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Pre-Feasibility Study on Construction of Modern Market In Final Pre-Feasibility Report Construction of Njiro Market in Arusha City (Engutoto Ward), Arusha City Council October 2018 Submitted to: The World Bank Submitted by: Deloitte Consulting Limited, Tanzania Final Pre-Feasibility Report October 2018 Construction of Njiro Market in Arusha City (Engutoto Ward) Table of Contents 1 Executive Summary ............................................................................................................. 8 2 Background ....................................................................................................................... 11 3 Strategic Case ................................................................................................................... 15 4 Economic Case ................................................................................................................... 28 5 Commercial case ................................................................................................................ 35 6 Financial Case .................................................................................................................... 60 7 Management Case ............................................................................................................. 80 8 Conclusion and Way forward ............................................................................................. 87 9 Annexure A: Willingness to Pay ......................................................................................... 96 10 Annexure B: Social Due Diligence by World Bank .............................................................104 11 Annexure C: Market Demand Assessment .........................................................................109 12 Annexure D: Site Suitability Analysis ................................................................................124 13 Annexure E: Conceptual Designs ......................................................................................127 14 Annexure F: Methodology for assessing basic construction costs .....................................128 15 Annex G: Capital Asset Pricing Model (CAPM) ...................................................................130 16 Annexure H: Environmental and Social Impact Assessment .............................................132 17 Annex I: Institutional Assessment Report (Presentation) ................................................142 18 Annex J: City Level Infrastructure Assessment.................................................................174 Page | 2 Final Pre-Feasibility Report October 2018 Construction of Njiro Market in Arusha City (Engutoto Ward) Index of Figures Figure 1: Map depicting Project Location in Engutoto Ward in Arusha City………………………………………………….18 Figure 2: Satellite Image of the Project Site ..................................................................................... 21 Figure 3: Classification of Site as per Master Plan ............................................................................. 21 Figure 4: Unfinished Structures on the Plot ...................................................................................... 22 Figure 5: Connectivity of Project Site……………………………………………………………………………………………………………. 28 Figure 6 Financial Analysis Methodology .......................................................................................... 60 Figure 7: Domains for Maturity Assessment…………………………………………………………………………………………………..80 Figure 8: Radar Chart showing score obtained by ACC on Maturity Assessment .................................... 81 Figure 9: Key Supervisory and Executive Institutions for the Project ................................................... 83 Figure 10 Commercial Shops at Njiro Market Site, owned by Private Traders ...................................... 107 Figure 11 Homeless families at the proposed Njiro Market site ......................................................... 108 Figure 12: Map depicting Project Location in Engutoto Ward in Arusha City………………………………………………109 Figure 13: Other markets/surrounding commercial infrastructure in Arusha City……………………………………..110 Figure 14: Institutional Infrastructure near Njiro Market in Arusha City ............................................. 112 Figure 15: Entertainment and Recreational Infrastructure near Njiro Market in Arusha City…………………….114 Figure 16: Social and Other Infrastructure near Njiro Market in Arusha City…………………………………………….115 Figure 17: Methodology for Market Demand Assessment of Markets ................................................. 116 Figure 18: Map of Arusha City identifying Catchment for Njiro Market ............................................... 118 Figure 19: Site Layout of Njiro Market in Engutoto ward in Arusha City ............................................. 127 Figure 20: Arusha City with Mount Meru in the background .............................................................. 174 Figure 21: Arusha City Master Plan ............................................................................................... 175 Figure 22: Arusha City Road Connections ...................................................................................... 176 Page | 3 Final Pre-Feasibility Report October 2018 Construction of Njiro Market in Arusha City (Engutoto Ward) Index of Tables Table 1: Economic Returns of the Project .......................................................................................... 9 Table 2: Project Indicator Scenarios – Under PPP model ...................................................................... 9 Table 3: Summary of financial project data – PPP (in mn TZS) ........................................................... 10 Table 4: List of 14 Projects which form part of the Consulting Engagement .......................................... 11 Table 5: Select Focal Market in Arusha City...................................................................................... 19 Table 6: Economic IRR and Benefit – Cost Ratio ............................................................................... 32 Table 7: Economic IRR and Benefit – Cost Ratio ............................................................................... 34 Table 8: PPP Options ..................................................................................................................... 36 Table 9: Role of Public and Private Entities ...................................................................................... 37 Table 10: Suggested Procurement Modality ..................................................................................... 39 Table 11: Risk Allocation and Mitigation Measures ............................................................................ 42 Table 12: Proposed planning details ................................................................................................ 48 Table 13: Area statement .............................................................................................................. 48 Table 14: Maintenance Standards for market and other buildings ....................................................... 56 Table 15: Maintenance Standards for main market area (stalls), internal pavement/ roads, parking area & circulation area ............................................................................................................................ 58 Table 16: Cost Assumptions ........................................................................................................... 62 Table 17: Base Capital Cost ........................................................................................................... 62 Table 18: Construction/Capital Phasing Timeline for Proposed Development on Project Site ................... 62 Table 19: Capital Structure ............................................................................................................ 63 Table 20: Corporate Tax rates ........................................................................................................ 63 Table 21: Total Capital cost ........................................................................................................... 64 Table 22: Construction Related Assumptions for Proposed Development on Project Site ........................ 64 Table 23: Leasing Revenue Assumptions for Proposed Development on Project Site .............................. 65 Table 24 Additional Revenue Stream Assumptions ............................................................................ 65 Table 25: Absorption Phasing Assumptions for Proposed Development on Project Site ........................... 66 Table 26: Staff salaries and wages.................................................................................................. 67 Table 27: Electricity and Water consumption .................................................................................... 67 Table 28: Other Operating Costs .................................................................................................... 67 Table 29: Depreciation Assumptions ............................................................................................... 68 Table 30: Key financial project indicators – PPP ................................................................................ 68 Table 31 Impact due to sensitivity factors ........................................................................................ 69 Table 32: Development mix ..........................................................................................................
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