Empirical Analysis on the Factors Influencing Private Investment in Tanzania

Mwesiga, Benjamini (2015) Empirical Analysis on the Factors Influencing Private Investment in Tanzania. Masters thesis, The Open University Of Tanzania.

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Abstract

The study set out to make empirical analysis on factors influencing private investment decisions in Tanzania. In doing that, the study collected primary data from TIC Registered Private Investment in Dar es Salaam in year 2014 through administering a questionnaire to respondents. The study used both qualitative and quantitative approaches and covered both foreign and domestic private investment. The theoretical model of FDI by Dunning (1988) was modified to include domestic investors’ and used in this studywhereby logit model was applied in estimations. The application of modified FDI model based on the fact that prior literature review and researcher own study on the variables identified by Dunning’s model affects both domestic and foreign investors. Thus, modification only intended to expand the horizon of the variables to be covered. The study reveals that the variables: political factors, location factors and market factors were significant with positive correlation with private investment in Tanzania. Hence, have predictive powers over private investment in Tanzania. Their probabilities are 0.088, 0.062 and 0.012 and hence significance level of 10, 10 and 5 percent respectively. This signifies that sustaining political stability and effective utilization of location factors together with market factors have higher chances of increasing private investment levels in Tanzania. The study also revealed existence of positive correlation between good investment facilitation services and willingness to reinvest. This is portrayed by the probability of 0.029, which is significant at 5 per cent level. Therefore, study recommends to the government to sustain political stability, location factors, market factors and investment facilitation servicesin order to remain competitive and stand the world competition in attracting private investment.

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