Product Description: Products considered in this project idea are simple hand tools used by rural households for a variety of tasks including agricultural activities. These tools include picks, axes, sickles, shovels, machetes, etc. The tools are used on farms and around houses.
Rationale: Due to our low level of development in manufacturing, transport, construction, trade and commerce, finance and other service sectors, more than 85 percent of the people of Ethiopia live in rural areas deriving their livelihood from traditional agriculture which depends much on human labor and animal power. This situation requires the extensive use of hand tools to perform different tasks at home and on farms by millions of rural family members. For example, axes and sickles are essential hand tools for any rural family. Every family has to have at least two sickles and one ax to meet the family requirement for accomplishing various tasks on farms and around the houses. There is also a need for the other hand tools.Even though there is one factory that produces sickles, shovels and spades, the bulk of the country’s demand for hand tools is met by imports. For example the sickle market is flooded by imports. Other hand tools are also supplied from imports. Since hand tools for rural households are part of agricultural implements and tools, they have an impact on agricultural production and rural reconstruction. As such these tools should be produced at home as much as it is economical.
Potential Market: In 2006, there are about 12.8 million families living in the rural areas of Ethiopia. Of these, 3.3 million families are in the Amhara region. As mentioned above, rural hand tools are needed by each rural family. For example, in the Amhara Region the demand for sickles is about 6.6 million, 3.3 million for axes, and similar numbers for other types of hand tools. Most rural households have the hand tools needed for their farm activities either from imports or domestic production. As domestic production is very small, most of the hand tools especially sickles in the hands of farmers are from imports. The future demand for these tools is, therefore, composed of replacement and new requirement by young rural families. A market study for rural hand tools indicated that in 2006, the demand will be about 434,000 and the share of the Amhara Region is about 130,000. The projected demand will grow in the future and this may justify the establishment of a plant which will produce different types of hand tools to be used mainly in rural areas.
Source of Raw material: The main raw materials are steel plates, rivets and for some products like sickles, wooden handles are also required. The metals will be imported.
Process and Technology: The plant will be a multipurpose mechanical workshop equipped with different kinds of mechanical equipment. The production process involves cutting, punching, forging, forming, bending, grinding/sharpening, heat treatment and painting. Major machinery and equipment needed are power shear, eccentric presses, fuel fired furnace, friction screw press, double ended pedestal grinder, quenching tank, manual tube bending machine, tumbler, painting equipment, black smith’s tolls and other auxiliaries.
Estimated Investment: For a plant which will produce about 200,000 pieces of different rural hand tools or implements, the estimated investment will be:-
Buildings/shade - 500m2 at Birr 1500/m2 = Birr 750,000
Plant and machinery ……………………….. = Birr 7,900,000
Working capital ……………………..………= Birr 400,000
Total ………. = Birr 9,050,000
Benefits: Substitutes imports from abroad and from other parts of the country there by saving foreign exchange for the country and financial resources to the Region. Facilitates the development of the rural economy, introduces new skills and technology, promotes self sufficiency,
Location: Bahir Dar, Combolcha