Contributions of Micro, Small and Medium Enterprises in Strengthening Rural-Urban Linkages in Wolaita Zone, South Ethiopia

Abstract

Development policies and strategies of Ethiopia envisage micro small and medium enterprises as a strategic tool for strengthening rural-urban linkages and for bringing overall economic development and poverty eradication. This is due to the role of the enterprises in bridging urban and rural areas together and showing the interdependence of the rural and urban economies in developing countries. However, the Ethiopian micro, small and medium enterprises do not seem to be on the right track in their relationship to the agricultural sector as required by the government policy, strategies and the Growth and Transformation Plan (GTP). The objective of this paper is to evaluate the capacity of micro, small and medium enterprises to forge rural-urban relationships that will assist towards achieving the goals of Growth and Transformation Plan. The study is based on a concurrent triangulation mixed-method approach using both quantitative and qualitative data with a questionnaire survey from 525 owners/managers of micro, small and medium enterprises as the main data collection tool. The study also collected qualitative data through informant interviews from 22 MSME owners/managers and 10 urban planners. The paper finds from the study that as high as 53.1 percent of micro, small and medium enterprises in the three administrative towns of Wolaita in south Ethiopia are wholly or partially dependent on industrial products for their inputs and that only 1.5 percent appear involved in the production and supply of agricultural inputs. Moreover, as much as 57.6 percent of the study's respondents chose the main reason hindering linkages as the unavailability of preferred and quality raw materials in the local market. In order to promote the linkage between the two sectors and areas, both the agricultural and MSME sectors' productivity should be enhanced through improved agricultural productivity and enhancing the performance of the small business sector to provide agricultural inputs.