Funding Request
- Total Required: ETB 22 million.
- Use of Funds:
- Oil imports (60%).
- Marketing (25%).
- Logistics (15%).
Discussion
**Expanded Funding Request & Use of Funds for Boaz Trading PLC**
Boaz Trading PLC seeks **ETB 22 million** ($400,000) to execute its Russian Oil Deal, addressing Ethiopia’s energy deficit while delivering a 150% ROI within 24 months. Below is a detailed breakdown of the capital allocation, risk-adjusted rationale, and strategic alignment with market opportunities:
---
### **1. Total Funding Required: ETB 22 Million**
| **Category** | **Amount (ETB)** | **Percentage** | **Key Activities** |
|-----------------------|-------------------|----------------|-----------------------------------------------------------------------------------|
| **Oil Imports** | 13,200,000 | 60% | Purchase of diesel, gasoline, and jet fuel from Russian suppliers. |
| **Marketing** | 5,500,000 | 25% | African Photo Safari campaign, influencer partnerships, and B2B/B2C activations. |
| **Logistics** | 3,300,000 | 15% | Djibouti Port fees, warehousing, last-mile delivery, and technology integration. |
---
### **2. Oil Imports (ETB 13.2M | 60%)**
#### **Breakdown**:
- **Product Mix**:
- **Diesel (70%)**: 840,000 liters @ ETB 40.9/liter (CIF Djibouti) = **ETB 9,240,000**.
- **Gasoline (20%)**: 120,000 liters @ ETB 58.5/liter = **ETB 2,340,000**.
- **Jet Fuel (10%)**: 60,000 liters @ ETB 76.5/liter = **ETB 1,620,000**.
- **Supplier Contracts**:
- **Rosneft**: 50,000 barrels of Urals crude (discounted 25% due to sanctions).
- **Lukoil**: Backup agreement for 10,000 barrels/month.
- **Risk Mitigation**:
- 30% of imports hedged via forward contracts to lock in prices.
- Barter 15% of payments using Ethiopian coffee exports to Russia.
---
### **3. Marketing (ETB 5.5M | 25%)**
#### **Breakdown**:
| **Component** | **Amount (ETB)** | **Details** |
|------------------------------|-------------------|-----------------------------------------------------------------------------|
| **African Photo Safari** | 2,200,000 | 3 curated tours for investors, diplomats, and media at GERD dam, Bole Lemi Industrial Park, and rural energy hubs. |
| **Influencer Campaigns** | 1,650,000 | Partnerships with 10 macro-influencers (e.g., *CGTN Africa*, *Addis Fortune*) for documentaries and social media. |
| **Digital & Traditional Ads** | 990,000 | Radio spots, billboards in Addis Ababa, and Google Ads targeting SMEs. |
| **PR & Events** | 660,000 | Launch event at Skylight Hotel, press releases, and op-eds in *The Reporter*. |
#### **ROI Justification**:
- **Investor Attraction**: Secure ETB 10M+ in follow-on funding via safari tours.
- **Brand Equity**: Position Boaz as Ethiopia’s energy disruptor, driving B2B contract sign-ups.
---
### **4. Logistics (ETB 3.3M | 15%)**
#### **Breakdown**:
| **Component** | **Amount (ETB)** | **Details** |
|------------------------------|-------------------|-----------------------------------------------------------------------------|
| **Djibouti Port Fees** | 1,320,000 | Priority berthing, customs clearance, and 30-day bonded storage. |
| **Warehousing** | 990,000 | Lease 10,000 sqm in Kaliti (Addis Ababa) and Adama. |
| **Last-Mile Delivery** | 660,000 | Partnerships with *Selam Trucking* and fuel ATMs for rural distribution. |
| **Technology** | 330,000 | IoT sensors, route optimization software, and blockchain traceability. |
#### **Efficiency Gains**:
- Reduce port-to-warehouse time from 7 days to 3 days.
- Cut delivery costs by 18% via AI route planning.
---
### **5. Contingency Planning**
- **Forex Volatility**: Allocate 5% (ETB 1.1M) of the total budget to hedge ETB/USD exposure.
- **Supply Chain Disruptions**: Reserve ETB 2.2M for emergency purchases from Kazakhstan’s Tengiz Field.
---
### **6. Strategic Alignment**
- **Government Priorities**: Supports Ethiopia’s 10-Year Plan to reduce energy costs and diversify imports.
- **Investor Appeal**: Combines high-growth markets (6% annual fuel demand) with geopolitical arbitrage (Russian discounts).
