Theses supervised by Glenn Paul Jenkins
15 theses · Eastern Mediterranean University
An Analysis of the Ethiopian and Rwanda Dairy Projects
Ethiopia and Rwanda are developing countries in Africa, and various projects are underway to improve the economic situations. One of the main areas of recent development is agriculture. Agriculture employs a huge part of the working age population in both countries, and the dairy industry is becoming more visible in the recent years. Ethiopia owns one of the largest livestock herd in Africa, and there is a potential in maximizing the milk production. However, poverty is still a huge problem in Ethiopia, and this can only be reduced by investing in the dairy industry to reduce unemployment and increase the food security. The current economic climate in Ethiopia is conducive for expanding investments in the dairy industry, and this can increase and motivate the smallholder farmers. If proper investments are done, then the dairy industry in Ethiopia will yield positive results. Rwanda is a beacon of hope in Africa. The level of good governance in the country is spectacular and sets the pace for other afican countries to follow. Rwanda is advancing its economy on a larger scale, and the willingness of the government to modernize its policies is something worth noticing. The dairy industry was in a bad state, but the USAID intervention has made tremendous efforts to modernize the industry. The farmers, feed processors and consumers have benefited from the training conducted by the USAID. If Rwanda continues with the same pace, then the dairy industry will flourish, and they will be able to compete with their neighbors. To flourish, both countries need to invest more in new technologies and education since these two are important in the long run. Keywords: Interventions, Investment, Ethiopia Dairy, Rwanda Dairy
Integrated Investment Appraisal of a Steel Manufacturing / Electricity Co-generation Electricity Project
The purpose of this paper is to examine the financial and economic appraisal of a co-generation power plant that utilizes waste heat (flue gas, also known as Corex gas) from a steel-manufacturing factory to generate electricity. It describes how an independent power producer (IPP) generates electricity for supply to industrial consumers and the state electricity board in the state of Karnataka, India. The 260-MW electricity-generating plant is promoted by a local company and its foreign partner on a build-own-operate (BOO) basis, and is financed through a modern project finance arrangement. A financial model is built based on the FAST modeling standard, and the outcomes of the financial analysis reported. The FAST financial modeling standard is also applied to the economic and stakeholder analysis. The diverse classes of related risk and key risk variables are identified, and risk mitigation measures considered. Lastly, an economic analysis is conducted, project externalities evaluated, and economic risk factors tested. Conclusions are then presented, based on the outcomes of the completed project analysis. Keywords: Investment Appraisal, Cogeneration, steel manufacturing, electricity generation, India, project finance, FAST modeling.
Cost Benefit Analysis of a Regional Arterial PPP Toll Road Project A Case Study of the Proposed R-1 Toll Road
Road infrastructure is of vital importance. Roads facilitate the movement of people, goods, services and resources within an economy. Traditionally, public infrastructure such as roads has been provided using national budgetary resources. Over time participation of the private sector in the procurement and provision of road infrastructure has increased. Public authorities have been partnering with the private sector due to the limitation of capital to undertake required road projects. Public-Private Partnerships (PPPs) of various forms have been used extensively in road transportation projects as an alternative to state and local government procurement and provision of road infrastructure. The primary objective of this thesis is to undertake a holistic assessment of a proposed PPP toll road project in the Southern African country of Zimbabwe; using Cost-Benefit Analysis (CBA).
Exchange Rates, Gold and Money Demand in India and South Africa
This dissertation endeavors to explore the different aspects of macroeconomic factors such as the exchange rate, price of gold and demand function for money in India and South Africa respectively. In the second chapter, we investigate the co-movements and relationships among gold and oil prices and Indian Rupee (INR) to US Dollar (USD) exchange rate over the period of January 12, 2004 to April 30, 2015, to consider whether economic policymakers in India should separate financial policies and energy policies. We use different econometric methods such as Johansen’s cointegration test, vector autoregressive (VAR) model, Granger-causality test and impulse response to describe the relationships among the factors. Our empirical results show that in spite of short-run causality effects between the variables, there is not a long-run relationship between them. This analysis provides a number of important economic insight into these markets in India. The third chapter is an empirical exercise in money demand behavior, testing whether economic and monetary uncertainties may affect the demand function for money in South Africa. This is often done by utilizing the unlimited error-correction model and bounds testing method to cointegration explained by Pesaran et al. (2001). We employ the moving-average standard deviation method to generate the results uncertainty estimation and monetary uncertainty estimation. The results suggest that any increase in output uncertainty causes a substitution effect away from cash and less volatile assets, whereas an increase in monetary uncertainty causes a precautionary impact to save more volatile assets i.e. cash. Finally, we use Brown et al.’s (1975) cumulative sum (CUSUM) and cumulative sum of squares (CUSUMSQ) tests to consider the coefficients strength. Our findings report the steady demand function for money in South Africa. In the fourth chapter, we check the impact of domestic and foreign interest rate volatility on the demand function for money in South Africa. Our findings show that the measure of interest rate volatility on domestic money has a negative relationship with the demand for money. This could induce a few investors to move a portion of their wealth out of ostensible resources, including money, into substantial resources such as product inventories. Moreover, the foreign interest rate fluctuation measure is not significantly related to the demand function for money in South Africa. The findings imply that monetary and financial policies have an important role in explaining the economy of less developed countries. Keywords: Exchange rate, gold price, oil price, money demand, India, South Africa.
