Opportunities and Challenges of Investment Along a Supply Chain: The Case of Selected Investment Areas of Ethiopia

Abstract

The purpose of this study was to identify salient opportunities and challenges of investment and investors’ perception towards the same in Ethiopian selected investment area- Arsi. It focused on manufacturing, agro-industry and agricultural investment operations. Explanatory research design was used along with primary and secondary source of data gathered via questionnaire, Focus Group Discussion and interview. A combination of sampling techniques (cluster, purposive and random) and data analysis tools including Explanatory Factor Analysis and Multi variant linear regression were utilized. According to the Factor Analysis and regression result, opportunity related variables which have strong association with investors’ perception and appeared significant at 95% confidence level include: labor availability, large market size, potentially growing investments alternatives, availability of raw material, transportation service, and commercial convenience of local culture. Whereas, challenge related variables are inaccessibility of investment sites, power interruption, vulnerability to social unrest, poor labor commitment, disintegrated policy implementation system, lack of community sense of belongingness of investments, and absence of entrepreneurial orientations of investors. Unique to the developed conceptual framework of the study, high interest rate, investors behavior, and community sense of belongingness appeared to be more significant. The salient factors have effect ranging across the Supply Chain nearly with similar magnitude which means investors engaged at any point in the Supply Chain would have similar challenges and opportunities. Therefore, an integrated and comprehensive approach is required to enhance the positive perception of investors and thereby attract more value creating investors.

Keywords: Investors’ Perception, Opportunities, Challenges, Investment.