Micale Final Paper PDF

The performance and contribution of AAIA
Acknowledgements
I will like to give special thanks and praise to the most merciful and the most gracious lord
of creature to God who sustained me in all my life.
I am grate full for my advisor, instructor Dagim Gashawtena, in Samara University Economics
Department for his scholastic and valuable suggestion, comments and criticisms. In addition, his
patience in reading bulk of unit, and eagerness in giving fastest feedback is extraordinary.
I owe special thanks to my father Ato Messele and my Sister Rahel Messele and for their care
and encouragement, they offered me in all my life.
Again, I would like to express my deepest appreciation to my lovely little sister MITTU, for her
invaluable moral assistance.
Last, but definitely not least, I would like to thank my best friend Dawit Belaineh for his
dedication to the fulfillment of my research
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Acronyms
AAIA – Addis Ababa Investment agency
AIA - Amhara investment agency
ETA- Ethiopia investment agency
MEC- marginal efficiency of capital
MNCs- multinational corporations
NA – not available
OIA – oromia investment agency
WB- World bank
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List of tables
Table 3.1 responses in relation to the contribution of AAIA…………………………………….16
Table 3.2 responses that related to the current performance of AAIA…………………………..17
Table 3.3 responses related to the needs and expectation of investors…………………………..18
Table 3.4 Responses in relation to the opinion of investors to expand their investment………...19
Table 3.5 responses of investors for the ability of AAIA in facilitating new of investor………..20
Table 3.2.1 the performance gap of AAIA in comparing with investors expectation …………..22
Table3.2.2 performance gap of AAIA in contribution of the main important provision………..23
Table 3.2.3 the performance gap of AAIA with other regional investment agencies…………...24
Table 3.2.4 the performance base line of AAIA………………………………………………..26
Table 3.2.5 the amount of capital invested in the previous six months in AAIA………………28
List of figures
Pie chart 1 demographic characteristic of investors……………………………………………16
Pie chart 2 types of investors…………………………………………………………………….16
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Table of contents
Acknowledgements
Acronyms
Chapter One
Introduction
1.1 Background of the study………………………………………………..........................1
1.2 Statement of the problem……………………………………………………………….1
1.3 Objective of the study…………………………………………………………………..2
1.3.1 General objective………………………………………………………………...2
1.3.2 Specific objective………………………………………………………………...2
1.4Hypothesis of the study………………………………………………………………….3
1.5 Methodology of the study………………………………………………………………3
1.5.1 Data collection……………………………………………………………………3
1.6 Data analysis technique………………………………………………………………….4
1.8 scopes and limitation of the study................................................................….................4
1.8.1 Scope of the study………………………………………………………………...4
1.8.2 Limitation of the study……………………………………………………………4
1.9 significance of the study…………………………………………………………………5
Chapter Two
Literature review
2.1.1 Defination of investment…………………………………………………………………6
2.1.2Types of investment……………………………………………………………………….7
2.1.3 Factors affecting investment……………………………………………………………. .8
2.1.4 Benefit of investment …………………………………………………………………...11
2.1.5 The role of governments ………………………………………………………………..11
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2.1.5 Investing for all stages of life……………………………………………………………12

Chapter Three
Data Analysis and Interpretation
3.1 Primary data analysis………………………………………………………………….15.
3.1.1 Basic information of respondents ………………………………………………...15
3.2 Secondary data presentation and analysis…………………………………………….22
Chapter Four
Conclusion and Recommendations

4.1.1 Conclusion of the study…………………………………………………………… 32
4.1.2 Recommendation of the stud……………………………………………………… 34
Bibliography
Annexes
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CHAPTER ONE
INTRODUCTION
1.1 Background of Study
Investment and economic growth are an inseparable concept that includes many relationships.
They are interconnected, interrelated and interdependent. According to Stephen L. Slavin,
“Investment is the thing that makes economy go. In addition, agreed that investment is one of the
pre requests for economic growth. Urbanization, high living standard, income equality and
generally high economic growth are results of the existence of investment. (Todaro)
To achieve all fruits of investment Government should have the capacity to facilitate both
foreign and domestic investor’s requirements in simple and easy autocracy. The subject of this
paper is about the performance of Addis Ababa investment agency and its contribution towards
investors. It is obvious that, simple bureaucracy and strong performance of all Government
investment agencies has strong effect for growth of investment. In a sense that, new investors
became satisfied when there, government fulfills requirement quickly.
Addis Ababa investment Agency is one of the service rendering agency established by the city
administration bureau to co-ordinate the investment activities of the city and settle its bureau in
centre of Addis Ababa, Piassia . The agency have many contribution for both domestic and
foreign investors by providing the resources potential profile, by providing project selection,
identification and profile preparation, by encouraging private sectors to play dominants role in
the economic development of the city and much more like. However, the current performance of
the agency cannot much with current needs and expectations of customers /investors and with
higher rate of investment in the city. This paper tries to discuss the performance of Addis Ababa
investment agency and its contribution towards investors.
1.2 Statement of the problem
Today, our world is more urbanized and industrialized than ever before. This process is more
rapid in developing countries like Ethiopia than developed nations. Small towns with few
thousands of population have now become millions dwellers with in short period. It is also the
same in the case of Addis Ababa because of the existence of rapid investment. In fact,
investment is a centre to develop, it also require strong performance from both government and
investors. Particularly when investment is expanded rapidly, new investors will be initiated to
come and to invest in their home country, which is mostly crucial for rapid economic growth.
Those new investors and the old ones require important contribution from government for their
investment project. (Bradly R Schiller)
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As stated above, strong performance and contribution of Addis Ababa Investment Agency is the
most important and essential for existence of rapid investment in the city. But the presence of
some weak performance in the agency highly affected the current investment in the city. The
significance consequence associated with the weak performance of Addis Ababa Investment
Agency is the inability to meet the requirement of both foreign and domestic investors.
Inadequate treatment and inappropriate contribution towards the investors, has a serious
consequence on the current expending investment in the city and towards investors.
In this regards, even though, the performance of Addis Ababa Investment Agency and its
contribution towards investors requires special attention, research and publication produced so
far are not satisfactory. Thus, this study will try to assess various questions that come out of the
above facts.
 How the current performance of Addis Ababa Investment Agency creates a gap with the
current needs and expectations of both foreign and domestic investors?
 How the current performances of Addis Ababa Investment Agency contribute towards
investors requirements?
 What is the main effect associated with the weak performance of Addis Ababa
Investment Agency towards new coming investors to the city?
 What is the level of investors who they newly entre into the city investment through
AAIA?
 What is the amount of employment and capital created as a result of AAIA contribution?
 What is the performance of AAIA as compared with other investment agency?
1.3 Objectives of the Study

1.3.1 General objective
The general objective of the study is to describe the performance and contribution of
Addis Ababa Investment Agency towards investors.
1.3.2 Specific Objectives
The study has the following specific objectives:

 To describe the gap between the current needs and expectations of investors and
current performance of Addis Ababa Investment Agency.
 To describe the contribution of Addis Ababa Investment Agency towards both
domestic and foreign investors.
 To assess the effect of Addis Ababa Investment Agency associated with its
performance on the investors in the city.
 To show the level of employment and capital created because of AAIA
contribution.
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 To show the level of new investors in the city who take the needed license and
invest in Addis Ababa.
1.4 Hypothesis of the study
The purpose of this study is regarded to the performance and contributions of AAIA
toward investors in Addis Ababa. For this study, the following hypotheses were used:-
 The current performance of Addis Ababa investment Agency is not match with
the current need and expectation of investors in city of Addis Ababa.
 Investors, which are newly entered in to the city investment is increasing as
compared to in previous period.
 Although, different contribution of AAIA creates employment for those
unemployed workers but not enough.
 AAIA contribute in different ways for investors who have the willing to invest in
Addis Ababa.
 When by comparing of AAIA with other regional investment agency, there is a
performance gap in provision of different contribution and activity.
1.5 Methodology the study
1.5.1 Data collection
The data collection techniques that were be used or applied in this study to gain primary
data are personal observation and questionnaires. The questioners are prepared for randomly
selected sample of investors that include both foreign and domestic investors. It aimed to provide
a general understanding of the level and extent of the performance of Addis Ababa investment
agency and its contribution to world investors. The observation method were be used to assess a
personally selected sample of investor in Addis Ababa who gets the contribution of Addis Ababa
investment agency. All necessary documents published and unpublished (books, surveys,
publication reports, magazines, journals and newspaper) related to the performance and
contribution of Addis Ababa investment agency was thoroughly consulted and reviewed as a
source of secondary data.
1.6 Data analysis techniques
The type of data analysis techniques used in any research depends on the methodology of data
collection. As stated earlier, this study will use the data gathering method of questionnaires and
observation. Thus, the data was collected by quantitative and qualitative method. Analyze the
data gathered by quantitative techniques that is observation was manually. Statistically analyze
the data gathered by quantitative techniques that is questionnaires were. In this case, computer
application was be used to construct table. Pie charts based on the collected data. These
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techniques were very helpful for the interpretation of data because they make it very simple and
easy.
1.8 Scope and Limitations of the study
1.8.1 Scope of the study
Addis Ababa investment agency is one of the branches of Ethiopian investment agency, which
aim to expand the current investment in Addis Ababa by providing many branch of Ethiopian
investment agency, which is located in Addis Ababa. The analysis of all branches would be very
difficult with the available resource and time. The study will focus specially on the performance
and contribution of Addis Ababa investment agency toward investor; it will assess other regional
agency’s performance and contribution because their study will require high capital and large
time.
1.8.2 Limitations of the study
This study may incur some potential weakness and limitation. This weakness may have various
factors such as lack of resources, time, methodology sample design etc.
Firstly, lack of adequate resource and time may have several effects. The study might be hastily
done and data that had been collected or planned to be collected would be left out. The collected
data may not be appropriately analyzed and interpreted due to some restriction. In addition, since
some data, gathering techniques require huge investment of capital and energy, lack of adequate
financial and material resources may result in the use of inadequate methodology.
Secondly, the study may have weakness due its utilization of questionnaires. It is very difficult, if
not impossible to verify the data collected from questionnaires because the respondents may be
unwilling to provide truthful answer.
Lastly, the research may face challenge because previous research with regarding the
performance and contribution of Addis Ababa Investment Agency toward investors had been
conducted in the study area. This practice gaining knowledge of previous levels and pattern of
the performance of Addis Ababa Investment Agency and its contribution toward investors.
To counter the limitations and challenges, which the study will face, adequate methodology,
representative sample and all available resources were be executively utilized.
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1.9 Significances of the Study
This study is concerned with the analysis of the performance of Addis Ababa Investment Agency
and its contribution toward foreign and domestic investors in Addis Ababa. These studies have
various uses to many related peoples and organizations.
Firstly, it is most recent study that focuses on the performance and contribution of Addis Ababa
investment Agency toward investors. So that, it will provide valuable information for future
researchers that will make for conducting for the purpose of assessing the performance of Addis
Ababa Investment Agency and its contribution toward investors in Addis Ababa City.
Secondly, the study will bring to light the level and extend of the performance of the agency and
its contribution for investors. This will have enormous significance for various organizations,
Agencies and even for Addis Ababa Investment Agency itself. It will provide information about
the current situation of the agency in providing its contribution and its major obstacles to meet
the needs and expectation of investors in Addis Ababa and it provide an incentive for concerned
bodies to take action on the current performance of Addis Ababa investment Agency.
Finally, this research might be a source of knowledge for investor in Addis Ababa and official
workers in the agency about the performance and contribution of Addis Ababa Investment
Agency. It will give them the general understanding of weak performance and contribution of the
agency that makes investors to face problem in present and future.
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CHAPTER TWO
LITERATURE REVIEW
2.1 Definitions of Investment
According to Stephen L.slavin, “Investment is the thing that makes the economy go.
When the country has prosperity, investment is high and hissing and when the country has
recession investment is low and falling. For an individual investment might include the purchase
of financial assets. Such as stocks, bonds, mutual funds or life insurance. Investment cans also
the purchase of durable goods such as house or a car. For an economy, Investment refers to
increase in real capital in an economy, such as an increase in factories and machinery or its
human capital. That is, a skilled and educated labor forces. (Keynesian Economics)
Investment is the most volatile sector in the economy. Fluctuation in GDP is largely
fluctuation in investment. More often than not, the country’s recessions are touched off decline
in investment and reconvenes are brought about by rising investment. (Adam Smith)
Different authors suggest about investment some of are-
According to Warren Buffet, Us economist, investment means buy stock as you buy
your groceries, not as you buy your perfume.
According to Andrew Carhegie, both us industrialist suggested that investing is

concentrate your energy, thought and capital excursively up on the business in which you are
engaged … “don’t put all your eggs in one basket “ is all wrong. I tell you put your eggs in one
basket and then watch that basket.
According to Camfell R. Mc cohhel, Investment is use of money for future profit, the
outlay of money. Example, by depositing it in a bank or by buying stock in a company to making
a profit.
According to Frank Hyneman Knight, Us economist, investment the key for strength
human potentialities and for efficient utilization of country resource.
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2.2Types of investment
A. Physical investment
Physical investment refers to the purchase of manufactured aids to production
Physical investment includes such as machines, factories, computer, trucks and office furniture.
The return on Physical investment is the amount by which the investment increases the business
review. Physical investment affected by tax through business increase. A tax on Physical
investment return reduce the firms income and thus the benefit from making the investment
believe that business tax decrease the amount of Physical investment by business.
B. Foreign direct investment

