THE PRACTICAL UTILIZATION OF INVESTMENT PROMOTION INCENTIVES: THE CASE OF WALIA STEEL INDUSTRY, SOF UMER INDUSTRY AND ASTCO FOOD COMPLEX

Abstract

This study examines the business environment and the practicality on the utilization of investment incentive. The purpose of this research is to examine the effectiveness of investment incentive. The study adopts a mixed methods research where primary data is collected using semi structured questionnaire from the management of three companies namely Walia steel industry, Sof UmerTerrazzo and Marble manufacturing , Astco Food Complex Factory S.C, and in addition to this secondary data was collected from various sources such, Ethiopian Investment Agency and Economic Development (MOFED). The sampling technique used was convenient (non-probability sampling).The study found that, Tax incentives cannot be an effective response to the economic or political problems that may exist in a country. Hence, the investment climate, which has a hampering effect in investment of the country, need to be checked and improved. The survey indicates that thetax system lacks simplicity and transparency in its administration. That overshadows the good range of incentives available to investors. The researcher also recommended that the existing tax incentives are worthy of attracting investment in the country. But these incentives alone cannot be as attractive as expected because of the very great influence of the business environment. Hence, improving administration of incentives and the tax system should be one area of focus.