Firms’ Participation on Grand Ethiopian Renaissance Dam Construction in Ethiopia

Abstract

This study designed particularly to identify factors affecting firms' decisions on the purchase of bonds and the amount of their investment on bond purchase for GERD construction. This study used cross-sectional data of enterprise surveys collected by the World Bank in 2015. In addition to descriptive statistics, the Tobit model was estimated to identify the underlying factors that; determine both firms' participation in the purchase of bonds and the amount of their investment for GERD construction. The model result indicates that the expected value of the amount of bond purchase is 2593.71 birr with 50.1% likelihood of the firms to purchase the bond for GERD construction. The results from the Tobit model indicate that; the decision to purchase bonds and the amount of bond purchase for GERD construction was affected by adopting technologies, being local owner, the income of firms, receiving loan, number of employees, the existence of female owner and being large in business size. The result suggests the need to design interventions to increase the access of innovative technologies by offering at a reasonable price and increase the access of a loan by reducing collateral requirements and avoiding complex bureaucratic processes to receive the loan. Besides, it is good if the government and the non-government organization works to empower women to be the owner of firms; and help firms to utilize their potential that leads them to hire more employees, produce high profit and be larger in its size.

Keywords: GERD, Tobit, Bond, Firms, Ethiopia

DOI: 10.7176/JAAS/76-03

Publication date:October 31^st 2021