Contributions, Prospects and Constraints of Agricultural Private Investment in Metekel Zone: Benishangul Gumuz Regional State
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Date
2009-06
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Addis Ababa University
Abstract
This research was done in Metekel Zone of Benishangul Gummuz Region State with the objective of assessing the
trend, level of contributions, constraints and prospects of agricultural private investment. The primary data for the
research were collected through opinion survey. Questionnaires were filled in by sample investors and government
bodies. Additional opinions were solicited through face-to-face interview and focus group discussions. Secondary
data were obtained from relevant government offices at various levels.
The analysis showed that the trend of the projects in agricultural private investment showed fluctuation over the
years since the commencement of private investment. It was found that agricultural private investment increased
from 1993/94 to 1999/000. Conversely, the trend of investment projects showed decline from 1999/00 to 2005/06.
From 2006/07 to 2007/08, the trend showed increment and progress.
The study also showed that although the number of workers employed in agricultural private investment sector in
the zone was high in number (compared to other investment sectors) the quality of their life and work has not been
in a good condition. Facilities in housing and transportation were better offered on the investment sites compared to
health care services, subsidized food and drinking water. Many of the investment firms did not sign contractual
agreement with the workers. There was also frequent turnover. As the result, the workers in agricultural private
investment of the study area felt job insecurity and instability. The overall average contribution of government
revenue from agricultural private investment was below one percent to the total annual revenue. The main causes for
less contribution to revenue were less volume of the investment, weak tax administration and follow~up, less
willingness of the investors to pay and long-term tax holiday allowed for annual crops and exit of investors.
Infrastructure, governance, fi nancial institutions and market were found to be the determinants of agricultural
private investment in the study area. Service delivery while obtaining land for investment was much delayed and the
number of days it took was far more than the standard set. Road network, telecommunication, electric power and
drinking water supply were poor and as such found to be the constraints to the sector in the study area. Road net
work was the most highly needed and superior determinant factor for agricultural private investment among
infrastructure facilities. Lack of road network resulted in lack of proper market for products, problems in providing
supplies to the workers on the investment sites and made investors unwilling to invest in areas away from the
woreda towns. The analysis mainly showed that bribe, practice of tax collection and administration, promotion and
support for the sector, weak conflict resolution mechanisms and absence or low enforcement of investment related
policies and laws were the main governance related constraints which negatively influenced expansion and
contribution of agricultural private investment in the zone. Moreover, financial constraints had a negative impact on
the utilization of resources such as land and productivity of the investors in the zone in the agricultural sector.
Furthermore, the study showed that lack of transportation, distance of investment sites from niche market, lack of
full demand in the area and low price were the main market constraints in the study area. Analysis also showed that
the investments were not environmentally- friendly.
Regarding the prospects, with the optimistic view of most investors to expand investments and the amended
investment law, the study indicated that there is possibility for private agricultural investment to contribute to the
development of the region more than what has been achieved so far. Conversely, the various constraints have made
some investors hold pessimistic view about the future investments and are thus possible threats to expansion and
contribution of the sector.
Finally, the study was concluded by offering some recommendations that may help to overcome the constraints and
may ass ist the government in policy formulation. The recommendations were offered in relation to improving
working condition, government revenue generation, so lving service delivery and bureaucratic problems, enhancing
physical and financial infrastructure and natural resource conservation.
Key words: Government revenue, employment opportunity, physical and financial infrastructure, bureaucracy, enablinG
investment environment, casual employment, temporal)' employment, pennanent employment, revenue forgone
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Keywords
Agricultural Private Investment