Parikalpana: KIIT Journal of Management

Open Access Open Access  Restricted Access Subscription Access

Opportunities and Challenges of Investment in Ethiopia: A case of North Shoa Zone of Amhara Regional State


Affiliations
1 Debre Berhan University, Dept. of Accounting & Finance, College of Business and Economics, Ethiopia
 

This study has examined the opportunities and challenges of investment in North Shoa Zone of Amhara Regional state of Ethiopia. The study adopts a qualitative type of research design. Specifically the study surveys 50 investment projects conveniently (ten percent of the total population of more than 490 investment projects). Also out of the 27 districts found in North Shoa Zone, 8 districts (Weredas) were selected as a sample purposively. The findings of the study revealed that North Shoa Zone is becoming one of the best investor destinations in Ethiopia in general and in Amhara Region in particular. The main reason for this is that; the Zone has so many investment opportunities in all sectors, favorable weather condition, availability of industry zone in Debre Berhan town, nearness to the capital of the country and port Djibouti, better bureaucracy, favorable investment policy, supply of land free of tender for industry sector, better infrastructures, better supply of raw materials, nearness to the market, availability of labor, Customs duty payment exemption on capital goods and construction materials, Income tax exemption from two to seven years, etc. even though the aforementioned factors attract investors to the Zone, there are also some challenges that hinder the investment activities of existing and potential investors. These are; elongated bureaucracy in some offices, lack of decision making capability by some officers, shortage of sufficient loan supply, contentious power interruption, shortage of foreign currency, unfair tax assessment, limited supply of qualified labor in some fields, road and transportation shortage in some districts, less government supervision, incentive, and follow-up, shortage of raw-materials, lack of quality on some raw materials supplied locally, limited market linkage.


User
Notifications
Font Size

  • Abel, A. B., and Blanchard, O. J. (1986): ‘The Present Value of Profits and Cyclical Movements in Investment’, Econometric, 54(2), pp. 249-273.

  • Anol, B. (2012). Social Science Research: Principles, Methods, and Practices University of South Florida, USF Tampa Liberary Open Access Collection.

  • Ataklty Adugna Abadi et al. (2015): Assessment Of Private Investment In Tigray, Northern Ethiopia: Challenges &Opportunities In The Case Of Manufacturing Sector, International Journal of Current ResearchVol. 7, Issue, 01, pp.12210-12217

  • Bazoumana, O. (2005). Modeling the Long Run Determinants of Private Investment in Senegal. Centre for Research in Economic Development and International Trade, University of Nottingham., CREDIT Research Paper No. 04/05.

  • Bruhn, M., Karlan, D. & Schoar, A. (2010). What Capital Is Missing in Developing Countries? American Economic Review, 100, 629-33.

  • Calvin, M., Sylvia, R., Patrick, M., Nomathemba, M. (2010). Agricultural Investment Funds for Developing Countries. Food and Agriculture Organization of the United Nation.

  • Daniel, Z., (n.d). Determinants of private investment in Ethiopia. Addis Ababa University.

  • Djankov, S. (2009). The Regulation of Entry: A Survey. World Bank Research Observer, 24, 183-203.

  • Djankov, S., LA Porta, R., Lopez DE Silanes, F. & Shleifer, A. (2002). The Regulation of Entry. The Quarterly Journal of Economics, CXVII.

  • Ethiopian Investment Agency,.(2012). Investment Climate in Ethiopia, July, 2012.

  • Ethiopian Investment Agency (2012). Investment opportunity profile for the manufacturing of leather garments and articles in Ethiopia. Addis Abeba, Ethiopia.

  • First Floor, 99 South wark Street London SE1 0JF, United Kingdom Exchequer Framework. Department of Public Expenditure and Reform.

  • Henok, A., Derk, B., & Dan, C. (2013). Ethiopia’s Investment Prospects: A Sectoral Overview* Journal compilation ©2013 African Centre for Economics and Finance. Published by Print Services, Rhodes University, P.O. Box 94, Grahamstown, South Africa. African Review of Economics and Finance, Vol. 4, No.2.

  • Hummels, D. and Schaur, G. (2012), “Time as a trade barrier”, NBER Working Paper, No. 17 758, January, National Bureau of Economic Research, Cambridge, MA.

  • Ignacio, F,. & Sunil, S,. (2011). Constraints to private investment in the poorest developing countries. A review of the literature. Nathan Associates London Ltd.

  • IMF. (1993). Balance of Payments and International Investment Position Manual, Fifth edition.

  • Ingersoll, G. L., &Eberhard, D. (1999). Grants management skills keep funded projects on target. Nursing Economics, 17, 131-141.

  • Investment Proclamation No. 769/2012

  • Kathuria, V. (2000). Productivity spillovers from technology transfer to Indian manufacturing firms. Journal of International Development, 12, 334-369.

  • Loayza, N., Oviedo, A. & Serven, L. (2005). The impact of regulation on growth and informality - cross-country evidence. Policy Research Working Paper Series. The World Bank.

  • Matwang. A, Fredrick, L. (2000). Determinants and Constraints to private Investment: The Case of Kenya (Abstract)

  • McMillan, J. H. & Schumacher, S. (1993). Research in education: A conceptual understanding. New York: Haprer Collins.

  • Ministry Of Agriculture (MoA). (2013). Agricultural investment opportunities in Ethiopia

  • Nebil, K., Gezahegn, A., Hayat, Y.,(2010).Enabling the Private Sector to Contribute to the Reduction of Urban Youth Unemployment in Ethiopia. Produced and distributed by the Addis Ababa Chamber of Commerce and Sectoral Associations with nantonal support from the Swedish Agency for International Development Cooperation, Sida.

