RIFT VALLEY UNIVERSITY BURAYU CAMPUS

FACULTY OF BUSINESS AND SOCIAL SCIENCES

DEPARTMENT OF BUSINESS MANAGEMENT

Assessment of Factor Affecting Investment Activity In Case Of

Burayu Town

A Research Proposal Submitted to the Department Business Management

for the Partial Fulfilment of Grade; the case of Research Methodology
Course.

Prepared By: - ID.No

1. Surane Kifatu………………………………….…….0248/14
2. Sinbon Ayana………………………………………...0287/14
3. Wakuma Chala………………………………………0268/14
4. Obse Turuna……………………………………….....0228/14
5. Yerusalem Tadala………………………….….….…..0278/14

Instructor:-Kebede Bone (MBA)

May, 2016/2024
Burayu, Oromia

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ACKNOWLEDGMENT
First and for most, we would like to thank the almightily “God” who help us by every direction.
Secondly we would like to reward our deepest gratitude to our advisor Mr. Kebede Bone who
has provided his wise and intellectual advice, guidance and directive to make this proposal.
Third, our appreciation goes to Rift Valley University Burayu Campus of Business and
Social Sciences for giving us this chance to prepare a proposal on Business Management for
the grade proposal. At last but not least we are also appreciating all Social Worker of Rift Valley
University Burayu Campus for their valuable support in every aspect.

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 TABLE OF CONTENTS
ACKNOWLEDGMENT................................................................................................................................ I
ABSTRACT.................................................................................................................................................... V
CHAPTER ONE ........................................................................................................................................... 1
1. INTRODUCTION .................................................................................................................................... 1
1.1 Background of the study ..................................................................................................................... 1
1.2 Statement of the Problem .................................................................................................................. 2
1.3 Research Questions ............................................................................................................................ 2
1.4 Objective of the study ......................................................................................................................... 3
1.4.1 General Objective ........................................................................................................................ 3
1.4.2 Specific Objective ......................................................................................................................... 3
1.5 Significance of the study ..................................................................................................................... 3
1.6 Scope of the Study .............................................................................................................................. 3
1.7 Organization of the proposal .............................................................................................................. 4
CHAPTER TWO ........................................................................................................................................ 5
LITERATURE REVIEW .......................................................................................................................... 5
2.1 Definition of investment ..................................................................................................................... 5
2.2 Objectives of Investment .................................................................................................................... 6
2.2.1 What are the various objectives of investment ........................................................................... 6
2.3 Knowing the investment area ............................................................................................................. 7
2.4 Phases of investment activity ............................................................................................................. 7
2.5 Factors affecting the process .............................................................................................................. 9
2.6 Foreign Direct Investment (FDI) .......................................................................................................... 9
2.7 Investment in Ethiopia ...................................................................................................................... 10
2.7.1 Types of investment in Ethiopia................................................................................................. 11
CHAPTER THREE .................................................................................................................................... 18
RESEARCH METHODOLOGY ................................................................................................................ 18
3.1 Description of the study area............................................................................................................ 18
3.2 Study Design...................................................................................................................................... 18
3.3 Source of data ................................................................................................................................... 18
3.4 Population Sample size and sampling technique ............................................................................. 18

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 3.5 Methods of data collection ............................................................................................................... 19
3.6 Method of data analysis.................................................................................................................... 19
3.7 Ethical Considerations of study......................................................................................................... 19
3.7.1 Reliability of study ...................................................................................................................... 20
3.7.2 Validity of study ......................................................................................................................... 20
3.8 TIME SCHUDUELE AND BUDGET BREAK DOWN ............................................................................... 21
3.8.1 Time Schedule ............................................................................................................................ 21
3.8.2 Budget Break Down ................................................................................................................... 21
REFERENCE.............................................................................................................................................. 22

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ABSTRACT
This study will be conducte on the topic of Assessment of factors affecting investment activities.
The purpose of this study will be to identify and. analyze the factors affecting investment, activity
in the study area. The main objectives of the study will be to identify the level of investment
activities in the study area and the problems affecting the Investment Activity. The study will be
conducted by using, primary and secondary source of data.- Primary data, will be gathered using
questionnaire distributed to all selected investors and interview. Secondary data will be collect
from organization, documents, such as books, Magazines and etc. The data will be collect from
(32) respondents of the investors. For this study used censes method. The collected data will
processed, analyzed and interpreted by using table, chart, and percentage. The finding of the
study shows that the majoring of investors who are found in the town are male and. only few
numbers are female, which directly engaged on their investment activity and few of them engaged
indirect means of Activity to produce some tangible and intangible product to customer. Finally
some appropriate managerial recommendation was made.

Key Words: Factor Affecting, Investment, Burayu Town

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 CHAPTER ONE
1. INTRODUCTION
1.1 Background of the study
The study of investment is not start latest time It. starts earliest began Britain and other
European country particularly before the First World War. Investment is the use of money
to earn income or profit. Investment also refers to the expenditure of funds for capital
goods such as item as, factories, farm, equipment, lives tocks, and machinery capital.
(Ency, P: 366 m)
Investment is central to the promotion of Economic well-being because it is one of the
most crucial Economic activities that business consumers' and government can undertake.
(Adam and Jessical Kuper, 19.83).
Without investment activity it is not possible to have any development rather it remains
in circle of poverty, because it is the source of income, employment, skills, goods and
services and other potentials for people in developing country. Now a day the
development of any country is determined by the degree of investment activity. Without
investment activity it is impossible to have sound and dependable development
particularly in developing countries like Ethiopia.
Therefore, investment plays a critical role in expanding and improving the Economy level
of any country in general and living standard of its citizens. Investment is one of the
fundamental factors for the growth of Economic development in the world, including
developing countries like Ethiopia that will producer. A stream of goods and services for
future consumption, the production of investment goods which are used to produce
commodities such as goods and services includes the exchange of inventories! Investment
is a real capital formation such as private or maintenance or machinery or the construction
of dwelling. It is the sum of depreciation or replacement and net i investment (Birtukn
2006:10)
Ethiopia is well known with large and diversified natural resources with potentially after
greater opportunities for investment is the sacrifice of a certain wealth for possible
uncertain future wealth. In other words investment is also the use of saving to produce
future in come Investment can play significant role in the economic development of any
country (Anderson 2000)

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Availability of infrastructure, suitable area (place) for investment, conducive
Environment, resource, labor etc. is the major determinants of the development of
investment activity. In case of Burayu town, Sheggar city, the development of the
investment activity is found to be bellow when compared to the availability of favorable
resources and this proposal tried to find out, some of the problem which limit the
development of investment in the study area.
1.2 Statement of the Problem
Investment is the sacrifice of certain wealth for possible uncertain future wealth. Now a
days the development of any country is determined by the degree of involvement in
investment. Among all other things investment is a crustal factors in the Economic growth
of one country especially for developing country like Ethiopia. Therefore the
development of a country is determined by increase its investment Activity.
So investment has the great role in the development of an economy as a whole and for a
society in particular. Similarly this study will tried to investigate some of the basic
problems that affect investment activity in the study area.
Burayu town Shegar city, Oromia has, the great investment potential having good
topography, resource labor, land (investment site) physical /material resources etc. Which
is contribute to the development of investment Activity. Having the above listed
resources which is used for investment activity like Industries, Social services,
commerce, and manufacture of different product there is less and unsatisfactory
investment expansion. Because of this the researcher is motivated to conduct this research
in order to identify the factors affecting Investment activity in the study area.
1.3 Research Questions
Based on the purpose of the study this proposal is tried to answer the following basic
question regarding to the limiting factors of investment Activity.
1. What are the major factors affecting investment activities in the study area?
2. Are there adequate infrastructure facilities for the investors in the study area?
3. How this factors becomes an. impact on economic development?
4. What are the levels of Investment activity in the study area?

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1.4 Objective of the study

1.4.1 General Objective

The main objective of this study will to identify the level of investment activity in the
study area and problem affecting the investment activity.
1.4.2 Specific Objective
The specific objective of the study was;
1. To assess the major factors affecting investment activity in the Study area.
2. To identify the availability of infrastructural facilities for th e investors in the study
area.
3. To assess the factors becomes an. impact on economic development.
4. To investigate the level of investment in the study area.
1.5 Significance of the study
This research will conduct to find out the factors affecting investment activity in the study
area. So this study is significant for both the researcher and the organization. For the
researcher it serves as an academic exercise to let the research relating th at of his
theoretical knowledge with what is really going on in the real environment or study area.
It will help the investors to understand and identify investment opportunities and
potentials in the study area and to understand the contribution of the investment for the
development of the study area. Recommending concerned bodies to come up with feasible
solution to minimize the problem. The searchers also believe that this research is used as
a reference for other researchers who need to conduct research in the area.
1.6 Scope of the Study
This study will focused on the factors affecting investment activity basically in the study
area. Geographically the study area was limited to, oromia region, Sheggar city, "Burayu
town. Furthermore to identify and investigate all aspects of investment it will demand
extensive research, much, more time, finance, energy, resource and sufficient
information.

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1.7 Organization of the proposal
This proposal composed of three chapters .the first chapter present the introduction part
of the study which include background of the study, background of the origination,
statement of problem, objective of the study significant of the study, scope of study and
limitation of study. The second chapter present review of literature. The third chapter
deals with methodology of the study such as method of data collection, description of the
study area, study design, data type & source, population ,sample size and sampling
technique, and also deals with time schedule, budget breakdown, and references,

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 CHAPTER TWO
LITERATURE REVIEW
2.1 Definition of investment
Investment is the use of money to earn income or profit and it refers to the expenditure
of funds for capital goods. Investment can also be defined as the process of e xchanging
income during one period of time for an asset that is expected to produce earning in the
future periods (the world book, encyclopedia].
Investment has a paramount importance in the development process of manufacturing
sector by boosting the production capacity and the level of productivity, Furthermore the
role of foreign direct investment is increasing gap and creating employment opportunities
for citizens by filling the gaps between resource required for development that are
domestically available. (To daro 1994:p 531-532).
Investment is affixed and initial operating source used for production of goods, the
provision of services and the development of science and technology capability (
Hewltert. 1997:102).
The term investment can have more than one meaning. In economics it refers to the
purchase of physical asset, such as firm’s acquisition of the plant, equipment, or inventory
or an individual purchase of a new home. To the lay person the word denotes buying
stocks or bonds (Or may even a house), but improvably do not mean purchasing a plant,
equipment or inventory (Mayo 0:6)
The valuation of some asset is complicated and people may have different estimates of
the future benefits. It is therefore easy to understand why to individual may have
completely divergent views on the worth of particular asset.
Investment that offers you potential large returns a term that frequently used in
conjunction with risk speculative many years ago virtually all investment were called
speculations. Assets have future benefits they offer. The process of determination what
an asset is worth today is called valuation. An investor appraised the asset and assigned.
Investment in economics refers to the purchase of physical asset such as firms acquisition
of a plant, equipment investor or individual purchase a few home. (Mayo , 1998:143).

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As mayo investor has to invest internally (with I its own activity) before starting of
external investment.
2.2 Objectives of Investment
The aim of investment activity is to develop the effort of human person and improvement
of the quality of life such as attainment of the most basic needs shelter, food, education
and health care etc.
Maximizing return by minimizing risk, assuring safety, and assuring liquidity and hedge
protection against inflation, utilization of tax incentive scheme offered by the government
is the main (objectives of the investment).
2.2.1 What are the various objectives of investment
Your investment objectives may differ in accordance with your life stage and risk pro file.
Here’s a list of them.
An investment is made because it serves some objective for an investor. Depending on
the life stage and risk appetite of the investor, there are three main objectives of
investment: safety, growth and income. Every investor invests with a specific objective
in mind, and each investment has its own unique set of benefits and risks. Let us
understand these objectives in detail.
Safety
While no investment option is completely safe, there are products that are preferred by
investors who are risk averse. Some individuals invest with an objective of keeping their
money safe, irrespective of the rate of return they receive on their capital. Such near - safe
products include fixed deposits, savings accounts, government bonds, etc.
Growth
While safety is an important objective for many investors, a majority of them invest to
receive capital gains, which means that they want the invested amount to grow. There are
several options in the market that offer this benefit. These include sto cks, mutual funds,
gold, property, commodities, etc. It is important to note t hat capital gains attract taxes,
the percentage of which varies according to the number of years of investment.

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Income
Some individuals invest with the objective of generating a second source of income.
Consequently, they invest in products that offer returns regularly like bank fixed deposits,
corporate and government bonds, etc.
Other objectives
While the aforementioned objectives are the most common ones among investors today,
some other objectives include:
Tax exemption; Some people invest their money in various financial products solely for
reducing their tax liability. Some products offer tax exemptions while many offer tax
benefits on long-term profits.
Liquidity; Many investment options are not liquid. This means they cannot be sold and
converted into cash instantly. However, some people prefer investing in options that can
be used during emergencies. Such liquid instruments include stock, money market
instruments and exchange-traded funds, to name a few (Mayo 1998;p 160).
2.3 Knowing the investment area
Before starting the investment activity one investor must know and analysis in what area
he is going to invest. The economic and potential situation of the ^ countr y, availability
of resources to run the activity and putting the standard for evaluating the profitability of
investment and must know the government policy toward investment activity.
2.4 Phases of investment activity
United National industrial development or generation (UNID: 1997) set different phases
of project cycle in investment activity?
•Pre-investment phase: which includes project identification, pre-selection preparation
and a praise?
•Investment phase (implementation): Provide wide scope for consultancy and injection
work, first and frame set in the field of project management.
•Operating phase: the problem of operational need to consider from both a short and
long term vie points.
The short term ;view relates to initial period after commencement for production when
a number of problems may arise concerning such matters as the application of production
techniques, operation of equipment or in adequate labor productivity owing to lack of
qualified staff and labor.

