAIP – profitability ratios

9 10 11 12 13 14 15
Ratios description
16
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
2025 2026 2027 2028 2029 2030 2031

Means of finance, financial and investment model analysis

tax)/(sales)
EBIT/sales ratio 80% 77% 76% 79% 79% 78% 81%
Operating expense ratio 14% 16% 17% 16% 16% 17% 15%
Return on investment (RoI)1= 6% 5% 5% 5% 5% 5% 6%
EBITDA/Total assets
Return on investment (RoI)2= 8% 7% 6% 7% 7% 7% 8%
EBITDA/Net assets
Return on investment (RoI)3= 7% 6% 6% 7% 7% 7% 7%
EBITDA/(GFA+NCA)
Return on equity (RoE)= 7% 6% 6% 7% 7% 7% 8%
PBT/NW
Return on capital employed 7% 6% 6% 7% 7% 7% 8%
(ROCE)=
EBIT/NA=(SalesxGPxEBIT)/(NA
xSalesxGP)
Return on equity (ROE)= 5% 4% 4% 5% 5% 5% 5%
PAT/NW
Equity internal rate of return
Internal rate of return (IRR)
Benefit to cost ratio
Payback period
Breakeven point 17% 20% 21% 19% 19% 19% 17%
Cash breakeven point 5% 6% 6% 6% 6% 6% 5%
Source: MACE analysis

Sensitivity analysis - IAIP

A detailed sensitivity analysis on the project IRR with 24 scenarios is carried out considering variation upto
± 10% in the capital expenditure and revenue as shown in Table No. 16.11.

Table No. 16.11: Sensitivity analysis – IAIP

Change in the capital Change in the Project IRR

Scenario
investment revenue (post tax)
Scenario - base 0% 0% 16.10%
Scenario - 1 -10% -10% 14.75%
Scenario - 2 -10% -5% 19.11%
Scenario - 3 -10% 0% 23.82%
Scenario - 4 -10% 5% 28.82%
Scenario - 5 -10% 10% 34.06%
Scenario - 6 -5% -10% 11.58%
Scenario - 7 -5% -5% 15.45%
Scenario - 8 -5% 0% 19.65%
Scenario - 9 -5% 5% 24.14%
Scenario - 10 -5% 10% 28.90%
Scenario - 11 0% -5% 12.36%
Scenario - 12 0% -10% 8.90%
Scenario - 13 0% 5% 20.14%

287
 Sensitivity analysis – IAIP

Change in the capital Change in the Project IRR

16 Scenario
investment revenue (post tax)
Scenario - 14 0% 10% 24.44%
Means of finance, financial and investment model analysis

Scenario - 15 5% -10% 6.60%

Scenario - 16 5% -5% 9.72%
Scenario - 17 5% 0% 13.08%
Scenario - 18 5% 5% 16.70%
Scenario - 19 5% 10% 20.58%
Scenario - 20 10% -10% 4.62%
Scenario - 21 10% -5% 7.44%
Scenario - 22 10% 0% 10.48%
Scenario - 23 10% 5% 13.75%
Scenario - 24 10% 10% 17.25%

Details of financial analysis of RTC

Table No. 16.12: Means of finance – RTC

(ETB in million)
Phase I Phase II Phase III Phase IV
Year
Cost (ETB in 1 2 3 4 5
million)
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Year ending
2017 2018 2019 2020 2021
Upfront requirements
Upfront equity 9.64 9.64
Upfront debt 14.46 14.46
Short term borrowing
Internal accrual
Balance funds required 26.18 15.80 6.91 3.46

Balance equity
Balance debt
Short term borrowing
Internal accrual 26.18 15.80 6.91 3.46
Total equity 9.64 9.64
Total debt 14.46 14.46
Total short term borrowing
Internal accrual 26.18 15.80 6.91 3.46
Total funds utilized 50.28 24.11 15.80 6.91 3.46
Source: MACE analysis

288
 RTC financing

Exhibit No. 16.5: Means of finance – RTC 16

Means of finance, financial and investment model analysis

9.64

14.46

26.18

Total equity Total debt Internal accrual

Source: MACE analysis
Table No. 16.13: Cost of operation - RTC

(ETB in million)
Year 1 2 3 4 5 6 7 8
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Year ending
2017 2018 2019 2020 2021 2022 2023 2024
Expenditure
Cost of sales - 0.56 0.10 0.05
built up space
Raw materials 0.37 0.50 0.60 0.68 0.76 0.86
and consumables
- specialized agri
infrastructure
Utilities - 0.28 0.37 0.45 0.51 0.57 0.64
specialized agri
infrastructure
Salaries and 0.22 0.29 0.35 0.39 0.44 0.50
other overheads
Operations & 0.72 0.86 0.93 0.95 0.96 0.98
utilities
pertaining to the
developed
industrial plots
and social
infrastructure
R&M expenses 0.64 0.76 0.83 0.84 0.85 0.85

289
 RTC operational expenses
analysis

Year 1 2 3 4 5 6 7 8
16
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Year ending
2017 2018 2019 2020 2021 2022 2023 2024
Means of finance, financial and investment model analysis

Wages & 0.48 0.51 0.55 0.59 0.64 0.69

salaries -
specialized
infrastructure
operations
Administration 0.27 0.33 0.35 0.36 0.36 0.37
expenses
Selling expenses 0.07 0.03 0.02
Total expenses 3.61 3.75 4.14 4.31 4.58 4.88
Contd...
Contd...
Year 9 10 11 12 13 14 15
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Year ending
2025 2026 2027 2028 2029 2030 2031
Expenditure
Cost of sales - built
up space
Raw materials and 0.96 1.08 1.24 1.43 1.65 1.89 2.18
consumables -
specialized agri
infrastructure
Utilities - specialized 0.72 0.81 0.93 1.07 1.23 1.42 1.63
agri infrastructure
Salaries and other 0.56 0.63 0.73 0.84 0.96 1.10 1.27
overheads
Operations & 0.99 1.01 1.02 1.04 1.05 1.07 1.08
utilities pertaining to
the developed
industrial plots and
social infrastructure
R&M expenses 0.86 0.87 0.88 0.89 0.90 0.91 0.92
Wages & salaries - 0.74 0.79 0.85 0.92 0.99 1.06 1.14
specialized
infrastructure
operations
Administration 0.37 0.37 0.38 0.38 0.38 0.39 0.39
expenses
Selling expenses
Total expenses 5.21 5.57 6.04 6.56 7.16 7.84 8.61
Source: MACE analysis

290
 RTC revenue analysis

Exhibit No. 16.6: Cost of operation - RTC

16
10.00

Means of finance, financial and investment model analysis

8.00
Total expenses

6.00

4.00
ETB in million

2.00

0.00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Year

Cost of sales - developed land

Cost of sales - built up space
Raw materials and consumables - specialized agri infrastructure
Utilities - specialized agri infrastructure
Salaries and other overheads
Operations & utilities pertaining to the developed industrial plots and social infrastructure
R&M expenses
Wages & salaries - specialized infrastructure operations
Administration expenses
Selling expenses
Total expenses
Source: MACE analysis

Table No. 16.14: Profit & loss statement - RTC

Initial
Operation Period
Development
INCOME UOM 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
2017 2018 2019 2020 2021 2022 2023 2024
1 2 3 4 5 6 7 8
Long term lease ETB 19.60 3.99 2.00
million
Monthly lease ETB 0.10 0.17 0.18 0.21 0.21 0.21
rental million
Built up space ETB 0.17 0.13 0.02
short term million
lease
Facility ETB 3.85 5.03 5.62 5.86 5.95 6.04
management million
Other income ETB 0.01 0.02 0.02 0.02 0.02 0.02
million
Income from ETB 3.12 4.14 5.01 5.63 6.34 7.13
direct operation million

291
 RTC P&L analysis

Initial
16 Development
Operation Period
INCOME UOM 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Means of finance, financial and investment model analysis

2017 2018 2019 2020 2021 2022 2023 2024

1 2 3 4 5 6 7 8
of specialized
services
Total income ETB 26.85 13.48 12.85 11.73 12.52 13.40
million
EXPENDITURE
Cost of sales - ETB 0.00 0.00 0.00
built up space - million
long term lease
Refurbishment ETB 0.56 0.10 0.05
/ major million
renovation cost
Other Operating ETB 0.64 0.76 0.83 0.84 0.85 0.85
Expenses million
Total operating ETB 2.41 2.89 3.26 3.48 3.74 4.02
expenses million
EBDITA ETB 3.61 3.75 4.14 4.31 4.58 4.88
million
Depreciation ETB 23.24 9.73 8.71 7.41 7.94 8.52
million
Preliminary ETB 1.03 1.71 2.00 2.15 2.15 2.15
expenses million
written off
EBIT ETB 0.02 0.02 0.02 0.02 0.02 0.02
million
Term loan ETB 22.18 8.00 6.69 5.24 5.76 6.35
Interest cost million
during
Operation
period
Financing ETB 1.22 1.19 1.17 0.89 0.35 0.03
charges million
EBT ETB 20.97 6.81 5.52 4.35 5.41 6.31
million
Provision for tax ETB 6.60 1.67 0.96 0.64 1.07 1.55
million
Total ETB 12.49 8.35 8.29 8.02 8.18 8.64
expenditure million
Profit /(Loss) ETB 14.37 5.14 4.56 3.71 4.34 4.76
for the year million
Equity dividend ETB 4.76
million
Retained Profit ETB 14.37 5.14 4.56 3.71 4.34
for the year million
Profit /(Loss) ETB 14.37 19.50 24.06 27.77 32.11
brought forward million

292
 RTC profitability analysed

Initial
Development
Operation Period 16
INCOME UOM 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-

Means of finance, financial and investment model analysis

2017 2018 2019 2020 2021 2022 2023 2024
1 2 3 4 5 6 7 8
Profit / (Loss) ETB 14.37 19.50 24.06 27.77 32.11 32.11
carried to million
balance sheet
Contd ...
Contd ...
Operation Period
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
INCOME UOM Total
2025 2026 2027 2028 2029 2030 2031
9 10 11 12 13 14 15
Long term lease ETB 25.59
million
Monthly lease ETB 0.25 0.25 0.25 0.29 0.29 0.29 0.35 3.07
rental million
Built up space ETB 0.32
short term lease million
Facility ETB 6.13 3.65 3.21 3.30 3.40 3.51 3.62 59.18
management million
Other income ETB 0.03 0.03 0.03 0.03 0.03 0.03 0.04 0.31
million
Income from ETB 8.02 9.02 10.37 11.93 13.72 15.78 18.14 118.34
direct operation of million
specialized
services
Total income ETB 14.42 12.95 13.86 15.56 17.45 19.61 22.14 206.82
million
EXPENDITURE
Cost of sales - ETB 0.71
built up space - million
long term lease
Refurbishment / ETB 0.86 0.87 0.88 0.89 0.90 0.91 0.92 10.99
major renovation million
cost
Other Operating ETB 4.34 4.70 5.16 5.67 6.26 6.93 7.70 60.56
Expenses million
Total operating ETB 5.21 5.57 6.04 6.56 7.16 7.84 8.61 72.26
expenses million
EBDITA ETB 9.22 7.38 7.82 8.99 10.28 11.77 13.53 134.56
million
Depreciation ETB 2.15 2.15 2.15 2.15 2.15 2.15 2.15 26.21
million
Preliminary ETB 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.32
expenses written million
off
EBIT ETB 7.05 5.21 5.65 6.82 8.11 9.60 11.36 108.03
million
293
 RTC to function as
independent from
financial perspective

Operation Period
16 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
INCOME UOM Total
2025 2026 2027 2028 2029 2030 2031
Means of finance, financial and investment model analysis

9 10 11 12 13 14 15
Term loan Interest ETB 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4.85
cost during million
Operation period
Financing charges ETB 0.00 0.00 0.00 0.00 0.00 0.00 0.00 4.85
million
EBT ETB 7.05 5.21 5.65 6.82 8.11 9.60 11.36 103.17
million
Provision for tax ETB 1.94 1.53 1.77 2.21 2.67 3.18 3.75 29.57
million
Total expenditure ETB 9.32 9.27 9.98 10.95 12.01 13.19 14.54 133.21
million
Profit /(Loss) for ETB 5.10 3.68 3.88 4.61 5.44 6.42 7.61 73.61
the year million
Equity dividend ETB 5.10 3.68 3.88 4.61 5.44 6.42 7.61
million
Retained Profit for ETB
the year million
Profit /(Loss) ETB 32.11 32.11 32.11 32.11 32.11 32.11 32.11
brought forward million
Profit / (Loss) ETB 32.11 32.11 32.11 32.11 32.11 32.11 32.11
carried to million
balance sheet

Source: MACE analysis

Exhibit No. 16.7: Profit & loss results - RTC

30.00

25.00

20.00

15.00
ETB in million

10.00

5.00

0.00
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Total income Year
Total operating expenses Financing charges
EBT Total expenditure Profit /(Loss) for the year

Source: MACE analysis

294
 RTC cash flow analysis

Table No. 16.15: Summary of cash flow statement - RTC

16
(ETB in million)

Means of finance, financial and investment model analysis

Year No. 1 2 3 4 5 6 7 8
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Year ending 2024
2017 2018 2019 2020 2021 2022 2023
Cash inflows
PAT+non-cash 15.98 6.96 6.63 5.88 6.51 6.93
expenses
Equity 2.43 7.21
Debt 3.65 10.81
Short term borrowing
Deposit from leased 0.15 0.10 0.17 0.15 0.17 0.15
property and advance
Total inflows 6.08 18.02 16.14 7.07 6.80 6.03 6.69 7.08

Cash outflows
Capital cost 6.08 18.02 15.80 6.91 3.46
Additional
Loan repayment 0.33 0.15 0.48 6.03 6.69 0.79
Short term borrowing
repayment
Equity dividend 4.76
Total outflows 6.08 18.02 16.14 7.07 3.94 6.03 6.69 5.55

Surplus/deficit 2.87 1.54

Opening balance 2.87 2.87 2.87

Closing balance 2.87 2.8680 2.87 4.40

Contd ...