An Integrated Investment Appraisal of Paddy Irrigation A Case of Senegal River Valley
According to the FAOStat 2015, agriculture contributes 17 percent of the Senegalese GDP and provides 68.89 percent of the total employment of the economically active population with females accounting for 48.50 percent of that labor force. Poverty is still a challenge in Senegal with an estimated 46.7 percent of the total population living below the national poverty line. Rice is one of the main food crops in Senegal, mostly grown by female subsistence farmers. Senegal has emerged to be one of the chief consumers of rice in West Africa and the largest importers of broken rice with approximately 70 percent of total domestic consumption imported. The project evaluated in this paper introduces paddy irrigation to increase production and introduces aromatic varieties to cater to urban preferences and reduce expensive exports. Keywords: Paddy Production, Irrigation Farming, Cost-Benefit Analysis, Financial Analysis, Economic Analysis, Risk Analysis, Risk Management.
An integrated investment appraisal of broiler production in Rwanda
The aim of this thesis is to identify the main opportunities and risks facing each farmer in broiler projects in Rwanda. Although a deterministic cost-benefit analysis showed that this kind of project have a highly satisfactory net present value (NPV), a risk analysis using an integrated financial, economic and stakeholder model detected many risk variables that might make this project unfeasible. Some essential risk includes the uncertainty of the price of chicken, the price of feeds and the real exchange rate. The study point out that exporting to nearby countries like D.R. Congo is very important and helpful if possible. The analysis also recommends some of the alternatives that can be used to reduce the cost for feeds effectively. Keywords: integrated investment appraisal, financial analysis, economic analysis, risk analysis, broiler production, Rwanda
Rates of Return to Capital, and the Economic Opportunity Cost of Capital in EAC Countries and Ghana
This research provides an analytical framework and an application to estimate the rate of return to capital, and the economic opportunity cost of capital (EOCK) intended for EAC countries consisting of Kenya, Rwanda, Tanzania, and Uganda, as well as the EOCK for Ghana. These parameters have a vital role in the evaluation of public investment projects. They expect to help policymakers at all levels of government improve investment allocations and project selection to ensure that the highest value public projects are chosen and financed in order to achieve more efficient utilization of resources. The marginal productivity of capital is a key variable in estimating the economic opportunity cost of capital. This study estimates the real economic rates of return to reproducible and remunerative capital of the EAC economies. The results indicate that the rates of return to reproducible capital in real terms over 1999 –2016 have averaged 10.70% in Kenya and Rwanda, while it averaged 12.05% and 9.86% in Tanzania and Uganda, respectively. With regard to the marginal rates of return to remunerative capital, the results suggest that EAC countries have averaged 16.28%, 16.21%, 15.07%, and 14.49% in Tanzania, Rwanda, Kenya, and Uganda, respectively, over the same period. The economic discount rate is derived for the East African Community (EAC) countries and Ghana on the base of the economic opportunity cost of funds sourced through domestic and international capital markets. The economic opportunity cost of each different source of funds, namely, the return to domestic investment, the rate of return of household saving, and the marginal economic cost of foreign financing, have been estimated for each country. Using a weighted average method, the results indicate that the EOCK are: 11.5% for Kenya, Uganda and Ghana, and 12.5% for Rwanda and Tanzania. Keywords: Discount Rate; Capital Return; Opportunity Cost; Public and Private Investment; Cost-Benefit Analysis; Economic Growth.
