Ethiopian Journal of Business and Economics (The)

Firm-Level Determinants of Capital Structure Decisions of Construction Companies in Ethiopia

Yitbarek Takele Bayiley, Fikru Teka Siweya — Thu, 30 Nov 2023 00:00:00 +0000

The study aimed to identify firm-level determinants of capital structure decisions of Grade I construction companies in Ethiopia. We analyzed audited financial statements of 5 of the 24 Grade I construction companies that met the selection criteria and showed their willingness to participate in the study. The study period covered from 2007 to 2012. We employed a fixed effect panel regression model to analyze study results. Fixed effect is a preferred model when one cannot consider the observations to be random draws of a large population. Of the nine firm-level antecedent variables, only non-debt tax shield, firm age, and earnings volatility explained the financing decisions of Grade I construction companies. The three variables explained 54% of the variance in the outcome variable during the study period. The results also signpost these variables can predict 41% of the future variation in capital structure decisions. Further, though both trade- off and pecking order theories explain the capital structure decision of the firms under study, the trade-off theory appears to be more competent. Moreover, we found SUR Construction PLC to be less leveraged than the other four Grade I construction companies. We, thus, recommend SUR Construction PLC make use of its underutilized debt capacity to finance profitable projects and achieve better growth. Finally, given the limited participation by Grade I construction companies, the conclusions of the study need to be carefully considered.

Women’s Empowerment in Decision Making and its Determinants on Contraceptives in Ethiopia: Insights from EDHS

Tigle Nadew, Bamlaku Alamirew — Thu, 30 Nov 2023 00:00:00 +0000

Enhancing women's empowerment in decision-making is an important factor in securing a sustained life. Sustainable Development Goal (SDG-5) hereby addresses this issue with equal access to all and their representation in decision-making. Women's empowerment, the decision to use, and the decision not to use contraceptives are interrelated. But, there is limited research on the influence of women’s empowerment on contraceptive use. Therefore, this study aimed to explore the role of women’s decision-making empowerment in contraceptive use among reproductive-age women in Ethiopia, using data from the 2016 Ethiopian Demographic and Health Survey. The analysis included descriptive analysis, correlation analysis, binary logistic regression, and multinomial logistic regression. Out of the total women surveyed, only 34.12% reported using contraception, indicating that 65.88% are not using it. The logit model indicates that husband age & education, wealth, regional variation, religions, access to advice, access to information, and distance to health facilities are statistically significant in influencing the usage of contraceptives. Only 24% and 30% of women have decided to use, and not-to-use contraceptives respectively, without the influences of their husbands, joint and community influences. The multinomial logit model on decision to use also confirms that husband age, regional variation, and information access are statistically significant to explain women decision to use contraceptive. However, husband desire of children, place of residence (rural), women education and age are statistically significant in explaining women decision not to use contraceptives. The findings suggest that raising education level, household wealth, distance to health facilities, access to information and advice should be prioritized.

Logistics and Customs Digital Transformation: Digital Maturity Model as A Comprehensive Assessment Framework

Matiwos Ensermu Jaleta — Sun, 31 Dec 2023 00:00:00 +0000

Globally, customs and logistics operations are important aspects of international trade facilitation. Even though the responsibilities of logistics service providers and customs authorities vary from country to country, customs authorities are dominant institutions and play a principal role in facilitating international trade by enforcing regulations. This study assesses the existing practices and gaps in logistics and customs digital technologies using a digital maturity model targeting digital maturity level and digital readiness from external and internal users’ perspectives. In addition, reviewed the technology acceptance model determinants to learn how new technologies are designed to be useful and easy to use. The study applied quantitative approaches with the six most cited subjective determinants of Digital Maturity Models to evaluate the status quo of as-is digitalization practices. A valid survey response of 238 customs employees and 384 logistics service providers was analyzed using descriptive statistics, correlation, and relative importance index analysis. The study findings with all digital maturity model dimensions reveal that external users view the customs' digital technology as not very advanced. Whereas the customs employee response slightly surpasses the expected nominal average, positioning it at an average maturity level. Digital technology, digital strategy, and digital process are ranked in the first three positions to present the relative importance among all dimensions. The study recommends a unified framework by combining the internal and external digital technology users' perceptions of digital maturity and the technology acceptance model supplemented by relative importance index analysis to evaluate the factors' importance. It is proposed to be used as a valid and reliable assessment tool for logistics and customs digital technologies.

