Association of owner related and external factors with micro and small manufacturing enterprises growth in Ethiopia

Tesfaye Ginbare Gutu,Abebe Shentema Yali

doi:10.22437/ppd.v8i2.9285

Tesfaye Ginbare Gutu, Abebe Shentema Yali

Open Access

https://doi.org/10.22437/ppd.v8i2.9285

Copy DOI

Abstract

This study was conducted with the objective of analyzing the association of owner related and external factors with growth of MSEs operating in the manufacturing sector. Primary data were collected from 218 randomly selected owner/operator of manufacturing MSEs and coordinators of MSEs by using structured questionnaire and interview, respectively. Chi-square test was employed to analyze the owner related/internal factors, and external factors with growth of manufacturing MSEs. The statistical test revealed that gender, initial investment size, modern machinery, training, infrastructure and location have statistically significant association with growth of manufacturing MSEs; whereas age, education level, work premises and market linkage/ access are found to have statistically insignificant association with growth of MSEs operating in the manufacturing sector, though they make difference on the MSEs growth level. Therefore, to improve the growth of manufacturing MSEs, MSEs development office in collaboration with the municipality, among others, should consider the statistically significant factors and focus on the MSEs’ challenges which are stated by the owners of the business (own working premise and market access/linkage) and take corrective actions. Finally, further research on similar area is suggested by considering factors that need solution such as previous experience of operator in the sector, firm age and access to credit; besides similar study on remaining MSEs sector and comparative study may be conducted even within the manufacturing sector as economic sub-sector (i.e., textile and garment, metal working workshop, furniture and wood working, manufacturing bricks etc.) in order to have a holistic understanding of about the determinants of manufacturing MSEs growth

Highlights

Micro and small enterprises play vital roles in poverty reduction, income and employment generation as well as economic development in developing countries like Ethiopia
The average growth rate of manufacturing micro and small enterprises shows 21.30%, 20.50%, 19.40%, and 17.40% for enterprises found in Adwa, Abiy Addi, WukroMaray, and Aksum towns, respectively
The average growth rate is higher (21.10%) for those manufacturing Micro and Small Enterprises (MSEs) which have machinery and (19.80%) for those manufacturing MSEs which have not it.the Chi-square analysis (Chi2=2.90, P=0.08) shows that there is a significant association between manufacturing MSEs growth and availability of machinery at 10 percent significance level

Summary

INTRODUCTION

Micro and small enterprises play vital roles in poverty reduction, income and employment generation as well as economic development in developing countries like Ethiopia. Ethiopia has prioritized on MSE development for economic growth, employment generation and building an industrial economy To this end, in 1997 the government has designed a National MSEs development and promotion strategy which was reviewed in 2011 in view of the country’s dynamic economic progress, program feedback and experience of other countries (MoTI, 2011), which facilitates and paves the ground for the growth and development of the sector with the primary objective of creating a favorable environment for MSEs so that MSEs could facilitate economic growth, create long-term jobs, strengthen cooperation between MSEs, provide the basis for medium and large scale enterprises and promote export. This study was conducted with the objective to analyzing the association of owner related and external factors with growth of micro and small manufacturing enterprises taking the case of selected towns of central administrative zone of Tigray regional state

METHODS

RESULT

Findings

CONCLUSIONS AND RECOMMENDATIONS