Practice of Economic Integration of Small and Medium Enterprise in Manufacturing Sector: The case of Tigray Regional State, Ethiopia

Abstract

This paper assesses the economic integration of small and medium enterprises (SMEs) in Tigray, Ethiopia. Focusing on strategies, enabling environment, competitiveness, and challenges of the economic integration of small and medium enterprises. The study was employed cross-sectional mixed approach method. The data were collected from sample of 148 SMEs selected based on proportional stratified sampling after a pilot test was conducted. Interviews with 15 leaders, 8 focus group discussions with SMEs council were conducted. The result indicates that SMEs contribution to create new job to citizens and change the living standard for others are insignificant. Lack of access to finance, work promising, market linkage, and quality and quantity input, problem of Peace and security among Region and outside, dependency mentality and rent seeking behavior of SMEs operators are challenges of SMEs. in addition, the commitment, attitude, and capacity of the leaders to support SMEs is weak. Thus, policies and strategies should review and adjust considering the current political situation and capacity building to operators and agency leaders are very critical. Finally, establishing special financial institutions and market supporting unit might help SME’s competitiveness. Work premises for production and market as well as infrastructure should be ready before the SMES established.