Like domestic investment, foreign direct investment stimulates growth, creates jobs,
fosters competition and facilitates the creation and exchange of goods and service and innovation
techniques. Its helps the economy maintains investment, which is vital to economic performance
and international competitiveness. Multi National Corporation facilitates foreign direct
investment. Multi rational corporation also sometimes called transitional corporation or
International Corporation, business that produce or distribute products or service in one or more
foreign countries by establishing a branch or affiliate there. MNC is engage in foreign direct
investment (FDI). That is, investment in one country by citizenly of another country. Some time
such investment involves acquiring an existing company. In other case, MNC has undertaken
what known as green field investment by creating new facilities or activities. MNC’s are mostly
established before world war ll (1934-1945) and facilitate foreign operation to secure source of
row material and developing countries were the largest recipients of worldwide FDI. The
tremendous growth and spread of MNC has spared controversy. Some people believe that MNC
contribute to unemployment in the countries where hining foreign workers base them for
overseas broacher or affiliates. Some people believe MNC’s create more jobs than they eliminate
and that MNC is binning capital and technology to areas that heed it.
C. Domestic investment
Domestic investment is investment in one country by citizens that country. Domestic

investment is one of the most crucial for higher economic growth through increasing the
domestic saving. Small inflow of foreign direct investment is the cause for shortage of Domestic
investment. For example in 1990s, the rate of Domestic investment was extraordinary low. A
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large number of capital left Russia in the form of capital flight. Because of small inflow of
foreign direct investment, the country overall level of investment declines. Domestic investment
is important element for reducing budget deficit. I.e. the organization for economic cooperation
and development estimated that Japan’s fiscal year 1996-budget deficit soar to 4.8 percent of
GDP, but Japan’s deficit was reduced to 3 to 3.5 percent 1997 due to government efforts in
providing much incentive for domestic investor and also for foreign ones. Generally, domestic
investment hisses the country by reducing capital flight from home ration to foreign country.
D. Company investment
Company investment, finance a company registered under Company investment to
invest pooled funds on behalf of its clients. Investment Companies are of three principal types.
Open end (or mutual funds); closed end (or publicly traded funds) and units investment trusts.
All three-type investment companies generally invest their funds in stocks, bonds or other
securities with in a framework of strict government regulations.
E. Investment Banking
Investment Banking, branch of finance concerned with the underwriting,
distribution and maintenance of market in securities issued by business firms and public
agencies.
2.3 Factor determining the level of investment
a) Factors of production: - inputs used in production process there are conventionally

define as land, labor and capital, but entrepreneurship (management) is often listed as
fourth factor of production. The availability of the various factor of production in country
its factor inducement ha an important influence on investment. To be successful a
business need to achieve a health mix of the various factor of production. The desirable
mix will change from time to time and will depend on such things as the need to expand,
the availability of skilled labor experienced and enterprising managers, new technology
and the market price for the different factor of production.
b) Inflation and Deflation: - Inflation is the rise of price good and service. It initially
increases business profit as wages and other cost lag behind price increase, leading to
more capital investment, payment of dividends and interest. Investment is initially rises
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because of inflation is that, personal spending rises because of “buy low, it will cost more
later “attitudes, personal real estate price appreciation may attract buyers which leads to
his in investment on real estate. Deflation determines the level of investment by lowering
the overall price of good and service. Lower price eventually encourage improvement in
consumption, which leads to improvement in investment, but only if the fundamental
cause of original deterioration are corrected. Despite these temporary gain. However,
inflation disrupts the level of investment, particularly if the face fluctuates. Generally,
inflation discourages business cost, discourage consumer spending, and depresses the
value of stocks and bores which leads to decline in the level of investment.
c) Interest rate: - interest rate is the cost of borrowing money. There are actual different
interest rate, depending on a firm’s credit worthiness and the size the loan. Usually low
interest rate, there for motivate businesspersons to make more investment and high
interest rate discourage them from doing so. It follows that investment is natively related
to interest rate.
d) The expected income flow from investment (expected revenue mines expected cost).
A profit-maximizing firm is interested to know how much money can be earned by
selling the output produced by one extra unit of capital. This value called the marginal
rate efficiency of capital (MEC). If the income flow is constant throughout the life time
of the capital, we can calculate MEC (marginal rate efficiency of capital),by using this
formula:-
MEC= F/c Where – F is constant expected flow
– C is cost (purchase price of capital)

If purchase price of capital rise and the constant expected income falls, managerial
efficiency of capital falls and leads to reduction in investment.
e) Sales outlook: - if the investor cannot sell its good and service, there is no point in
investment, so the ultimate determinant of the level of investment is the business firm
sales outlook. If the business is good and sales are expected to be strong for the next
period. Then the business firm will take on more investment. Generally, according
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Stephen L. Slavin, investors will not invest is their sales outlook is bad and to invest more
must work more and consume less.
f) Tax:-Tax intervene the level of investment. This is because the government taxes return
on some types of investment at higher rates than others. These differences causes
business to make investment decision based on tax consequences, rather than whether
they are sound from a business point of view. By distorting investment decisions, the tax
system leads to an inefficient pattern of investment, but if the tax system is moderate and
free from any differences, it leads to efficient pattern of investment.
g) Government Policy: - Government policy has strong intervene on the level of
investment. When countries have a government with good economic policy, the country
will have high level of investment and large number of investors in different sectors. For
example, great Britain and United States in 1980’s have strong economic policy
regarding to government regulation private enterprises and it enlarge the potential profits
of corporation and encourage additional investment, higher productivity, and renewed
economic growth. (BBC)
h) A country’s Import and Export: According to Ayele Kuns, Investment means
expenditure on all types of capital goods, In other words, it is expenditure on three
categories of capital. Although ordinary investment is also used to denote purchases of
financial assets such as stocks and bonds, economists restrict the use of the term to the
creation of real asset.
Investment is the second largest element of aggregate expenditure represented in the equation
GNP= C+I+G+NE; In the context of this equation, investment is similar to the other elements of
aggregate demand because it represent demand for part of the country’s current output. Hence
investment plays the following role in the rational economy.
(A) Change in investment can have a significant impact on aggregate demand and hence on
national output & employment.
(B) The act of investment increases the productive capacity of an economy. Adding to the
stock of capital goods increases the national potential output and promotes economic
growth in the long term. That is for countries growth and future prosperity of a country,
high level of investment is essential.
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2.4 Benefits of Investment in Canada and Holland.
As stated by Stephen L-Slavin, “Investment is the thing that makes the economy go”. It
promotes the production of goods and service and increase export. For example, Canada in
1957, its economy was expanding but the face of expansion was for less rapid, and in some
industries the sales curve had not only levied out but also turned downward. The gross
national product seemed likely to stand below the budget estimate. Generally, the economy
of Canada was not in correct road. After making of huge capital investment, the country
export market became strengthen and the pressure of rising price face weak pressure towards
the country’s economy. (Encarta Root 2007).
Investment in Holland also can be a good example. The United States investment in
Holland makes the country Industrial sector to teach its boom or pear. In September of 1960,
some of 145 major United States Corporation had established themselves in the Netherlands,
either by constructing their own plants or by engaging in various joint enterprises with Dutch
firms. The establishment of U.S. Corporation, even if it cause decline in hospitality in
Dutch’s to subsidiaries of U.S. corporation, the U.S. corporation established rises the
country’s level of investment through foreign direct investment by US.
2.5 .The Role of Government for Promoting Investment
Government Policy, which is its economic policy, has a considerable impact on

