The Survival and Growth of Micro Enterprises in Ethiopia: Case of two Peasant Associations in Baso Worcna Woreda, North Shoa

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Addis Ababa University


This study aims at examining the general characteristics of rural micro enterprises, and factors determining their survival and growth in an area with chronically low agricultural output: Baso Worena Woreda, North Shoa Zone. Two peasant associations one accessible to major markets - Talak Amba- and the other with relatively little access located in the gorge - Atse Wash- are the focus of this study. Based on a survey conducted in the two Peasant Associations, the paper revealed that micro enterprises are sources of both employment and income for significant proportion of the households in the area. People mainly use the sector as an alternative source of income and employmelll to the agricultural sector. A wide range of activities are undertaken in the sector by different people, which illuminates the intense potentials it has. Owing to data constraint, the survival analysis focused only 'on micro entelprises operated by credit serviced households, who are mainly female. The main reason for the closure of female headed elltelprises based all descriptive analysis, is non - economic, while the economic reasons are confined to market and finanCial constraints. The paper compares the major differences and similarities of surviving and closed micro enterprises. On the other hand based on a general sample, using linear regression method the growth analysis also identified factors influencing micro entelprise growth in the area. Accordingly characteristics of the operator, the entelprise as well as the household have explained the growth of micro entelprises. The paper discusses this result in relation to the theol)1 established. Constraints faced by the operators were also investigated, accordingly the major problem of ME activities in the area are found to be finanCial, demand and input problems that affect them in the different stages of their life. Differences have also been found among different activities. Although the presence of few financial services indicated, [heir prospect seems limited. Besides, finanCial support alone doesn't ensure development of the sector, other technical support are found to be crucial. The government has given due emphasis to the sector in general. The micro and small entelprise development and promotion strategy seems promising to exploit the potentials of the sector. However, th e study area could not benefit much so far pam what is stated in the strategy. In general, the findings, indicate that the ME sector is an alternative source of income as well as employment in the area, that it shares some of the burden 011 the agricultural sector. However, much attention is required pam development practitioners to exploit the potentials MEs have.



Growth of Micro Enterprises