---
### **7. ROI Pathway**
| **Metric** | **Year 1** | **Year 2** | **Total** |
|---------------------|------------------|------------------|-------------------|
| **Revenue** | ETB 33M | ETB 55M | ETB 88M |
| **Net Profit** | ETB 8.25M | ETB 16.5M | ETB 24.75M |
| **ROI** | 37.5% | 112.5% | **150%** |
---
### **Conclusion**
This funding request is meticulously structured to capitalize on Ethiopia’s energy import gap, Russian geopolitical tailwinds, and Boaz’s hyperlocal distribution network. By allocating 60% to high-margin oil imports, 25% to brand-building, and 15% to agile logistics, Boaz ensures rapid market penetration and sustainable returns.
**Next Steps**:
1. Finalize Russian supply contracts with *Rosneft* and *Lukoil*.
2. Launch influencer campaigns to pre-market the safari tours.
3. Secure Djibouti Port storage leases to avoid Q1 bottlenecks.
---
This strategic allocation balances risk and reward, positioning Boaz as Ethiopia’s energy partner of choice while delivering outsized investor returns.
### **Expanded Funding Request & Use of Funds Breakdown**
Boaz Trading PLC seeks **ETB 22 million** ($400,000 USD equivalent) to execute its Russian Oil Deal. Below is a detailed allocation of funds, risk-mitigation strategies, and alignment with business objectives:
---
#### **1. Oil Imports (60%: ETB 13.2M)**
**Breakdown**:
- **Product Procurement (80%)**:
- **Cost**: $75/barrel for Russian diesel (vs. global benchmark of $90/barrel).
- **Volume**: 15,000 barrels (≈2 million liters) at $75/barrel = **$1.125M (ETB 10.56M)**.
- **Shipping & Insurance (15%)**:
- Freight from Novorossiysk to Djibouti Port: $15/barrel → **$225,000 (ETB 2.11M)**.
- **Import Duties & Taxes (5%)**:
- Ethiopian import tariffs (7%) + VAT (15%) → **ETB 0.53M**.
**Risk Mitigation**:
- **Supplier Diversification**: Allocate 20% of import funds (ETB 2.64M) to secure backup contracts with UAE’s ADNOC.
- **Currency Hedging**: Lock in ETB/USD rates for 70% of import costs via 6-month forward contracts.
---
#### **2. Marketing (25%: ETB 5.5M)**
**Breakdown**:
- **African Photo Safari Campaign (ETB 4.5M)**:
- **Photography/Videography**: ETB 2.5M (crew, drones, permits).
- **Launch Event**: ETB 1.2M (venue, catering, influencer fees).
- **Media Buys**: ETB 0.8M (TV ads on Fana Broadcasting, LinkedIn/Facebook campaigns).
- **Local Promotions (ETB 1M)**:
- Fuel vouchers for ride-hailing drivers (ETB 0.5M).
- Rural LPG awareness campaigns (ETB 0.5M).
**Alignment with Goals**:
- **Brand Positioning**: The safari campaign ties Russian oil to Ethiopia’s growth narrative, attracting investors and consumers.
- **ROI**: Target 50+ high-net-worth investor leads and 10% market awareness in Addis Ababa.
---
#### **3. Logistics (15%: ETB 3.3M)**
**Breakdown**:
- **Djibouti Port Operations (40%)**:
- Priority berthing fees: $50,000/year (ETB 0.47M).
- Buffer storage lease: 10,000 cubic meters → ETB 0.85M.
- **Inland Transport (50%)**:
- Ethio-Djibouti Railway: ETB 1.2M for 12 dedicated shipments.
- Last-mile trucking partnerships: ETB 0.45M (advance payments to Shegole Transport).
- **Warehouse Security & Tech (10%)**:
- IoT sensors and fire suppression systems: ETB 0.33M.
**Risk Mitigation**:
- **Buffer Stock**: Reserve ETB 0.5M for emergency truck rentals during rail delays.
- **Redundant Storage**: Pre-negotiate warehouse space in Dire Dawa (ETB 0.2M).
---
#### **4. Financial Justification**
| **Category** | **Cost (ETB)** | **Revenue Link** |
|-------------------|----------------|------------------------------------------|
| Oil Imports | 13.2M | Direct sales to B2B/B2C (ETB 33M Year 1).|
| Marketing | 5.5M | Brand equity → 10% market share in Addis.|
| Logistics | 3.3M | Enables 72-hour delivery, customer retention.|
---
#### **5. Risk Management**
- **Geopolitical Risks**: Allocate 10% of import funds (ETB 1.32M) to diversify suppliers.
- **Currency Volatility**: Hedge $300,000 via Ethiopian banks’ forward contracts.
- **Contingency Fund**: Reserve ETB 1M (4.5% of total) for unplanned regulatory/operational costs.
---
### **Conclusion**
Boaz’s funding request is strategically allocated to secure discounted Russian oil, build brand equity through culturally resonant marketing, and establish a logistics network that outperforms competitors. By mitigating risks through diversification, hedging, and contingency reserves, the company ensures efficient capital deployment toward achieving **150% ROI by Year 2**.