expanding the level of investment. United States is dominant country in the world in which
the country’s level of investment of high and reach the customers and/or consumers demand.
But, in recent period, in which the world’s economy is declining, many dominant countries
across the world face low level of investment. In case of Ethiopia it is different, from the
beginning of 1984 (EC), the pace of investment is rising from time to time. The most
important role, which is needed from government, is, the provision of incentives in form of
tax, provision of land and many the like.
In many developing countries, most of the governments are autocratic and/or dictators
that many of the countries do not use their resources for the development of their country’s
economy. It is clear that, investment in the key to raise the country economy, it reroute strong
government role such as:
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 Decisions to provide business with increased incentives to invest, take risk, and work
harder with modern technologies, which would reduce the cost of alternatives to
many sectors of the economy such as data processing and scientific agriculture,
would experience rapid investment especially in the case of Ethiopia.
 Efficient utilization of funds from custom revenue and limited tax base, the
government should rave energetically seeking to modernize the infrastructure that
will be the means to attract additional investment. A good experience can be taken
from the economic history of Vietnam. Vietnam accelerate its level of investment by
making modernized infrastructure from funds derived from custom revenue and
limited tax base in 1968 (EC) and rise the country economy.
2.6. Investing for all stage of life
According to Nancy Dunnan, investor want to make progress, to success, the investor need to
know, where the investor is needed; and what is the best way to get a need?
In finance, everything does change. The stock market moves up & down, interest rate rise and
fall, mutual fund portfolio manager came and go. Most predictably, when time goes, the right
investment may not be the right investment. So the needed components must be known and
adjusted by the investor. In accordance with Nancy Dunnan, the following elements are
important to make the investor successful and the economy growth.
(A) Investor Portfolio:- Because things are changed, the investor should review at least
twice a year, every year and compare he’s/ she’s investments to their value at your last
review. Asset allocation, the strategy of investment, describes how the investor divides
his or her money among the three basic investment categories, which are cash, fixed
income and growth.
 Cash (Saving Accounts, Bank certificates of deposit money market funds):-
To an investor, cash has several advantages. It offers stabilities amid other
changes. It is the basic of an emergency next egg. On other hand, cash growth
more slowly than other investments can. If inflation strikes, cash can actually
lose value in comparison to rising prices. Before investor investing in stock or
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bonds, the investor should have enough saving in cash to live on the next period
of the investor life.
 Fixed Income (Usually Bond):- When an investor buys a bond, he/she become a
lender, loaning money to the issuer of the bond. Bonds are issued both by
corporations and by governments. Although money invested in a bond is not
readily available, bonds can be bought and sold, and changes in bond values of
ten smooth out difficulties in the stock market. When stock values are insecure,
demand for bonds increase, and so do bonds prices.
 Growth (Usually Stocks):- They also called equities; represent shared
ownership of a company. When investor buys a stock, he/she join other owner. If
price of stock goes up, investors can make a profit by seeking the stock for more
than they paid for it., Because stocks can increase in value freely and quickly,
they offer a greater chance of significant investment growth than cash or bond
do. Owing a range of stocks, as in a mutual fund, limits dependence on one
company’s success. It’s price also fluctuate in response to the general economic
climate, however you can lose your money in stocks.
(B) Allocating Assets:-
The investor asset allocation should be based on four factors:
(I) The amount of time the investor has to teach him/her financial goal.
(II) The type of goal the investor have
(III) Investor tolerance for risk
(IV) Investor personal wealth
Aggressive investors with long-term goals will want more stocks in their
portfolio, while more investors that are conservative will want more bonds.
Aggressive investors typically look for high growth stocks including stock of
companies in other countries. These stocks called blue chips because of their
consistently high performance.
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C. Ministering to Investor Portfolio:
It is not only twice the investor should review its portfolio during his/her investment.
A number of events could trigger a reallocation of your portfolio:
 When Investor like changed

 When the economy changed
 When an asset changed
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CHAPTER THREE
DATA ANALYSIS AND INTERPRETATION
3.1 Nature and Source of Data
In this chapter data collected through questionnaire, personal observation and documents are
analyzed and interpreted. Questionnaires were distributed to one
one-hundred-fifty
fifty investors in the
city of Addis Ababa who they are related with the performance and contribution of AAIA. From
the total respondents
pondents twelve (12) where from machinery sector, sixty
sixty-four
four (64) from real-estate
real
sector, eight (8) from education sector, forty
forty-nine
nine (49) where from health sector and seventeen
(17) from construction and other related sectors. Personal observation was al
also
so used from the
agency by looking the different contribution of AAIA and analyzing the agency performance.
3.1.1 Basic information of investors
To find out good information, the researcher distributed the Questionnaire to those who have
direct and indirect relationship to performance and contribution of A
AAIA
AIA towards investors in
Addis Ababa. The analyzed Questionnaire
Questionnaires are presented one by one as follows.
Figure 1. Demographic characteristics of respondents
SEX
20.00%
MALE
FEMALE
80.00%
As stated in the above pie chart from the total respondents of the questionnaire around 80 %(
130) are male and the remaining 20 %( 20) are female, this sample indicates that
t most of
respondents are male.
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investors
domestic
investors
foreign
investors
Figure 2. Types of investors
Also the above pie chart shows that almost 65.34 %( 98) of the respondents are domestic
investors and the remaining 34.66 %( 52) are foreign investors.
Table 3.1  response in related to the main contribution of AAIA
No Item Alternatives Respondents

. No. %
1 What is the main contribution Provision of investment license 139 92.66
you get from AAIA? Provision of land 0 0
Fulfillment of infrastructure 6 4
Other contribution 5 3.33
Total 150 100
Source-questionnaire
As shown in table3.1, more than 90% of the respondents responded that, the main contribution
of AAIA is the provision of investment and other related license and 6(4%) of the respondents
stated the main contribution of AAIA is fulfil
fulfillment
lment of infrastructure for their investment projects.
In the same table (3.1), 3.33 %( 5) of respondents state different contribution of the agency such
as _
 Preparation of profile regarding to the resource potential and profitable sector

 Different activities
ties in relation to promotion
 Provision of follow-up
up activities
 Provision of trade license in relation with other governmental offices.
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Table 3.2 responses in relation to the current performance of AAIA
No Items Alternatives Responses

No %
1 What do you think about the Weak 132 88
current performance of Strong 18 12
AAIA?
Total 150 100
2 If your answer is weak for Problem in relation with 80 60.60
the above question, what is investment license
your main reason High level of bureaucracy 27 20.45
Inability to stop illegal 11 8.33
investment
Other reason 14 10.62
Total 132 100
As indicated in the above table item no (1) around 132(88%) of the respondents responded that,
their opinion about the current performance of the agency is weak, while the remaining 38(12%
) of the respondents responded that it is strong. In the same table (3.2) item no (2), the weak
respondent of item no (1) indicate that, around 80(60.60%) of the respondents states that the
reasons for the weak performance of the agency is due to problems regard to provision of
investment license and the other 27(20.45%) of respondents stated problems of bureaucracy in
the agency while it gives its contribution and activities. Out of 138 respondents, 11(8.33%) of
them stated that, the weak performance of AAIA is due to the inability to stop illegal investments
by some investors which make the legal investors unprofitable. The remaining 14(10.62%) of
respondents responded different reasons such that:-
 Lack of getting the needed investment information from the agency, which related to
their investment project.
 obstacles in getting the needed land for their investment project
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 Different problems for getting the resource potential study and lack of educated man
power in the agency.
Table 3.3 responses related to needs and expectation of investors

