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ESTABLISHING A BAKERY BUSINESS IN UGANDA

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Introduction

Bread and Confectionary products are a lucrative business. These, especially bread, are quite nutritive and easily preserved and the shelf life can be prolonged. These are products commonly stocked almost by all provision stores. Bread is one common product on people’s dining tables to a sizeable proportion of the urban and semi-urban communities and therefore, enjoys a ready market.

This is a project to produce bread, cakes, buns, mandazi, doughnuts etc. It requires capital investment of US $55,580, yield revenue of 920,400 and net profit margin of 60%.

Capital Requirements and equipment

The investment scale depends on the project set objectives.

Capital Investment Requirements in US$

Capital Investment Item Units Qty @ total
Land & Buildings No 25,000
Firewood Oven No 1 3,500 3,500
Mixer No 1 2,700 2,700
Proover System No 1 750 750
Doughnut Stove No 1 50 50
Trays No 100 10 1,000
Tins (1kg-size) No 40 12 480
Tins (1/2kg-size) No 40 10 400
Furniture &Fittings No 2,000 2,000
Delivery Van No 2 9,000 18,000
Slicing Machine No 1 1,250 1,250
Other tools No 450 450
Total 55,580

Production and Operating Costs

(a)Direct Materials, Supplies and Costs in $
Cost Item Units @ Qty/ day Pdn Cost/day Pdn Cost/ month Pdn Cost/ year
Direct Costs
Wheat flour kgs 2 1,000 2,000 52,000 624,000
Salt kgs 1 20 20 520 6,240
Sugar kgs 1 250 250 6,500 78,000
Yeast kgs 6 20 120 3,120 37,440
Improver kgs 4 20 20 520 6,240
Water Ltrs 0.05 1,200 60 1,560 18,720
Vanilla Btls 1 5 5 130 1,560
Cooking fat ltrs 2 20 40 1,040 12,480
Packaging materials Pcs 0.03 2,500 75 1,950 23,400
Other materials 4 104 1,248
Sub-total 2,594 67,444 809,328
General Costs (Overheads)
Labour 1,200 14,400
Utilities 680 8,160
Selling & distribution 1,800 150
Administration expenses 267 3,200
Cleaning & toiletries 192 2,300
Miscellaneous 175 2,100
Depreciation 600 50
Sub-total 4,914 30,360
Total Operating Costs 72,358 839,688
  1. Production costs assumed 312 days per year with daily capacity of producing 2,750 loaves of bread.
  2. Depreciation (fixed asset write off) assumes 4-years life of assets written off at 25% per year for all assets.
  3. Direct costs include materials, supplies and other costs that directly go into production of the product.
  4. Total monthly days assumed are 26-days.
  5. The valuation currency used is United States Dollars.

Project Product Costs and Price Structure

Item Qty/ day Qty/yr @ Pdn Cost/yr UPx Total Rve
Bread-1kg 1,250 390,000 1 300,688 1.4 546,000
Bread-1/2kg 1,500 468,000 0.5 539,000 0.8 374,400
Total 2,750 858,000 839,688 920,400

Profitability Analysis Table

Profitability Item Per day Per Mnth Per year
Revenue 2,950 76,700 920,400
Less: Production & Operating Costs 2,691 69,974 839,688
Profit 259 6,726 80,712

Market Analysis

Bread is a household item, therefore it has a ready market throughout the year and the country.

Government Facilities and Incentives

There exists a liberalized trade policy. Bakery owners are allowed to import wheat tax free and process it into wheat flour.

 

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