**Expanded Funding Request & Capital Allocation Strategy**
Boaz Trading PLC seeks **ETB 22 million ($400,000 USD)** to execute its Russian Oil Deal, structured to address Ethiopia’s fuel deficit while delivering a 150% ROI within 24 months. Below is a detailed breakdown of capital allocation, risk mitigation, and strategic alignment:
---
### **Total Funding Required: ETB 22 Million**
| **Category** | **Amount (ETB)** | **% of Total** | **Key Activities** |
|---------------------|------------------|----------------|-----------------------------------|
| **Oil Imports** | 13.2M | 60% | Purchase, shipping, customs |
| **Marketing** | 5.5M | 25% | Branding, events, digital campaigns |
| **Logistics** | 3.3M | 15% | Warehousing, transport, technology |
---
### **1. Oil Imports (ETB 13.2M / 60%)**
**Breakdown**:
- **Russian Crude Procurement**: ETB 10.5M for 15,000 barrels/month at $70/barrel (discounted 20% vs. Brent crude).
- **Shipping & Insurance**: ETB 1.8M for Suez Canal transit, marine insurance (0.5% of cargo value).
- **Ethiopian Customs & Duties**: ETB 0.9M (8% tariff under *Priority Sector Import Scheme*).
**Risk Mitigation**:
- **Prepayment Terms**: 30% upfront to Russian suppliers to lock in pricing; balance paid upon Djibouti delivery.
- **Currency Hedging**: Allocate ETB 1M to forward contracts (Commercial Bank of Ethiopia) to stabilize ETB/USD rates.
---
### **2. Marketing (ETB 5.5M / 25%)**
**Breakdown**:
- **African Photo Safari Campaign**: ETB 3.3M for:
- Luxury events in Simien Mountains (ETB 1.5M).
- Influencer partnerships (ETB 1M).
- Content production (ETB 0.8M).
- **Digital & Retail Marketing**: ETB 2.2M for:
- Fuel station co-branding (ETB 1M).
- Prepaid fuel cards & SMS campaigns (ETB 0.7M).
- Google/Facebook ads (ETB 0.5M).
**Strategic Rationale**:
- **High-Impact Branding**: Safari events target HNWIs and diplomats, crucial for securing investor partnerships.
- **Grassroots Engagement**: Co-branded fuel stations build trust in price-sensitive urban/rural markets.
---
### **3. Logistics (ETB 3.3M / 15%)**
**Breakdown**:
- **Warehousing**: ETB 1.5M for Addis Ababa storage (15M-liter capacity, solar-powered).
- **Transport**: ETB 1.3M for rail/road contracts (Ethio-Djibouti Railway, Selam Trucking).
- **Technology**: ETB 0.5M for IoT sensors (Siemens MindSphere) and blockchain documentation (WaveBL).
**Operational Efficiency**:
- **Cost Savings**: Rail transport reduces per-liter logistics costs by 25% vs. road-only competitors.
- **Inventory Control**: Real-time tracking minimizes pilferage and stockouts.
---
### **Risk Management**
| **Risk** | **Impact** | **Mitigation** | **Fund Allocation** |
|-------------------------|-------------------------|-----------------------------------------|--------------------------|
| **Russian Supply Halt** | Revenue loss (30%) | Backup contracts with Kazakh suppliers | ETB 2M (oil imports) |
| **ETB Depreciation** | COGS increases 20% | Forex hedging (50% exposure) | ETB 1M (oil imports) |
| **Port Delays** | Storage costs (+15%) | Pre-booked Djibouti Port slots | ETB 0.5M (logistics) |
---
### **Alignment with Business Goals**
1. **Market Penetration**: ETB 5.5M marketing spend targets 10% Addis Ababa market share by Month 12.
2. **ROI Focus**: ETB 13.2M oil imports underpin 150% returns via bulk pricing (ETB 45/liter vs. competitors’ ETB 50).
3. **Scalability**: ETB 3.3M logistics investment establishes infrastructure for regional expansion (Kenya/Sudan by 2028).
---
### **Fund Utilization Timeline**
| **Quarter** | **Activity** | **Expenditure (ETB)** |
|-------------|----------------------------------|-----------------------|
| Q1 | Oil imports, safari campaign | 10M |
| Q2 | Warehouse setup, digital ads | 7M |
| Q3–Q4 | Logistics tech, rural expansion | 5M |
---
**Conclusion**
Boaz’s funding allocation strategically balances supply chain security (60% imports), brand visibility (25% marketing), and operational agility (15% logistics). By hedging risks and targeting high-growth segments, the ETB 22 million investment positions Boaz to dominate Ethiopia’s fuel market while delivering transformative investor returns.