Analysis of an Integrated Combined Power Cycle Plant in Egypt
This study examines the investment in the proposed combined power cycle plant in Egypt. Due to rise in population, Egypt is facing a challenge supply of the electricity to the end users. As a result, the demand of electricity in Egypt is very high and it is potentially attractive to invest in the power sector. In order to meet the growing demand for electricity, the Egyptian government is considering to introduce the various projects, which are efficient in terms of cost, as well as, they have a positive impact on the economy. Out of these projects, from the cost and benefit perspective the El Kureimat Combined Power Cycle Plant is a good choice. Furthermore, the proposed plant technology is an alternative to the existing fuel technology plants which are not so fuel efficient, thus, the cost of generating electricity per unit decreases. The proposed plant is powered by natural gas and uses 6th gas and steam turbines. It has a capacity of 750MW electricity. The Gas turbines generate 500MW and the steam one produces 250MW. Different kinds of analyses such as economic, financial and stakeholder analyses are conducted under this research in order to check the impacts of the proposed plant on the economy. Financially and economically this project is viable but it has some issues regarding the repayment of the loan. There are some factors that impose risks to the financial variability of the project caused by such factors as change in interest rate, electricity tariffs, inflation, the rate of inflation, the degree of subsidization of the natural gas and demand tariff on financial viability that have an adverse impact of the proposed project. Possible measures need to be considered in order to decrease the identified risk exposure, as well as to make this project more attractive in future. Keywords: Investment appraisal, financial analysis, economic analysis, stakeholder analysis, risk analysis, power plant, Egypt
Integrated Investment Appraisal of Water and Sanitation Projects: A Case of Senegal Water and Sanitation Project
Senegal’s water supply coverage was 75 percent in 2004. Of the 75 percent of the total population. 64 percent of the rural population is covered, and 90 percent of the urban population has access to water. The figures are much lower with sanitation however, with only 33 percent coverage of the entire population of Senegal. Of the 33 percent, 17 percent of the rural population is covered and 57 percent of the urban population is covered. To further improve the water and sanitation sector of Senegal, especially in the rural areas, the African Development Bank (AfDB) decided to intervene with a series of engagement. The study is the appraisal of a water and sanitation project which is the first phase of the African Development Bank’s (AfDB) engagement in rural water and sanitation in Senegal. This initiative is directed towards ensuring that Senegal reaches the millennium development goals it signed up for. The intervention is structured such that it takes care of the water supply infrastructure, the sanitation infrastructure and the renewal of the unified framework of implementation. This study is an appraisal of this project, and the impact it has on all major stakeholders. The Cost-Benefit Analysis (CBA) done in this study employs the Integrated Investment Appraisal Approach (IIA) which typically includes the financial, economic, stakeholder and risk analyses of the project. Keywords: Water and sanitation sector, Senegal, African Development Bank, CostBenefit Analysis, Integrated Investment Appraisal Approach, Financial Analysis, Economic Analysis, Stakeholder/Distributive Analysis, Risk Analysis
An Assessment of the Financial and Economic Feasibility of a Fertilizer Manufacturing Facility in Nigeria
This study assesses the financial and economic feasibility of the fertilizer plant in Nigeria. And it analyses alternatives for the implementation of the fertilizer plant using the integrated method of investment appraisal. The analysis also helps in the estimation of the allocation of benefits to the government of Nigeria. In assessing the potential risks variables the sensitivity analysis was carried out. Inadequate food availability and food insecurity has a core effect on any nation and its inhabitants; it’s on this premise that the need for better technologies like fertilizers arose. Fertilizer is the added nutrient sources which help to nourish the plants with essential nutrients. Lack of fertilizer plant would result in low production of food to cater for the entire community needs. Having a urea plant in Nigeria as the reduced rate of producing natural gas would enhance agricultural productivity and reduce food scarcity. Venturing into a urea business in Nigeria would enhance the standard of living of Nigerian and would also be viable source of revenue. Keywords: Investment appraisal, financial analysis, economic analysis, stakeholder analysis, risk analysis, fertilizer plant, Nigeria.
Integrated Investment Appraisal of Waste Water Facility Project: The Case of a Proposed Waste Water Treatment Plant in South Africa
This analysis is an evaluation study of a Water Conservation and Resource Plan with Infrastructure Execution located in South Africa. The Cost-Benefit Analysis (CBA) in this appraisal study contains a comprehensive analysis of the Wastewater treatment plant project from various perspectives that mainly involves the project's financial, economic, stakeholder and risk analyses. The influences of each main stakeholders are measured to assess the project's potential costs and benefits. The recycling project benefits will be assessed against the option of purchasing water for use by the mining company and its large resident community of workers and their families. Keywords: Water, Wastewater, South Africa, Water treatment, Infrastructure, Cost Benefit Analysis, Integrated Investment Appraisal.