No %
1 Do you think that your current needs Yes 45 30
and expectation match with the current
No 105 70
performance of the agency?
Total 150 100

2 If your answer is yes for the above Problem in profile 23 21.9
item, what is your main reason? preparation on
resource potential
Lack of incentive 16 15.2
Problem in provision 53 50.4
of investment license
Total 105 100
As shown in the above table item no (1), from the total respondents, 45(30%) of them responded
that their current needs and expectation match with the current performance of AAIA and the
remaining 105(70%) of the respondents needs and expectation cannot match with the current
performance of the agency. In the same table item no (2) the NO respondents of item no(1)
indicated that, around 23(21.9%) of the total respondents current needs and expectation is not
match with the current performance of the agency due to the problem associated with the profile
preparation and resource potential studies which is very crucial for them to be more profitable
and make them able to expand their investment project. In addition, around 16(15.2%) of the
respondents responded that because of lack of the needed incentive for the investors their needs
and expectation cannot match with the current performance of AAIA. In the same table item no
(2) along 105 no respondents 53(50.4%) of respondents states their reason for not matching with
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the current performance of AAIA is that the existence of difficulties in getting for investment
license and in renewal of their investments license. The remaining 13(12.3%) respondents in
item no (1) states different reason such as:-
 broaden of the form of the investments license

 The inability of providing the needed marketing information and make the investors to
face loss
 Lack of co-ordination with other related government agencies with AAIA and make
them to waste many work times.
 Some of stated that the absence of the provision of photo copies, fasteners and classers
Table 3.4 responses in relation with investors plan
Item Questions Alternatives Responses

no No %
1 Do you have a plan to Yes 123 82
expand your investments? No 27 18
Total 150 100
2 If your answer is yes for Easy bureaucracy 16 13
the above question, what Curbing of illegal investments 21 17.0
do you expect from AAIA? projects
Short time of getting the needed 71 57.7
investment license
Other 15 12.1
Total 123 100
As shown in the above table 3.4 item no (1), the majority of the respondents (i.e123 (82%)) say
that they have a plan to expand their investment but the remaining 27(18 %) does not have a
plan. In the same table 3.4, the yes respondents stated that, they would expand if the agency will
have easy bureaucracy and other related governments’ agency, which they are connected with
investment. Around 21(17%) of the total respondents responded that, they will start other
investments in Addis Ababa if the agency curbs illegal investment project. For almost 71(57.7%)
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of the respondents states that if the agency performs quickly in its provision and renewal of
investment license, they will expand and start many investments. The remaining 15(12.1%) of
the respondents expect different contribution and performance in their contribution. such as:-
 The expectation of technically skilled worker for their investments.

 The expectation of only one center for getting different activities from different agencies,
which is related to investment.
 amendment some rules and proclamation which does not satisfy some investors and make
them to do not expand even also to stop their investments in the city of Addis Ababa such
as, pro.no 375/1996 article 12,sub article 1.
Table 3.5 response in relation to the AAIA ability to facilitate the increasing no of investors

No %
1 Do you think that the current Yes 45 30
performance of AAIA No 105 70
facilitate additional number
of investors.
Total 150 100
2 If your answer is No for the Skilled man power 12 11.42
above item, what is your Easy bureaucracy 18 17.14
main reason? Strong performance and 51 48.57
incentive provision
Total 105 100
As shown in the above table 3.5 item no (1), the majority of the respondents (i.e. 105(70%) says
the agency cannot facilitates additional investors requirements but the remaining 45(30%) say
yes. According to 105 respondents 12(11.42%) of them stated that if the agency have skilled and
educated man power it may facilitates the requirement of more and more investors. In the same
table, among the NO respondents 18(17.14%) of them suggested that it is better to additional
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investors to be satisfied, the existence of easy bureaucracy is crucial. According to 51(48.57%)

of no respondents ,the existence of strong performances incentives provision make the agency to
attract additional investors and fulfill their requirement. in the same table the same table the NO
respondents in item no(1) suggest different opinion of their own such as:-
 Training for workers through facilitation, communication and leadership.

 The application of new technologies in contribution of different activities by the
agency. such as local area net work-LAN, wide area net work –WAN
 Appropriate external internal interface
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3.2 SECONDERY DATA ANALYSIS
Addis Ababa investment agency is one of the services rendering agency that coordinate
investment activity of the city. As stated in the first chapter of the paper the study deals with the
performance and contribution of AAIA. In this section important data are presented and analyzed
in which they highly shows the performance and contribution of AAIA. the analysis mainly
concerned on the performance gap of the agency with investors expectation in different line of
contribution, the performance of AAIA with other regional investment agency, creation of
employment by AAIA contribution is analyzed and interpreted.
3.2.1 PERFORMANCE GAP OF AAIA
In this part, the current performances of AAIA with current needs expectation of investors are
presented and analyzed as follows.
Table 3.2.1 performance gap of AAIA with current expectation of investors
No. Main contribution Investors needs Current performance Performance gap

&expectation
Da quali Satisfac Day Qual satisf Day Quali Satisfa
y ty tion ity actio ty ction
n
1 Profile study 86 100 90 105 60 60 19 40 30
2 Promotional work 13 86 92 26 56 48.7 13 30 43.3
3 Contribution of 0.0 89 97 0.043 60.5 63.7 0.008- 28.5 33.3
information 35 -36 36.46
Source-AAIA library
As indicated in the above table, three important contribution of the agency is compared
contrasted with the current investor’s needs, expectation, and forms performance gap. In the case
of profile study, investors expect the profile to be studied in 86 days but currently the agency can
provide in 105 days that create a performance gap of 19 days. Investors also expect the quality of
100% and a satisfaction of 90% but the agency have a quality of 60% and satisfaction of 60%,
which creates a performance gap of 40% and 30% respectively. In the case of promotional work,
it takes 26 days with quality of 56% and satisfaction of 48.7%creates a performance gap of 13
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days, 30%, and 43.33% in quality and satisfaction respectively. In the case of information and
guidance, investors expect 89% quality and 97% satisfaction that lead to the existence of
performance gap of 28.5% in quality and 33.3%in satisfaction.
Table 3.2.2- performance gap in provision of three important contributions
No. Main contribution Investors needs Current performance Performance gap