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The long term; view relates to chosen strategies the association production and
marketing cost as well as sales revenue, These have direct relationship with the projection
made at the pre-investment phase.
An investor should consider first the amount to be expected on the investment, the
potential benefit of the activity, the time period and many final recovery of capital for
determined feasibility (attraction) of investment. Generally, five methods for evaluating
project has set by (shaumy, 1998:29).
The payback period (PBP) this measures the length of time required to recover the amount
of initial investment. The investor should choose the project -with shorter PBP.
The Net present value (NPV) it is excess of present value of cash inflows generated from
the investment over the amount of initial investment. The project with positive NPV
would be accepted. Accounting rate of return (ARR) it is excess of geset. This measures
the probability from conventional stand point, by relating this required investment to the
future annual net income. Under this method the project with the highest rate of return
should be chosen. Internal rate of return (IRR) is defined as the rate that equal interest
with the present value of future cash flows. Investment, decision accepted if (IRR)
exceeds the cost of the total investment. Profitability index (PI) method: it is the ratio of
the total present value of cash inflow of the initial investment. The project is accepted it
probability index is greater than one. Other factors to be considered in investment
decision are risk associated with the activity, inflation, tax policy of government,
infrastructure facilities, and exchange rate. (Shaumey 1998:200) has also set the process
of evaluating and selecting long-term investment and classified investment decision as:
i. Section decision concerning proposed project that involves investment in- long term
asset such as property, Plant and equipment or resource commitments in the form of new
product development, market research, reformed (long-term-debt.)
ii. Re placemen decision such as replacement of existing facilities
Public investments can.be guided by principles other than narrow profit and tax account
of social asset and benefit as well as pecuniary once.
Public investment is might, consequently, be under taken to allocate unemployment in
depressed area or to encourage technical changes.Kynesian economist has argues that
public investment can be important catalysts to economic development. Economic

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literature postulates that there are some measured determinants of pr ivate investment
demand. The rate of interest, the increase national income, Other
The other factors clearly influence investment as well as: this includes wages and tax
rate, which affect the relevant cost of capital and labour. Assuming that this other f actor
constant, however it is postulated that change in the rate of interest will influence(shumy
1998;29).
2.5 Factors affecting the process
Regardless of individual action, however, certain factors in the investment environment
affect all investors. These factors should be consistently be kept in mind as investors
work through the investment decision process Un certainty in ex -post returns dominates
decision process: The first and paramount factor that are investors must come to grip with
is uncertainty investor buy various financial asset, expected to earn to various return over,
some future holding period. Investors must know cope with a change investing
environment: The global investment arena.
The citizen of developing country because they are poor th ey would have high propensity
to consume and low propensity to save. Hence, saving would be likely to below the level
of investment needed to generate high economic growth in economic development. The
lower rate of interest the more investment project becomes profitable.
Hence the, higher level of investment and aggregate demand in most developing countries
the real price of foreign exchange and its availability affects private equipment more
productive than previous equipment. This will raise the rate of r eturn an investment
project (Anderson 200:24).
2.6 Foreign Direct Investment (FDI)
FDI is playing an increasingly important role in the economic and industrial development
plans of developed and developing countries and many Governments are actively seeki ng
to win an increased share of this investment. Its magnitude has increased by more than
25 times over the past two decades, but with demand for FDI still growing, competition
for FDI continues to intensify. Countries seeking an increased share need to be able to
outmatch their competitors as they adjust economically over the long -term from factor-
driven to innovation-driven socio-economic development.

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The various forms in which FDI occurs include direct investment in wholly owned
companies, joint ventures, technology transfers, licensing agreements, mergers and
acquisitions and other forms of inter-company alliances. Foreign Direct Investment and
joint ventures absorb the bulk of annual capital flows of funds, however technology
transfer and licensing agreements also play an important role.
Therefore, in any investment promotion strategy attention should be paid to these. More
recently FDI in industrialized countries has been dominated by Cross -Border Mergers
and Acquisitions.
Three interrelated factors influence a country’s ability to win FDI:
1. Its overall investment policy framework, public governance and market
competitiveness environment.
2. Its investment promotion and institutional capacity building strategies.
3. Its institutional capacity for implementing these strategies.
The relative importance of each factor varies by country and in time in relation to the
country’s developmental strategy and institutional structures for supporting the efficient
working of markets. The policy environment is of paramount importance in a country
with a sizeable local market and substantial natural resources. For countries with smaller
markets and fewer natural resources, an active and focused investment promotion strategy
is important, as is having an effective Investment Promotion Agency (IPA)2 to implement
the strategy. In many countries Investment Promotion Agencies have gained a high
profile in implementing national development policies with respect to attracting FDI
(UNIDO Vienna;2003).
2.7 Investment in Ethiopia
Business is changing test in Ethiopia just ten years ago \ There were no more- private
companies in the county. The government of Ethiopia granted protection to industries
enterprise by instituting high tariffs and by banning the importation of commodities that
right adversely affect predict of domestic product so to say something to expand the
investment in everywhere and the country including the study area, the assistance and the
government of Ethiopia is the major one government can assist the investors through
different giving permission or license for investors as they unrest (world Fact book 1999
reported by USA).

