THE DETERMINANTS OF MEDIUM SCALE PRIVATE INVESTMENT IN GEDEO ZONE, SNNPR, ETHIOPIA

Medium scale private investment plays a very important role in a country’s overall economic
growth by increasing the productive capacity of the economy, creating employment opportunity
and promoting technical progress through the introduction of new production techniques.
However, the development and expansions of medium scale private investment activities are low
in Ethiopia. Hence, this study aimed to identify the challenges and determinants of medium-scale
private investment in Gedeo zone, Ethiopia. The study mainly used cross sectional survey data
collected through questionnaire from selected respondents in the study area. The study employed
a mix of qualitative and quantitative research methodologies, including interviews, surveys, and
document analysis. Both descriptive and inferential statistics were used to analyze the collected
data. The results of the study reveal that private investors face challenges in accessing
investment permit/license, lack of investment incentives, corruption, lack of access to credit,
political instability, lack of market access, lack of access to land, existing bureaucracy, lack of
adequate infrastructure facilities, and tax rates and administration are found the major
challenges making it difficult for them to start and operate businesses in the study area.
Inferential statistics results also indicates that the level of education and business experience
have significant positive effect on the medium scale private investment, however lack of credit
access, lack of adequate infrastructures, lack of land access, bureaucratic red tape, lack of
investment incentive, lack of market demand are significant variables which negatively affect the
development and expansion of medium scale investment activities in the study area. Therefore
improving access to finance, enhancing infrastructure, providing investment incentive, land
access, and simplifying regulations would encourage and enhance medium scale private
investment activities in the study area.