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Private investment enhances the development of country through reduction of poverty, increasing the accumulation of fixed capital, creation of employment opportunity, increasing the revenue of government. This requires creating conducive business environment.The paper examined the challenges and prospects of domestic private investment in Hawassa city.The study investigated challenges such as lack of start-up capital, limited access to land, weak marketing infrastructure, long bureaucratic procedures, limited access to credit, and corruption that were determining factors for domestic private investment in the city. The study has also identified untapped resource potentials in the city, such as, the surrounding areas of Lake Hawassa that could be used as tourist attraction centers, availability of cheap labor force that enable to achieve economies of scale in the production process, raw materials for manufacturing processes, and road network with cities in the region. The prospects of domestic private investment in the city also strongly depend on the strategies to deal with the given determinants.

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Tamirat Wangore hold his Masters Degree in Urban Management specialization in Local Economic and Social Development. Currently, he is working for the Ethiopian Civil Service College as a lecturer.

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