CHAPTER FOUR

4. DATA PRESENTATION AND ANALYSIS

4.1 Description of the study area

Sodo a town located in southern Ethiopia and is surroundeds by Wolaita Zone. It is located at 7°3'N
38°28'E at the elevation of 1708m and, 270 km south of Addis Ababa. Sodo is a busy transportation
center. The town is situated along the road that connects Addis Ababa with different southern district
and large numbers of trucks use the same route to travel to and from the southern district. The town
serves as administration, industry, trade, conference and higher recreation center. The economic
activity rate for both sexes is 58.2% and 66.8 % for males and 49.8% for females, while unemployment
rate is 21.4% for both sexes 16% for males and 28.4% females. The average annual revenue of the
municipality within 2010- 2014 period was 428,527,581 Birr. The main sources of revenues were
taxes, land lease and rent, and service charges. Sodo city has major potential for industry, agro-
industry processing and recreation area. Wolaita Sodo University (Main campus and agri campus)is
located in Sodo and Wolaita sodo is the home of Sodo town FC, a member of the Ethiopian Football
Federation league.

Sodo town has economic linkage with several regions and towns. The town is destination for
agricultural inputs and manufacturing and commercial products from Addis Ababa and other southern
district like moyale. The city gets grain, livestock supply from Arsi, Bale and Borana while Kereyu and
Afar was the main supplier of natural resources (fuel wood, charcoal). SER and Amhara Regions are
the main surplus labor supplier for the town.

Regarding infrastructure, the town has asphalt and gravel roads connecting it to different woreda, zone,
and region and with Addis Ababa. . In addition to these; the town gets 24 hours electric supply from the
national grid, mobile and fixed telephone lines, and has internet, and postal services. The main water
supply sources are Wolaita sodo with pipe system. The town has open ditch system to discharge storm
water. But sometimes there is occurred shortage in supply of electricity and water. There are 4675
private and government owned houses mainly built of mud and wood while wood, stone, sand and
Hollow Concrete blocks are widely available construction materials in the town. There is daily inter-
urban transport service to and from more than 25 towns. The town has bus station. When we
compared to other towns Sodo town is an industrial zone.
4.2 General information about the collected data in the study

A total of 40 respondents were selected as a source of primary data about the issue of private
investment and its contribution. Among the respondents most of them responded to the questionnaires
that the researcher was distributed to different private investment centers. Since the purpose of the
study is to assess the role of private investment on employment creation in Sodo town. The
questionnaire was prepared directly towards the investors found in Sodo town. Among the 40
questionnaires; 31 of them were distributed to service sector and the 7 were distributed to industrial
sector and 2 were distribute to Agricultural sector Finally; from the questionnaires distributed during
the time all of them are turned back.

4.3 General Characteristics of the respondents

 4.3.1 Demographic characteristics of respondents

A. Age structure

This demographic variable has direct implication for several issues related to socioeconomic aspects of
population such as the trend of population increases, employment, labor force, sex ratio of the
population in the productive ages. Is female actively participating like that of male in investment?
Therefore, the sex structure of the population should be considered under socioeconomic development.
The sex composition of the sample investors is analyzed in the following tables

Table 4.1 age structure of the sample respondents

age economic sector total

catago
agriculture industry service
ry
frequen percenta frequen percenta frequen Percenta Freguen percenta
cy ge cy ge cy ge cy ge

below 5 16.1 5 12.5

30

30-44 8 25.8 8 20

45-59 1 50 2 28.57 4 13 7 17.5

60-74 1 50 3 42.9 7 22.58 11 27.5

above 2 28.57 7 22.58 9 22.5

74

total 2 100 7 100 31 100 40 100

Source; own survey 2019

The above table shows that most of the respondents are accumulated their capital and participated in
investment majorly in age group of 64-79and above 74which comprises 27.5% and 22.5% of the total
sample respondents respectively. Whereas 12.5% of the total respondents are below the age of 30.
B. Sex composition of respondents