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2.7.1 Types of investment in Ethiopia
-Agriculture; Agriculture is the backbone of the Ethiopian economy. The sector
contributes about 43% of the GDP and 86% of exports. The export of Ethiopia is
dominated by coffee and oil seeds, which together accounted to 50.6% in 2008/09. Other
principal export commodities are ‘chat’, flowers, pulses, and live animals. Ethiopia with
18 major agro-ecological zones and various agro-ecological sub-zones has a suitable
climate for growing over 146 types of crops.
a) Food and beverage crops
Maize is an important crop in Ethiopia. It is grown in the mid highland areas of the
country. There are huge tracts of land in all regions suitable for maize farming. Maize is
mainly produced in SNNPR and Oromia regions where there are about 1.77 million
hectares under cultivation. Wheat and Barley Farming Wheat and barley are mostly
grown in the highlands and mid highland areas of the country mainly in Oromia (Bale
and Arsi Zones) and some parts of Amhara. (North Gondar and North Shewa) Regions.
Wheat and barley are the main cereal crops in the country with about 1,095,436 and
1,398,215 hectares under cultivation, respectively. The potential for the private sector in
agro-processing and out growers’ scheme of development is significant. It offers
excellent opportunities for production of wheat under irrigation in the Afar,[ Gambella,
SNNPR and Somali] Regions
Oil seeds and pulses;
A variety of oil seeds (e.g. sesame, rapeseed, linseed, groundnut, sunflower, Niger seed,
cotton seed, etc.) are grown in Ethiopia. The demand for sesame has been increasing in
the global market making sesame an increasingly important export commodity in
Ethiopia. In 2008/09, Ethiopia exported 287,000 tons of sesame valued at 356.1 million
USD, accounting for 24.6% of the total export earnings. Rapeseed, linseed, groundnut,
sunflower, Niger seed and cotton seed also serve as raw mat erials for the domestic edible
oil industry.

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Cultivation of pulses;
Like beans, peas, chickpeas, lentils, soybeans, etc. is also common in Ethiopia.
Cultivation is carried out in both the highland and lowland areas of the country mainly
by peasant farmers. Currently, the country exports a large quantity of pulses to the
international market. There are also a number of factories that process pulses in the
country.
Rice Farming
Rice could suitably grow in many parts of the country. The predominant pote ntial areas
are:-
• West central highlands of Amhara Region (Fogera, Gonder Zuria,Dembia, Takusa and
Achefer);
• North West lowland areas of Amhara and Benshangul Regions (Jawi, Pawi, Metema
and Dangur);
• Gameblla regional state (Abobo and Etang Woredas)
• South and South West Lowlands of SNNPR (Beralee, Weyito, Omorate, Gura Ferda and
Menit);
• Somali Region (Gode);
• South Western Highlands of Oromia Region (Illuababora, East and West Wellega and
Jimma Zones).
Spices
The major spices cultivated in Ethiopia are ginger, hot pepper, fenugreek, turmeric,
cummins, cardamoms, corianders and black pepper. Currently, there are nearly 122,700
ha under spice farming. Spice production reached 244,000 tonnes per year. The potential
areas for the cultivation of spice are Amhara and Oromiya, SNNP and Gambella regions.
The potential for low land spice farming is estimated to be 200,000ha.
Coffee
Ethiopia is one of Africa’s leading exporters of coffee generating most of its export
earnings. Coffee is grown over 600,000 hectares, the largest of these areas lie in the south
and south western highlands of the country. More than 60% of Ethiopian coffee is
produced as forest or semi-forest coffee. The four main coffee growing regions in
Ethiopia are: Harrar, Ghimbi, Sidama /Yirgacheffe, and Jimma/Keffa.

