Economic Feasibility Of A First-Mover Abattoir Establishment In Somali Region, Ethiopia

The objective of this study is to identify the economic feasibility of the investment made to establish a commercial slaughterhouse facility in Faafan village, Somali Regional State, Ethiopia. Although the financial feasibility of the facility is essential for the project, the main purpose of the exercise is to estimate the economic returns and the net benefits created for the project stakeholders, namely: the private operator, the small holder livestock producers, the livestock traders, the labor employed by the facility, and the Government of Ethiopia. A deterministic cost-benefit analysis revealed a positive Economic Net Present Value, discounted at a 12 percent economic opportunity cost of capital, of the project. There are few risk factors, however, that may prevent a successful outcome of the project. These factors include the future price of meat in the international market, insufficient supply of raw materials i.e. livestock, the level of livestock inventories required to assure stable operations of the facility and the frequency of draught. An extensive literature review and field visits revealed that the project may be the only relatively reliable market i.e. stable price, for the smallholders in the region. Moreover if the ongoing effort of the Government to limit/forbid the informal livestock cross-border trade will succeed, the facility may gain a monopolistic power by being the only off-taker available to the farmers in the region.