This demographic variable has direct implication for several issues related to socioeconomic aspects of
population such as the trend of population increases, employment labor force , female and male
population in the productive ages. Is female actively participating like that of male in investment?
Therefore, the sex structure of the population should be considered under socioeconomic development.
The sex composition of the sample investors is analyzed in the following table
sex number of investor in economic sector total
Agriculture industry service
frequenc percentag frequenc percentag frequenc percentag frequenc percentag
y e y e y e y e
male 2 100 5 71 18 58 25 62.5
femal 2 29 13 42 15 37.5
e
total 2 100 7 100 31 100 40 100
the abovetable shows that 62.5 of respondents are males and 37.5 of the respondants are.this
composition implies that the number of male investors greater than femal investors in greator
amount.Also this shows that femal investors are growing through time to time whereas it does not
equal to male investor .This is caused by different socail poletical and economic problems,such as luck
of finance(start up capital).Also in the Agricultural sector there is no female investors as compared on
idustrial and service sector. Female investors service sector is (48%) better than the industrial
sector(29%). This implies that the industrialsector requires huge capital. In our country there is a
difficulty to get financial capital for females. Besides this problem there is another difficulty, attitudinal
problem towards female is not good. But this problem is solved from time to time through education
and by creating awareness to avoid gender inequality and also by giving special incentives for female
investors; we can increase their contribution in economic growth.
4.3.2 Educational back ground of respondents

In Order to perform an activity effectively and efficiently educational background has its own
implication in the study area, without education it is difficult to introduce new technologies. Investors
must have a better awareness about ways of production and technology to be achieving their objective
efficiently in the study area. This could be important to create the educated labor force and skilled
professionals in the study area. Educational background of the sample investors is analyzed in the
following table.
Table 4.3 educational back ground of the respondents

educational level economic sector total

Agriculture Industry Service

 frequen percent frequen percent frequen percent frequen percent
cy age cy age cy age cy age

illitrate

primary 1 14.2 9 29 10 25

secodary&prepar 1 50 1 14.2 10 19.4 12 30

atory

College 1 50 3 43 5 16 9 22.5

degree&above 2 28.6 7 22.6 9 22.5

total 2 100 7 100 31 100 40 100

Source; own survey 2019

The above table shows that there is no private investor who is illiterate. From the whole,
respondents25% of the respondent graduated primary level of education. Most of the respondent30
completed secondary and preparatory level. The remaining 22.5% of the respondents are diploma
holders and 22.5% of the respondents are degree holders and above

4.4. Initial capital and employment during the establishment

4.4.1 Initial capital during the establishment

Table 4.4 Initial capital of respondents

Initial Economic sector total

capital of
Agriculture Industry service
project

frequenc percenta frequenc percenta frequenc percenta frequenc percetag

y ge y ge y ge y e

>500000 1 50 2 28.57 10 32,25 13 32.5

0
5000000 1 50 5 16 6 15

1200000

1200000 1 14.28 7 22 8 20

1-

1700000

1700000 1 14.28 6 19.4 7 17.5

1-

2200000

Above 3 43 2 6.45 5 12.5

2200000

total 2 100 7 100 31 1000 40 100

Source; own survey 2019

As we can see in the above table 4.4 the from the total sample Most of the respondents(32.5) intial
capitalis is below 5000000 birr ,15 %of the respondant the initial capital is found the interval between
5000000-12000000 birr, 20 % of the respondents initial capital is found between the interval
12000001-17000000 birr. Also 17.5 of sample respondents beginning capital is found the interval
between 17000001-22000000 birr. The rest 12.5 % of the sample investors’ initial capital is22000000
birr. And also when we come to sectors individually, in service sector most of the respondents’
(32.25%) initial capital is found below 5000000 and 22% of the respondents’ capital is found the
interval between 5000000-12000000 birr. Whereas the industrial sector most of the respondents (43%)
initial capital is above 22000000 birr in agricultural sector ther is no investor found above 12000000
birr intial capita .This shows that the industrial sector requires more capital as compared to service
sector and agricultural sector

4.4.2 Employment during the establishment

The private investment and employment generation has a direct relationship in the town. The private
investment can solve the problem of unemployment, improve the living standard of the employee,
increase output level and provide infrastructure of the town. Private investment needs labor to achieve
specific objective of the investors.