Contd ...

Year No. 9 10 11 12 13 14 15
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Year ending 2025 2026 2027 2028 2029 2030 2031
Cash inflows
PAT+non-cash expenses 7.27 5.85 6.05 6.78 7.61 8.59 9.78
Equity
Debt
Short term borrowing
Deposit from leased property 0.23 0.15 0.23 0.21 0.23 0.21 0.30
and advance
Total inflows 7.50 6.00 6.28 7.00 7.84 8.81 10.08

295
 RTC to function as
aggregator and storage
and not as holding hub

Year No. 9 10 11 12 13 14 15
16 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Year ending 2025 2026 2027 2028 2029 2030 2031
Means of finance, financial and investment model analysis

Cash outflows
Capital cost
Additional
Loan repayment
Short term borrowing
repayment
Equity dividend 5.10 3.68 3.88 4.61 5.44 6.42 7.61
Total outflows 5.10 3.68 3.88 4.61 5.44 6.42 7.61

Surplus/deficit 2.40 2.32 2.40 2.39 2.40 2.39 2.48

Opening balance 4.40 6.80 9.12 11.52 13.91 16.31 18.70

Closing balance 6.80 9.12 11.52 13.91 16.31 18.70 21.17
Source: MACE analysis

Table No. 16.16: Cash flow statement - RTC

7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-

Year Ending
UOM 2017 2018 2019 2020 2021 2022 2023 2024
Particulars 1 2 3 4 5 6 7 8
Outflows:
Captive ETB 2.40 7.00 6.40 2.80 1.40
development land million
earmarked for
captive built up
space
Buildings - Industrial ETB 1.08 3.15 2.88 1.26 0.63
/ Business - Captive million
development
Buildings - captive ETB 0.29 0.84 0.76 0.33 0.17
development million
Specialized agri ETB 1.00 2.92 2.67 1.17 0.58
infrastructure million
facilities within IAIP
Miscellaneous fixed ETB 0.30 0.88 0.80 0.35 0.18
assets million
Preliminary ETB 0.04 0.11 0.10 0.04 0.02
Expenses & million
Company Formation
Expenses
Manpower Cost ETB 0.01 0.04 0.03 0.01 0.01
during pre operative million
period
Project Consultancy, ETB 0.08 0.22 0.20 0.09 0.04
Detailed Engineering million
and Project
Supervision Cost

296
 RTC investment return
computation

7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-

Year Ending
UOM 2017 2018 2019 2020 2021 2022 2023 2024 16
Particulars 1 2 3 4 5 6 7 8

Means of finance, financial and investment model analysis

Initial marketing and ETB 0.11 0.33 0.30 0.13 0.07
project launch million
expenses
Pre operative and ETB 0.11 0.33 0.30 0.13 0.07
other expenses million
Contingency ETB 0.51 1.48 1.35 0.59 0.30
million
Interest during ETB 0.15 0.74
construction million
Refurbishment / ETB 0.64 0.76 0.83 0.84 0.85 0.85
major renovation million
cost
Other operating ETB 2.41 2.89 3.26 3.48 3.74 4.02
Expenses million
Debt repayment ETB 0.33 0.15 0.48 6.03 6.69 0.79
million
Equity dividend ETB
million
Term loan Interest ETB 1.22 1.19 1.17 0.89 0.35 0.03
cost during million
Operation period
Provision for tax ETB 6.60 1.67 0.96 0.64 1.07 1.55
million
Total outflow 6.08 18.02 27.01 13.58 10.15 11.88 12.69 12.01
Inflows:
Equity ETB 2.43 7.21
million
Built up space long ETB 19.60 3.99 2.00
term leasehold million
Built up space short ETB 0.17 0.13 0.02
lease - industrial / million
business space
Monthly lease rental ETB 0.10 0.17 0.18 0.21 0.21 0.21
million
Facility management ETB 3.85 5.03 5.62 5.86 5.95 6.04
million
Deposit from ETB 0.15 0.10 0.17 0.15 0.17 0.15
Leased Property million
and advance
Interest earned ETB 0.01 0.02 0.02 0.02 0.02 0.02
from deposit from million
leased property
Income from direct ETB 3.12 4.14 5.01 5.63 6.34 7.13
operation of million
specialized services
Debt ETB 3.65 10.81
million

297
 RTC cash flow dependent
on quantities handled and
storage occupancy

7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-

16 Year Ending
UOM 2017 2018 2019 2020 2021 2022 2023 2024
Particulars 1 2 3 4 5 6 7 8
Means of finance, financial and investment model analysis

Total Inflows ETB 6.08 18.02 27.01 13.58 13.02 11.88 12.69 13.55
million
Net flows ETB 2.87 1.54
million
Cumulative flows ETB 2.87 2.87 2.87 4.40
million
Net flow to the ETB -6.08 -18.02 1.40 1.24 4.34 6.77 6.87 6.97
project million
Capital value @ 12 % ETB
million
Net available flow to ETB -6.08 -18.02 1.40 1.24 4.34 6.77 6.87 6.97
the project million
Project IRR (Post % 17.03%
Tax)
Capital value @ 12 %
Net available flow to -6.08 -18.02 8.00 2.92 5.31 7.41 7.94 8.52
the project pre tax
Project IRR (Pre % 25.80%
Tax)
Contd ...
Contd ...
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Year Ending Total
UOM 2025 2026 2027 2028 2029 2030 2031
Particulars 9 10 11 12 13 14 15
Outflows:
Captive development ETB 19.99
land earmarked for million
captive built up space
Buildings - Industrial / ETB 9.00
Business - Captive million
development
Buildings - captive ETB 2.39
development million
Specialized agri ETB 8.33
infrastructure facilities million
within IAIP
Miscellaneous fixed ETB 2.50
assets million
Preliminary Expenses ETB 0.32
& Company Formation million
Expenses
Manpower Cost ETB 0.11
during pre operative million
period
Project Consultancy, ETB 0.63
Detailed Engineering million
and Project

298
 RTC viability can be
enhanced through extensive
backward linkages

7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-

Year Ending
UOM 2025 2026 2027 2028 2029 2030 2031
Total 16
Particulars 9 10 11 12 13 14 15

Means of finance, financial and investment model analysis

Supervision Cost
Initial marketing and ETB 0.95
project launch million
expenses
Pre operative and ETB 0.95
other expenses million
Contingency ETB 4.22
million
Interest during ETB 0.89
construction million
Refurbishment / ETB 0.86 0.87 0.88 0.89 0.90 0.91 0.92 10.99
major renovation cost million
Other Operating ETB 4.34 4.70 5.16 5.67 6.26 6.93 7.70 60.56
Expenses million
Debt repayment ETB 14.46
million
Equity dividend ETB 5.10 3.68 3.88 4.61 5.44 6.42 7.61 41.49
million
Term loan Interest ETB 4.85
cost during Operation million
period
Provision for tax ETB 1.94 1.53 1.77 2.21 2.67 3.18 3.75 29.57
million
Total outflow 12.25 10.78 11.69 13.38 15.27 17.44 19.97 212.21
Inflows:
Equity ETB 9.64
million
Built up space long ETB 25.59
term leasehold million
Built up space short ETB 0.32
lease - industrial / million
business space
Monthly lease rental ETB 0.25 0.25 0.25 0.29 0.29 0.29 0.35 3.07
million
Facility management ETB 6.13 3.65 3.21 3.30 3.40 3.51 3.62 59.18
million
Deposit from Leased ETB 0.23 0.15 0.23 0.21 0.23 0.21 0.30 2.46
Property and advance million
Interest earned from ETB 0.03 0.03 0.03 0.03 0.03 0.03 0.04 0.31
deposit from leased million
property
Income from direct ETB 8.02 9.02 10.37 11.93 13.72 15.78 18.14 118.34
operation of million
specialized services
Debt ETB 14.46
million
Total Inflows ETB 14.65 13.10 14.09 15.77 17.67 19.82 22.45 22.45

299
 Financial indicators for
RTC computed

7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-

16 Year Ending
UOM 2025 2026 2027 2028 2029 2030 2031
Total
Particulars 9 10 11 12 13 14 15
Means of finance, financial and investment model analysis

million
Net flows ETB 2.40 2.32 2.40 2.39 2.40 2.39 2.48 2.40
million
Cumulative flows ETB 6.80 9.12 11.52 13.91 16.31 18.70 21.17
million
Net flow to the project ETB 7.27 5.85 6.05 6.78 7.61 8.59 9.78
million
Capital value @ 12 % ETB
million
Net available flow to ETB 7.27 5.85 6.05 6.78 7.61 8.59 9.78
the project million
Project IRR (Post Tax) %
Capital value @ 12 %
Net available flow to 9.22 7.38 7.82 8.99 10.28 11.77 13.53
the project pre tax
Project IRR (Pre Tax) %

Source: MACE analysis

Table No. 16.17: Balance sheet - RTC

(ETB in million)
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Year Ending
2017 2018 2019 2020 2021 2022 2023 2024
Year 1 2 3 4 5 6 7 8
SOURCES OF FUNDS
Share holder's funds
Share capital 2.43 9.64 9.64 9.64 9.64 9.64 9.64 9.64
Loan funds 3.65 14.46 14.13 13.98 13.50 7.47 0.79
Short term borrowing
Working Capital Borrowings
Loan funds 3.65 14.46 14.13 13.98 13.50 7.47 0.79
Profit and loss account 14.37 19.50 24.06 27.77 32.11 32.11
Total 6.08 24.11 38.14 43.13 47.21 44.88 42.54 41.76

APPLICATION OF FUNDS
Fixed assets
Gross block 5.95 23.58 39.02 45.78 49.15 49.15 49.15 49.15
Additions
Gross block 5.95 23.58 39.02 45.78 49.15 49.15 49.15 49.15
Less: Depreciation 1.03 2.74 4.74 6.88 9.03 11.18
Net block 5.95 23.58 37.99 43.04 44.42 42.27 40.12 37.97
Current assets, loans and
advances
Inventories 0.10 0.38 0.08 0.09 0.10 0.10 0.10 0.10
Cash and bank balances 2.87 2.87 2.87 4.40

300
 RTC standalone viability
established

7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-

Year Ending
2017 2018 2019 2020 2021 2022 2023 2024 16
Year 1 2 3 4 5 6 7 8

Means of finance, financial and investment model analysis

Current assets, loans and 0.10 0.38 0.08 0.09 2.97 2.97 2.97 4.50
advances
Less: Current liabilities and 0.15 0.25 0.42 0.57 0.74 0.89
provisions
Current liabilities 0.15 0.25 0.42 0.57 0.74 0.89
Preliminary expenses 0.04 0.15 0.23 0.25 0.24 0.22 0.19 0.17
written off (to the extent not
written off)
Net current assets 0.14 0.53 0.15 0.09 2.79 2.62 2.42 3.78
Profit and loss account
Total 6.08 24.11 38.14 43.13 47.21 44.88 42.54 41.76
Contd ...
Contd ...
7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul- 7-Jul-
Year Ending
2025 2026 2027 2028 2029 2030 2031
Year 9 10 11 12 13 14 15
SOURCES OF FUNDS
Share holder's funds
Share capital 9.64 9.64 9.64 9.64 9.64 9.64 9.64
Loan funds
Short term borrowing
Working Capital Borrowings
Loan funds
Profit and loss account 32.11 32.11 32.11 32.11 32.11 32.11 32.11
Total 41.76 41.76 41.76 41.76 41.76 41.76 41.76

