**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:
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### **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 |
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### **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.
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### **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.
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### **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.
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### **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) |
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### **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).
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### **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 |
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**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.