&expectation
Day Qual Satisfa Day Qual satisfa Day Qua Satisfa
ity ction ity ction lity ction
1 Trade registration 0.95 89 100 3.4 78.3 80.7 2.45 10. 19.3
7
2 Investment license 1.4 89 97 2.4 79.2 78.7 1 9.8 18.3
provision
3 Renewal of 0.12 81 89 0.02 90.6 79.2 0.10 9.6 9.8
investment license
4 Provision of land 23.3 81 93 136 47 51.2 112.6 34 41.8
Source-AAIA library
As shown in table 3.2, among different contribution of AAIA, the most important four
contribution of the agency are compared with the current needs and expectation of investors.
And in what amount it differ from investors expectation of time, quality, and satisfaction with
current quality, time, and satisfaction yield from the agency. In the case of trade registration,
investors need to register within 0.95days with quality of 89% and satisfaction of 100%
respectively. However, currently the agency provides this contribution in 3.4days with current
quality and satisfaction of 78.3% and 80.7% respectively. This difference creates a performance
gap of 2.45 in days, 10.7 in quality and 19.7% in satisfaction difference. In the case of
investment license provision investors expect to have it in 1.4 days, with expectation of quality
of 89% and satisfaction of 97%.But,currently the agency provide this contribution within 3.4days
with quality of 78.3% and satisfaction of 18.3% of investors. However, the performance gap in
the case of investment license provision, with regarded to the time it takes, is one, which shows
the gap is good. This is because investors expect to have it within 1.4 days but the agency
provides within a single day. According to the agency report, the renewal of investment license
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takes place within 0.026days by having a quality of 9.6% and 9.8 satisfaction to investors. But
investors expect the contribution of renewal of investments license within 0.129 days by getting
a quality of 81% and 89% of satisfaction. This difference creates a gap of 0.103 in days, 9.6% in
quality and 9.8% in satisfaction. The provision of land from the agency takes 136days with 47%
quality and 51.2satisfaction.But investors expect to have the investment land in 23.35days with
quality of 81% and 93% satisfaction. This leads to the performance gap of 112.6 in days and a
quality gap of 34% and 41.8% in that of 41.8% of satisfaction. This indicated that strong
measure must be taken in order to reduce the gap between the current performances of the
agency with investor’s expectation in the case of renewing their in9.8% in satisfaction.
2.3- the analysis of the performance gap of AAIA with other regional investments agency
No Main Current performance of Current performance of Current performance of

OIA
contribution AAIA AIA
Day Quality Satisfaction day Quality Satisfaction Day Quality satisfaction

1 Profile 105 60 60 45 50 59 61 33.3 60
study
2 Promotional 26 56 48.7 15 26 36.3 32.3 48.1 41.7
work
3 Provision of 0.043- 60.5 63.7 12 59.5 60 0.09- 48 41
42
information 36
Table 3.2.3 - the performance gap of AAIA with other regional investments agency
Source-AAIA library
As shown in the above table, the current performance AAIA is compared with other regional
investment agencies. According to the table, profile preparation on resource potential takes
105days with quality of 60% and satisfaction of 60%.Amahara investment agency, in its profile
study on resource potential performs in 45 days with work quality of 50% and makes investors to
satisfy 59%. And in the case of oromia investment agency it takes 61 days to prepare the profile
on resource potential with quality of 33% and 60% satisfaction for investors. With the above
stated current performance of AAIA leads to the performance gap of 60days, 10% of quality and
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10% of satisfaction with AIA in the case of profile study on resource potential. In the provision
of promotional work for investors, currently AAIA performs this contribution in 26days with
quality and satisfaction of 56% and 48.7% respectively .But in the case of AIA the promotional
work for investors take 15 days with creation of 26% quality and 36.3% satisfaction. This
difference create a performance gap of 11 days in promotional work with quality gap of 30% and
satisfaction gap of 12.4% as comparing AAIA and AIA. In the case of OIA the promotional
work for investors, take 61 days with a quality of 33.3% and 60% satisfaction to investors in the
region that leads to a performance gap of 44 days, 26.7% in qualities as compared with AAIA
with OIA. According to AAIA, the provision of information and guidance takes 0.043-36 days
with quality of 60.5% and satisfaction of 63.7% for investors. In the case of AIA, the provision
of information and guidance toward investors take 12days by creating a quality of 59.5% and
60% satisfaction when it provided to investors in Amahara region. When we see AAIA and AIA
performances in the provision of information, there is a performance gap of 24 days, 1% of
quality 3.7% satisfaction which created by investors. The investment agency of oromia performs
this contribution in the interval between 0.09-42 days with a quality of 48% and 41% satisfaction
toward investors. As we compare to AAIA there a gap on the performance of providing
information and guidance, which is, 0.047 in days, 12.5% in quality and 22.7 in satisfaction.
When we see the general performance of each agency, Addis Ababa investment agency performs
better than those of the two investment agencies in contributing the three important provisions.
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3.2.4 Performance base line of AAIA
No Main provision Staff Waiting Total step Returning Quality Satisfaction

processing time time time/day in % in %
time
1 Profile study on 75 30 105 - 60 60
resource
2 Promotional work 20 6 26 - 56 48.7
3 Information & 0.02 0 0.02 5 60.5 63.7
guidance
4 Trade registration 0.2 3.2 3.4 - 78.3 80.7
5 Provision of investment 0.18 2.22 2.4 9 79.2 78.7
license
6 Renewal of investment 0.02 0.24 0.26 8 90.6 79.2
license
7 Provision of land NA - 136 5-7 47 51.2
8 Fulfillment of NA - 69 - 56.9 58.9

infrastructure
9 Free of tax 0.5 2 2.5 4 50.8 55..6
10 Trade license 0.09 3.71 3.8 4 78.4 77.7
11 Follow up activities 0.125 0.125 0.25 NA 49.3 54.7
Table 3.4-the performance base line of AAIA
Source-Ethiopian investment agency
As can be seen from the above table, AAIA contribute the above 11 activities for rising the city
of investment. The table consists six important elements, which used to evaluate the performance
of AAIA in the contribution of the above stated provision and contribution. Each provision have
staff processing time, returning time, quality of the service, and satisfaction of investors from the
provision
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In the case of profile, study on resource potential takes 75 days and waiting time of 30 days.
Waiting time means days that the profile study is not worked. It has a quality of 60% with
creating a satisfaction of 60% toward investors. Promotional work takes the staff processing time
of 20days with waiting time of 6 days and total step time became 26 days .promotional work
which is provided from the agency have a quality of 56% and a satisfaction of 48.7%. the
provision of information and guidance have take 0.02 staff processing time with zero waiting
time and returning time. For this provision, the agency creates a quality of 56% by satisfying
48.7% of investor’s requirement. as indicated in the above table, trade registration have staff
processing time of 0.2 days with waiting time of 3.2 days in which the total step time will be 3.4
days. The main trade registration undertaken by AAIA satisfies 80.7% utility of an investor with
a quality of 78.3% for those who go to agency for getting trade registration. in the provision of
investment license, which is the key factor that require strong performance in its provision for
attracting additional investors to the city, have staff processing time of 0.18dayswith waiting
time of 2.22 days. Investors are return back and again for almost 5 days for having the needed
investment license. However, the provision of investment license from AAIA creates a
satisfaction of 78.7% satisfaction a quality of 79.2% toward investors. The renewal of the
provided license has staff processing time of 0.02 step time per day. Investor returns for about 8
times and get a quality of 90.6% satisfied 79.2% of their wants. In the case of provision of land
and fulfillment of infrastructure do not have staff processing time and waiting time but they have
total step time of 136 and 69 days respectively. The provision of land requires investors to return
for almost 5-7 times, and also in its provision, it has a quality of 47% and satisfaction of 51.2%.
Fulfillment of infrastructure does not require any returning times but when it is processed by the
agency, it creates a satisfaction of 58.9% of investors wants. When investors go to the AAIA, to
require free tax service for his/her investment project, the agency provide the investors
requirement with staff processing time 0.5 days and waiting time of 2 days. The investor should
return and again for almost 4 days and have a satisfaction of 55.6% of his/her wants by having a
quality of 50.8% of the provision. In trade license and follow-up activities, each of they have a
0.09 and 0.125 staff processing time with waiting time of 3.71 and 0.125 per day respectively. In
the case of returning time, trade license provision requires investors to return for 4 times but
AAIA do not have a well known data with regard to the returning time for follow-up activities.
In undertaking each of the above stated provision, the agencies have the job quality of 78.4% for
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trade license and 49.3% for follow-up activities. From the provision of trade license, 77% of an
investor want is satisfied when they get the needed trade license from the agency. Follow-up
activities of AAIA satisfied 54.7% an investor requirement. Generally, AAIA in the contribution
and provision of the above 11 activities, it has 348 total step time and a mean quality of
64.2%.and also in the provision of the above contribution, an average of 64.4% of an investor
wants are satisfied when they receive one of the contribution from the agency.
3.2.5 Provision of investment license the creation of capital in Addis Ababa
In the year 2002, from meskerm up to yekatit, the agency provides the following amounts of
investment license with a given capital and shows the amount of employment created those
investments.
Table 3.2.5 the contribution of investment license by AAIA and the created capital
No Types of project Amount Capital Creation of

