Business Plan for an ODAS Project of 250 ha or More: Water, Sector, Timetable, Financing

1. 1. Why does the business plan weigh so much?

Because it is the document the committee has to approve. Article 34 of executive decree no. 20-265 gives it three tasks: assess whether projects are worthwhile, assess whether they are feasible, approve business plans. The order of 21 March 2021 gives it thirty days to rule on the file and the business plan (article 10).

Decree 21-432 puts the business plan first in the file, ahead of the proof of financial capacity and the articles of association (article 14). The other documents confirm what it states.

ODAS has no published grid like the 2012 order for ONTA. What follows is therefore our reading: the points the committee cannot avoid looking at, given the Office's conditions and the specifications.

2. 2. Sector and processing

The ODAS conditions page names four sectors: cereals (maize included), oilseeds, sugar crops and fodder. It points them towards processing, to serve the national market and cut imports, and asks for an integrated project.

The business plan therefore has to say what happens to the harvest. Sold to whom, processed where, and what share of output. A maize project that supplies a feed mill meets the condition. A project that sells grain with no named outlet meets it poorly.

Our reading is that the market section of an ODAS file works best when it starts from processing rather than from the crop. The outlet justifies the sector, and the sector justifies the area.

3. 3. Water, the plan's first assumption

On a Saharan perimeter, everything else depends on water. Yields, the area actually farmed each year and production costs all follow from it. The business plan must say where the water comes from and how much there is.

The starting point is the perimeter's fact sheet, published with the portfolio. It can be downloaded during the call and disappears when the call closes, so keep a copy. The plan's figures should tie back to it.

The cropping plan comes next. Which crops, on how many hectares, in what rotation, with what water need per season. A plan that irrigates 250 ha of maize without saying how much water that takes leaves the committee no way to check feasibility.

4. 4. A timetable that fits the specifications

Decree 21-432 requires works to start within six months of installation on the plot (article 11). The model specifications treat a failure to start after six months as a breach (annex, article 8). The 2021 order adds that works start when the specifications are signed (article 16).

The business plan's timetable must allow for this. It shows what is done in the first six months and how it is paid for. Development then proceeds in phases, each with its investment and first harvests.

The committee reads this timetable next to the financing plan. A borehole planned for the first half-year needs its funding in the first half-year.

5. 5. The financing plan and the statements

ODAS asks for financial capacity shown by recent bank statements, and for an area consistent with the business plan and that capacity. The three figures are read together: area requested, investment, funds available.

A plan that funds the first phase with a loan not yet applied for rests on an assumption the committee cannot check. Our reading is that a smaller area covered by proven funds is a better request than the 3,000 ha of a whole perimeter without matching resources.

6. 6. Inconsistencies that cost a file

In our reading, these are the ones the committee spots without needing an expert:

• the area requested exceeds what the cropping plan uses;
• the cropping plan does not match the water stated;
• first-phase investment exceeds the funds the statements prove;
• the timetable pushes the first works beyond six months;
• the main crop belongs to none of the four sectors;
• processing is announced with no partner, no site and no figures.

Each can be fixed before filing. After that, there are fifteen days to appeal (article 12 of the order).

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BENSAID Farouk

Financial & Economic Research Consultant — ProfitPilot NextGen Consulting

Certified sole trader and expert in financial studies, risk analysis and market research for SMEs, startups and investors in Algeria. View full profile