APPLICATION OF FUNDS
Fixed assets
Gross block 49.15 49.15 49.15 49.15 49.15 49.15 49.15
Additions
Gross block 49.15 49.15 49.15 49.15 49.15 49.15 49.15
Less: Depreciation 13.33 15.48 17.62 19.77 21.92 24.07 26.21
Net block 35.83 33.68 31.53 29.38 27.24 25.09 22.94
Current assets, loans and advances
Inventories 0.10 0.10 0.10 0.10 0.10 0.10 0.10
Cash and bank balances 6.80 9.12 11.52 13.91 16.31 18.70 21.17
Current assets, loans and advances 6.90 9.22 11.62 14.01 16.41 18.80 21.27
Less: Current liabilities and provisions 1.12 1.27 1.50 1.71 1.94 2.15 2.46
Current liabilities 1.12 1.27 1.50 1.71 1.94 2.15 2.46
Preliminary expenses written off (to 0.15 0.12 0.10 0.07 0.05 0.02 0.00
the extent not written off)
Net current assets 5.93 8.08 10.23 12.37 14.52 16.67 18.82
Profit and loss account
Total 41.76 41.76 41.76 41.76 41.76 41.76 41.76
Source: MACE analysis

301
 Sensitivity analysis – RTC

Sensitivity analysis - RTC

16
A detailed sensitivity analysis on the project IRR with 24 scenarios is carried out considering variation upto
± 10% in the capital expenditure and revenue as shown in Table No. 16.18.
Means of finance, financial and investment model analysis

Table No. 16.18: Sensitivity analysis – RTC

Change in the capital Change in the Project IRR

Scenario
investment revenue (post tax)
Scenario - base 0% 0% 17.03%
Scenario -1 -10% -10% 17.13%
Scenario -2 -10% -5% 18.84%
Scenario -3 -10% 0% 20.57%
Scenario - 4 -10% 5% 22.33%
Scenario -5 -10% 10% 24.11%
Scenario -6 -5% -10% 15.46%
Scenario -7 -5% -5% 17.07%
Scenario -8 -5% 0% 18.70%
Scenario -9 -5% 5% 20.35%
Scenario -10 -5% 10% 22.01%
Scenario - 11 0% -5% 15.49%
Scenario -12 0% -10% 13.96%
Scenario -13 0% 5% 18.57%
Scenario -14 0% 10% 20.14%
Scenario -15 5% -10% 12.61%
Scenario -16 5% -5% 14.06%
Scenario -17 5% 0% 15.52%
Scenario -18 5% 5% 16.98%
Scenario -19 5% 10% 18.46%
Scenario -20 10% -10% 11.37%
Scenario -21 10% -5% 12.76%
Scenario -22 10% 0% 14.15%
Scenario -23 10% 5% 15.54%
Scenario -24 10% 10% 16.95%

302
 Chapter – 17

Integrated ACPZ and IAIP branding and

marketing strategies

Strategies groups including developers / co-developers about the

Well planned strategic branding & advertising
campaign and other sales promotion methods shall be
adopted to promote this unique concept and in
identifying the developer for IAIP (including developer of
RTC) and / or anchor tenant for industrial zone /
commercial zone / business zone / specialized agri
infrastructure.
It is pertinent to create an identity and
develop communication strategy to inform target
integrated ACPZ and IAIP initiative. Good branding
provides opportunities for greater collaboration and
synergies. It provides an external manifestation of
strategic intent and creates differentiation in the
market.
The key tasks involved in media and
communication plan for promoting the integrated
ACPZ and IAIP clusters are highlighted in the Table
No. 17.1.

Table No. 17.1: Strategies and action plan

Mode of communication Core purpose – creating brand and identity

System elements – word o International and regional
mark, tagline, word mark in languages – English, Amharic,
regional / international Arabic, Chinese, Japanese,
languages Korean, French, German, regional
languages

System elements – o Letterhead, envelope, business card, memo envelope, CD + CD cover, press
stationery system kit, compliments slip + notepad
System elements – o Brochure, poster, newsletter, standee, folder, wall paper, annual report,
collateral system banner
System elements – o High-level building signs, office premises, vernacular signage’s, directional
signage system signage etc.
System elements – o Newspapers, sector magazines, electronic media
advertising system and
digital system
Website o Dynamic & quick means of communication. The website will be designed
highlighting the opportunities, role played by GoE, details of significant project
components and matters related to sustainable agribusiness IAIP & RTC.
This shall be hosted and managed by EAIAIDCo through designated agencies
ably supported by UNIDO, regional administration, national and international
consultants. The website will be user friendly covering the interest of various
stakeholders and will be highly interactive. The website layout design will be
the latest technology and will be hosted on an unlimited band width top
hosting company.
Information kit o Details each project component
The various sub tasks involved are outlined below:

303
 Target group wise themed
media plan shall be
adopted

Mode of communication Core purpose – creating brand and identity

17  Develop the layout
 Artwork for the information kit
 Printing of the information kit
o An e-brochure shall also be designed and developed. The e- brochure shall
Integrated ACPZ & IAIP branding and marketing strategies

be uploaded in the website for larger circulation. Visitors can flip through
(the e-brochure) to understand the salient features of integrated ACPZ and
IAIP clusters and various opportunities that are presented.
Stakeholder consultation o Detailed information on the project, status of the statutory approvals, project
kit progress, etc.
o Information on expected benefits to key stakeholders such as farmers,
fishermen, rural communities, traders, exporters, processors and others.
Audio video o Captures GoE initiatives and details the salient features of integrated ACPZ
and IAIP and envisaged agro based industrial and specialized agri
infrastructure investments.
o A well-conceived audio-video (AV) film for the project shall be made in various
regional and international languages.
Print media: dailies and o Brief note about the integrated ACPZ and IAIP clusters, agro based
business newspapers industrial and specialized agri infrastructure opportunities and product
offerings, Refer Table No. 17.2.

Table No. 17.2: Target group and core theme

Target group Core theme

Urban Sustainable agri infrastructure, agro based
projects and sustainable agribusiness
Rural Rural prosperity
National Sustainable agri infrastructure, agro based
projects, sustainable agribusiness and project
opportunities
International Project opportunities in industrial and
infrastructure segment

Print media: sector specific
journals
Electronic media: television
& radio
o The various print media (newspapers) shall be identified and the frequency of
release advertisement will be finalized.
o Synopsis about the integrated ACPZ and IAIP clusters, envisaged sector
specific agro based industrial and specialized agri infrastructure
investments.
o Sector specific journals for release of advertisement shall also be identified.
o Flash information about the integrated ACPZ and IAIP clusters, envisaged
sector specific agro based industrial and specialized agri infrastructure
investments during prime commercial slot.
o As part of the electronic media campaign, themes shall be developed and
media (TV & FM channels) shall be identified.

304
 Micro level sub sector
project opportunities
mapped

Mode of communication Core purpose – creating brand and identity

Others: bag, cap, pens, o The following compliments for
17
displays of concepts etc. distribution during road show and
other meetings shall be done:

Integrated ACPZ & IAIP branding and marketing strategies

• Designing and developing
invites
• Design and production of caps,
pen and bag
• Conceptualizing, designing
and developing collaterals for
banners, standees, backdrops,
labels, wrappers etc.

Source: MACE analysis

Micro level sub sector wise project opportunities and project profiles

The micro level sub sector wise project opportunities shall be hosted in the “Ethiopia Agropower”
website for prospective investors and occupant units as highlighted in the Table No. 17.3.

Table No. 17.3: Preparation of micro level sub sector wise project opportunities

• Agri input
• Irrigation sector
• Agriculture
• Horticulture
• Tissue culture
• Fisheries & aqua
• Dairying, poultry
farming and animal
husbandry
• Apiculture
• Sericulture
• Agri engineering
Source: MACE analysis
• Agro based industry – hi-tech • Agro based industry – animal,
cultivation under controlled climatic dairy and poultry products
conditions • Agro based industry – hi-tech
• Food technology, food engineering and biotechnology based
and processing agriculture and research
• Agro based industry – vegetables • Agri infrastructure – post
and fruit processing harvest infrastructure – RTC
• Agro based industry – grains • Agri industrial infrastructure
processing, bakery and • Education & knowledge hubs
confectionery • Capacity development, skill
• Agro based industry – spice development
products • Management and other areas
• Agro based industry – aqua
products

Major marketing programs o Conducting domestic road shows

The major marketing programs could cover
theme based advertisement programs, road shows,
Global ISAI2D forum, etc. as detailed below:
o Preparation of media plan and media campaign
o Identification of potential investors, developers
and co-developers
o Identification of potential occupant units
o Coordination with various industry associations
o Conducting international road shows
o Conducting one to one business meetings
o Arranging investor group visit to integrated
ACPZ and IAIP
o Input and coordination with potential occupant
units and follow up
o Conducting multiple Global ISAI2D forum
o Signing of various MoUs

305
 Global ISAI2D forum to
promote integrated ACPZ
and IAIP

International road shows 4. Attracting country partnership for involving in

17 the project in various capacities – technology,
Detailed country wise road shows shall be know how, marketing support and country
conducted for: specific zone development
5. Attracting agri infrastructure developers
Integrated ACPZ & IAIP branding and marketing strategies

1. Attracting IAIP developer / co-developer 6. Attracting large product marketing support

2. Attracting agro industrial anchor units in IAIP providers
3. Attracting large scale agriculture and allied
sector companies to promote activities in The proposed countries for international road
ACPZ shows are highlighted in the Exhibit No. 17.1.

Exhibit No. 17.1: International road shows

Australia Canada China France Germany India Israel Italy

Middle Nether New

Japan Korea Malaysia East lands Zealand
Singapore USA

Source: MACE analysis

Global ISAI2D forum cutting edge technologies / success stories /

partnerships besides promoting investments in
It is envisaged to conduct multiple Global agribusiness sector. The flyers for the proposed
ISAI2D forum, road shows, B2B meetings etc. Global Global ISAI2D forum 2015 are depicted as an Exhibit
ISAI2D forum will be an ideal forum to showcase No. 17.2.

306
 Strategies are drawn for
popularizing the integrated
ACPZ and IAIP clusters

Exhibit No. 17.2: Flyers for Global ISAI2D forum

17

Integrated ACPZ & IAIP branding and marketing strategies

Source: MACE analysis

Global ISAI2D forum will be a confluence of the various players interested in developing sustainable
agribusiness in Ethiopia as shown in the Exhibit No. 17.3.

Exhibit No. 17.3: Global ISAI 2D forum – Confluence of interested players

Leading Specialized
Leading Leading Leading Leading agri
machinery, research and market and industrial
technology education infrastructure
suppliers equipment branding infrastructure developers
suppliers universities & institutions developers
institutes and
operators

Farmers /
International Financial growers /
Leading agro Nodal industry/ Sector
industries & domestic institutions agencies
investors and banks traders / experts
exporters
association

