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