Study On Business Environment Problems Of Ethiopia

The general objective of this study was to identify the significant challenges of the business environment of Ethiopia based on Addis Ababa city administration and to find out ways to improve current problems of business enabling environmet in the city and country.The research is based on a methodology developed in the light of pragmatist research philosophy;this research also followed the paradigm of constructive and applies a convergent parallel mixed approach,survey questionnaire,and secondary data strategy.There are significant number of studies about business environment published by World Bank groups,the prominent one among this publications is World Bank /IFC yearly report that determines favourability or severity of business enabling anenvironment of each country out of 189 nations.However,most of these studies on business conditions are subjected to three constraints.Such as,Limited scope i.e.focused only on the impact of business environment on private sector development.Applicability of data provided by few informants just one or two firms,focusing or interested by only tax indicators,and the number and diversity of informants for all indicators are not representative.1 This research attempted to fill this gap by diversifying government officials,employees,businesses,and consumers as an informant and by incorporating primary indicators and a significant number of sub-indicators.Accordingly data in this research has been collected from a group of 109 sample population out of 120 purposively selected sampling schemes,including,50% of private sectors’ or businesses,25% of consumers and 25% government employees and officials which,generally reflected the major economic actors whose interests are affected by environment of activity factors in three sub city of Addis Ababa and three administration units within those sub-cities.The research aim has been achieved successfully through its three specific objectives including,identifying challenges of business enabling environment with respect to the role of Government,Business and consumer,pinpointing the major sources of challenges and problems that hinder business enabling environment,and providing solutions that help decision makers to take corrective measures,The main findings of the research relating to challenges of business enabling environment in Addis Ababa as well as Ethiopia are: unregulated computation,tax administration,electricity supply,renewing business license,corruption,access to land and construction permit,access to finance,cost and availability of shops stores and offices,telecommunication service,frequent change in business laws and regulations.The main sources of mentioned problems are legal,bureaucratic and technological incapability of government institutions.Unnecessary documentary requirements,lack of clarity of procedures,poor institutional coordination,uneven enforcement of rules,uneven registration for VAT,interruption and cuts in electric supply,unclear rules that leads to discretionary practices of officials,oligopolistic market structure,limited accessibility to the dispute resolution mechanism,severity of penalties and lack of guidance on compliance and severity of inefficacy in service provision and client handling.Finally,this study concludes that current doing business environment in Addis Ababa is not favariable for business,consumers are not satisfied and government policy goals of reform not achived.Accordingly,most of the problems detailed above have been caused by government’s legal,administrative and institutional inefficiency.So,the government should have to take Lions share through legal,technological and institutional reform to improve all aspects of business enabling environment.Similarly,private sectors or businesses have had significant contribution through unethical business practice and consumers through ignorance of defending their rights.for that reason,my paper tried to reveal the prospective roles be played by both consumers and private sectors through public private partinership mechanisms and consumer associations respectively.The significant limitations of this research was a lack of incorporating all ease of doing business indicators in the survey questionnaires or the primary research questions,like border trading,employing workers,registering property right and protecting investors.The reason for this limitation is related to nature of business enabling environment components;that affect a vast pool of end-recipients,institutions,and stockholders.