Source: MACE analysis

307

Strategies for popularizing the integrated ACPZ and IAIP clusters
17
Some of the strategies proposed for popularizing the integrated ACPZ and IAIP clusters are listed in the
Table No. 17.4.
Integrated ACPZ & IAIP branding and marketing strategies
Table No. 17.4: Strategies for popularizing the integrated ACPZ and IAIP clusters
• Publishing information in agriculture
newsletter and agribusiness magazine
• Engaging professional agency for corporate
publication
• Promoting the integrated ACPZ and IAIP
clusters through websites and brochures of
partners/ universities/ research institutes/
occupant units
• Library with the latest books, publications,
encyclopaedia on related areas
• A virtual library on internet on the Ethiopia
Agropower website
• The integrated ACPZ and IAIP clusters shall
also actively develop e-learning industry,
including the development of innovative
education courseware, methodologies, tools
and processes, to reach out to a wider
market
• Instituting Ethiopia Agropower innovation
annual awards in the field of cutting edge
agri practices, agri sciences, farming
practices, advanced technologies in
agribusiness, renewable energy, innovative
materials, environment, sustainable
development, alternative thinking, driving
positive change in the society and
sustainability
• Conducting training on sustainable
agricultural activity, enhanced productivity
and better realization to farming community
• Conducting conferences, seminars,
workshops, training programmes, cultural
and social functions and other events
pertinent to agribusiness, corporate ethics,
food safety, and environmental awareness.
• Conducting CSR programs jointly with
industry partners and corporate in the field
of awareness creation in agri technologies,
water usage, environment, health, education
and other societal issues
Source: MACE analysis
308
Multi pronged approach is
expected to bring high
visibility to visibility
• Conducting regular international seminar /
conference
• Regular farmers – industry – processors – exporters
– institution interaction forum
• Active involvement in industrial and management
consultancy
• Structured training and placement program
• Conducting regular thematic exhibitions dealing on the
contemporary issues and subjects
• Celebrating birthdays of eminent personalities related
to development of identified sectors, education,
human development, science, technology, sustainable
development, environmental conservation, women
development, society development and other
contributors in the field of innovation and technology
on a regular basis
• Honouring young firms and individuals in the field of
agribusiness
• Celebrating Engineers Day, World Wetland Day,
National Science Day, World Forestry Day, World
Water Day, World Meteorological Day, World Health
Day, World Heritage Day, Earth Day, World
Environment Day, World Population Day, World Ozone
Day, Green Consumer Day, World Habitat Day, World
Wildlife Week, World Animal Welfare Day,
International Day for Natural Disaster Reduction etc.
• Regular youth development programs
• Development programs for local skill set
• Conducting cultural events and other events on a
regular basis keeping the entire community in focus
• Education exchange programs with other countries,
partnering institutions and Universities
• Organizing exchange of visits by scholars, eminent
personal, university, research institutes, industry
experts, innovation award winners, young scientist,
young entrepreneur, women entrepreneur, research
patent owners, etc.
 Chapter – 18
Implementation schedule and micro level action
plan
Implementation and monitoring mechanism
To realize the vision of the integrated ACPZ
and IAIP clusters and implement the project within the
envisaged time frame, a conscious effort is required.
The project involves coordination with various
agencies. Implementation schedule is developed as a
part of the study. The implementation schedule dwells
in detail on activities covering investment decision,
strategic partners / co-developers selection, finalizing
partnership with various agencies, financial closure,
concession agreement, tendering & award of contract,
statutory approval, external linkages and connectivity,
design and detailed engineering, execution,
organization, marketing of space, etc.
Major development activities are identified
and associated timelines are indicated in the
implementation schedule. As a part of the
implementation plan, the key intervention required by
various agencies involved in the development process
for achieving the desired objective.
The monitoring mechanism shall include
identification of key elements for ensuring success
from management structure perspective, statutory
standards to be maintained, adherence to
sustainability concepts, in depth analysis of various
bidding / contract structure and recommendation of
appropriate location specific project / contract
structure along with merit and demerit analysis,
monitoring of concessionaire performance, delivery
standards, statutory and regulatory compliance,
measures for monitoring marketing, benchmarking
performance and stipulating performance standards,
etc.,
A summary of the action plan for the
implementation of the integrated ACPZ and IAIP is
shown in Exhibit No. 18.1.
The total period for implementation of the
integrated ACPZ and IAIPs is estimated to be 48
months and shall be implemented in phases. However
the occupant units shall commercial production from
third year of development onwards.
The phase I development shall be carried out
over a period of 2 years. Phase II to phase III
development shall take place on 3rd and 4th year
respectively as presented in Table No. 18.1.
309
 Activities spread across
project initiation to
execution identified

18 Exhibit No. 18.1: Action plan

Implementation schedule and micro level action plan

Formation of tender
Approval of the committee comprising
Specific project Formation of
integrated ACPZ and officials of the MoI and
clearance EAIAIDCL other public sector
IAIP
agencies
Project award

NIT floating, RFQ Preparation of bid

Preparation of Preparation of notice
floating, receipt of documents – RFP
Project Information inviting tender (NIT)
response to RFQ and concession
Memorandum (PIM) / RFQs
and evaluation agreement

Discussion, approval of Drafting

RFP issue, receipt of Organizational
the bid, issuance of
implementation structuring and staffing
financial bid, letter of award and
signing of concession framework and for administration and
evaluation management of SPVs
agreement forming SPVs
Project investigation, design and engineering

Site investigations, Design and detailed

BoQ and detailed
surveys, field engineering plan for
project costing
investigations development nodes

310
 Activities for achieving
commercial operation of
IAIP identified

18

Implementation schedule and micro level action plan

Country partnership, research
Drafting project Project promotional
Signing of contract
Project financial closure

institutions and foreign

promotion strategy
and preparation of
marketing collaterals
activities - Investor institutions / technology
suppliers / marketing agency with occupant
meets, B2B meets
/ innovative technology & industries
etc. know how supplier – Tie up

Procuring statutory approvals

Statutory application
submission and EIA
approval process
for construction (land
clearance, environmental Achieving financial
clearance) and obtaining
“Consent for development ” closure
from statutory authorities for
IAIP

Contract
Action plan on Tendering and Selection of Bid floating,
packaging for all
external linkages empanelment of vendors and contract
Project execution

development
and connectivity vendors signing of contract finalization
nodes and phases

Completion of Completion of
Construction
general, process area and Completion of
phase for
specialized and non-process area external linkages
occupant industrial
specific development of and connectivity
units
infrastructure industrial units

Obtaining “Consent for Procuring statutory Testing, commissioning Testing, commissioning

approvals for
Operation” from and system integration and system integration
Project commissioning

commencement of
statutory authorities for operation of specialized and of specialized and of environmental
the IAIP specific infrastructure specific infrastructure infrastructure

Obtaining “Consent for

Statuary approval for
occupant industry
Industrial unit’s
Operation” from
commercial production
statutory authorities for
commencement
the industrial units

Source: MACE analysis

311
 Phased investment plan

18 Table No. 18.1: Project cost deployment

Year No.
Implementation schedule and micro level action plan

1 1 1 1 2 2 2 2
Year ending
Particulars
7-Jul-17 7-Jul-17 7-Jul-17 7-Jul-17 7-Jul-18 7-Jul-18 7-Jul-18 7-Jul-18
Quarter ending
7-Oct-16 7-Jan-17 7-Apr-17 7-Jul-17 7-Oct-17 7-Jan-18 7-Apr-18 7-Jul-18
Land and land 0.02 0.02
development -
IAIP
Land and land 50% 50%
development,
hectares %
Land and land 100%
development,
hectares %
Land and land 41.38 59.48
development,
hectares
Other 4% 4% 4% 4% 5% 6% 6% 6%
developments
Specialized agri 4% 4% 4% 4% 5% 6% 6% 6%
infrastructure
within IAIP
Total IAIP
147.36 149.25 151.15 153.09 191.89 231.18 234.15 237.16
project cost
Total IAIP 600.84 894.38
project cost
year wise
Land and land 9% 16.20%
development for
the year - IAIP
Other 9% 16.20%
development for
the year - IAIP

Contd...

Contd...

Year No.
3 3 3 3 4 4 4 4
Year ending
Particulars
7-Jul-19 7-Jul-19 7-Jul-19 7-Jul-19 7-Jul-20 7-Jul-20 7-Jul-20 7-Jul-20
Quarter ending
7-Oct-18 7-Jan-19 7-Apr-19 7-Jul-19 7-Oct-19 7-Jan-20 7-Apr-20 7-Jul-20
Land and land
development –
IAIP

312
 Phased investment reduces
risk apart from realigning
with market

Year No. 18
3 3 3 3 4 4 4 4
Year ending
Particulars
7-Jul-19 7-Jul-19 7-Jul-19 7-Jul-19 7-Jul-20 7-Jul-20 7-Jul-20 7-Jul-20

Implementation schedule and micro level action plan

Quarter ending
7-Oct-18 7-Jan-19 7-Apr-19 7-Jul-19 7-Oct-19 7-Jan-20 7-Apr-20 7-Jul-20
Land and land
development ,
hectares %
Land and land
development ,
hectares %
Land and land 72.41 85.34
development ,
hectares
Other 7% 7% 7% 7% 8% 8% 8% 9%
developments
Specialized agri 7% 7% 7% 7% 8% 8% 8% 9%
infrastructure
within IAIP
Total IAIP 256.20 256.20 256.20 256.20 292.80 292.80 292.80 329.41
project cost
Total IAIP 1024.82 1207.82
project cost
year wise
Land and land 6% 3.50%
development for
the year - IAIP
Other 6% 3.00%
development for
the year - IAIP

Contd...

Contd...

Year No.
5 5 5 5 6 6 6 6
Year ending
Particulars
7-Jul-21 7-Jul-21 7-Jul-21 7-Jul-21 7-Jul-22 7-Jul-22 7-Jul-22 7-Jul-22
Quarter ending
7-Oct-20 7-Jan-21 7-Apr-21 7-Jul-21 7-Oct-21 7-Jan-22 7-Apr-22 7-Jul-22
Land and land
development –
IAIP
Land and land
development ,
hectares %
Land and land
development ,
hectares %

313
 Phased investment
proposal is market linked

18 Year No.
5 5 5 5 6 6 6 6
Year ending
Particulars
7-Jul-21 7-Jul-21 7-Jul-21 7-Jul-21 7-Jul-22 7-Jul-22 7-Jul-22 7-Jul-22
Implementation schedule and micro level action plan

Quarter ending
7-Oct-20 7-Jan-21 7-Apr-21 7-Jul-21 7-Oct-21 7-Jan-22 7-Apr-22 7-Jul-22
Land and land
development ,
hectares
Other
developments
Specialized agri
infrastructure
within IAIP
Total IAIP
project cost
Total IAIP
project cost
year wise
Land and land 2.25% 4%
development for
the year - IAIP
Other 2.50% 4%
development for
the year - IAIP

Contd...

Contd...

Year No.
7 7 7 7 8 8 8 8
Year ending
Particulars
7-Jul-23 7-Jul-23 7-Jul-23 7-Jul-23 7-Jul-24 7-Jul-24 7-Jul-24 7-Jul-24
Quarter ending
7-Oct-22 7-Jan-23 7-Apr-23 7-Jul-23 7-Oct-23 7-Jan-24 7-Apr-24 7-Jul-24
Land and land
development –
IAIP

Land and land

development ,
hectares %
Land and land
development ,
hectares %
Land and land
development ,
hectares
Other
developments

314
 Phased investment
facilitates affordability

Year No. 18
7 7 7 7 8 8 8 8
Year ending
Particulars
7-Jul-23 7-Jul-23 7-Jul-23 7-Jul-23 7-Jul-24 7-Jul-24 7-Jul-24 7-Jul-24

Implementation schedule and micro level action plan

Quarter ending
7-Oct-22 7-Jan-23 7-Apr-23 7-Jul-23 7-Oct-23 7-Jan-24 7-Apr-24 7-Jul-24
Specialized agri
infrastructure
within IAIP
Total IAIP
project cost
Total IAIP
project cost
year wise
Land and land 9% 12.50%
development for
the year - IAIP
Other 9% 12.50%
development for
the year - IAIP

Contd...

Contd...

Year No.
9 9 9 9 10 10 10 10
Year ending
Particulars
7-Jul-25 7-Jul-25 7-Jul-25 7-Jul-25 7-Jul-26 7-Jul-26 7-Jul-26 7-Jul-26
Quarter ending
7-Oct-24 7-Jan-25 7-Apr-25 7-Jul-25 7-Oct-25 7-Jan-26 7-Apr-26 7-Jul-26
Land and land
development -
IAIP
Land and land
development ,
hectares %
Land and land
development ,
hectares %
Land and land
development ,
hectares
Other
developments
Specialized agri
infrastructure
within IAIP
Total IAIP
project cost

315
 Micro level planning
exercise

18 Year No.
9 9 9 9 10 10 10 10
Year ending
Particulars
7-Jul-25 7-Jul-25 7-Jul-25 7-Jul-25 7-Jul-26 7-Jul-26 7-Jul-26 7-Jul-26
Implementation schedule and micro level action plan

Quarter ending
7-Oct-24 7-Jan-25 7-Apr-25 7-Jul-25 7-Oct-25 7-Jan-26 7-Apr-26 7-Jul-26
Total IAIP
project cost
year wise
Land and land 18% 19.55%
development for
the year - IAIP
Other 17% 20.80%
development for
the year - IAIP

Micro level action plan

The various micro level activities required to be taken towards finalization of industry partners,
development, implementation and establishment of the integrated ACPZ and IAIP are discussed under following
major heads:

Table No. 18.2: Micro level activities

Approval of the integrated ACPZ and Specific project

Formation of EAIAIDCo
IAIP clearance
• Approval of the concept developed, • Obtaining specific • Formation of Ethiopian Agri
master plan, feasibility studies of project clearance Infrastructure and Agro
the integrated ACPZ and IAIP and budget Industries Development
• Decision and approval to go ahead clearance from Corporation (EAIAIDCo) and
with the development of the competent registration under the relevant
integrated ACPZ and IAIP and authorities regulations
finalization of the option
• Finalization of the nodal agency of
Project award

GoE
• Finalization of terms of
engagement of private sector/
developers
• Finalization of project development
components to be done by GoE
and regional government
• Finalization of administrative
structure and constitution of
committees
Formation of tender committee Preparation of
Preparation of notice inviting tender
comprising officials of the MoI and Project Information
(NIT) / RFQs
other public sector agencies Memorandum (PIM)
The procurement, bidding documents and negotiation procedures shall be done in accordance with the
procedures laid by the competent authority

316
 Micro level activities for
implementation of integrated
ACPZ and IAIP identified

Discussion, 18
Preparation of bid RFP issue,approval of the bid,
NIT floating, RFQ floating, receipt of documents – RFP receipt of
issuance of letter of
response to RFQ and evaluation and concession financial bid,
award and signing

