Determinants of Domestic Private Investment Performance: Evidence from Sheger City Administration, Ethiopia

This study examines the determinants of domestic private investment performance in Sheger City Administration, Ethiopia, focusing on infrastructure, access to finance, political stability, the regulatory environment, and exchange rate stability. A mixed-methods approach was employed, combining quantitative and qualitative data. Primary data were collected from domestic private investors using structured questionnaires and semi-structured interviews, with respondents selected through stratified random sampling. Of the 200 questionnaires distributed, 190 were validly returned, yielding a 95% response rate. Quantitative data were analyzed using descriptive statistics, correlation, and multiple linear regression, while qualitative data were analyzed thematically. The regression model was statistically significant (F = 61.380, p < 0.001) and explained 62.5% of the variation in private investment performance (R² = 0.625). All five predictors exhibited positive and statistically significant effects. Exchange rate stability emerged as the strongest predictor (β = 0.396, p < 0.001), followed by access to finance (β = 0.205, p = 0.002), infrastructure (β = 0.152, p = 0.016), political stability (β = 0.144, p = 0.044), and the regulatory environment (β = 0.033, p = 0.033). The findings indicate that private investment performance depends on an integrated investment climate combining macroeconomic stability, financial accessibility, reliable infrastructure, political predictability, and effective regulation. The study recommends coordinated policy interventions to strengthen these interconnected determinants and promote sustainable domestic private investment.