Problems of Micro and Small Enterprises in Addis Ababa: The Case of Kirkos, Kolfe, and Yeka Sub Cities
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Date
2012-05
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Addis Ababa University
Abstract
This study aimed at identifying the major problems that are associated with the
performance of MSEs in Addis Ababa. In the study, both qualitative and quantitative
research methods were used. Primary data was obtained using questionnaires and
unstructured interviews. Secondary data was also collected from books, journals, past
research works, official documents and the internet. Stratified sampling was used to
select proportional number of samples from the study area. The analytical strategy used
was based on the assumptions developed by previous studies. On the basis of the findings,
the major problems facing MSEs in Addis Ababa are lack business plan, lack of formal
and informal association, lack of favorable business environment, high cost and shortage
of raw materials, lack of proper institutional support, lack of proper marketing practice,
and stiff competition among MSEs in the same business line and medium and large
companies. The study recommended that Enterprises should train by professionals how to
develop business plan; the culture of cooperation, and formal and informal association
should be improved by taking the work of successful enterprises as examples;
enterprises must develop sufficient marketing skills and diversified their product;
enterprises should form a supply chain management and support each other to minimize
their raw material related problems; the government should adjust the price of output of
MSEs parallel with the increase in cost of raw materials purchased by the MSEs; the
favorability of the business environment should be enhanced; the quality and
accessibility service of supporting institutions should be enhanced; and conducting
continuous research to identify the potential problems of the enterprises.
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Keywords
Micro and Small Enterprises