ECONOMIC ASSESSMENT OF THE FISH SOLAR TENT DRYERS IN MALAWI

Abstract

The main objective of this research study was to conduct an economic assessment of the fish solar tent dryers in Malawi. An investment model for the fish solar tent dryers in Malawi was developed where investment appraisal techniques, specifically, the net present value, internal rate of return and the payback period were calculated. Risk analysis has also been conducted in which through the use of the Monte Carlo simulation technique, a probabilistic net present value for the investment model was found. Primary data from the baseline survey has mainly been used for the analyses. Results of the study have shown that the investment‟s NPV is MK6, 014, 489.44, the IRR is 57% higher than the estimated 16.32% cost of capital and the payback period is 1.77 years. The sensitivity analysis results have shown that only two input variables influence the investment's net present value. These are the dried fish selling prices that have correlated positively with the net present value and the fresh fish buying prices that are negatively correlating with the net present value of the investment. On the other hand, the risk analysis results have shown that chances of making a loss from this type of investment are 18.26%. It has also been observed that there exist only a 0.20 probability of experiencing an NPV of a negative value from this investment. Lastly, the study has also found that the net present value of the fish solar tent dryer's investment is still robust in spite of any changes in the levels of investors risk preferences. With these results, the study has concluded that the fish solar tent dryers in Malawi are an economically viable investment because they are capable of improving the returns to the investors in the fish processing business. Therefore, this technology need to be adopted by investors in the fishing industry.