Implementation schedule and micro level action plan

agreement evaluation of concession
agreement
The procurement, bidding documents and negotiation procedures shall be done in accordance with the
procedures laid by the competent authority
Organizational structuring and
Drafting implementation framework and forming SPVs staffing for administration and
management of SPV
• Finalizing project implementation and monitoring • Finalizing the organizational
framework including representation from developers and structure for the SPV
GoE and regional government • Staffing including role definition
• Formation of main SPV and sub SPVs to implement sub for management of SPV
components
• Finalizing overall implementation structure and guidelines
and control regulations

Design and detailed

Site investigations, surveys,
engineering plan for BoQ and detailed project costing
field investigations
Project investigation, design and engineering

development nodes
• Detailed geotechnical • Analysis of processing, non • Preparing bills of material and
investigation processing and common quantities for all components in
• Detailed investigation on area under each project individual development nodes
site topography, water zone based on technical detailing in
and other studies • Preparing the overall layout the master plan
• Evaluation of solar and for common infrastructure • Analysis of quotations for cost
other renewable energy and utility connections components
potential • Detailed engineering • Detailed costing for all
drawing, technical development nodes to arrive at
specifications and value the final capital cost for the
engineering for all integrated ACPZ and IAIP
development nodes cluster

317
 Micro level activities for
leading to financial closure of
the project identified

18
Country partnership,
research institutions and
Implementation schedule and micro level action plan

Drafting project promotion
strategy and preparation of
marketing collaterals
• Preparation of strategy and
activity schedule for project
promotion
• Development of investor docket
• Preparation of sector profiles
• Preparation of micro level sub
sector wise project
opportunities and project
profiles
• Preparation of development
Project financial closure
Project promotional
activities - Investor meets,
B2B meets etc.
• Media plan and media
campaign
• Identification of potential
occupant units
• Coordination with various
industry association
• Conducting domestic
road shows and
international road shows
• Participating in major
foreign institutions /
technology suppliers /
auction centre / marketing
agency / innovative
technology & know how
supplier – Tie up
• Strategy for Linkages
• Mapping of target partner
countries to focus sectors
• Firming up modalities for
partnering and liasoning
with target countries

node profile agribusiness meets and

• Brochure, logos development, seminars to network and
media kits, multimedia promote integrated ACPZ
promotion materials marketing and IAIP
kits
Procuring statutory approvals
for construction (land
Statutory application clearance, environmental
Signing of contract with occupant
submission and EIA approval clearance) and obtaining
industries
process “Consent for development”
from statutory authorities for
IAIP
• Identifying and attracting tenant • Base line data • Approvals for possession of
industries • One season assessment land and construction
• Negotiating and signing of • Analysis of results and • Environmental and other
engagement contracts with project proponent to file clearances
tenant units for long term necessary papers
lease/ monthly rental,
provisioning utilities and
applicable service contracts
Achieving financial closure
• Shareholders / share subscription agreement with strategic partners based on the scenario opted
• Raising equity and term loan tie up based on the scenario opted
• Subsidies and grant finalization, if any
• Achieving the financial closure for implementation

318
 Micro level activities for
project execution are detailed
under different heads

18
Action plan on external linkages Contract packaging for all Tendering and

Implementation schedule and micro level action plan

and connectivity development nodes and phases empanelment of vendors
• Company structuring and • Analysis of implementation • Preparation of RFQs for
recovery model schedule and timelines for empanelment of
• Coordination, approval and various sub-components in vendors and co
follow-up each development node developers for all sub
• Contract packaging based on components
inputs from analysis of • Empanelment of
implementation timeline and vendors and co
project cost developers
• Decision on comprehensive
EPC route / major EPC
packages / conventional
tender packages
• Finalizing contract packages
and scope of work for each
package
Completion of general,
Selection of vendors and signing
Bid floating, contract finalization specialized and specific
of contract
infrastructure
Project execution

• Preparation of RFPs for all • The procurement, bidding • Quality control

contract packages documents and negotiation • Adherence to design
• Preparation of terms of procedures shall be done in standards and
contract, evaluation criteria accordance with the confirming to
and model contract established procedures by the specification and
agreement board of the SPV and relevant concession agreements
• Tendering process guidelines
• Bid processing for all
contract packages
• Negotiation and selection of
developers and vendors for all
contract packages
Completion of process area and
Construction phase for Completion of external
non-process area development
occupant industrial units linkages and connectivity
of industrial units
• Construction & erection of • Quality control checks • Quality control checks
general, specialized and • Adherence to design • Adherence to design
specific industry components standards and confirming to standards and
and infrastructure by the specification and concession confirming to
occupant units agreements and performance specification and
• Coordination with occupant tests concession agreements
units for the provisioning and performance tests
access to utilities like power,
water supply,
telecommunication, approach
roads, etc.

319
 Micro level activities
identified for obtaining
“consent for operation”

18
Procuring statutory
Obtaining “Consent for approvals for Testing, commissioning and
Implementation schedule and micro level action plan

Operation” from statutory commencement of system integration of specialized

authorities for the IAIP operation of specialized and
specific infrastructure
• Demonstrating compliance • Applying for statutory
and adherence to terms and approvals for beginning
conditions of concession operations of specialized
agreements and approvals infrastructure
• Follow up with
departments and
procuring approvals
Project commissioning
and specific infrastructure
• Quality assurance compliance
• Readiness for field inspection
by statutory authorities
• System integration
• Procuring licenses, quality
certificates, subsidies and

other approvals as applicable

• Commencement of operations
Testing, commissioning and Obtaining “Consent for
Statutory approval for
system integration of Operation” from statutory
occupant industry
environmental infrastructure authorities for the industrial units
• Quality assurance • Applying for statutory • Applications to the statutory
compliance approvals from GoE and authorities for approval of
• Readiness for field regional government and commencement of operations
inspection by statutory official of MoI • Follow up and procuring
for
authorities occupant industries approvals for commencement
• System integration • Follow up with of operation
• Confirmation to EMP departments and
procedures and monitoring agencies
guidelines
• Commencement of
operations
Industrial unit’s commercial production commencement
• Pilot production and testing
• Commencement of commercial production by occupant industries

Source: MACE analysis

320
 Activities forming part of
implementation spread over a
period of 4 years are
identified and scheduled

Implementation schedule 18
The implementation schedule factoring these stages is presented in the Exhibit No. 18.2.

Implementation schedule and micro level action plan

Exhibit No. 18.2: Micro level action plan

Source: MACE analysis

321
 Chapter – 19

Risk mapping, analysis and mitigation

strategies

Generalized approach towards risk management

The generalized approach towards risk management in developing integrated ACPZ and IAIP with private
sector investment is depicted in Exhibit No. 19.1.

Exhibit No. 19.1: Risk and mitigation strategies

Agri sector constraints

•Conducive policy framework and innovative mitigation tools

•RTC initiative

Concept promotion and acceptance

•Need to remove the apprehensions of farmer and rural community on the possibilities of losing
agriculture land, foregoing means of income and shattering of their livelihood
•Extensive stakeholder consultation across the region to create awareness, eradicate apprehensions
engulfing their minds and instil confidence

Land for development components

•GIS and innovative planning tools

•Transparent land allotment
•No disturbance to cultivable land

Government related Issues and approval process

•Policy to be in place
•High important sector
•Transparent approval process in developer selection and land allotment – full adherence requirement

Plot off take

•Multi pronged approach

•Anchor clients
•Phased development
•Road shows and B2B meeting

Environmental and implementation

•Favorable sector
•Huge emphasis on environmental infrastructure and green practices
•Well-structured team for operation and maintenance

Source: MACE analysis

322
 Comprehensive country and
project specific SWOT
analysis done
SWOT analysis
The strength, weakness, opportunity and
threat are analyzed at length in the context of creating
integrated ACPZ and IAIP clusters in Ethiopia. The
project derives its strength from its concept and
positioning, focused approach towards sustainable
agribusiness infrastructure and its affordability to
users.
Innovation element is incorporated in every
stage of development cycle – conceptualization stage,
drafting development strategy, approach to attract
private sector occupant units and reaching out to
private sector investors (conducting B2B meets,
investors meets), implementation and operational
management of IAIP. The configuration of integrated
ACPZ and IAIP effectively addresses the threats and
weakness while leveraging the strengths and
capitalizing on the opportunities presented by the
agribusiness ecosystem.
The development strategy and model for
integrated ACPZ and IAIP has optimally integrated the
country’s existing and proposed connectivity
infrastructure like roads and airports. The availability of
power, water social infrastructure, natural resources
and industrial infrastructure has been considered
while designing its development model and
configuration. Hence a comprehensive SWOT analysis
is done covering issues related to the present context
of ACPZ and IAIP development in Ethiopia and the
identified IAIP site in Tigray region as a preparatory
effort towards structuring the ACPZ’s and IAIP
development model.
SWOT – country specific
 Strength
• General
o Ethiopia has a rich biodiversity by virtue of
its variable climatic conditions and
physical features.
o Ethiopia has ample resources for
agriculture – 74 million hectares of
arable land, plentiful water resources, 12
million farmer households and rich
livestock resources.
o Has a highly diversified agro-ecological
condition which makes possible the
production of a wide range of agricultural
products. 19
o Agriculture constitutes one of the most
important sectors of the economy in
terms of its employment generation;
Risk mapping, analysis and mitigation strategies
contribution to GDP (46%) and export
revenue earnings.
o More than 85% of the population derives
their means of livelihood from agriculture,
and the economy is characterized by a
large rural based traditional sector and
local technology.
o The agricultural sector remains the
highest employer of labour in Ethiopia,
with a significant percentage of women
involvement.
o Ethiopia is the world’s leading producer of
coffee, sesame and cereals
o Ethiopia is Africa’s second largest maize
producer.
o Ethiopia livestock population is largest in
Africa and the livestock sub-sector in
Ethiopia currently accounts for about
10% of agricultural GDP
o Ethiopia has extensive public research
and extension systems with 17 federal
agricultural research centres, 7 regional
agricultural research institutes and 12
universities / higher learning institutes
o GoE has instituted a policy of Agricultural
Development Led Industrialisation (ADLI).
o Ethiopia has good extension systems in
agriculture including PADETES, FTC’s,
ATVET and institutional coordination.
o Interventions under Ethiopia’s ambitious
Agricultural Transformation Agenda
provide necessary focus to create a
paradigm shift in agricultural sector.
o Innovative systems such as direct seed
marketing project, the Ethiopian Soil
Information System (ETHIOSIS) and
commission based cooperative marketing
are in place.
o Agriculture expenditure share in total
expenditure is highest in Ethiopia as
compared to neighbouring African
countries.
• Integrated ACPZ and IAIP clusters
o Integrated ACPZ and IAIP development is
supported by the GoE.
323

