THE ROLE OF MICRO AND SMALL SCALE ENTERPRISE

TOWARDS UNEMPLOYMENT REDUCTION IN CASE OF

SEBETA TOWN

A RESEARCH PAPER SUBMITTED TO RIFT VALLEY UNIVERSITY SEBETA

CAMPUS THE DEPARTMENT OF ECONOMICS OF IN PARTIAL FULFILLMENTS
FOR THE AWARD OF A BACHELOR OF ART DEGREE IN ECONOMICS

PREPARED BY
ID NO.
1. ABU BOTE………..............................................................0001/19

2. ADUGNA BIRU…….………………………….……….0034/19

3. REBIRA ESHETU…….....................................................0049/19

4. ALEMISA WOLTEJI…....................................................0067/19

5. ABDI KABETA…….…………………………….……….0053/19

ADVISOR: Yobsen Tesfaye (MA)

RIFT VALLEY UNIVERSITY SEBETA CAMPUS

DEPARTMENT OF ECONOMICS
December 2021
Sebeta, Ethiopia
 DECLARATION
This s report is representation of our original work whenever contribution of other are involved every
effort is made to indicate this clearly, with due to reference to the literature and acknowledgement of
collaborative research and discussion information taken from published and unpublished work of other
has been acknowledged in the text and list of reference is given. We declare that this report has not been
submitted in any form of another degree or Diploma at any university or other institution of tertiary
education. The work has been done under the guidance of Mr.Yobsen Tesfaye (MA)

Researchers Full Name

1 ABU BOTE Signature______________ Date______________

2. ADUGNA BIRU Signature______________ Date______________

3 REBIRA ESHETU Signature______________ Date______________

4. ALEMISA WOLTEJI Signature______________ Date______________

5 .ABDI KABETA Signature______________ Date______________

i
 Approval Sheet

This research project is our original work and has not been presented for a degree in any other
college or university.

The research project has been submitted for examination with our approval as university advisor.

Approved by the Board of Examiners

Advisor: ----------------------------Signature--------------

Examiner: --------------------------Signature--------------

Examiner: -------------------------Signature---------------

ii
 ABSTRACT

This study paper assess causes and consequence of food in security as well as its determinants in
special zone with in particular reference to Sebata Administrative city. This paper focused on
hindrance factors of food security in Sebeta Administrative city, people are living with large
family size , fragmented land , illiteracy and use tradition farming method. The study regarding
data requires collecting reliable information regarding food insecurity, data will be collected
from both primary and secondary data source.

The primary data were collected from those individual which are highly affected by food
insecurity through structured questionnaires.

Regarding secondary data were collected from different research papers that have do on food in
security and also collected from relevant institution such as Sebata Administrative city and
surrounded zone agriculture and rural development Office as well as published and un
published data sources.

Key word
(Food in security, fragmented land, illiteracy and tradition farming)

iii
 ACKNOWLEDGEMENT
First and for most, I am glad to express my heartfelt gratitude to GOD who allow me to do this
study successfully. Besides, I want to say much more thanks to my advisor Yobsen Tesfaye who
has scarified his golden time to help us. More ever; I would like to thank our parents who
support us financially and morally and to all my friends who support us by materials.

Table Content

Table of Contents
iv
DECLARATION...............................................................................................................................................i
Approval Sheet............................................................................................................................................ii
ABSTRACT...................................................................................................................................................iii
ACKNOWLEDGEMENT.................................................................................................................................iv
Table Content..............................................................................................................................................v
Acronyms..................................................................................................................................................viii
CHAPTER ONE..............................................................................................................................................1
1. INTRODUCTION.......................................................................................................................................1
1.1 Background............................................................................................................................................1
1.2 Statement of the problem.....................................................................................................................3
1.3 Research Question.................................................................................................................................4
1.4. Objective of the study..........................................................................................................................4
1.4.1. General objective of the study...........................................................................................................4
1.4.2. Specific objectives of the study.........................................................................................................4
1.5. Scope of the study...............................................................................................................................4
1.6. Significance of the study......................................................................................................................4
1.7. Limitation of the study.........................................................................................................................5
1.8. Organization of the study.....................................................................................................................5
CHAPTER TWO.............................................................................................................................................6
LITERATURE REVIEW....................................................................................................................................6
2.1. THEORETICAL LITERATURE REVIEW.................................................................................................6
2.1.1. Definition of micro and small scale enterprises...........................................................................6
2.2 Qualitative approach.............................................................................................................................6
2.2.1 Quantitative approach........................................................................................................................6
2.2.2 Micro and small scale enterprise development strategy..............................................................9
2.3 The federal micro and small enterprises development agency...........................................................10
2.3.1 The micro and small enterprise sector in Ethiopia............................................................................11
2.4 Related Empirical Literature................................................................................................................12
2.4.1 Importance of micro and small scale enterprises.............................................................................12
2.4.2 Removing regional imbalance...........................................................................................................13
2.4.3 Employment creation.......................................................................................................................13
2.4.4 Fostering industrialization process...................................................................................................13

