Strategy on Income Generating Schemes from Non-Timb Forest Product (NTFPS) and Identification of Marketing Structures in the Pfm-Intervention Areas: Eco-Tourism Business Plan for Suba- Sabata, Oromia, Ethiopia

Abstract

Suba Sabata is considered as the most ancient park in Africa. Due to its proximity to Addis Abeba its dense forests, diverse wildlife, and scenic landscapes it attracts some 6.200 visitors annually. However its potential for eco-tourism has not been seriously explored. Thus there is a substantial interest of the Enterprise, the private sector and local communities to develop and upscale related activities including touristic infrastructure and accommodation services which to date are limited and antiquated. Based on the site specific strategy’s recommendations and field visits to the area, an assessment of potential activities and services was carried out. The activities proposed encompass primarily to improve facilities and infrastructure to enhance the attractiveness of the Forest for diverse ecotouristic activities. At the same time this would also improve opportunities for public-private partnerships and for involving local communities. First priority shall be given to Guided nature observation tours, Trekking and hiking, Horse riding, and Providing accommodation and gastronomic facilities. Apart from capacity development at different management levels at the Enterprise and in the communities, the expected investment and operation costs require to lift up visitor figures to some 15.000 per year in the fifth the of operation, which in turn calls for decent promotion efforts. The total investment costs for the project amount to approx. ETB 1.384.000 whereof - according to present state of knowledge – approximately ETB 725.000 can be contributed by the Project for rehabilitation of infrastructure, training and capacity building. The five year operating result in scenario 1 shows a total net profit of approx. ETB 793.500 which equals almost 35,8 % of the operating costs including costs of keep-up/depreciation. In this scenario it is being assumed that the investment is paid from existing OFWE assets. The venture is profitable already in year one. Cash-flow is expected to grow from -520.000 ETB in year one to about ETB 235.000 in year five. The overall cash-flow in this period is projected at ETB 135.000. This means that under the chosen scenario break-even is reached in the fifth year of operation. The 5-year Net Present Values (NPV) compared to a 5 % bank deposit (scenario 1b) and a 10 % return on investment (scenario 1a) are both positive at ETB 25.000 and ETB 12.800 respectively. The five year operating result in scenario 2 shows a total net profit of approx. ETB 519.000 which equals almost 20,8 % of the operating costs including costs of keep-up/depreciation and interest rate of loan. The venture is profitable already in year one. Cash-flow is expected to grow from -580.000 ETB in year one to about ETB 180.500 in year five. The overall cash-flow in this period is projected at ETB - 139.500. This means that under the chosen scenario break-even is reached in the sixth year of operation. The 5-year Net Present Values compared to a 5 % bank deposit (scenario 2b) and a 10 % return on investment (scenario 2a) are both positive at ETB 14.000 and ETB 7.350 respectively.  Scenario should be discarded as the interest rate for bank loans is with 8,5 % above the interest rate for bank deposit. With regard to this relatively long payback period, direct benefit sharing from entrance fees with the communities would have to be arranged as a baseline share and could be topped up with a share on pre-tax profit. Besides the option of direct benefit sharing, income opportunities for community members arise from providing services and products (souvenirs) to the visitors. Yet the required capacities still have to be built.