The Challenges of Micro and Small Enterprises and Business Development Service
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Date
2015-10
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Addis Ababa University
Abstract
The objective of this research was to investigate empirically the challenges that the Micro and
Small Enterprises in Bahir Dar city are facing and the extent of business development services
provided by the Technical, Vocational and Enterprise Development Department of the city
Administration’sTechnical, Vocational, and Enterprise Development Department to help them
continue in operation. This research covered both the demand and the supply side of business
development service. The sample involved in the study were 334 micro and small enterprise
operators and an expert from each of the nine sub cities of Bahir Dar. The number of micro and
small business operators from every sub city, and the five selected business sectors were
proportionately selected using a multi stage stratified clustering method. The results of the study
revealed that,the micro and small enterprisesoperating in the city have been facing various
constraints that needs additional effort from different actors. The effort that has been deployed
by the TVEDD as a BDS provider appeared to be very low. Micro and small enterprises found it
very difficult to access alternative financing, market for their products, adequate trainings and
advisory services, infrastructure, quality inputs and skilled labor to improve productivity and
maintain the required standards of quality. This in turn affected their products’ marketability
and negatively contributed towards their negotiation capacity to grow and continue in operation.
In general, the BDSs thatTVEDD provided to date are found very helpful by the enterprises
operating in manufacturing, construction and urban agriculture sectors. On the other hand
business from retail and service sector found the services to be generic and not in line with their
identified gaps. Even though the information on BDS is available to the MSEs at large,TVEDD
provided services were not equally accessible by the MSEs.In relation to the level of challenge
that the MSE operators are facing, the level of non-financial services provided to the MSEs is
very limited. The awareness level of MSEs to make use of BDS is also at its infant stage.The
results found suggest that, BDS is important to improve growth and sustainability of MSE but the
quality and quantity of the services provided to the MSE need to be enhanced, well-coordinated
and networked. It is also equally important to document and institute a referral system to
enhance both the quality and the quantity of the services that need to be provided to MSEs.
Finally the government should also consider encouraging and building the capacity of the nongovernmental
service providers and facilitators to satisfy the needs of the MSEs to grow and
sustain.
Key words, Business Development Services, Micro and Small Enterprises, Bahir Dar
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Keywords
Business Development Services, Micro and Small Enterprises, Bahir Dar