employment
1 Construction 389 1,778,757,280 51,180
2 Manufacturing 180 1,468,864,538 10,208
3 Real estate 34 907,487,898 12,072
4 Machinery rental 283 789,345,053 4,950
5 Agriculture 12 38,769,000 359
6 Education 14 297,428,600 1,022
7 Hotel 54 782,980,753 5,171
8 Health 7 36,176,000 825
9 Other 40 345,783,850 2,878
Source-AAIA library
As shown in the above table, eight main investment projects are presented and other in which the
license is provided for investors of those projects from AAIA and creates large amount of
employment. In the field of construction, sector 389 investors get the investment license in the
past six months with total capital of 1,778,757,280 and create employment opportunities of
51,180 workers. In the case of manufacture and real estate sector, 214 investors received their
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investment license with capital amount of totally 1,468,864,538 in manufacturing and

907,487,898 in real estate sector and creates employment amount of 10,208 by investors of
manufacturing and 12,072 workers from real estate investment. In the past six months, 283
investors are entered in to machinery rental with a capital of 789,345,053 birr. This investment
sector creates an employment level of 4,950 workers. Agriculture, education and hotel sectors
contains 12,14 and 54 new investors in the past six months by getting the needed investment
license from the agency with total capital of all the three sectors of 1,119,178,353 birr and
creates a job for 6552 workers in Addis Ababa. In the case of health sector, 54 new investors and
the old ones (those who expand their investment project) received the license and creates a job
opportunity for 825 workers to work on their investment project with total capital of 54 investors
of 36,176,000 birr. Finally, in other projects, 40 investment licenses are provided for those 40
investors with total capital of 345,783,850 which makes the creation of employment for those
2,878 workers who have no job or have jobs but they are underemployed. Generally, for almost
1013 investors are investing in the city of Addis Ababa by getting a legal investment license
from the agency with total capital of 6,445,592,792 in the past six months, and the creation of
job opportunities for those 88,665 workers who are jobless or underemployed people. From the
above analysis, we see the importance of Addis Ababa Investment Agency’s contribution for
increasing the country’s employment and economy level. The better the performance of the
agency, the economic growth.
As shown in Appendix table 1, Addis Ababa investment Agency plays an important role for the
city investment by providing different investment licenses for different investors. The agency
contributes to those investors in many sectors but the key ones are machinery, real estate,
manufacturing, construction, education, health, hotel and other different sectors are included in
other column. As we see in the above table, the number of investors in each sector is increasing
from the year 1984-2001. In the year 1984, there were almost 7 investors in the city of Addis
Ababa and in 1985, 1986 and 1987 this number was increased to 411, 321, and 200 in each year
respectively. The number of new entrants of investors in the years 1988, 1989, and 1990 was
209, 264, and 22, respectively. However, in the year 1991, the number of investors was
increasing at a decreasing rate, which is from 229 to 197. A massive increment was shown in the
years 1993, 1994 and 1995. According to the agency sources, this increment takes place due to
the increment of the agency’s performance in its contribution and provision for different
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investors. In the year 1996, there were 1280 new investors who took their investment licenses
from the agency and in the later year of 1997, an additional 1281 new investors entered to the
city in different investment projects. In recent years of 2001, 2000, 1999, and 1998 the existence
of new investors became increasing at an increasing rate. In 1998, 2823 new investors took their
license and got different contributions from the agency. In 1999, a greater amount of domestic
and foreign investors entered into the city investment. In this year, a number of investors started
their investment projects as we compared to other years of new entrants of investors. In the year
2000 and 2001, almost 2602 and 2774 new investors took their license from Addis Ababa
Investment Agency. According to the above table, almost 17845 investors entered into the city
investment in different investment projects from 1984-2001. Generally, more than these amounts
of investors are willing to enter into the city investment if the Addis Ababa Investment Agency
performance becomes strong in its contribution towards investors.
Among 17845 investors, 4868 of them are engaged in manufacturing sector, and 1013 are
engaged in real estate investment. A greater number of investors are engaged in rental of
machinery projects in amount of 6478 out of the total 17845 investors. Out of the total amount,
2222 and 694 investors are engaged in investing on education and construction sectors,
respectively. As shown in the above table, from the year 1984-2001, 438 investors received their
investment license investing on the health sector and 816 are investing in sector of hotel. Other
small sectors contain 1321 investors who got their licenses from 1984-2001. Finally, the above
table indicates the more performance of the agency, the more number of investors in the city.
3.2.6 Capital amount
As shown in appendix table 2, because of the provision of AAIA contribution, large amount of
capital is expected from those investors. The table shows the expected capital from the year
1984-2001. The amount of capital that is invested is increasing at an increasing rate as we see
from the 1984 up to 1987. When we compare the amount of capital in between 1984-1987 4.2 %
of mean increment has been seen. In the year 1989, almost double amount of capital is invested
as we compare it with the 1987-year’s capital. A magnificent increment has taken place from the
year 1994-2001. The amount of capital increased by 46% from 1994-1995, by 24% from 1995-
1996, and by 9.3% from 1996-1997. As shown in table 2 in appendix part, a double amount of
capital was invested in the year 1998, which means 100% of increment existed. This increment is
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the result of AAIA contribution and strong performance, which attract the number of investors
into the city investment. According to the agency, in the year 2001, almost 120,366,235.29 birr is
expected to be invested by investors in the city of Addis Ababa. The more performance in its
provision, the more capital investment by investors.
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CHAPTER FOUR
CONCLUSION AND RECOMMENDATIONS
4.1Conclusion
AAIA is one of the services rendering agency for investors in Addis Ababa and it play a key
role for raising the city investment. However, based on the findings discussed in the preceding
chapter, the performance of the agency cannot match with the current expectation of investors in
the city. Generally, by depending on the previous discussion the following conclusions are
drawn:-
As identified by the study, AAIA is one of the service-rendering agencies that is highly
contributing for the city of Addis Ababa. However, its performance and its contribution do not
match with the current needs and expectations of investors. It was indicated in the findings that
this performance gap of the agency with investors is due to inappropriate provision of profile
study on resource potential, the existence of high-level map of current process, and the existence
of high returning back of investors to get different contributions and provision of AAIA.
As indicated in the previous chapter, AAIA plays important role for raising the number of
investors in the city of Addis Ababa, the existence of shortage of incentives for investors’
investment projects and high level of bureaucracy makes the reduction in the entrants of new
investors in different investment projects.
It was found that the agency approves the investors’ capital and provides the needed investment
license with the provision of land for their investment projects. However, the existence of
slightly weak performance in its provision makes investors to return for many times.
As it shown on the study, most investors get appropriate information and guidance for their
investment project and information about the current market situation for their products through
profile preparation on resource potential.
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Generally, along with the current performance of Addis Ababa investment agency, it encourages
private sector to play dominant role in the economic development of the city through
contributing different provision that required from both domestic and foreign investors.
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4.2 Recommendations
Based on the findings discussed in the conclusion, the following recommendations are
forwarded:
 The first issue related with the problem of performance gap is that weak studies on
resource potential and profile preparation. This study makes investors to become more
profitable because it assesses the current market situation of each investment project’s
products, which are invested, by both domestic and foreign investors. Therefore, as
shown in the study, all investors are highly dependent on the aforementioned
contribution. So, it is better to have a strong and technically skilled manpower when the
profile is prepared which makes large number of investors to come to the city for
investing their limited resources.
 As stated in the study, AAIA have a significant role for raising the city investment.
However, to have a strong performance in its contribution of different provisions, it
should have to have the ability to stop illegal investment projects, appropriate supply of
office equipment such as photocopy, fastener, classer, creation of attractive market
situation, undertaking the problem of investors and provide them with solutions. Finally,
the agency should have a strong performance in its provision of investment and other
related licenses within a great quality and creation of satisfaction for both domestic and
foreign investors.
 Generally, as indicated in the previous section of the study, investors in the city of Addis
Ababa require the agency to have better reception activities, easy and precise investment
form in which the investors filled it when they are on the way to have the legal
investment license. They also require reliable information in relation to alternative
investment in the city in a centralized way, and finally the provision of each and every
contribution without any wastage of time. Once the aforementioned situations exist, in a
short time the city investment becomes high because of the entrants of new investors in
different investment projects and expanding of the investment projects by the old ones.
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Bibliography
 AAIA (2002) Profile preparation on resource potential study
 Cambell R. McConnell (1980) Macro economic theory 2nd edition
 Encarta premium @2007
 Nancy Dunnan (1998) how to invest vol.1,1st edition, England
 Stephen L. Slavin (1998) Politics and Economics vol.3, 3rd edition,
 www.ethiopia investment.com
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Samara University
Faculty of Business and Economics
Dear respondents
The purpose of this questionnaire is to collect data for senior essay project in a requirement for
partial fulfillment of BA degree in economics of Samara University. Your response for the
following question has importance for successful completion of this paper. The information you
provide is used only for the purpose of indicated and will be kept confidentially.
NOTE -there no need to write your name
-Either respond by putting a tick (√) or mark on the space provide or write, if necessary,
on the space provide.
1. Sex
Male female
2. Age
18-25 26-33 34-41 42-49 above 50
3. What type of investor you are?
Domestic foreign
4. In what investment project you invest.
Machinery education hotel real estate
5. If you will your capital_____________________________________________________
6. What are the main contributions you get from Addis Ababa investment agency?
Provision of investment license Fulfillment of infrastructure
Provision of land other contribution
7. What is your opinion about the current performance of Addis Ababa investment agency?
Strong Weak Medium
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8. If your answer is weak, medium or strong for the above question, what is your reason?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
9. Do you think that your current need and expectation match with the current performance of
Addis Ababa investment agency?
Yes no
10. If your answer is no for the above question, please verify your reason.
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
11. Do you have a plan to expand your investment project?
Yes no
12. If your answer is yes for the above question, what you expect from Addis Ababa investment
agency?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
13. Do you think that the current performance of Addis Ababa investment agency can strongly
facilitates the increasing number of investors?
Yes no
14. If your answer is no for the above question, what is your recommendation?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
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15. Finally, what you recommend in regarding with the performance and contribution of Addis
Ababa investment agency to Addis Ababa investment high?
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
Thank you in advance
Get yours now!

