Causes for Failure of Project Financed By Development Bank of Ethiopia: The Ease Of Addis Ababa District

Abstract

The purpose of this study is identify the causes for project failure financed by Development Bank of Ethiopia in general and specifically factors in connection with project specific, credit management related factors, and macro environment related factors and socio political environment factors. However, failure of projects financed by the Process is becoming a big problem. According to the information obtained from the bank annual performance report of 2017, only 29% of projects financed by bank are categorized as successful while the remaining 71% are in failure category. Hence the objective of this research project was to identify the major causes of failure of projects that were financed by DBE Addis Ababa district. Survey questionnaire, Document analysis and open ended interview were employed to identify the major causes. As a result, project specific factors, credit related management factors, socio political environment and economic factors of financed projects are considered for the study. The projects were from the three economic sectors, agriculture, industry and service. After collecting the required data, a descriptive and explanatory analysis has been conducted. The results of the analysis had shown that cause of project failure financed by the bank are management problem, implementation problem market problem, technical failure ,quality of manpower problem, missing objectives, follow up level /technical support given by the bank ,overestimation of project return and manpower quality of projects, problems of corruption and related cause, continuous rise of product price ,raw materials price and wages, intervention of political leaders on project ,government officials perception towards the project and change in economic policies. Moreover, the study that the concerned stakeholders, mainly the bank helps the project to be implemented as per the stated schedule and the bank has to conduct follow up activity through give intensive training to the operators and also the bank should involve in finding market destination of the product or giving advice to the promoter by assigning marketing experts.