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AFRICABIZ VOL 1 - ISSUES: 87 & 88
JULY 15 - SEPTEMBER 14, 2006
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Editor: Dr. Bienvenu-Magloire Quenum
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A WORD FROM THE EDITOR


Dear visitor and international investor,


We warmly welcome you, if this is your first visit to Africabiz Online - The ultimate newsletter on trading and investing in 49 sub-Saharan African countries. If you are a regular and faithful reader, welcome back.

- THIS DELIVERY STANDS FOR TWO ISSUES

Africabiz Online's editorial team is taking one month break from August 15 to September 14, 2006. Therefore, this delivery covers two months: July 15 to August 14 - Issue N° 87; and August 15 to September 14 - Issue N° 88. The next issue N° 89 will be online on September 15, 2006.

- TO MANAGE A PROJECT, AND NOT JUST TO SUPERVISE


In continuation to previous deliveries [75, 76, 78, 80, 81, 82, 86], we introduce, starting with this issue, an article about Project's Management.

This is really a vast subject that had been covered by thousand of books written by academic people, businessmen and businesswomen and professionals around the world - without ever closing the debate. Indeed, the matter is big and vast, extending into several areas of human life and behaviour: economics, human resources, politics and sociology.

Nevertheless, in line with Africabiz's main objective that is to discuss and debate about "How Emerging Countries Could Bridge the Developing Gap", we will endeavour to sum up and deal with the subject in three successive deliveries, and few thousand words - focusing on the management of developing projects.

This issue is Part I of the series and is titled: - Project Management: Definitions. That will be followed by:

- What a Project that has the Potential to be a Success looks like?
- To Manage A Project to a Successful End And Not Just to Supervise.

Part I: Project Management: Definitions is here to review

- NEW PAY-PER-CLICK ADVERTISEMENT PLATFORM: ALIBABA SEARCH ENGINE

List of Products and Solutions to trading and investing in and out emerging nations - and particularly in sub-Saharan African nations - is here to review.

We draw your attention to Jobs & Projects' platform that assists first, project-owners to tender for the best experts to carry out projects at very competitive costs, and, second, job-seekers to publish for free Résumés/CV to attract project-owners attention.

The Pay-Per- Click advertisement platform is also the cheapest way to advertise for your business.

- Contributor's Guidelines are here to review. Your contribution on "How emerging nations and particularly African countries / entrepreneurs could bridge the developing gap" is welcome. You may visit Africabiz Online Interactive to comment about articles posted in Africabiz Online.

Many thanks for dropping by and see you here on September 15, 2006.

Dr. B.M. Quenum

Editor of AFRICABIZ

Contact Dr. Bienvenu-Magloire Quenum

BUSINESS OPPORTUNITIES IN AFRICA


- Several business opportunities - component parts of the Integrated Developing Scheme described in Africans, Stop Being Poor! are listed in following table.


a- SHEA BUTTER (5, 6, 7, 11, 12, 13)
b- BLUE GOLD (14, 15, 16, 17, 18, 19)
c- FREEZE-DRIED PAPAIN (20, 21, 22 and here)
d- KENAF (23, 24)
e- VEGETABLE OIL (25, 26, 27, 28)
f- CEREALS (30, 31, 32, 33)
g- FRUITS (34, 35, 36, 37, 38, 39, 40, 42, 43, 44, 45, 46)
h- ESSENTIAL OILS (47, 48, 49, 50, 51, 52)
i- ROOTS & TUBERS (54, 55, 56, 57, 58, 59, 60, 61, 62, 63, 64)
j- FOWL BREEDING (66, 67, 68, 69, 70, 71, 72, 73, 74, 75, 76)
k- FISH FARMING (78, 79, 80, 81, 82, 83, 84, 85, 86, 87) 89

- FISH FARMING AS BUSINESS OPPORTUNITY: PART X - THE IMPACT OF MASS PRODUCTION ON PROFIT-MARGIN - THE ECONOMY OF SCALE.

