Administrative, Infrastructural and Finance Related Factors Affecting Private Investment in Ethiopia: Evidence from East Gojjam Zone of Amhara Regional State

Abstract

The aim of this paper is to identify the main factors related to administrative, infrastructure and market related issues affecting private investment activities in East Gojjam zone with the intention of providing valuable information about the investment environment of the zone to potential investors. Descriptive type of research design has been used in this study by giving more emphasis on qualitative data analysis method. On the other hand, quantitative research analysis has been used to provide numerical measurement and analysis of the magnitude and extent of the problem and trend of private investment in the Zone. The study used both primary and secondary data. Pre-designed self-administered questionnaire has been used to collect primary data. The outcome of this study revealed that, the major bottlenecks of investment in East Gojjam related to administrative and policy related factors include policy distortions and rent seeking, direct government involvement in some investment areas, corruption and dysfunction of the judiciary system, malpractices in granting licenses of investment activities, favoritism in tax revenue collection, arbitrary and inappropriate enforcement of business regulations, bureaucracy and policy implementation delay. Whereas, infrastructural factors affecting private investment include inadequate electric energy, poor water supply and transportation and communication problems. Shortage of foreign currency, fluctuations of exchange rates, access to credit in formal financial institutions, inadequate amount of loan, high interest rates, and bureaucracy of lending institutions to give loan are finance related factors affecting private investment in the study area.

Keywords: Private Investment, East Gojjam

DOI: 10.7176/EJBM/12-34-05

Publication date: December 31^st 2020