Domestic Production of Ready to Use Therapeutic Food (RUTF) for Improved Nutrition
Life expectancy at birth in Uganda is approximately 58.46 years in 2014. The infant mortality rate under the age of 5 is about 55 deaths per 1,000 children. Low-quality health facilities and the distance to health services is one of the major problems in Uganda. About 38% of children less than five years of age are stunted, nearly 16% of them are underweight, and 8.1% suffer from moderate and severe malnutrition. Ready-to-use therapeutic food (RUTF) is a nutritional paste that is made from a recipe of peanuts, powdered milk, vegetable oil, sugar, vitamins and mineral mix (Wagh and Deore, 2015). It contains a therapeutic mix of nutrients to treat a child with Severe Acute Malnutrition SAM. The aim of this study, therefore, is to appraise a project aimed at promoting the domestic production of RUTF in Uganda. The appraisal will involve financial, economic, stakeholder and risk analysis of the proposed project. Keywords: Ready-To-Use Therapeutic Food, Severe Acute Malnutrition, Cost-Benefit Analysis, Financial Analysis, Uganda, Economic Analysis, Sensitivity Analysis, Distributive Analysis.
A Financial and Economic Appraisal of Capital Investment in Jijiga Export Slaughter House, Somali Region, Ethiopia, Using FAST Modeling Standards
This paper presents a financial and economic appraisal of an investment for the construction of a slaughterhouse facility in Faafan village, Somali region, Ethiopia. Sustained political unrest has hampered private-sector activity in the region. As such, this first-mover investment could be critical to attract more capital to the region if successful. Success of this project can be a turning point for the region and new investments can take the area out of the economic backwardness. The financial modeling undertaken in this study is based on the FAST (Flexible, Appropriate, Structured, and Transparent) approach, which increases model readability and decreases the incidence of error. This is followed by an integrated economic and beneficiary analysis. An important conclusion is that the project will generate significant FNPV and ENPV (US$ 9.42 million and US$ 65.32 million, respectively), sufficient to attract other investors to the Somali region. A positive ENPV indicates that in addition to being of benefit to pastoralists, the presence of a commercial slaughterhouse facility will be helpful to the broader, national economy. On the other hand, first-mover status means that the facility has assumed a number of risks in isolation, including local resistance, regional instability, and foreign-market risk. The project stakeholders comprise of the private investor, smallholder livestock producers, livestock traders, slaughterhouse workers, the Faafan village community, and the Government of Ethiopia, who are also major project beneficiaries. Keywords: financial and economic analysis, FAST modeling, Somali region, Slaughterhouse, FNPV, ENPV
An Investment Appraisal for a Government Funded Irrigation Project
In Rwanda most public projects do not undergo deep economic analysis before they are implemented. Projects selection is done considering mostly qualitative criteria. However, it is very important to assess the financial viability of projects if private investors are to be potentially willing to invest in them. The Country has objective of becoming a middle-income one in 2020. Therefore the average growth rate of GDP has to be at least 11.5%. There is a political recognition that private sector has to take the lead in the economic development of the economy. The Ministry of Agriculture and Animal Resources (MINAGRI) has to play a major role to achieve the economic targets of Rwanda. Agriculture sector employs 75% of the people. Modernizing the sector was identified as a key in the Rwanda vision 2020. One of the activities planned to boost crop production is increasing the area under irrigation. The target is to have 100,000 hectares irrigated in 2017 from the counted 24,000 hectares irrigated in 2012. MINAGRI has developed a project aiming at augmenting the area under irrigation. That project is called Government Funded Irrigation (GFI). It funds irrigation in various sites of the country. In one site, Mpanga, the Government developed hillside irrigation and farmers are now producing various commodities namely Maize on 600 ha, Beans on 500 ha, Tomatoes on 150 ha and Onions on 150 ha. Attracting the private sector to work together with the Government in irrigation one needs to see if their schemes are feasible. This research conducts an appraisal of the Mpanga irrigation scheme project. The study found that currently the NPV of the Government is highly negative because irrigation infrastructures are set free of charge for farmers and the Government gives subsidies on maize fertilizers. However, farmers are making money and they can make more if they are allowed to change the cropping pattern currently on the ground. In incremental analysis, the study shows that farmers can contribute to the investment without losing on their current NPV, if they practice only Maize on 600 ha and Tomatoes on 800 ha in the Mpanga irrigation scheme. Keywords: Cost-Benefit Analysis, Investment Appraisal, GFI Financing, Economic Development and Poverty Reduction Strategy, Government of Rwanda.
Measuring Transaction Costs of International Trade for 9 West African Countries
In this study, we determined the effect of total compliance costs on the current value of imports for 9 West African countries. As a result, we managed to measure the estimated change in value of import after administrative reform and more importantly the total efficiency gained due to administrative reform using partial equilibrium framework and price elasticity of demand equation. It showed that countries that have higher total compliance cost, take longer to import and have a more price elastic demand to import such as Cameroon and Nigeria, would benefit more from administrative reform. Next, we calculated the total efficiency gained on their current value of GDP. We understood that total efficiency gained on the value of GDP is about 1% of most of these countries. And the total efficiency gained on their value of import is between 2%-5%. Lastly we measure the total value of efficiency gained as a percentage of Development AID received.