Determining Factors of Private Investment Performance: Scientific Focus in Sodo City, Wolaita Zone, Southern Ethiopia

Abstract

To make private investment more attractive, most African countries have liberalised the market and attempted to create enabling environment in recent decades. Like many African countries, Ethiopia took steps towards liberalising the market and the macroeconomic regime and introducing measures to improve the investment regulatory framework. This study analyses the determinants of private investment performance in Wolaita Sodo city. Data for the study were collected from 165 investors from different categories. Data was collected using primary and secondary sources; a Multi-stage sampling technique was used to meet with the study points. To attain the study’s stated objectives, different data analysis methods, i.e. descriptive analysis and econometric analysis, were used to identify the effect of independent variables on the dependent variable. Descriptive analysis percentages, graphs, charts, and tables were presented, affecting private investment. In logistic regression analysis, the variables positively related to the probability of investment are investment incentive, marital status, land, investment experience, labour, and credit facility. On the other hand, the variables negatively correlate with the probability of investment interest on the loan, age, sex, education, and inflation. From 11 explanatory variables, 5 of the variables: investment incentive, credit facility, interest on the loan, sex, and inflation have a significant effect on the private investment at the significance level at 1 per cent, 5 per cent, and 10 per cent.