Micro and Small Enterprises’ Development in the Ethiopian Construction Industry: The Challenges and Improvement Regulatory Framework

Abstract

The purpose of this study is to assess the challenges and develop a regulatory framework for the sustainable development of micro and small enterprises (MSE) in the construction industry. A structured questionnaire was used to collect the quantitative data and a semi-structured interview was conducted to get detailed insight into the MSE development. Descriptive analysis was used for the quantitative data analysis and the qualitative data was analysed thematically focusing on the challenges and applicable regulatory instruments. The identified internal challenges are associated with management practice, financial capacity and technical capacity. The external challenges are ineffective policy support and regulation, weak registration practice and demand and price fluctuation. Considering these findings, an improvement regulatory framework with four pillars was developed. The pillars of the improvement regulatory framework are registration and follow-up, access to markets, access to finance, and training and advisory. The identified internal and external challenges are interrelated and situation-dependent; therefore, continual monitoring and controlling of the operating environment would help to ensure the sustainable development of MSE. The nature of the construction industry in developing countries shares common characteristics, hence the findings and the developed improvement framework can be extended to similar contexts.