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