  • North Shoa Zone, (2013). North Shoa Zone Investment Directory.

  • OBG (2012), the Report: Nigeria 2012, Oxford Business Group, London.

  • OECD (Organisation for Economic Cooperation and Development). 1996. Benchmark Definition of Foreign Direct Investment. Third edition (reprinted 1999).

  • Oyelaran-Oyeyinka, G. Sampath. (2007). Innovation in African Development: Case Studies of Uganda, Tanzania and Kenya, Washington, D.C.: World Bank, study presented at “Innovation in the African Context: A Forum for Policymakers” hosted by Irish Aid World Bank Institute, 6.–8. March 2007, Dublin.

  • Ping, H., and Donglin, L. (2012). What is a good investment measure? Investment Management and Financial Innovations, Volume 9, Issue 1, 2012.

  • Reinikka, R. & Svensson, J. (2002). Coping with Poor Public Capital. Journal of Development Economics, 69, 51-69.

  • Roinn, C., Phoiblii (2011). Infrastructure and Capital Investment 2012-16: Medium Term

  • Simon, W. (2005). Enhancing private investment for development. Policy guidance for development agencies Southern African IDEAS

  • Sinani, E. & Meyer, K. (2004). Spillovers of technology transfer from FDI: the case of Estonia. Journal of Comparative Economics, 32, 445-466.

  • The Organization for Security and Cooperation in Europe. (2006). Best practice guide for a positive business and investment climate. The Organization for Security and Cooperation in Europe (OSCE) ISBN-10: 3-95028-0-8 ISBN13: 978-3-9502218-0-0.

  • Trebilcock, M.J. and M. Mota Prado (2011), What Makes Poor Countries Poor? Institutional Determinants of Development, Edward Elgar, Northampton, MA.

  • Tsegaye, T. (n.d). Investment Promotion and Incentives in Ethiopia. The Ethiopian Economy: Structure, Problems and Policy Issues.

  • UNIDO. (2008). Creating an Enabling Environment for Private Sector Development in sub-Saharan Africa United Nations Industrial Development Organization. Federal Ministry for Economic Cooperation and Development, Vienna, 2008.

  • World Bank, (2010). Investment Law Reform A Handbook for Development Practitioners. Investment Climate Advisory Services of the World Bank Group June 2010 in partnership. The World Bank Group 1818 H Street, NW Washington, DC 20433

  • World Bank. (2004). Doing Business in 2004: Understanding Regulation, Washington, DC.

  • World Bank. (2005). A Better Investment Climate for Everyone. World Development Report. Washington DC: The World Bank.

  • World Bank. (2007). World development report. Washington D.C.,

  • World Economic and Social Survey. (2013). Sustainable Development Challenges. Department of Economic and Social Affairs. E/2013/50/Rev. 1, ST/ ESA/344.

  • Ethiopian Investment Commission: http://www.investethiopia.gov.et

  • Ethiopian Investment Agency: http://ethioinvest.com

  • Embassy of Ethiopia Washington DC: http://www.ethiopianembassy.org.

  • OECD (2014), “Creating an environment for investment and sustainable development”, in Development Cooperation Report 2014 Part II: Mobilizing Resources for Sustainable Development, OECD Publishing. http://dx.doi.org/10.1787/dcr-2014-16-en.

  • OECD (2013a), OECD Investment Policy Reviews: Malaysia 2013, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264194588-en.

  • OECD (2013b), OECD Investment Policy Reviews: Tanzania 2013, OECD Publishing, Paris, http://dx.doi.org/10.1787/ 9789264204348-en.


Abstract Views: 872

PDF Views: 1




  • Opportunities and Challenges of Investment in Ethiopia: A case of North Shoa Zone of Amhara Regional State

Abstract Views: 872  |  PDF Views: 1

Authors

Girmachew Kahsay
Debre Berhan University, Dept. of Accounting & Finance, College of Business and Economics, Ethiopia
Gashaw Belete
Debre Berhan University, Dept. of Accounting & Finance, College of Business and Economics, Ethiopia

Abstract


This study has examined the opportunities and challenges of investment in North Shoa Zone of Amhara Regional state of Ethiopia. The study adopts a qualitative type of research design. Specifically the study surveys 50 investment projects conveniently (ten percent of the total population of more than 490 investment projects). Also out of the 27 districts found in North Shoa Zone, 8 districts (Weredas) were selected as a sample purposively. The findings of the study revealed that North Shoa Zone is becoming one of the best investor destinations in Ethiopia in general and in Amhara Region in particular. The main reason for this is that; the Zone has so many investment opportunities in all sectors, favorable weather condition, availability of industry zone in Debre Berhan town, nearness to the capital of the country and port Djibouti, better bureaucracy, favorable investment policy, supply of land free of tender for industry sector, better infrastructures, better supply of raw materials, nearness to the market, availability of labor, Customs duty payment exemption on capital goods and construction materials, Income tax exemption from two to seven years, etc. even though the aforementioned factors attract investors to the Zone, there are also some challenges that hinder the investment activities of existing and potential investors. These are; elongated bureaucracy in some offices, lack of decision making capability by some officers, shortage of sufficient loan supply, contentious power interruption, shortage of foreign currency, unfair tax assessment, limited supply of qualified labor in some fields, road and transportation shortage in some districts, less government supervision, incentive, and follow-up, shortage of raw-materials, lack of quality on some raw materials supplied locally, limited market linkage.


References





DOI: https://doi.org/10.23862/kiit-parikalpana%2F2018%2Fv14%2Fi2%2F177862