The Contributions of Micro Small and Medium Enterprises in 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 and 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 and strategies. Most Ethiopian micro, small and medium enterprises are known for their high dependence on imported raw materials. Past studies failed to realize the potential benefits of creating production linkages by reinforcing rural-urban links across the country. The objective of this paper is to evaluate the capacity of micro, small and medium enterprises to forge rural-urban relationships that will assist in towards achieving the goals of GTP. The methodology for putting the paper together is by drawing results from the ongoing doctoral research 1 by the author. 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. The research question addressed in this paper is what contributions can micro, small and medium enterprises play to strengthen rural-urban economic linkages? There is every reason to believe that micro, small and medium enterprises have the capacity to expand their demand for local agricultural raw material. Rural areas, on the other hand, have an equally reliable desire for agro-based products such as fertilizers, pesticides, and farming equipment. Unfortunately, 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 and that only 1.5 percent appear involved in the production and supply of agricultural inputs. Extraordinarily, however, 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 small business sector to provide agricultural inputs through all rounded support of the government. Keywords; Micro, Small and Medium Enterprises; Rural-Urban Linkage, Contributions, Wolaita Zone, South Ethiopia DOI : 10.7176/CER/11-4-01 Publication date :May 31 st 2019