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The country has more genetic diversity among its coffee varieties than any other county.
Nine different varieties are cultivated in the four major growing areas.
Tea
Ethiopian tea is some of the best quality tea in the world. Ethiopia’s current annual tea
production from three private estates is approximately 7000 tons of black tea per annum.
The total area covered by tea plantation is 2700 ha and the country only produces black
tea but has potential to grow all types of tea. Investment potential exists in large-scale
commercial tea production and modern tea blending and packing industries. The tea
industry in Ethiopia has been lacking investment. The Government has been proactive to
increase private investment in tea plantations. As part of its privatization program me for
state owned enterprises, in 2000, two estates covering 2,109ha for $27milliom USD were
sold to private investors. Moreover, an Indian company that owns and runs the Tata Tea
Estate has signed an agreement with a domestic owned private company to manage the
tea estate. The company will transfer the latest technology of tea planting, growing,
harvesting and manufacturing of black tea, assist in planting tea in 5,000 hectares of land
and also have the option of investing in the equity of the company at a future date.
Horticultural crops Fruits, vegetables and flowers;
The climate, various soil types and access to water make Ethiopia favorable for the
growing of fruits, vegetables and flowers. Major exportable fruits include citrus, banana,
mango, papaya, avocado, guava, grapes, pineapple, passion fruit, apples and strawberries.
Vegetables include potatoes, cabbage, cauliflower, okra, egg plant, tomato, celery,
cucumber etc. Currently a total of 1200 hectares of land is covered by more than 80
flower growers who came from the Netherlands, India and Israel as well as domestic
investors. The main cut flower exports include: stat ice, alliums, roses and carnations.
The Ethiopian Horticulture Producer Exporters Association contains extensive
information on the sector.
b) Livestock
Fishery Ethiopia is first in Africa and tenth in the world for its livestock population.
According to Central Statistics Agency (2008-2009), the country has 49 million heads of
cattle, 17 million heads of sheep, 22 million heads of goats and 38 million chickens.
Ethiopia’s potential for fishery development is in its freshwater lakes, reservoirs and

13
rivers. The total fish catch potential from these waters is estimated at 40,000 tons pe r
year. There is also an opportunity for investment in the construction of aquaculture to
produce fresh water fish for local and international markets. This sector offers great
investment opportunities. The potential for livestock and fisheries have not b een fully
exploited. The investment opportunities in livestock and fishery are in:
• Meat processing;
• Dairy farming and milk processing;
• Raising and fattening of sheep, goat, cattle and camel; and
• Fish farming and processing.
Manufacturing
The manufacturing sector contributed 5% of GDP and 37.8% to the total value of
industrial production in 2008/09 (Central Statistical Agency Statistical Abstract 2009).
The major manufacturing activities are production of food, beverages, tobacco, textiles
and garments, leather goods, proposal, metallic and non-metallic mineral products,
cement and chemicals. Under the export-led industrial development strategy, production
of textile and garments, leather products and agro-processing are priority areas for
investment.
a) Textile and garment
The textile industry is the largest manufacturing industry in the country. There are a
number of state-owned and private textile and garment factories. The industry contributes
the lion-share of employment in the manufacturing sub-sector. The main textile products
manufactured are cotton and nylon fabrics, acrylic yarn, wool and waste cotton blankets
and sewing thread. The availability of inexpensive labour and the main raw material,
cotton, are the major factors for considering this industrial sector as one of the strategic
industries for export development.
b) Leather products
Ethiopia exports processed and semi-processed hides and skins to the world market.
Some of the products, such as Ethiopian highland sheepskin (whi ch has gained an
international reputation for making gloves), are known for their quality and natural
characteristics. Ethiopian hide and skin exports include pickled sheep skin, wet blue
sheep skin, crust sheep skin, wet blue goat skin, crust goat skin, c rust cow hides, finished

14
garment leather, finished glove leather, lining/upper leather, suede leather, full grain
leather, embossed leather and patent leather. The manufacturing and export potential of
finished leather and leather products (such as leather garments, footwear, gloves, bags
and other leather articles) is also highly promising.
c) Agro-processing Ethiopia
Has tremendous potential for investment in agro-processing. Many of its agricultural
products can be exported without being processed, while others can be processed before
they are brought to domestic and foreign markets. The government has also placed a
priority on the export of processed products, which involves and stimulates the growth of
the agro-processing sector. Specific opportunities in
Agro-processing include:
• Processing and preservation of meat and fish products, fruits and vegetables;
• Production and processing of dairy products;
• Manufacturing of starch and starch products; and
• Processing of animal feed, etc
d.Other:
• Cement and other construction materials;
• Pharmaceuticals and industrial chemicals, pesto- and fungi-codes, detergents; and
• Glass ware and ceramic products, etc… Tourism Ethiopia has much to offer to
international tourists. It has unique historical and cultural heritages, magnificent
scenery, surprisingly pleasant climate and religious, archeological, and historical places
to visit. Ethiopia is a land of contrasts and extremes, a land of remote and wild places
with a wide range of tourist attractions which have not yet been fully exploited. Among
others, the main tourist attractions include about 7000 species of plants out of which
1100 are endemic; about 242 mammals out of which 23 are endemic; about 850 bird
species, out of which 16 are endemic. As Ethiopia is also the cradle of mankind, there
are a number of archeological sites. Tourism opportunities exist in the construction of
star-designated hotels, lodges and resorts, international and specialized restaurants and
as tour operators. Potential investors can take advantage of these opportunities through
direct investment or joint-ventures with Ethiopians.

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Tourism
Opportunities exist in the construction and operation of:
• Star-rated hotels, lodges, and restaurants; and
•Tour operation. Construction Ethiopia has extensive opportunities in the construction
industry, particularly in the construction of roads, residential development, commercial
and industrial
Construction
The Government has given special attention to the development of the coun try’s road
network. A wide range of opportunities exist for foreign investors who meet the standards
set forth for the following services:
• General Contractor Grade One (GC1)
• Building Contractor Grade One (BC1)
• Road Contractor Grade One (RC1)
• Specialized Contractor Grade One (GC1)
• Water well drilling services (WW1) Construction machinery and equipment rental
services and real state development are also other opportunities in the sector.
Mining and Energy
Ethiopia offers excellent opportunities for mineral prospecting and development.
Geological studies have identified a favorable geological environment hosting a wide
variety of mineral resources. Gold, tantalum, potash, platinum, marble, gem stone, etc.
are among the minerals identified for future development.
The Ministry of Mines and Energy is responsible for the processing of license application,
regulation of mineral operations and the promotion of investment opportunities in the
mining sector.
Ethiopia has the potential to generate 45,000 MW and 5,000 MW of electricity from hydro
power and geothermal resources respectively. The private sector can participate in
electricity generation from any source and without any capacity limit. Off -grid
transmission and distribution of electricity is also allowed for private investors. However,
transmission and supply of electrical energy through the integrated National Grid System
is exclusively reserved for the state electricity provider, the Ethiopian Electric Power
Corporation

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Services
a) Education in Ethiopia; aspires to attract internationally reputable educational
institutions, universities and training centers. The following areas are some of the
opportunities for both domestic and foreign investors.
• Kindergarten and nursery
• Primary and secondary schools;
• Science and technology colleges/ universities;
• Colleges for business and marketing;
• Schools for medical science;
• ICT institutions;
• Vocational training centers;
• Training center for hospitality industry.
b) Health Opportunities
For investment in health services exist in the following areas:
• General and specialized clinics;
• General and specialized hospitals;
• Clinical laboratory;
• Diagnostic centers.
c) Telecommunications Opportunities;
are there for private investors to invest in the telecom services in partnership with the
Government
d) Information and Communication Technology (ICT)
• Software, content, application, and database development
• System integration and data center services
• Manufacturing of ICT equipment like computers and peripheral equipment, audio and
video equipment, telephone apparatus, and production of semi -(World Fact book 1999
reported by USA).

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 CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Description of the study area
This study will be conducted in the Burayu sub city in the Oromia Region. Burayu sub city is one
of the sheggar city in the Oromia Region of Ethiopia. It is situated at a distance of 38 kilometers
North of Addis Ababa and 72 kilometers North West of Fiche Town, the Capital of North Shoa
Zone (Oromia). Burayu is located 09 º 17’ 84’’ N Latitude & 38 º 75’ 79’’ East longitudes. The
total population of the town is 37988 as on 2015 (CSA, 2010). This city has classified into four
districts namely; (i) keta welele, (ii) wererso nono, (iii) weserbi guto, and (iv) Walelube akako
with a population of 12712, 11102, 8539 and 5635 in the respective sub-city
The altitude and rainfall of the area ranges from 600-3471masl and 834mms to 1440.5mms
respectively and has temperature range of 14-25°C,[ According to the Administrative Office of the
Woreda (AOW) 2012].
3.2 Study Design
To carry out the study descriptive research founded to be appropriate to obtain complete
and adequate' information and present the truth and come out feasible solut ion.
3.3 Source of data
Both primary and secondary source of data.
-Primary data source; the primary data will be used obtained from the selected
respondents.
-Secondary data source; the secondary data consist different materials such as journals,
books published and unpublished materials which are believed to be valuable to the
study and other document from the organization.
3.4 Population Sample size and sampling technique
The target population of the study will be the factor affecting investment activity in
Burayu town. Currently there are many investors in Burayu town since, the size of the
population is small therefore census is used. The required sample size Customer Satisfaction
is determined based on sample size determination of Yamane (1967) at confidence level 95%
and precision level 0.05 and determine sample size.