Table 4.5 employment level during the establishment

numberof economic sector total

employ in
the Agriculture Industry Service
organizati
on frequen Percenta frequen percenta frequen percenta frequen percenta
cy ge cy ge cy ge cy ge

below 150 2 100 4 57 15 48.4 21 52.5

150-300 2 28.3 9 29 11 27.5

301-450 1 14.7 4 13 5 12.5

451-600 3 9.6 3 7.5

abovw
600

total 2 100 7 100 31 100 40 100

Source; own survey 2019

As we have understood from the above table from the sample most of the respondents (private
investors) 52.5 of them can create job opportunity below 150 employees during their establishment.
From the sample respondents 27.5 of them can create job opportunity for 150-300 permanent and
temporary employee 12.5% of the respondents also can create employment opportunity for 301-450
employees, and 7.5% of sample investors can employee 451-600workers during establishment of their
business.from the above table the is no investor thay employe above 600 worker. When we see the
sectorial contribution of job opportunity;100% of the respondents create job opportunity for below 150
workers during their establishment and 57% and 27.5 %of the respondents found in industrial sector
can hire below 150 and 150-300 employee respectively and 48.4% of the respondant creat job
opportunity for below 150 workers. Generally, when we compared the three sectors in their
contribution to job opportunity is high in service sector than other sector and agricuture contribut less.

4.4.3 Present (current) capital and level of employment

4.4.1 Current level of sample respondents

Table 4.6 current capital level of sample respondents

Current eeconomic sector total

level of
capital in Agriculture industry service
birr
frequen percenta frequen percenta frequen percenta frequen percenta
cy ge cy ge cy ge cy ge

Below 1 50 1 14.3 7 22.5 9 22.5

1000000
0

1000000 1 50 4 57.1 12 38.7 17 42.5

-
2000000
0

2000001 1 14.3 7 22.5 8 20

-
3000000
0

3000000 1 14.3 4 11.7 5 12.5

1-
4000000
0

above 1 3.6 1 2.5

4000000
0

total 2 100 7 100 31 100 40 100

Source; own survey 2019

The above table shows that current capital of the respondents in both agricultural, industrial and service
sector shows increments from their initial capital. From the total sample respondents 22.5% of their
capital is found below 10000000 birr, most of the respondents current capital is found the interval
between 10 million-20million. 2.5 of the respondecurrent capital is now above 40millon birr. When we
come to sectors detail most of the respondents found in Idustrial sector, 57.1% of the respondents
capital between the interval of 10million-20million. But above these two intervals their proportion is
decrease but this is not true for industrial sector. From sample respondents in service sector 38.7% of
the respondents’ capital is between the interval of 10million- 20million birr,50% of respondents capital
is below 10million and between the interval 10million-20million. Generally, the industrial sector needs
more capital and improved equipment than service and agricultural sector.
4.4.4 Current employment capacity of respondents

Table 4.7current employment capacity respondents

number of Economic sector total

employees
Agriculture industry service
(in worker)

frequen Percenta frequen percenta frequen percenta frequen percenta

cy ge cy ge cy ge cy ge

below200 1 50 2 28.6 6 19.4 9 22.5

200-400 1 50 3 42.8 16 51.6 20 50

401-600 1 14.3 5 16.1 6 15

above 600 1 1 14.3 4 12.9 5 12.5

total 2 100 7 100 31 100 40 100

Source; own survey 2019

As we can understand from the above table the employment opportunity planned to be provided in each
year was not the same. But there is fluctuation from year to year. That means the investors employment
capacity during establishment and current time is not the same. In 2007 the employment opportunity is
higher. From the total sample respondent 22.5% can employee below 200 workers, most of the
respondant (50%), create job opportunity to the interval of 200-400 worker. Most of sample
respondents’ hire workers between the first two intervals in both agriculture industry and service, 50%,
42.8% and 50% respectively. This indicates employment opportunity is increase through time and also
number of projects are highly labor intensive.

