Factors Inhibiting the Growth of Micro and Small Enterprises in Ethiopia- The Case of Addis Ababa
No Thumbnail Available
Date
2016-06
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Addis Ababa University
Abstract
This study is an assessment of the factors that hinder the growth of micro and small scale
enterprises in Addis Ababa. It is a survey research. The target population of the study were
managers/owners and employees of the selected companies. A Sample size of 367 was
taken out of 4380 MSEs. The relevant data was collected through survey questionnaire and
random sampling technique was employed when distributing the survey questionnaires.
Out of the 367 questionnaires distributed to the randomly selected employees and
managers, 351 were properly completed and returned. This represents a response rate of
approximately 95.6 % from the distributed questionnaires. The data was analyzed by using
descriptive analysis technique through using tables, graphs and figures. Major findings
revealed that internal factors such as poor management, failure to apply financial
statement analysis, unplanned withdrawal of cash have low impact of the growth of the
enterprises. However, external factors such as low market competitiveness due to lack of
Adequate skill and appropriate equipment’s; which will not allow them to produce quality
products and compete in the market, low financial provision (access to finance), limiting
them from making additional investment; these are the major factors inhibiting the growth
and performance of MSEs in Addis Ababa engaged in manufacturing sector. In line with
the findings obtained from this study recommendations to respective governmental bodies
and MSE’s owners/managers have been forwarded. These among others include: MSEs
owners/managers have to use effectively the borrowed amount for the intended purposes
and able to save money on for future investment, practice ways of gathering customer
information for the purpose of satisfying their needs through conducting market research
and creating network with other MSEs, the government should arrange and give necessary
materials through lease in which MSEs can cover the payment during the operations to
reduce doubt of getting back payments for the borrowed finance, and financial institutions,
the Federal and Regional Governments, donors, NGOs can assist in creating lines of credit
and special windows for assisting growth-oriented businesses.
Key words: Micro and Small scale Enterprises, Internal factors, External factors
Description
Keywords
Micro and Small scale Enterprises, Internal factors, External factors