Economic Integration of Small and Medium Enterprise in Manufacturing Sector: The Case of Ethiopia, Tigray Regional State Mekelle City

Abstract

The purpose of this study is to assess the economic integration of small and medium enterprises (SMEs) in Tigray, Ethiopia. Focusing mainly on strategies, enabling environment, competitiveness, and challenges of the economic integration of SMEs. This study was employed in a cross-sectional mixed approach method. The data were collected using 148 samples based on proportional stratified sampling after a pilot test was managed and analyzed using SPSS. It presented using percentage, mean, standard deviation, and ordinary least squire regression model. Interviews with 15 leaders and stakeholders, 8 focus group discussions were conducted with the SMEs council and a non-participatory observation of the researcher. The result indicates that SMEs are operated by owners and families, which implies that contribution to employment and income generation for others is very limited. Access to finance, work promising, market linkage, and quality and quantity input were also the general challenge of all SMEs. Peace and security among Ethiopian Regions and the Ethio-Eriteria border, the dependency mentality and rent-seeking behavior of SMEs operators are other challenges of SMEs. Also, the commitment, attitude, and capacity of the leaders at a different level to support and coordinate SMEs is weak. Thus, policies and strategies should review and adjust considering the current political situation. Capacity building to operators and agency leaders are very critical. Finally, special financial institutions and market supporting unit should be established to help SME’s competitiveness. Work promises and infrastructure should be ready before the SMEs was established. Keywords: Small and Medium Enterprise, Economic Integration of Small Enterprises, Challenges, Tigray, Ethiopia DOI: 10.7176/JESD/12-19-01 Publication date: October 31 st 2021