We will conclude the series on Fish Farming considering the economics of a medium-scale operation to smoking fresh tilapia and catfish.

The purpose of the exposé is to show the impact of "mass production" on profit-margin or the effect of the economy of scale. Further, this brief study will highlight the paramount importance to drafting a Business Plan before starting a venture.


Operating conditions

Operating conditions are similar to the ones used for the small-scale smoking operation but to transform fivefold the quantities of tilapia and catfish, that is 4,500 kg of tilapia and 4,500 kg of catfish daily.

The following table summarizes the operating costs:

Operating Inputs & Costs
Inputs Daily Monthly (24 days) Yearly Yearly costs (US$)
Tilapia (kg) 4,500 108,000 1,296,000 2,072,000
Catfish (kg) 4,500 108,000 1,296,000 2,332,800
Brinning mix (liters) 3,600 86,400 1,036,800 210,000
Gas-Propane (kg) 149 3,577 42,926 7,980

One dual (wood and propane gas) powered AquaTech equipment (RS-300) was used to smoke 1,800 kg of tilapia and catfish daily (for more consult issue 86). That means the medium-scale operation would require five Aquatech RS-300 smoking-equipments.

- ECONOMICS BRIEFS ABOUT THE MEDIUM-SCALE OPERATION

Based on previous preliminaries [84,85,86] one has the following table that summarizes the operation's economics:

Items
US$
INVESTMENTS

Production Space Layout: cold room, preparation space, brinning tanks, smoking area, storage space for finished products - 300 sq. Plus 200 sq meter space for workers cloakroom. Shelter for propane-gas containers. Small office space. Etc

50,000

Production equipment: Four 1,000 liters content water tank; 36 (100 liters content) plastic basins to brin 250 kg (each) of fresh fish per 24 hours; One fork-lift to transport the basin to the smokers; five AquaTech dual powered (propane gas and fuel-wood) RS-300 smoking-apparatus; plus sets of knives. Etc

45,500

Other Production Equipment and Inputs: One pick-up car; handling equipment, 100 small five kg content plastics basins to handling wastes (fish blood, scales and gutting wastes), plastic overalls for workers, soap bars and scrubbers. Etc.

27,500

Total investment

123,000
OPERATING COSTS

Operating Expenses: to producing 1,760 metric tons of smoked tilapia and 1,985 metric tons of smoked catfish and 300 kg of wastes (dried bowels and blood, crushed scales that could be used for animal feed formulation) including 45 workers salaries and wages.

4,650,000
PRODUCTION COSTS

1,985 metric tons of smoked catfish (weighting each 298 gram. in average (click here for more about the weight of the fresh fish.) That is 6,661,074 smoked catfish per year for 2,325,000 US$ production costs. That gives a production cost per fish equals to .350 US$ or per kg. of smoked catfish =

1,174

1,760 metric tons of smoked tilapia (weighting each each 128 gram. in average (click here for more about the weight of the fresh fish.) That is 13,750,000 smoked tilapia per year for 2,350,000 US$ production costs. That gives a production cost per fish equals to .171 US$ or per kg. of smoked tilapia =

1,335
GENERATED REVENUES
Catfish: 1,985,000 x 1,820* US$ = 3,612,105
Tilapia: 1,760,000 x 1,800* US$ = 3,150,000
Total = 6,762,105
GROSS PROFIT
GROSS PROFIT 2,112,105

Fifty-five percent profit margin had been applied to catfish's cost of production and thirty-five percent to tilapia's one having in mind taxes and other levies that the company would have to pay.

- THE EFFECT OF THE ECONOMY OF SCALE ON PROFIT-MARGIN

Table below shows the production cost for each fish specie in small and medium-scale operations. One notices that catfish's production costs decrease from US$ 1,208 (small-scale operation) to US$ 1,174 (medium-scale). That is twenty-eight percent decrease. For tilapia, the decrease amounts to thirteen percent. These diminutions reflect the positive impact of mass production on productions' costs.

PRODUCTION COSTS / MEDIUM-SCALE OPERATION

1,985 metric tons of smoked catfish (weighting each 298 gram. in average (click here for more about the weight of the fresh fish.) That is 6,661,074 smoked catfish per year for 2,325,000 US$ production costs. That gives a production cost per fish equals to .350 US$ or per kg. of smoked catfish =

1,174

1,760 metric tons of smoked tilapia (weighting each each 128 gram. in average (click here for more about the weight of the fresh fish.) That is 13,750,000 smoked tilapia per year for 2,350,000 US$ production costs. That gives a production cost per fish equals to .171 US$ or per kg. of smoked tilapia =

1,335
PRODUCTION COSTS / SMALL-SCALE OPERATION

397 metric tons of smoked catfish (weighting each 298 gram. in average (click here for more about the weight of the fresh fish.) That is 1,332,214 smoked catfish per year for 475,000 US$ production costs. That gives a production cost per fish equals to .360 US$ or per kg. of smoked catfish =

1,208

352 metric tons of smoked tilapia (weighting each each 128 gram. in average (click here for more about the weight of the fresh fish.) That is 2,750,000 smoked tilapia per year for 475,000 US$ production costs. That gives a production cost per fish equals to .173 US$ or per kg. of smoked tilapia =

1,349

Table below compares Gross Profit generated by both operations:

GROSS PROFIT / MEDIUM-SCALE OPERATION
GROSS PROFIT 2,112,105
GROSS PROFIT / SMALL-SCALE OPERATION
GROSS PROFIT 434,396

One notices that for an increase of investment from US$ 81,000 (small operation) to US$ 123,000 (medium operation) - that is 51.8% - the resulting Gross-Profit jump from US$ 434,395 to US$ 2,112,105 that is an increase of 386%.

- THE IMPORTANCE OF A COMPREHENSIVE BUSINESS PLAN

Above remarks and observations highlight the importance of business planning before starting a new venture. Without a business plan, the investor cannot have a good estimate of the respective cost of production of the different species of fish. He cannot therefore know which profit margin to apply to have a competitive selling price, pay taxes and keep the Cash Flow evolution in the green.

You can observe the tinniest changes that occur in the production costs when one consider a small-scale operation versus a medium-scale one. These changes, as small as they may look, are of paramount importance in a tight competitive marketplace!

Indeed, the manager that have access to these figures is better equipped to tackle the operating costs. He would know where to slash inputs' purchasing prices to remain competitive should any unforeseen event occur that disturb the production line.

However, as here explained, a "static" business plan is not enough either. It is compulsory to have a Control Board that is a dynamic business plan, which results from steady revision and updating of the initial static business plan (quarterly for instance) to know for sure the exact figures with regards operating expenses and Cash-Flow's evolution.

Without a comprehensive business plan to start with and a dynamic one as a Control Board, a manager, whatever maybe his outstanding managing-skills, cannot accomplish miracles. For the simple reason (a paradox) that the management skills of the project's manager is not the prerequisite for the potential success of a project.
as here briefly exposed

MORE ON FISH FARMING
1- How to Start and Manage a Fish Farming Business
by Jerre G. Lewis
2- Integrated Fish Farming
by Workshop on Integrated Fish Farming
3- Catfish farming handbook
by Jerry Mack Johnson
4- Commercial Catfish Farming
by Jasper S. Lee
5-
Cage Culture Of Tilapia
In Rural Farm Ponds

An article from: Journal of the Alabama Academy of Science [HTML]
(Digital - January 1, 2000)
6- Backyard Fish Farming
by Paul Bryant

7- Intensive Fish Farming
by Jonathan Shepherd, Niall Bromage
8- Second International Symposium on Tilapia in Aquaculture:
by Thai International Symposium on Tilapia in Aquaculture 1987 Bangkok, et al (Hardcover - January 1990)
9- Tilapia Culture
by Abdel-fattah M. El-sayed, A. F. M. Sayed (Hardcover - February 2006)
10- Tilapias: Biology and Exploitation
by M.C.M Beveridge (Editor), B. McAndrew (Editor)

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