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The performance and contribution of AAIA

AAIA – Addis Ababa Investment agency

AIA - Amhara investment agency

ETA- Ethiopia investment agency

MEC- marginal efficiency of capital

MNCs- multinational corporations

OIA – oromia investment agency

WB- World bank

Table 3.1 responses in relation to the contribution of AAIA…………………………………….16

Table 3.2 responses that related to the current performance of AAIA…………………………..17

Table 3.3 responses related to the needs and expectation of investors…………………………..18

Table3.2.2 performance gap of AAIA in contribution of the main important provision………..23

Table 3.2.4 the performance base line of AAIA………………………………………………..26

Pie chart 1 demographic characteristic of investors……………………………………………16

Pie chart 2 types of investors…………………………………………………………………….16

1.1 Background of the study………………………………………………..........................1

1.2 Statement of the problem……………………………………………………………….1

1.3 Objective of the study…………………………………………………………………..2

1.3.1 General objective………………………………………………………………...2

1.3.2 Specific objective………………………………………………………………...2

1.4Hypothesis of the study………………………………………………………………….3

1.5 Methodology of the study………………………………………………………………3

1.5.1 Data collection……………………………………………………………………3

1.6 Data analysis technique………………………………………………………………….4

1.8 scopes and limitation of the study................................................................….................4

1.8.1 Scope of the study………………………………………………………………...4

1.8.2 Limitation of the study……………………………………………………………4

1.9 significance of the study…………………………………………………………………5

2.1.1 Defination of investment…………………………………………………………………6

2.1.3 Factors affecting investment……………………………………………………………. .8

2.1.4 Benefit of investment …………………………………………………………………...11

2.1.5 The role of governments ………………………………………………………………..11

2.1.5 Investing for all stages of life……………………………………………………………12

3.1.1 Basic information of respondents ………………………………………………...15

3.2 Secondary data presentation and analysis…………………………………………….22

Conclusion and Recommendations

4.1.2 Recommendation of the stud……………………………………………………… 34

1.2 Statement of the problem

1.3 Objectives of the Study

1.3.2 Specific Objectives

The study has the following specific objectives:

1.4 Hypothesis of the study

1.5 Methodology the study

1.5.1 Data collection

1.6 Data analysis techniques

1.8 Scope and Limitations of the study

1.8.1 Scope of the study

1.8.2 Limitations of the study

1.9 Significances of the Study

2.1 Definitions of Investment

Different authors suggest about investment some of are-

According to Andrew Carhegie, both us industrialist suggested that investing is

B. Foreign direct investment

Domestic investment is investment in one country by citizens that country. Domestic

2.3 Factor determining the level of investment

a) Factors of production: - inputs used in production process there are conventionally

MEC= F/c Where – F is constant expected flow

– C is cost (purchase price of capital)

2.4 Benefits of Investment in Canada and Holland.

2.5 .The Role of Government for Promoting Investment

Government Policy, which is its economic policy, has a considerable impact on

2.6. Investing for all stage of life