DETERMINANTS OF AGRICULTURAL PROJECT FAILURE FINANCED BY DEVELOPMENT BANK OF ETHIOPIA IN AYSAITA DISTRICT, AFAR NATIONAL REGIONAL STATE

Abstract The successful execution of projects serves as a visible indicator of development in a country and large amount of funds have been lost by governments as a result of failed projects. The main objective of this study was to investigating the determinants of agricultural project failure financed by development bank of Ethiopia at Aysaita district. Both primary and secondary data has been collected. Primary data was collected from the employees and managers through close-ended questionnaire. Data collected was analyzed by using descriptive and inferential statistics with the help of SPSS software version 23. The study employed both descriptive and explanatory research designs with quantitative research approach. From the total target population of 191 employees, 132 sample respondents were selected using stratified and simple random sampling techniques. The finding of this study indicates that most respondents agreed that slows down economic growth, loss of revenue by state, unemployment, collapse of local businesses, cost escalation, discourages investment, financial institutions, lose confidence, bad image for government and loss of foreign Aid were major consequence of project failure in Aysaita district administration. In conclusion, project specific factor, credit management, macro-economic environment, delays in payment, management and administrative practices and environmental related factors were significantly contributed to agricultural project failure. The relationship between delays in payment, macro-economic environment, management and administrative practices, project specific factor and environmental related factors and agricultural project failure had a positive and statistically significant, while credit management was statistically insignificant effect on agricultural project failure of Aysaita district administration. Thus, the researcher recommends that the bank should frequent assessment changes on the escalation of material prices (inflation). These could help the institution to be a better performer and minimize the problems.