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 100
𝑛=
1 + 100(0.05)2
𝑛 = 80
Where, n = Is Sample Size Of inventors
N=Is Total Number Of inventors
e=is level of precision. (0.05)
3.5 Methods of data collection
The researcher used both Interview and questionnaire to collect the required data. The
questionnaire .will prepared in both open ended and close-ended in the form of
understandable and distributed to investors. Open -ended questions was used because it
helps the respondents to give their own intention freely and help researcher to generalize
the respondents and they are easy to process. In addition structured personal Interview
was used to collect information from the manager of Burayu investment office. The
researcher also used secondary data to get additional information from written
documents, such as books, magazines and etc.
3.6 Method of data analysis
After the data will collect bay help of questionnaire and interview schedule next the data
will be connect and analysis by using descriptive statics such as table and percentage .
3.7 Ethical Considerations of study
1. Informed Consent: Any data collection or assessment should be conducted with the informed
consent of the participants, ensuring they understand the purpose and use of the information.
2. Confidentiality and Privacy: The personal and sensitive information of the participants should
be kept confidential and protected, respecting their privacy.
3. Objectivity and Impartiality: The assessment should be conducted in an objective and impartial
manner, without any bias or undue influence from external factors.
4. Beneficence and Non-Maleficence: The assessment should aim to benefit the community and
not cause any harm or negative consequences to the participants or the local economy.

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3.7.1 Reliability of study
Consistency: The assessment methods and tools used should produce consistent results, ensuring
that the same measurements or observations yield similar outcomes when repeated. Stability: The
assessment should be able to produce stable results over time, even if the data collection is
conducted at different intervals.Inter-rater Reliability: If multiple assessors are involved, their
evaluations should be consistent and show a high degree of agreement.

3.7.2 Validity of study

Content Validity: The assessment should accurately measure the factors that are relevant and
important in determining the investment activity in Burayu Town. Construct Validity: The
assessment should be able to measure the underlying constructs or concepts that are being
investigated, such as the economic, social, and political factors affecting investment. Criterion
Validity: The assessment should be able to predict or correlate with other relevant measures or
outcomes related to investment activity in the town. External Validity: The findings from the
assessment should be generalizable and applicable to other similar contexts or settings, allowing
for broader insights and recommendations.
To ensure the ethical, reliable, and valid assessment of factors affecting investment activity in
Burayu Town, it is crucial to- Develop a comprehensive research design that addresses these
considerations, Employ appropriate data collection methods, such as surveys, interviews, and
secondary data analysis, Involve relevant stakeholders, including local authorities, investors, and
community members, in the assessment process,Analyze the data using robust statistical
techniques and qualitative analysis, Interpret the findings objectively and transparently,
considering the limitations and potential biases and Communicate the results in a clear and
actionable manner to inform policymaking and investment decisions.

20
3.8 TIME SCHUDUELE AND BUDGET BREAK DOWN
3.8.1 Time Schedule
The study will be completed within the eight months’. The following tables explain each of
important phases necessary for conducting research.
S/No Activities April May
Week Week Week3 Week4 Week1 Week2 Week3 Week4
1 2
1 Title
Selection
2 Introduction
3 Literature
Review
4 Redefining
Hypothesis
5 Data
Collection
6 Discussion
and Analysis
7 Time
Schedule and
Budget
Schedule
8 Editing and
Finalizing the
problem
9 Submission
and
Presentation
3.8.2 Budget Break Down
The research will be estimated the cost amount of budget listed below within a given time
because to do a research budget is also the most important and great role. Without budget we
can’t do a research, therefore, a researcher plan for the following budget plan.
S/No Items description Quantity Cost per Unit Total Costs
1 Proposal 2 110 440
2 Pen 7 20 140
3 Pencil 3 10 6
4 Flash 1 300 300
5 Ruler 2 10 20
6 Transportation 10 10 100
7 Typing 4 200 800
8 Mobile card 1 100 100
10 Contingencies 2000
Total 3906

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REFERENCE
Allia n Anderson (2000) General economic 3rd edition, mcgraw hill in USA Amdetsion.

Sone, And (1989) Consumption and Investment economics 13th edition.

Siegel, 1998: Financial management, 2nd edition.

Blefer. M. and khan. Jun 1984 'Government policy and private

M.D.W perkins, M.Roemer and D.R snodonys, 1987 Economics of development 2nd edition.

Haile mariam hagos (2004) Determinants and constraints of private investment in Ethiopia,
Mekelle University.

Berbery B.Mayo, 1998 5th edition.

Birtukan Bishaw (2004). Private investment in Ethiopia, Ar bam Inch University.

Ligcmud, G, 1997: Business research Method 5th edition. ^

Ethiopian Economic Association Vol. 2 may 2005.

Appendix Jimma University College of Business and Economics Department of management

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