Abstract
This paper examines the effect of access to external sources of finance on employment growth in small and micro-manufacturing enterprises in Ethiopia. Based on a sample of 1321 respondents covering the 11 zonal capital towns of Amhara region, the key findings include: (1) A large fraction (60.5%) of small and micro-manufacturing enterprises are financially constrained. (2) Access to external finance has positive and significant effect on employment growth—specifically in the metal-wood work subsector, in family-/group-operated enterprises, and in those enterprises that started operation with a mix of own capital and borrowed money. (3) Even though a significant fraction of the enterprises in the sample reported having exposure to some type of industrial extension service, this exposure has no significant effect on employment growth. (4) Women participation in the management/ownership of small and micro-manufacturing enterprises is relatively low (about 29%), and male-operated enterprises are significantly more likely to report expansion in employment than their female-operated counterparts.
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