o Focused thrust on much needed agri
19 infrastructure on an end to end concept.
o Proactive government, transparent
governance, quick decision cycles and
other proactive measures with an
Risk mapping, analysis and mitigation strategies
underlying emphasis on inclusive growth.
o Unique positioning – concept of
developing “integrated industrial &
business city” with excellent state of art
infrastructure facilities
o Innovative configuration:
• Industrial, environmental, social and
physical infrastructure with multi
formatted user friendly utilization
options for occupant units
• Addressing the growth needs of the
entire agriculture sector: agri input –
agri infrastructure – agriculture –
horticulture – animal husbandry –
dairying – fisheries – apiculture –
food processing
o Strong upstream and downstream
linkages
o Adequate size and economy of scale
o Strong brand positioning strategy and
partnering with international players
o World-class infrastructure benchmarked
against global standards
o High level of environmental infrastructure
and green practices
o Efficient and transparent zone
administration and governance practices
o Pioneering model in Ethiopia
agribusiness sector
 Weaknesses
• Ethiopia’s agriculture depends highly on
climate and Ethiopia is likely to be one of the
most negatively impacted countries in the
world as a result of climate change. Variable
impacts of climate change such as
unpredictable rains, droughts, floods often
weigh heavily on small holder farmers.
• Low physical infrastructure for agricultural
data collection, analysis, and computerization
and absence of a well-developed management
information system (MIS) as well as tools for
proper data management.
• Low levels of irrigation, soil degradation &
erosion, inadequate agricultural research &
324
Weakness mitigated through
strategies and well devised
business model
extension and constraints in market
development.
• Ongoing environmental degradation caused by
issues such as over tillage and over grazing is
reducing top soil and fertility.
• Partnerships and linkages among academics
industry and government machinery are weak.
However, following efforts are being made to
strengthen such relationship.
o Proposal to establish world class industry
development institutes to bridge the gap
between academia & industry and to
translate the research findings on field.
o In regard to skill development, universities
can ensure that the next generation of
policy analysts, policymakers,
researchers, and faculty members are
trained in disciplines where existing gaps
have been identified such as accounting
and management, leadership, computer
software, women development programs,
agricultural extension messages, survey
and methodology, general administration,
agricultural production techniques, and
business management apart from the
core disciplines in agricultural sciences.
Development of the above courses would
enable problem-solving research that
addresses the lack of productivity in
agriculture and food insecurity. At the
same time, innovative research programs
could be developed within the universities
or Ethiopia’s research system, to address
the knowledge gaps identified.
• Lack of information feedback
o Without clear specification as to the role
of the stakeholder, appropriate
information has not been influencing
national agricultural and rural
development policies;
• Ethiopian public research and extension
centres are currently affected by numerous
constraints, which include:
o Insufficient funds that limit the potential
for relevant research
• Higher education institutions involved in
agriculture are not a major driver of learning
as the content and methods used in teaching
are often outdated and the quality of the
curriculum weak.
• Access to land and tenure security is a major
constraint to increased private investment.
 Sector specific
opportunities and external
threats are identified
• Poor infrastructure such as roads &
communication
• High mortality rate
• Inadequate pesticide regulations
• Small scale farmers do not have sufficient
access to credit, transport, storage
infrastructure and markets
• Limited access to advance farming
technologies thus reducing the global
competitiveness
• Low productivity due to fragmented farms and
limited input use
• High levels of post harvest losses including
high prevalence of aflotoxin
• Low livestock reproductive performance and
off take
• Lack of organization at the pastoralist level
among value chain actors
• Weak public sector capacity for disease
surveillance & health service provision
• Weak capacity for phyto sanitary inspection
 Threats
 Opportunities
• Ethiopia has about 72 million hectares of
cultivable land with a large part of it been
uncultivated
• With a large and diversified production base
coupled with huge involvement of population in
the core activities and proliferation of modern
technology, Ethiopia’s food processing sector
is poised for growth, if the advantages are
leveraged optimally.
• A fully developed food processing industry
shall lead to increase in farm gate prices,
increase in rural incomes, reduce wastages,
ensure value addition, promote crop
diversification, generate employment
opportunities as well as export earnings.
• Integrated ACPZ and IAIP effectively
addresses three major constraints to
agribusiness viz.,
o Outdated technologies and management
o Lack of public investment in connectivity&
logistical infrastructure
o Lack of private investments in post
harvest processing and management.
• Increasing demand for organic products
• Potential for opportunities for regional trade
with Sudan, Kenya, Somalia
• The agribusiness infrastructure developed
through the initiative of establishing
19
integrated ACPZ and IAIP shall trigger
inorganic growth of the food processing and
agribusiness sector in the country.
Risk mapping, analysis and mitigation strategies
• Opportunities exist for improving the policy
analysis and research capacity of the
agriculture sector in Ethiopia such as
revamping the higher education programs,
providing training, supporting monitoring and
evaluation, establishing a management
information system, and improving export
markets.
• Ethiopia, by working closely with development
partners and learning from their experience
of pilot programs and seeking assistance on
the role of the government in supporting the
private sector can address some of the major
constraints affecting export flows in Ethiopia
like lack of infrastructure, quality, and
marketing and information systems.
• Rising input costs
• Adoption of self sufficient policies of
neighbouring countries inhibit cross country
trade
• Ambivalent role of Ethiopian grain trade
enterprise interventions, export bans and
price controls
• Extensive government interference in input
markets inhibits private sector suppliers
• Lack of transparency and over right of land
leasing leads to future conflict / litigation.
• Threats that can affect the performance of
the agricultural sector in Ethiopia include:
o Investment insecurity
o Non-standardized product quality
• Non-competitive nature of agricultural
products in the export market due to high
production and marketing cost and lack of
adequate storage and processing facilities.
• Any unplanned growth and development
without addressing the three spheres of
sustainability in a holistic manner will lead to
deterioration of the physical quality of life and
rise in transaction cost to industry making the
region less favourable and defeating the core
purpose of agro clusters.
• Institution of bans by MENA countries
• Increasing sanitary and phyto sanitary
standards in importing countries
325
 Location specific SWOT
analysis carried out

19 SWOT – Location specific

Table No. 19.1: IAIP location specific SWOT analysis

Risk mapping, analysis and mitigation strategies

Location –
region –
Strength Weakness Opportunities Threat
focus crop
/ sector
Tigray – • Availability of large area • Changing trend in farmers • Availability of • Similar
Live stock, for development to move for different jobs surplus land developments
sesame, • Location enjoys • Low level of mechanized for in
sorghum, excellent connectivity farming agricultural neighbourhoods
vegetable, by abutting the federal • Black cotton soil – activities • Effect of climate
dairy highway connecting foundation cost more • Large change
products Gondar and Humera compared to other soils domestic
• Flat terrain with no • Poor to low infrastructure market base
significant undulations facilities • Export
– less burden on • Lack of entrepreneurial opportunities
development cost skills and strategies for focus crop
• Samina river passing • Inefficient market products –
near the site provide information system proximity to
options for water off • Inadequate supply of Sudan, Eritrea
take for IAIP agriculture inputs and Djibouti.
• Majority of the • Low level use of appropriate
households in / modern technology
agriculture activities • Environmental challenges
• Availability of improved such as soil erosion, flood,
cultivar varieties waste management,
• Available local • Available facilities in the
resources for social sector are
appropriate technology inadequate and
• Well endowed with a deteriorating
labour workforce
Source: MACE and secondary data

326
 The critical factors required for
success of the proposed integrated
ACPZ and IAIP are analysed

Critical success factors for integrated ACPZ and
IAIP
Ethiopia’s varied agro ecological zones,
knowledge base, abundant raw material resources,
strategic locations is essentially an expression of the
ambition to derive all such benefits from the country’s 19
ecosystem to the agribusiness stakeholders including
rural communities.

Risk mapping, analysis and mitigation strategies

unlimited opportunities in the agro and food
processing sector have the potential to bestow great
benefits on agribusiness companies, government,
people and the environment. The decision to establish
integrated ACPZ and IAIP clusters in Ethiopia at
The critical factors required for success of
the proposed integrated ACPZ and IAIP in terms of
adequate size, brand positioning and partnering,
administration, GoE support etc. are analyzed based
on the findings and presented in Exhibit No. 19.2.

Exhibit No. 19.2: Integrated ACPZ and IAIP – critical success factors

Brand World-class Good zone Active

Adequate size Theme positioning and government
infrastructure administration
partnering support

Integrated Project
Partnering with Integrated approval,
Large approach on farmers and facilities for Streamlining
catchment end to end growers production, procedural environment
basis in clearances clearances,
area processing,
land
agribusiness manufacturing, acquisition
Tie up with partner
countries logistics
/international residential, and provision
Minimum land experts / universities commercial of basic
area for bringing
Well / institutions of utilities
structured repute Efficient day-
multi sector and
to-day
best environment
for business and
holistic running
Unique
work live play approach offerings and Land
project allocation for
structuring Reliability of processing
Large size Excellent common zone and
helps the hub Best project
to leverage
linkages international facilities Safety and
economies of between key cluster at an security facilitation
scale players affordable price support
structure

Source: MACE analysis

Need for multi criteria analysis for risk assessment
and risk assessment methodology
Many business and non business factors,
external and internal influence factors may have
significant impact on integrated ACPZ and IAIP. Hence
there is a need to develop multi criteria assessment
model for risk evaluation in the second approach. The
structured approach has been adopted in developing
risk matrix.
The appropriate risk matrix is developed in the
context of integrated ACPZ and IAIP through two
different types of approaches.
In the first approach, the qualitative
assessment of risk associated with the volume, value,
cost, growth, governance, brand perspectives are
mapped against various parameters like internal,
partners, customer, competition and Political,
Economic, Social, Technological, Environmental &
Legal (PESTEL). These are discussed both in the
context of IAIP developer, IAIP occupant units and
327
 The risk associated with the volume,
value, cost, growth, governance, brand
perspectives are mapped against various
parameters like internal, partners,
customer, competition and PESTEL

business agencies associated with IAIP operations. against each risk are also mapped as shown in the
19 Further, the impact of the risk and likely occurrence Table No. 19.2.

Table No. 19.2: Risk matrix

Risk mapping, analysis and mitigation strategies

Description Internal Partners Customer Competition PESTEL

Volume, value, cost, growth,
governance, brand
Potential impact on success of
integrated ACPZ and IAIP
Likelihood of occurrence
Source: MACE analysis

Types of risk during the project used with 1 indicating the lowest risk. On the other
implementation stage are significant different from hand, the post implementation stage, a scale of A to E
those risks faced during operation stage. Thus in the has been used with A indicating the lowest risk. A
second approach, risk assessment of integrated ACPZ combination of the two would give a two dimension
and IAIP development under two stages viz., matrix as an output. Thus on a comprehensive manner
implementation stage and operation stage are carried of risk assessment, 1A would indicate the lowest risk
out. and 5E the highest.

In the second approach, the quantitative risk
are analyzed in terms of strategic orientation,
customer orientation, project implementation and
execution risk, triple bottom line sensitivity, human
dimension and economic dimension.
The risk assessment score are designated in
numeric alpha mode in the second approach. For
implementation stage risk, a scale of 1 to 5 has been
Risk assessment, impact analysis and mitigation
strategies – approach 1
Based on the risk matrix, risk assessment
mapping is carried out along with impact and likelihood
of occurrence. The mitigation strategies are drawn out
for the identified risks as show in Table Nos. 19.3 to
19.8.

Table No. 19.3: Risk assessment, analysis and mitigation strategies - volume

Description Internal Partners Customer Competition PESTEL

Volume Team availability Selective Non dependence Competition Agro and food
and senior partnership for on single sector or from new processing
people time outreach single client or players polices and
single market regulatory
issues
Potential High impact High impact High impact High impact High impact
impact on
success of
integrated
ACPZ and
IAIP
Likelihood of Low occurrence Medium Low occurrence High Medium
occurrence occurrence occurrence occurrence

328
 The risk assessment, impact,
likelihood of occurrence are
mapped with appropriate
mitigation strategies

Description Internal Partners Customer Competition PESTEL

Volume - risk a) Adopt mix of a) Establish a) Adopt multiple a) Adopt a) Aligning
19
mitigation experienced credible sectors and diversificati product
strategies and new partners in multiple on in lines to GoE
professionals terms of market product policy and

Risk mapping, analysis and mitigation strategies

b) Heterogeneo marketing approach offerings initiatives
us clients mix partners, b) Deep b) Develop
c) Known clients financial penetration in multi sector
and new investors, selected and multi
clients branding sectors and product
d) Team to and market capabilities
include strategic c) Assorted c) Offer high
specialists in partners client mix quality
handling b) Establish d) Focus on products
business strategic domestic and
development alliances international
and agro market
commodities e) Constantly
procurement develop
capability to
address
multiple
market
requirements
Source: MACE analysis

Table No. 19.4: Risk assessment, analysis and mitigation strategies – value

Description Internal Partners Customer Competition PESTEL

Value Inability to offer High margin Varied client Low value of External
high value allocation to profile like mix of services offered barriers to
added partners government, by competitors realize the
products and private and public associated with value
services sector and lower quality of
difficulties in products
ensuring
affordable quality
of delivery
Potential High impact High impact High impact High impact High impact
impact on
success of
integrated
ACPZ and IAIP
Likelihood of Low Medium High occurrence High High
occurrence occurrence occurrence occurrence occurrence
Value - risk a) Focus on a) Partnership a) Providing a a) IAIP offerings a) Adopt
mitigation niche to be mix of value should be of appropriate
strategies segments commensura added heterogeneo business
for better te with their products us mix structure
UVR overall instead of b) Focus on addressing
b) Increase margin and mere affordable the
weighted maximize preserved products constraints
329
 Appropriate risk allocation
need to be exercised

19 Description Internal Partners Customer Competition PESTEL

average revenue to products through b) Balanced
price for IAIP b) Develop high differentiate revenue
per tonne b) Adopt end d price mix
Risk mapping, analysis and mitigation strategies

handling differentiated affordable structure through

price products c) Establish different
structure for prime mover geographic
varied quality advantage al
and market d) Create value concentrati
for money on, product
proposition ranges
Source: MACE analysis

Table No. 19.5: Risk assessment, analysis and mitigation strategies - cost

Description Internal Partners Customer Competition PESTEL

Cost Processing zone Huge Price sensitive Competition from Regulatory
and processing overheads of market new players influences
industry related partners
risks and cost
overrun
Potential Medium impact High impact High impact Medium impact High impact
impact on
success of
integrated
ACPZ and
IAIP
Likelihood of Low Medium High High occurrence Medium
occurrence occurrence occurrence occurrence occurrence
Cost - risk a) Define risk a) Identify the a) IAIP shall a) Continuously a) Adopt
mitigation sharing multiple constantly increase appropriate
strategies mechanisms agencies work on cost capability and business
in the b) Work reduction and demonstrate structure
collaborative towards leverage on each time addressing
and contract large volume innovation increased the
agreements business b) Increased customer constraints
b) Work opportunities productivity centric
towards c) Resource c) Differentiated approach
unifying the optimization price b) High level of
facilities and structure resource
resource optimization
sharing c) Adopt
c) Resource diversification in
optimization product
through offerings
collaborative
and strategic
alliance
approach
Source: MACE analysis