Economic and Social Costs of 2019-2020 Violent Political Unrest in Ethiopia

Atlaw Alemu , Hailu Elias , Tadesse Kuma — Thu, 29 Feb 2024 00:00:00 +0000

In the last few decades, despite the prevalence of socio-political unrest, Ethiopia generally remained a nation of peace and security for Civilians. However, in recent years, particularly between 2019 and 2020, Ethiopia experienced repeated violent riots. In Oromia alone, two rounds of violent riots occurred in 8 months. Except for duration and scale, the unrest was spread to all regional states of the country. In light of this background, a study was conducted to identify the drivers, motives, precipitating factors, and direct and indirect costs of the violent riots. Quantitative data was collected on direct costs in 65 woreda towns that encountered substantive damage. This was done using 519 randomly selected victim and non-victim respondents from 43 sample woreda-towns. As the results indicate, the damages were largely in the Oromia region, Southern Nations Nationalities and Peoples Region (SNNPR), and in Amhara Region. Damages of property through arson were the largest (53.76%), followed by looting (23.47%) and breaking / physical damage (22.77%). The victims were predominantly ethnic minorities in the respective localities. The largest victims were ethnic Amharas (35.4%), ethnic Oromos (21.4%), ethnic Gurages (14.1%), and ethnic Wolaytas (6.6%) constituting 77.5% of the sample victims, largely belonging to the Orthodox Christian (65.32%). The value of direct costs was in the range of 8.8 billion Birr (in 2020 prices). Damages per sector indicate that services constituted 85.5%, while agricultural damages were 8.9%, and industrial 6.6%. Among indirect costs, 88% was the value of foregone material inputs, 7% was foregone wages and salaries, and 5% was foregone government tax income. The magnitude of indirect costs expands with the time taken to rehabilitate the households and businesses. The longer it takes to rehabilitate the victims, the greater will be the magnitude of the indirect costs. Ethnic hatred among young people based on remote historical narratives, payment incentives made to disturb, and envy of the economic success of others were the three most prominent drivers in the views of respondents. The social media, riot organizers, and financiers with weak governance occasioned the violent riots. Restricting ethnic politics, strengthening good governance, strengthening the rule of law, and rehabilitating the victims, as fast as possible, are the suggested remedial measures.

The Mediating Role of the Capital Growth of Wood-based Micro and Small Enterprises on Livelihoods in North Western Amhara, Ethiopia

Jigar Yirsaw, Bamlaku Alamirew, Asmamaw Alemu — Thu, 29 Feb 2024 00:00:00 +0000

A study was conducted to evaluate the impact of wood-based micro and small enterprises on livelihood improvements among entrepreneurs in the northwestern Amhara region. Data were collected from 225 wood-based micro and small enterprises through questionnaires, focus group discussions, and key informant interviews. Analysis methods included frequency tables, chi-square tests, and structural equation modeling (SEM). The findings indicated that 78.7% of enterprises were experiencing growth, while 21.3% were declining. Structural equation model analysis identified significant factors influencing business growth in the first stage, including the type of working place, access to credit, and market linkage. In the second stage, a positive and significant relationship was observed between business growth and various livelihood outcomes such as food security, health, education, and decision-making abilities. These results underscore the importance of continued support from the government and other relevant stakeholders to maximize the positive impact of wood-based enterprises on people’s lives. Moreover, a comprehensive policy framework that acknowledges and leverages the diverse contributions of wood-based micro and small enterprises can facilitate sustainable and holistic improvements in the livelihoods of entrepreneurs and their communities.