Eco-Tourism Business Plan as Strategy on Income Generating Schemes from Non-Timber Forest Product (NTFPs) for Arsi Mountains National Park, Dhera-Dilfaqar Block, Oromia, Ethiopia

Abstract

Dhera-Dilfaqar block is a 13.4km² area of wildlife habitat that has been designated as a protected area by Oromia Region in 1995 and harbours some 25 species of mammals and more than 150 bird species. Due to its good access and its proximity to Sodere Resort and to the Adama city, the park offers good prospects for eco-tourism development. Although the Park was declared a protected area, it is still accessible and to some extent used by the bordering communities for grazing and cutting grass for housing.

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 as strong income generating and benefit sharing effect for the local communities while at the same time targeting at generating revenue for the Enterprise from entrance fees. First priority shall be given to guide wildlife observation services, in particular guided wildlife tours on foot, guided tours on horse or camel, and coach rides.

These activities at any circumstances shall avoid to overstraining the Park’s carrying capacity. However a few constructions works, in particular the establishment of a visitor information centre are required. Even more important is training local community members to providing qualified guide services. In addition some promotion activities are necessary to attract the targeted number of visitors, which is assumed to be rising from approximately 1.000 in the first year to about 5.200 in the fifth year of operation. The cost assessment projects total investment cost for the project amount to approx. ETB 406.000.

In scenario 1, with investments paid from existing assets, the 5-years operating result shows a total net profit of approx. ETB 856.500 which equals almost 102 % of the operating cost including costs of keep-up/depreciation. The venture is profitable already in year one. As a result of the investment cost, a cash-flow of approx. –403.300 ETB can be expected for year one. From year two onwards a positive cash-flow development of approx. ETB 70.000 (year two) to approx. ETB 340.900 in year five is being projected. The overall cash-flow in this period is at approx. ETB 453.200. Under the present scenario the break-even point is reached in year four. The 5-year Net Present Values (NPV) compared to a 5 % bank deposit (scenario 1b) and 10 % returns on investment (scenario 1a) respectively are both positive at ETB 928 and ETB 3.360 respectively.

In scenario 2, with investments paid from bank loan at 8,5 % interest p.a. an no repayment, the 5-years operating result shows a total net profit of approx. ETB 721.400 which equals almost 86 % of the operating cost including costs of keep-up/depreciation. The venture operates at profitable level from year two onwards. As a result of the investment cost, a cash-flow of approx. –437.700 ETB can be expected for year one. From year two onwards a positive cash-flow development of approx. ETB 36.000 (year two) to approx. ETB 307.000 in year five is being projected. The overall cash-flow in this period is at approx. ETB 283.700. Under the present scenario the break-even point is reached in the course of year five. The 5-year Net Present Values (NPV) compared to a 5 % bank deposit (scenario 2b) and 10 % returns on investment (scenario 2a) respectively are both negative at ETB -3.508 and ETB -2.512 respectively. This means that in the middle run and with an annual number of 3.100 to 5.200 visitors the Park could be run at a quite profitable level and benefit sharing from entrance fees with communities would be feasible. Still, at present it cannot be assessed whether the targeted visitor figures would overstrain the Park’s carrying capacity. Besides the option of direct benefit sharing from entrance fees, income opportunities for community members are estimated at minimum 25.000 ETB per thousand visitors. The success of the Park as eco-tourism destination however will mainly depend on a clever and effective marketing strategy.