330
 The suggested checks &
balances should substantially
reduce or mitigate the impact
on success

Table No. 19.6: Risk assessment, analysis and mitigation strategies - growth
19
Description Internal Partners Customer Competition PESTEL
Growth a) Lack of IAIP not a) Unclear Exponential Delayed decision

Risk mapping, analysis and mitigation strategies

funding getting contract growth of cycles
b) Shortage of compensated scope competitors
qualified for providing b) Poor
personnel opportunities customer
for partners satisfaction
Potential High impact High impact High impact Medium impact High impact
impact on
success of
integrated
ACPZ and
IAIP
Likelihood of Medium Medium Medium High Medium
occurrence occurrence occurrence occurrence occurrence occurrence
Growth - risk a) Ensure a) Evolving a) Clarity in a) Migrate to a) Factor
mitigation availability of robust contract next layer of appropriate
strategies funding contract b) Constantly competition timelines for
towards framework evolve through business
capital and b) Developing adjacent benchmarking maturing cycle
operational adequate sector of services, b) Highlight the
expenses checks and product product line benefits to the
b) Adopting balances lines – and society and the
business c) Continued capacity geographies long term gains
scenario monitoring building, skill with for the
enabling the development international community at
additional performan training, best practices large
revenue ce of the awareness and strategies c) The government
c) Do a skill set partners program needs to be
mapping and c) Conduct appraised of the
identify regularly activities of the
individual client IAIP through
training satisfaction presentations
programs survey from the
authorities about
the projects with
their benefits
from time to time
d) Establish
appropriate
media plan
Source: MACE analysis

331
 Exhaustive risk mapping,
analysis and mitigation
strategies provides a business
resilience

Table No. 19.7: Risk assessment, analysis and mitigation strategies - governance
19
Description Internal Partners Customer Competition PESTEL
Governance a) Product Performance Poor delivery Slow a) Delay in project
offering and governance to ultimate responsivenes execution
Risk mapping, analysis and mitigation strategies

liability risks standards of customers s and delayed b) Lack of

b) Internal partners due to decision understanding of
process and improper cycles of IAIP deliverables
quality selection c) Regulatory
process of burdens
partners d) Intellectual
property
infringement
e) Conflict of interest
in cluster working
mode
Potential High impact High impact High impact High impact High impact
impact on
success of
integrated
ACPZ and
IAIP
Likelihood of High High Medium High Medium occurrence
occurrence occurrence occurrence occurrence occurrence
Governance a) Well a) Upfront a) Established a) Adopt a) Adopt appropriate
- risk documented discussion of standards appropriat business structure
mitigation roles and terms of and e business b) Conduct
strategies responsibiliti working and selection structure awareness
es client delivery criteria for raising campaign
b) Robust standards b) Well responsive c) Sensitizing the
agreement b) Deliverables defined ness index operational team
c) Liability monitoring selection b) Evolve with appropriate
limitation through process dynamic training on
clause appropriate market intellectual
d) Establish appraisal responsive property rights and
high quality mechanism mechanism mediums to
governance c) Clear connect and check
standards definition of for infringement of
e) Transparent roles and patented
operational responsibility technologies
process d) The conflict of
f) Timely interest among
delivery various teams
could be avoided
by rules framed by
a body of legal and
domain experts
Source: MACE analysis

332
 IAIP - SPV should achieve its
objectives through high level of
governance and extensive
internal business process

Table No. 19.8: Risk assessment, analysis and mitigation strategies - brand at risk
19
Description Internal Partners Customer Competition PESTEL
Brand at a) Processing a) Conflict of Low perceived a) Misusing of Governance

Risk mapping, analysis and mitigation strategies

risk risks interest and impact / IAIP initiatives risks
b) Accountability partner benefits associated with
and selection resulting from unorganized
transparency b) Excessive the agro and food
pricing by transformation processing
partners al Initiatives sector
Potential High impact High impact Medium High impact High impact
impact on impact
success of
integrated
ACPZ and
IAIP
Likelihood of Low occurrence Medium Medium High occurrence Medium
occurrence occurrence occurrence occurrence
Brand at a) Develop a) Meticulous a) IAIP should a) IAIP should a) Effective
risk - risk performance transparent draw out its evolve robust contract
mitigation assessment selection operational system to agreement
strategies matrix process plan to ensure its b) Create IPR
b) Conceive well b) Defining the recognize initiatives are c) Continuous
defined roles roles and as not misused monitoring
and responsibilities knowledge through and
responsibility of the and appropriate reporting
matrix participants processing contract
c) Develop c) Evolving hub documentation
leadership detailed functioning and proper
competency guidelines for across internal
matrix with quick sectors and process
expected role resolution of geographies b) Strong
at each level conflicts offering disclaimer
d) Conduct d) Emerge as inclusive - conditions
business in a technically innovative -
fair, honest, best and least integrated
impartial and cost solution affordable
transparent provider agro
manner and e) Establish processing
with full appropriate solutions
disclosure checks and b) Design and
e) Practice balances to promote
ethical ensure awareness
business affordable programs
adhering to price levels c) Extensive
the prescribed media plan
norms,
statutory and
regulatory
stipulation
f) Evolve systems
to ensure the

333
 Development stage risk
is identified

19 Description Internal Partners Customer Competition PESTEL

collaborative
and contract
working are
Risk mapping, analysis and mitigation strategies

conducted
with
transparent
approach
g) High quality
team
Source: MACE analysis

Development of risk assessment matrix during
project implementation stage – approach 2
A set of major indicators along with the sub
indicators are identified for risk assessment during
implementation stage. These indicators essentially
outline the parameters to be analyzed from risk
perspective during implementation. The weightages
are assigned for main indicators and sub indicators as
shown in Table No. 19.9.10% weightage is given for
each main indicator and each main indicators is
evaluated through selected sub indicators and equal
weightage of 10% is assigned for each sub indicator.

Table No. 19.9: Indicators, sub indicators and weightage assigned – project implementation

Indicator during implementation: Strategic orientation Weightage for the indicator: 10

Sub indicators Weightage for the sub indicators
Business perspective 10
Anticipating and leveraging business opportunities / business models 10
Sustained supply of raw materials 10
Innovative business model 10
Thought leadership 10
Cost leadership and optimization 10
Integrated approach 10
Indicator during implementation: Customer orientation Weightage for the indicator: 10
Sub indicators Weightage for the sub indicators
Ability to fulfil the customer needs 10
Uniqueness in business concept / programs offered & facilities provided 10
Product differentiators 10
Innovation in product offerings and services 10
Change catalyst/ critical and contributing factors for success 10
Indicator during implementation: Project execution and result Weightage for the indicator: 10
orientation
Sub indicators Weightage for the sub indicators
Land availability and acquisition 10
Construction equipment, project execution 10
Planning 10
Design and engineering 10
Construction challenges 10
Contract default arrangements and resolution systems 10
External linkages and offsite infrastructure 10
Statutory clearances and approvals 10

334
 Composite risk assessment
score during implementation
stage is computed

Indicator during implementation: Triple bottom line orientation Weightage for the indicator: 10
Sub indicators Weightage for the sub indicators
19
Leadership through sustainability 10
Brand positioning, ‘premium’, ‘value’ or ‘economy 10

Risk mapping, analysis and mitigation strategies

Institutional efficiency 10
Indicator during implementation: Human dimension of sustainability Weightage for the indicator: 10
Sub indicators Weightage for the sub indicators
Social risks and mitigation- displacement, land grabs, etc. 10
Indicator during implementation: Economic dimension of Weightage for the indicator: 10
sustainability
Sub indicators Weightage for the sub indicators
Developer selection 10
Innovative capital structure 10
Financial closure 10
Source: MACE analysis

The risk assessment in terms of low / are 1, 2, 3, 4 and 5 respectively as shown in Table
medium / high / very high / extreme against each of No. 19.10. The weighted score against each key
the identified sub indicators are done and weightage indicator is determined.
assigned for low, medium, high, very high and extreme

Table No. 19.10: Assigned weightage for sub indicators

Weightage for sub indicator 10

Risk rating against the parameter (user perception) Risk rating value
Low risk 1
Medium risk 2
High risk 3
Very high risk 4
Extreme risk 5
Source: MACE analysis

The risk assessment for each indicator is The composite risk assessment score during
done across the sub indicators as shown in Annexure implementation based on the analysis of indicators and
19. sub indicators considerations are shown in Table No.
19.11 and Exhibit No. 19.3.

Table No. 19.11: Composite risk assessment score during implementation stage

S. Integrated ACPZ and IAIP risk

Risk assessment during implementation
No. assessment score in a band of 1 to 5
1 Strategic orientation 2.14
2 Customer orientation 2.00
3 Project execution and result orientation 1.75
4 Triple bottom line orientation 2.00
5 Human dimension of sustainability 1.00
6 Economic dimension of sustainability 2.00
Composite risk assessment score during 1.82
implementation stage
Source: MACE analysis

335
 Operation stage risk is
identified

Exhibit No. 19.3: Integrated ACPZ and IAIP risk assessment matrix during implementation in a 1 to 5
19 band

Integrated ACPZ and IAIP risk assessment matrix during implementation in a band of 1 to 5
Risk mapping, analysis and mitigation strategies

2.14
Strategic orientation
2.50

2.00

Economic dimension of 1.50

2.00
2.00
Customer orientation
sustainability
1.00

0.50

0.00
1.00

1.75
Human dimension of Project execution and result
sustainability orientation
2.00

Triple bottom line orientation

Source: MACE analysis

Development of risk matrix during operation –
approach 2
A set of major indicators along with the sub
indicators are identified for risk assessment during
operation stage. These indicators essentially outline
the parameters to be analyzed from risk perspective
during operation as shown in Table No. 19.12.

Table No. 19.12: Indicators and sub indicators – project operation

Indicators during operation Sub indicators

Strategic orientation
Customer orientation
Operation and result
orientation
Triple bottom line
orientation
o Business facilitator
o Marketing and off take of the developed industrial plots and ready built
space
o Global standards and practices
o Quality of service and delivery
o Customer centric operation strategies
o Ability to identify anchor units
o Community approach to quality & affordable services
o Customer profitability
o Environmental compliance
o Pest management plan and phyto sanitation assessment & plan
o Community partnerships and outreach
o Stakeholder focus
o Business strategy around sustainability drivers
o Systems oriented sustainability
o Accessibility and community approach to quality & affordable services

336
 Composite risk assessment
score during operation
stage is computed

Indicators during operation Sub indicators

19
o Impact and social inclusion
o Collaboration & strategic alliances
Human dimension of o Capacity building

Risk mapping, analysis and mitigation strategies

sustainability
Economic dimension of
sustainability
Source: MACE analysis
o Professional development in agribusiness
o Work life balance focus
o Innovative methods to minimize operational expenses
o Innovation in price structure
o Revenue modelling
o Profitability and other financial indicators
o Financial reporting and monitoring
o Revenue sharing with GoE and regional government
o CSR initiatives

Risk assessment against the set of given criteria the identified sub indicators are done and rating of A,
B, C, D and E are assigned for low, medium, high, very
The risk assessment in terms of low / high and extreme risk respectively as shown in Table
medium / high / very high / extreme against each of No. 19.13.

Table No. 19.13: Assigned rating for risk

Risk rating against the sub indicator(user perception) Risk rating value
Low risk A
Medium risk B
High risk C
Very high risk D
Extreme risk E
Source: MACE analysis

The risk assessment for each indicator is The composite risk assessment score during
done across the sub indicators as shown in Annexure operation stage based on the analysis of indicators
19. and sub indicators considerations are shown in Table
No. 19.14 and Exhibit No. 19.4

Table No. 19.14: Composite risk assessment score during operation stage

S. Integrated ACPZ and IAIP risk

Risk assessment during operation
Number assessment score in a band of A to E
1 Strategic orientation B
2 Customer orientation B
3 Operation and result orientation B
4 Triple bottom line orientation B
5 Human dimension of sustainability B
6 Economic dimension of sustainability B
Composite risk assessment score during operation B
stage, based on number of occurrences

Source: MACE analysis

337
 Combined risk assessment
score is computed

19 Exhibit No. 19.4: Integrated ACPZ and IAIP risk assessment matrix during operation in A to E band

A B C D E
Risk mapping, analysis and mitigation strategies

Strategic orientation
Customer orientation
Operation and result orientation
Triple bottom line orientation
Human dimension of sustainability
Economic dimension of sustainability
Source: MACE analysis

Combined risk assessment score

The combined risk assessment score for the integrated ACPZ and IAIP are given in Table No. 19.15.

