Causes Of Failure Of Projects Financed By Development Bank Of Ethiopia: The Case Of Dessie District
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Date
2018-09-09
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Addis Ababa University
Abstract
Corporate Credit Process (CCP) of DBE is the major lending unit of the Bank and through which more than 75% of the total annual lending amount of the Bank has been granted to borrowers. However, failure of projects financed by the Process is becoming a big problem. According to the information obtained from the bank annual performance report of 2012, only 29% of projects financed by bank are categorized as successful while the remaining 71% are in failure category. Hence the objective of this research project was to identify the major causes of failure of projects that were financed by DBE Dessie district. Survey questionnaire, Document analysis and open ended interview were employed to identify the major causes. As a result, project specific factors, credit related management factors, socio political environment and economic factors of 24 financed projects are considered for the study. The projects were from the three economic sectors, agriculture, industry and service. After collecting the required data, a descriptive analysis has been conducted. The results of the analysis had shown that cause of project failure financed by the bank are management problem, implementation problem market problem, technical failure ,quality of manpower problem, missing objectives, follow up level /technical support given by the bank ,overestimation of project return and manpower quality of projects, problems of corruption and related cause, continuous rise of product price ,raw materials price and wages, intervention of political leaders on project ,government officials perception towards the project and change in economic policies. Moreover, the study that the concerned stakeholders, mainly the bank helps the project to be implemented as per the stated schedule and the bank has to conduct follow up activity through give intensive training to the operators and also the bank should involve in finding market destination of the product or giving advice to the promoter by assigning marketing experts.
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Project failure, Corporate Credit Process, Development Bank of Ethiopia