### **Expanded Risk Mitigation Strategy for Boaz Trading PLC**
#### **1. Currency Risk: Hedging Forex Exposure for Cannes Expenses**
**Risk**: Fluctuations in the Ethiopian Birr (ETB) against the Euro/USD could inflate costs for Cannes-related expenses (e.g., event fees, logistics, marketing).
**Mitigation Strategies**:
- **Forward Contracts**: Lock in exchange rates 6–12 months in advance with the Commercial Bank of Ethiopia (CBE) to fix costs for Cannes activations (e.g., €50,000 for booth rental at today’s rate).
- **Multi-Currency Accounts**: Hold USD/EUR accounts at CBE to insulate funds from ETB volatility.
- **Pricing in Stable Currencies**: Invoice international buyers in USD for the Cannes line, reducing reliance on ETB.
- **Forex Reserves**: Allocate 10% of the Cannes budget (687,500 ETB) to a forex reserve fund for unexpected rate swings.
**Example**: If the ETB depreciates by 15% (as in 2023), forward contracts would save ~1,031,250 ETB on a 6,875,000 ETB budget.
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#### **2. Supply Chain Risk: Dual Sourcing (Local + International)**
**Risk**: Over-reliance on local suppliers (e.g., Arsi cotton farms) or international partners (e.g., Indian silk) could disrupt production due to droughts, logistics delays, or geopolitical issues.
**Mitigation Strategies**:
- **Local Sourcing**:
- Partner with 3–5 organic cotton farms across regions (Arsi, Tigray, Amhara) to diversify agricultural risks.
- Collaborate with Hawassa Industrial Park for bulk material storage (30-day safety stock).
- **International Sourcing**:
- Secure backup silk suppliers in Vietnam and Tanzania via platforms like Alibaba, ensuring competitive pricing and FOB terms.
- Use Djibouti’s Doraleh Port as a logistics hub to avoid congestion at Addis Ababa’s dry port.
- **Blockchain Tracking**: Implement IoT-enabled supply chain monitoring with Safaricom Ethiopia to flag delays in real time.
**Example**: If Tigray cotton production drops 30% due to drought, Boaz can pivot to Amhara suppliers or activate Vietnamese silk reserves.
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#### **3. Political Risk: Diversify Revenue Streams (Online/Export)**
**Risk**: Regional instability (e.g., Oromia protests) or regulatory shifts (e.g., AGOA eligibility changes) could disrupt local operations.
**Mitigation Strategies**:
- **Export Diversification**:
- Target **AGOA-beneficiary markets**: Secure orders from U.S. retailers (e.g., Whole Foods) for the Cannes line, leveraging duty-free access.
- Enter **COMESA markets**: Partner with Kenyan distributor *Soko* to sell in Nairobi malls, reducing reliance on Ethiopian sales.
- **E-Commerce Expansion**:
- Launch a Shopify store with TeleBirr integration for global diaspora sales.
- List on *Jumia* and *Amazon* to reach EU/U.S. buyers, ensuring 40% of revenue comes online by Year 2.
- **Political Risk Insurance**: Enroll in the World Bank’s *MIGA* guarantees to cover expropriation or contract breaches.
- **Local Advocacy**: Engage with the Ethiopian Textile Association to lobby for stable export policies.
**Example**: If local unrest reduces Addis Ababa store traffic by 50%, online sales and Kenyan exports can offset losses.
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### **Additional Mitigation Measures**
- **Community Partnerships**: Invest in cotton farming cooperatives (e.g., training, microloans) to build loyalty and stabilize local supply.
- **Scenario Planning**: Conduct quarterly risk audits with Deloitte East Africa to model disruptions (e.g., -20% ETB depreciation, -30% cotton yield).
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### **Key Metrics for Success**
| **Risk** | **Metric** | **Target** |
|--------------------|-------------------------------------|--------------------------|
| Currency Exposure | % of Cannes budget hedged | 80% by Q3 2024 |
| Supply Chain | Number of backup suppliers | 3 local, 2 international |
| Political Stability| % revenue from exports/online | 40% by Year 2 |
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### **Conclusion**
By proactively hedging forex, diversifying suppliers, and expanding into resilient revenue channels, Boaz Trading PLC can navigate Ethiopia’s volatile economic landscape while safeguarding its 18% ROI target. These strategies transform risks into competitive advantages, ensuring agility and long-term sustainability.