Table No. 19.15: Combined risk assessment score

Risk assessment Rating Remarks

Risk assessment during 1.82 In a band of 1 to 5
implementation period Level 1 indicates low risk whereas 5 indicates extreme risk
Risk assessment during operation B In a band of A to E
period Level A indicates low risk whereas
E indicates extreme risk
Combined risk assessment score 1.82 B 1 A indicates low risk whereas
5 E indicates extreme risk on a combined assessment
Source: MACE analysis

338
 Chapter – 20
Integrated ACPZ and
contribution
Integrated ACPZ and IAIP’s overall objective
The major issues facing the country are
ensuring food security, self-sufficiency in food
production, remunerative prices to the farmers for
their produce etc. If productivity is increased through
technological interventions and if the surplus
production of focus crops, cereals, fruits, vegetables,
milk, fish, meat and poultry etc. are processed and
marketed both inside and outside the country, there
will be greater opportunities for adding to the income
of farmers and employment.
Integrated ACPZ and IAIP and clusters of
Integrated ACPZs and IAIPs leading to AIGC shall
provide an enabling framework leading to increase in
yield, reduction in consumer prices on the domestic
front, grading and food safety practices, self-sufficiency
on the domestic front, increase in exports, reduction
in post-harvest losses, sustainable farming practices,
extensive processing and increased penetration of
technology.
The Integrated ACPZ and IAIP clusters are
expected to contribute to growth of the agribusiness
by effectively addressing three major constraints to
agribusiness viz.,
IAIP benefits and
• Outdated technologies & management
• Lack of public investment in connectivity &
logistical infrastructure and
• Lack of private investments in post-harvest
processing and management
The Integrated ACPZ and IAIP clusters
concept facilitates the state of the art technology,
knowhow & avenues for production, processing, and
marketing of the produce apart from investments by
private sector in developing the much needed agri
infrastructure & agro based industry units in a fair and
transparent manner for ensuring sustainable
agribusiness development in Ethiopia.
The Integrated ACPZ and IAIP cluster shall
enjoy strategic importance in view of its role in
developing the country’s food security and inclusive
growth.
Analysis of benefits and contribution
The benefits and the contribution of the
proposed Integrated ACPZ and IAIP are analyzed both
from the sector point of view and agribusiness
contributor as shown in the Exhibit No. 20.1.
339
 Benefits through best cultivation
practices and productivity
enhancement enablers, industrial
infrastructure are identified

20 Exhibit No. 20.1: Analysis of benefits and contribution

Integrated IAIP, ACPZ benefits and contribution

Source: MACE analysis

Benefits to sector

The anticipated benefits to sector are outlined in the Table No. 20.1.

Table No. 20.1: Integrated ACPZ and IAIP – sector benefits and contribution

Agri input o Ensuring timely availability of agri inputs of right quality and quantity
o Enhance fodder and feed production
o Refinement of seed-production technologies
Hybrid and improved o Development of improved crop varieties / hybrids
cultivars o Genetic resources and development of improved cultivars
o Indigenous poultry breeds including improved strains
o Genetic up-gradation of indigenous / native cattle
o Conservation and improvement of native animal genetic resources to
maintain diversity of breeds
o Sustainable management of natural resources
Modern practices o Better production practices for focus crop
o High density plantations, shade net cultivation, poly house cultivation, green
house cultivation, precision farming
o Diversification from traditional crops to plantations, orchards, vineyards,
flowers and vegetable gardens
o Deep sea fishing
o Shift from subsistent livestock farming to sustainable livestock and poultry
farming
o Milk production & milk processing capacity and dairy products
o Database for standardization of methodologies for estimation of catch from
diverse aquatic resources
o Energy management and utilization of conventional and non-conventional
energy sources in agricultural production and processing activities
Production and yield o Knowledge dissemination and technology transfer for increasing yield
enhancement o Productivity of animal husbandry sector
o Efficient, economic, eco-friendly & sustainable crop production and
protection technologies

340
 Provision of state-of-the-art
infrastructure and institutional
mechanism will trigger economic
activities and faster inclusive
growth
Market and linkages
Occupant units
Planning and infrastructure
Institutional mechanism
Economic activities and
inclusive growth
o Meeting international sanitary & hygiene standards and norms 20
o Sustainable, profitable and competitive enterprise through engineering
interventions of farm mechanization, value addition & energy management in
Integrated IAIP, ACPZ benefits and contribution
production & post harvest operations
o Adoption of precision machinery and strategies for carrying out timely and
efficient agricultural operations for agriculture, horticulture, livestock and
fisheries production
o Better utilization and value-addition of agricultural produce
o Linkages among stakeholders such as farmers, industry, research and
extension service providers
o Addressing the growing domestic and overseas markets for better price
realization
o Access to capital, technology, effective management and support services
such as credit, marketing, research and extension
o Minimize post harvest losses, reduce wastages resulting in higher value
realization to farmers
o An Integrated ACPZ and IAIP cluster holistically addresses supply chain
alignment with domestic and international requirements, improvement of
market access through market Intelligence
o Waste minimization at all stages in the food processing chain by
development of specialized agri infrastructure for storage, transportation
and processing of agro-produce
o Creation of world-class best environment for business
o Integrated ACPZ and IAIP cluster shall offer world-class facilities at an
affordable cost structure
o The occupants units of IAIP have the advantage of being able to avail the
common infrastructure facilities, access to market intelligence, interact and
conduct transactions at some of the world's leading institutions at a fraction
of what it would have cost on standalone mode due to cluster benefits
o Excellent facility management in IAIP
o Induction of modern technology into the food processing industries
o Planned as a vibrant IAIP campus with state-of-the-art infrastructure
o Good lifestyle of integrated work – learn – live – play environment – self –
contained business hub with compatible social infrastructure facilities
o A great lifestyle and low cost of living - secure, friendly and stimulating
environment
o Integrated ACPZ and IAIP clusters aims to create an enabling institutional
structure for addressing identified thrust areas, facilitates flow of
investment, technologies, skill sets and modern management practices
o Integrated ACPZ and IAIP aims to provide a mechanism to bring together
farmers, processors and retailers and link agricultural production to the
market so as to ensure maximization of value addition, minimization of
wastages and improving farmers’ income
o Encouraging R&D in food processing for product and process development
o A strong and dynamic agribusiness and food processing sector plays a
significant role in diversification of agricultural activities, improving value-
addition opportunities and creating surplus for export of agro-food products
o A developed agribusiness and food processing industry is expected to lead
to an increase in farm gate prices translating into increased rural incomes,
reduce wastages, ensure value addition, promote crop diversification,
generate employment opportunities as well as export earnings. With such a
large and diversified production base coupled with low manpower cost and
341
 Benefits that could be
accrued by the agribusiness
stakeholders are identified

modern technology, the Ethiopian food processing sector is poised for

20 growth, if the advantages are leveraged optimally
o Integrated ACPZ and IAIP is a tool for driving rural economy as it brings
Integrated IAIP, ACPZ benefits and contribution

synergy between industry and agriculture

o The demand for ancillary jobs required for the IAIP’s activity will help in
development of industry in and around the area and add to the furtherance
of industrialization of Ethiopia
o ACPZ clusters would play a pivotal role in attracting agribusiness
investments, creating employment opportunities for the local population and
fostering sustainable inclusive economic growth
o ACPZ ensures substantial increase in the investments aimed at streamlining
agricultural value chain by attracting state of the art technology and by
encouraging best practices in every aspect of agribusiness, all of which will
help in reducing total transaction costs and improve value realization for
farmers
Source: MACE analysis

Benefits to agribusiness contributors

The anticipated benefits to agribusiness contributors are outlined in the Table No. 20.2.

Table No. 20.2: Integrated ACPZ & IAIP - benefits to agribusiness contributors

Anticipated benefits
Farmers /  Exposure and familiarity to hi-tech agriculture technologies
growers /  Improved production and productivity
fishermen / rural  Reduction in production cost
community  Wastage reduction
 Increasing value addition
 High unit value realization
 Price stabilization
 Enhanced revenue to farmers, growers, rural community
 Rural growth and employment to local population
 Improvement in pre and post harvest management
 Enhanced fish production
 Better standard of living of farmers, growers, rural community and fishers
Traders  Supply chain alignment with domestic and international requirements
 Removing of regulatory hurdles that have been affecting growth
 Improved branding, marketing
Exporters  Leverage the growing demand in both domestic and international markets
 Brand image for unique agro food products of Ethiopia and develop ‘key products’ to
gain market dominance
 New markets and new product lines and develop alternate marketing channels
 High realization and value added exports meeting EU, HACCP, FDA and other
international standards
 Improvement of market access through market intelligence
 Competitive and efficient marketing arrangements
Processors  Facilitates flow of investment, technologies, skill sets and modern management
practices.
 Increased industrial output
 Improved grading and food safety practices
 Special emphasis shall be laid down to make small-scale agro based units in the

342
 Quantitative assessment
of benefits is carried out

region to remain competitive in global markets

 To raise the competitiveness and efficiency of SME
20
Others  Balanced agro and food industrialization spread across the region / country

Integrated IAIP, ACPZ benefits and contribution

 Reduction in consumer prices in the domestic front
 Increasing the availability for domestic consumption and generating exportable
surplus to target markets
 Nutrition security for the country and region
 Positioning Ethiopia produce in the global arena
Source: MACE analysis

The anticipated quantity benefits from the proposed integrated ACPZ and IAIP developments are
outlined in the Table No. 20.3.

Table No. 20.3: Quantity assessment of benefits

Short term – within Medium term - 3 to Long term - more than

Description
2 years 4 years 4 years
Area occupancy (industrial area 30 % of the area. 80 % of the area. 90 % of the area.
including specialised infrastructure) 43 hectares 116 hectares 130 hectares
Processing capacity, MTPA 233533 622755 700599
Transaction (million ETB) 5864 15638 17593
Transaction (million ETB ) / hectare 135.03 135.04 135.04
Source: MACE analysis

Likely employment generation from the proposed ACPZ and IAIP developments for the initial of 258.62
hectares and ultimate development of 1000 hectares are outlined in the Table No. 20.4.

Table No. 20.4: Longterm employment generation

1 2 3 4 5
No. Manufacturing Sector 7 July 7 July 7 July 7 July 7 July
2017 2018 2019 2020 2021
Area developed 41.38 59.48 72.41 85.34 125
Cumulative area (in hectares) 41.38 100.86 173.28 258.62 383.62
Direct employment
1 Integrated Agro Industrial Parks -
Total
• Senior management 56 115 187 272 397
• Middle level management 112 230 374 544 794
• Technicians & supervisory 336 690 1122 1632 2382
staffs
• Skilled factory labours 833 2023 3471 5178 7678
• Semi skilled and unskilled 1666 4046 6942 10356 15356
factory labours
• Security, housekeeping, 1666 4046 6942 10356 15356
landscaping, loading /
unloading and infrastructure
maintenance labours
2 Employment generated in RTC and 120 180 270 405 608
RTC related activities

343
 1 2 3 4 5
20 No. Manufacturing Sector 7 July 7 July 7 July 7 July 7 July
2017 2018 2019 2020 2021
Integrated IAIP, ACPZ benefits and contribution

3 Additional employment generated 16791 40927 70311 104941 155663

in ACPZ in farming sector
Estimated direct employment 21580 52257 89619 133684 198234
Indirect employment
4 Indirect employment generated viz. 10790 26129 44809 66842 99117
primary, secondary and tertiary
sectors including banks, logistics,
insurance, manufacturing, trading,
brokerage, ancillary industries,
institutions, schools, colleges and
other social infrastructure
Total direct & indirect 32370 78386 134428 200526 297351
employment
Contd...
Contd...
6 7 8 9 10
No. Manufacturing Sector 7 July 7 July 7 July 7 July 7 July
2022 2023 2024 2025 2026
Area developed 125 125 125 125 116.38
Cumulative area (in hectares) 508.62 633.62 758.62 883.62 1000.00
Direct employment
1 Integrated Agro Industrial Parks - Total
• Senior management 522 647 772 897 1013
• Middle level management 1044 1294 1544 1794 2026
• Technicians & supervisory staffs 3132 3882 4632 5382 6078
• Skilled factory labours 10178 12678 15178 17678 20006
• Semi skilled and unskilled factory 20356 25356 30356 35356 40012
labours
• Security, housekeeping, 20356 25356 30356 35356 40012
landscaping, loading / unloading
and infrastructure maintenance
labours
2 Employment generated in RTC and 912 1368 2052 3078 4617
RTC related activities
3 Additional employment generated in 206385 257106 307828 358550 405774
ACPZ in farming sector
Estimated direct employment 262885 327687 392718 458091 519538
Indirect employment
4 Indirect employment generated viz. 131442 163844 196359 229046 259769
primary, secondary and tertiary
sectors including banks, logistics,
insurance, manufacturing, trading,
brokerage, ancillary industries,
institutions, schools, colleges and
other social infrastructure
Total direct & indirect employment 394327 491531 589077 687137 779307

344