Factors Affecting the Growth of Micro and Small Enterprises: The Case of Daro Lebu and Hawi Gudina Districts of West Hararghe Zone, Oromia, Ethiopia

Abstract

The purpose of this study was to identify factors affecting the growth of micro and small enterprises operating in Daro Lebu and Hawi Gudina districts of west hararghe zone, oromia region, Ethiopia. The study adopted both Quantitative and Qualitative research designed with arrangement of primary data collection via a cross-sectional survey. Survey Data collected through structured questionnaires from a sample of 197 MSEs selected using stratified sample techniques. The result of regression analysis revealed that access to credit, government support, Education, gender and enterprises’ age were positively significant effects on MSEs' growth. But, Initial capital and infrastructure were negatively associated with capital growth rate of MSEs. However, Recordkeeping, access to technology, access to market and labor found to be insignificant variable in determining enterprises’ growth. More evidence desired on factors affecting the growth of micro and small enterprises before any generalization of the results can be prepared. In addition, the empirical tests conducted only on 197 sampled enterprises employee in Daro Lebu and Hawi Gudina Districts since 2024. Therefore, the results cannot be taken as uniform to generalize for MSEs in the country. The study might help the entrepreneurs, donated to the body of knowledge on the factors affecting the growth of micro and small enterprises to take some corrective action for both planners and policy implementation in government organizations toward developing their performance and in turn contribute to employment creation, poverty alleviation, and economic development. This paper adds to the literature on factors affecting the growth of micro and small enterprises. In particular, it tests the influence of access to credit, government support, Education, gender, enterprises’ age, Initial capital and access to infrastructure on growth of enterprises. The result forward key policy implications to take a corrective action that alleviates the existing challenges of the sector and calls for further MSEs bearing evaluation research.