According to the town investment administration office head, the town investment did different
activities or efforts to reduce unemployment through creating the means of employment opportunity.
The city administration investment office believed medium extent of contribution has been done by
domestic private investment in employment generation. The number of employed people increases due
to the increasing number of private investors and projects.

4.5 monthly incomes of the sample respondents

Table 4.8 monthly incomes of respondents

Monthly economic sector total

income
of the Agriculture industry service
responde
frequenc percenta freqeunc percenta freuenc percenta frequenc percenta
nt
y ge y ge y ge y ge

below 1 14.2 3 9.6 4 10

15000

15000- 2 100 3 43 13 42 18 45
25000

25001- 2 28,6 8 25.8 10 25

35000

above 1 14.2 7 22.6 8 20

35000

total 2 100 7 100 31 100 40 100

Source; own survey 2019

As we can observe from the above table, 10 % of the respondents’ monthly income of is below 15000
birr, Most (45) of the respondents’ income is the interval between 15000-25000birr per month, 25 of
the respondents get 25001-35000 birr monthly income and the rest 20% are receive monthly income
above 35000. But when we come to sectors separately, there is a difference between agriculture,
industry and service sector in generating income. In the agricultural sector 100% of the respondent
monthly income is the interval between 15000-25000birt and in industrial sector 43% of the
respondents’ monthly income is above 15000-25000 birr. and olso in service sector 42% of sample
investors’ monthly income is below15000-25000. This difference is because of the difference in capital
accumulation. Therefore the maximum income in private sector is found in the service sector. It
indicates that the service sector has a greater contribution to income generation and employment
creation.

4.6 Source of Finance during Establishment

Investors may get their capital from different sources of capital such as gift borrowing from bank or
person, private saving, property sales and others the respondents are summarized the source of capital
in the table below.

Table 4.9 source of finance during establishment

source of economic sector total

capital
during Agriculture industry service
establishm
frequen Percenta frequen percenta frequen percenta frequen percenta
ent
cy ge cy ge cy ge cy ge

From their 2 100 2 28.6 5 16.1 9 22.5

own saving

Get 1 14.2 4 13 5 12.5

fromtheir
familly

Get from 3 42.8 17 54.8 20 50

financail
institution

other 1 14.2 5 16.1 6 15

total 2 100 7 100 31 100 40 100

Source; own survey 2019

As we can observe from the above table 22.5% of the total sample respondents source of capital is their
own saving, 12.5% of the respondents’ source of initial capital is gift from their family. But most of the
respondents’ (50%) source of capital is loan from financial institutions. This indicates that the
availability of loan and its accessibility affects private investment growth and its productivity. Because
in our country the monthly income of household is lower as compared to developed countries, So that
the private saving is insufficient to start a particular business. The remaining 15% of the respondents’
sources of capital is other sources of capital. When we come to sectors separately, from the total
respondents in industrial sector 42.8% and 54.8% in service sector source of capital is borrowing from
financial institutions but no investors can borrow capital from financial institution. Therefore the role
of financial institutions for the growth of investment is significant. Next to financial institutions private
saving is the major source for private capital.

4.7 problem and factors that promote private investment and affect its contribution

Do you face a problem during the establishment of your business?

Table 4.10 a problems faced the investors during establishment

Response

Do you faced a problem in starting your business frequency Percentage (%)

Yes 22 55

No 18 45

Total 40 100

Source; own survey 2019

From the above table we can understand that most of the respondents (55) face different problems
during the establishment of their business. These problems affect the growth of private investment and
its contribution for the economic growth, to decrease unemployment and to reduction of poverty for
Hawassa town and also for country in aggregate level. Major problems that the respondents were face
during establishment were analyzed in the table below.

Major problems the respondents faced during Establishment

Table 4.11 Major Problems of investors During the Establishment

Problems faced investors during establishment Responses of investors

frequency Percentage (%)

Lack of work place (land) 3 13.6

Lack of finance 9 41

Lack of raw material 2 9

Government policy and work habit 4 18.4

Infrastructural problems 2 9

Other 2 9

Total 22 100

Source; own survey 2019

The above table indicates that, the major problems that private investors faced during the establishment
were lack of finance, government policy and work habit and lack of work place . From the respondents
13.6% of the respondents faced problem of work place (land) 41% of the respondents faced lack of
finance,18.4% of the respondant faced problem of government policy and work habit and 9% of the
sample respondents faced problem associated with infrastructure facilities,lack of raw material and
other problem.
 CHAPTER FIVE

5. CONCLUSION AND RECOMMENDATION

5.1. Conclusion
Investment refers to the purchase of various types of goods and services that can be used for production
of other goods. There were different investment policies declared in different regimes of the Ethiopian
government. Investment can be classified in to different classifications by different writers (authors).
Private investment is very crucial for economic and social development of Adama town. It is an
increasing capital stock which is essential means for the development the town and helping people to
become prosperous, but it is fluctuate by different problems, Such as cost of inputs, marketing
problems, and implementation of technology and capital accumulation of the investors. The level of
investment, employment opportunity and income generation have similar and positive trend. The
highest employment opportunity is created by the industrial sector and it is followed by service sector,
and also the highest capital accumulated in investment by this sector. This indicates that the town is
growing rapidly and conducive to investment, commercial center, tourist leading, and also there have
been human capital resource. But the contribution of private investment is undermined because of
different problems.

 Even if incentives and facilities are provided by the concerned bodies to the activities of
private sector, but it is not sufficient enough to enhance the investment activity of the study
area.
 Lack of credit availability, water supply, transportation, capital problem, market integration,
cost of raw materials and electric power and taxation are the major and serious problems faced
by all investors in the area under investigation.
 Form the major constraints the low infrastructure of the town had been lag behind the private
investment to score high economic growth and to create more employment opportunity.
 The industry sector needs a higher capital because the sector expand higher cost of equipment,
higher cost of machines, cost of inputs imported from abroad, cost of experts and other raw
material costs.
 The expansion of private investment has a great contribution towards employment creation
and income generation.
 Most of investors in the town are males, medium age, and educated. They get capital from
different sources. Such as gift, borrowing, private saving, property sales and others.

5.2. Recommendation

 To increase the number of investors in the town, governmental bodies of the city should give
great deal of emphasis in enhancing advance and well-functioning infrastructure, better
 transport service and controlling traffic methods and illegal activities, better communication
service, enough water supply, better electric flow and generation, credit available in all part of
the city and reduce rate of interest for the creditor.
 The incentives and facilities provided by the government are not sufficient enough to enhance
the investment activity in the town. So the investment office of Adana town should engage in
making the investment climate over conducive for investment.
 One of the problems of domestic private investors in the town is that of identifying profitable
and productive opportunity. So that the official administration body should give effective
training for investors to address the problem.
 Government body should be give attention to creation of conducive and enabling investment
environment by providing a clear and stable policy of investment.
 Identification of land of available for investment and its price should determine beforehand
and quick leasing of land to investors have to be introduced.
 More projects are inactive due to finance problem, lack of resource and restriction of credit.
this problem is solved by the responsible town investment administration bureau head and
government bodies to continue the project and increase private investors.
 The town capacity building programs in human resource must be accelerated in order to solve
problems of skilled labor that are required in new investment project and to easily adopt new
technologies.
 Access to electricity power and water supplies for investors has to be easy and should
available within short period of time.
 Compared to men investor’s female investors are low in number, so the town investment
administration bureau must give attention to increase the participation female investors in the
town by giving different incentives to female investors.
 To solve the problem associated to beginning capital the government should expand financial
institutions to increase the availability of loan.
 Private investors should pay reasonable wage and salary for their employees to increase their
productivity and incentive to work.

REFERENCE

 Asfaw (2006), problems of private investment in south Gonder zone, unpublished, Arba Minch,
University
 Dorn bush (2001), Principle of Macroeconomics, Chicago University, USA

 Ethiopian Economic Association(EEA);report on the Ethiopian economy volume vii 2007/08

 Federal Democratic Republic of Ethiopia (FDRE) Ministry of Finance and Economic

Development (MOFED) July, 2002 Addis Ababa Ethiopia.