Factors that Affect the Development of Micro and Small Enterprises: The Case of Manufacturing Enterprises in Bahir Dar City
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Date
2010-05
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A.A.U
Abstract
Micro and small enterprises are generally regarded as the driving force of economic growth, job
creation, and poverty reduction in developing countries. They are the means through which accelerated
economic growth and rapid industrialization have been achieved in developed countries.
The purpose of this study was to assess the factors that affect the development of micro and small
enterprises in the city of Bahir Dar; the case is manufacturing enterprise sub-sector. To address specific
objectives both qualitative and quantitative approaches are employed in the process of analyzing and
interpreting the collected data. Descriptive survey method and simple random sampling technique is
used. Quantitative data are generated using questionnaire containing close-ended and few open-ended
questions from 138 sample respondents, who are selected randomly from the three zones of the city.
interview from the MSE development agency experts, branch Bank manager and field observation are
also used to strengthen the data collected using questionnaire.
Although there have been attempts by the government and other stakeholders to improve the working
environment of micro and small enterprises in Bahir Dar city, the sector has been suffering from a
number of factors that affect its development. The results of the study indicates that lack of initial/working
capital, lack of working place, unfavorable policy frameworks mainly of high tax and arbitrary tax
administrative systems, lack of market, lack of business skill and information are the major problems that
affect the development of the sub-sector. 1n order to alleviate such factors, a micro and small enterprise
development agency has been designed to support the existing business community and to facilitate the
creation of new business environment focusing on the unemployed individuals. However, the finding from. the survey data shows that there is divergence between directives issued and their actual implementation
in the ground.
Above all let alone the implementation gaps and the infancy stage of the supportive agencies, the
development of the Regional micro and small enterprises policy and strategy with supportive
organizational structures starting from the Regional to the local level are structured.
Finally, the result of the survey calls for concrete and coordinated regulatory and institutional support in
business places, financial and extension services, promotion of marketing facilities, provision of business
training and other supportive facilities like road, water, electricity services from Micro and Small
Enterprises Development Agency of the city of Bahir Dar and other concerned bodies
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Keywords
Manufacturing Enterprises in Bahir Dar City, The Development of Micro and Small Enterprises: