Underlying Causes of Micro and Small Business Failures in Addis Ketema Sub City: A Case Study
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Date
2008-01
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Addis Ababa University
Abstract
The privatization drive and the Civil and Public Service reforms that began in the early
1990s in Addis Ababa laid a foundation for an increased number of Micro and small
business enterprises. By 2005, micro and small business enterprises were employing
approximately 251,081 persons in Addis Ababa city administration.
The entrepreneurs that set up these enterprises lacked business management skills and
capital, and as such, many of them faced a number of problems. A survey was carried out
to establish the causes of micro and small business failures in Addis ketema sub city as
case study.
The objective of the study is to identify the underlying causes of micro and small
business failures in Addis Ketema sub city, by investigating the sub city’s MSEs. The
main research instrument was in-depth interview with the owners of MSEs and
authorities involved in the implementation, respectively. The result of the in-depth
interview was triangulated with secondary data sources.
It is concluded that the causes of small businesses failure are multidimensional and
diverse. They include both internal and external factors. In practice, many of these are
interrelated. The study established causes of micro and small businesses failure, among
which are: lack of capital, lack of business plans, high taxes, luck of land and premises,
and, poor market, high rent charges and wrong pricing in the study area. The study was
concluded by making a number of practical suggestions against business failure
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Business failures in addis Ketema sub City: a case study