Challenges of financing agricultural investment: case study of gambella city administration and itang special woreda, gambella peoples’ regional state, Ethiopia

Abstract

Agriculture is one of the main contributors to local economy of Ethiopia in terms of its products ranging from plant-based foods to household materials. Despite these all benefits and contributions of the sector, studies have shown that agricultural investment is still facing financing challenges. In the literatures, the sources of finance for agricultural investment, performance and challenges of agricultural investment and measures taken for those challenges have been long justified. The main goal of this paper was to assess the agricultural investment financing challenges in Gambella city administration and Itang special Woreda, Gambella People Regional state, Ethiopia. To achieve this objective, data were collected from both primary and secondary sources, mixed research design was employed, both exploratory and descriptive research method were used and the 215 sample were selected using simple and stratified random sampling technique from the total population of the workers of DBE, investment agency and investors of Gambella city administration and Itang special Woreda. The data were analyzed using both descriptive and inferential statistics and SPSS version 20 was used for this purpose to come up with findings and discussions, conclusion and recommendations. The study found it that, the major challenging factors are the low investment return, farm risk, security issues, lending procedures, farm size, distant of investor’s farm from lender, poor infrastructure, lack of technical capacity, farm age and budget failure with their respective proportion. This study has further revealed that, budget failure, investment return, farm risk, security issues, infrastructure ,farm age and technical capacity have positive effect on financing agricultural investment, whereas, lending procedures, farm size, distant of investor’s farm from lender, farm risk, and have the opposite effect. The study had also found that, all the explanatory variables with exception of budget failure have significant challenging effects on financing agricultural investment. Finally, this study recommended that, diversified sources of finance for agricultural investment must be there, training programs on performance issues must be there, each challenges must be seriously dealt with and others measures like strong monitoring and evaluation need to be put into practice.