Determinants of Private Agricultural Investment in Assosa Zone, Benishangul Gumuz Region, Ethiopia (Micro Level Analysis)

Abstract

Ethiopia is one of the leading agrarian economies and having wide resources potential to attract domestic and foreign direct investment. The objective of this study was to identify and analysis the micro-determinants factors for private agricultural investment in the Benishangul Gumuz Regional State in Assosa zone, Ethiopia. A survey was conducted on 123 agricultural investors. Descriptive analysis and econometric methods of data analysis were employed to analyze the surveyed data. The results of micro level study showed that age, access to credit, access to infrastructure facilities, access of market, bureaucratic red tape, investment incentives and agro climate factors are siginificantlly determinants of agricultural investment in the study areas on amount of capital to invest, assume other variables in the model were constant. The results of this study also revealed that most of the problems encountered by agricultural investors were lack of commitment to invest, lack of adquate finance and institutional constaints. The intervention program might be viewed as strengthening institutional set-up and improves the micro economic stability in one hand and encourage investors to invest on the others hand. This could be done by establishing true, independent and efficient institution, through minimizing bureaucratic red tape, and eliminating unnecessary regulation so as to create access to credit, provide infrastructure facilities to the agricultural investment. The regional governments should work with investors to make conducive investment climate and open up its doors to investors by applying approprate policies and investment incentives to achieve the long term development of the regional economy.

Keywords: Determinants, agricultural investment, Status of investment, Tobit model