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2.4.5 Constraints facing MSE in Ethiopia...................................................................................................14
2.4.6 Lack of premises, land and infrastructure.........................................................................................15
2.4.7 Lack of market, managerial ability, skilled labor and policy to enhancement..................................15
2.4.8 Nature and incidence of unemployment..........................................................................................16
CHAPTER THREE........................................................................................................................................18
3. RESEACH DESIGN AND METHODOLOGY................................................................................................18
3.1. Research area description..................................................................................................................18
3.2. Research Design.................................................................................................................................19
3.3. Research Approaches.........................................................................................................................19
3.4. Sources and type of data....................................................................................................................19
3.5 Target Population................................................................................................................................20
3.5.1 Sample Size and Sampling Method...............................................................................................20
3.5.2 Sample Size:..............................................................................................................................20
3.6. Sampling Method: -............................................................................................................................21
3.7. Data processing and analyzing............................................................................................................21
CHAPTER FOUR..........................................................................................................................................22
4. Data Analysis and Interpretation...........................................................................................................22
4.1 Socio economic and Demographic characteristics of the respondent.............................................22
4.1.1 Sex distribution of respondents........................................................................................................22
4.1.2 Age structure of respondents...........................................................................................................23
4.1.3 Educational level of respondents......................................................................................................23
4.1.4 The pre enrolment of the respondents............................................................................................24
4.1.5 Source of capital requirement..........................................................................................................24
4.2 Advantages from entering into micro and small enterprise................................................................26
4.3.3 Credit in accessibility constraint.......................................................................................................27
4.3.4 Capacity of the government support.........................................................................................27
CHAPTER FIVE............................................................................................................................................29
5. Conclusion and Recommendation.........................................................................................................29
5.1Conclusion............................................................................................................................................29
5.2 Recommendation................................................................................................................................30
REFERANCE................................................................................................................................................31
Appendix...................................................................................................................................................32

vi
Questionnaire............................................................................................................................................32

List of Tables

Table 1 Amount of credit and jobs created through MSEs 11

Table 2 Contribution of MSEs 14

vii
Table 3 sex distribution of the respondents 22
Table 4 age structure of the respondent 23
Table 5 Educational level of the respondents 24
Table 6 the pre enrolment of the respondents 24
Table 7 Advantage of from entering into MSEs 26
Table 8 credit related constraints to the MSE, operators 27
Table 9 capacity of the government support 27

Acronyms
ONRS= Oromia National Regional State

viii
CSA= Central Statical Agency

EEA= Ethiopian Economic Association

FMSEDA= Federation of Micro and Small Enterprises Development Agency

GDP= Gross Domestic Product

GTP = Growth and Transformation Plan

ILO= International Labor Organization

MFI = Micro Financial Institution

MOTI= Minster of Trade and Industry

MSE= Micro and Small Enterprises

NMSEDPS = National Micro and Small Enterprises Development Promotion Strategy

RMSEDA= Regional Micro and Small Enterprises Development Agency

TVET = Technical and Vocational Education Training

UN = United Nation

WB = World Bank

ix
 CHAPTER ONE

1. INTRODUCTION

1.1 Background
Unemployment has been one of the major problems and causes of poverty in many urban areas
of Ethiopia during the past regimes. Several people who are capable of working and also eager to
do have stayed without job for a long period of time. However, the incumbent government
attached due attention to avoid and reliably solve problems. In order to solve those problems the
government identifies programs that can bring about rapid job opportunities along with providing
the unemployed people with access to finances production and market places. Micro and small
scale enterprises were among the programs that the government of Ethiopia paid attention to
address the challenges of unemployment and to expedite economic growth across the country

Oromia is the largest region in Ethiopia in terms of land mass and population.2 It occupies
approximately 34 per cent of the land in Ethiopia and accounts for 37 per cent of the population.
In absolute numbers, this represents over 37 million people: 18,683,000 males and 18,584,000
females. The Oromia population is young: people between 0 and 5 years of age account for 15
per cent of the population (51 per cent male and 49 per cent female),3 while under 18 years of
age account for 54 per cent of the population (51 per cent male and 49 per cent female).4 The
fertility rate in Oromia is higher than the national average, with a total fertility rate of 5.4 (age
15-49 years) compared to the national rate of 4.6.5 Oromia is well positioned for a demographic
dividend if fertility continues to decline and the current large youth population is able to find
productive employment. The average household size in Oromia is large, at 5.2 people per
household compared to the national average of 4.8 people per household.6 The dependency ratio
is high (97 per cent) and most dependents come from the lower end of the age distribution.7
Oromia has diverse agro-ecological zones. The highland areas are characterized by sedentary
rain-fed agriculture and livestock production, while the lowlands are largely inhabited by
pastoralist communities who depend on livestock production. In 2019, 84 per cent of the
population lived in rural areas.8 The region is divided into 20 administrative zones, 30 town
administrations, 287 rural and 46 town woredas (districts).9 Oromia has experienced high and
sustainable economic growth, which is mostly attributable to growth in the agricultural sector.

1
There are limited off-farm job opportunities in the region, especially for youth. Oromia has
diverse agro-ecological zones. The highland areas are characterized by sedentary rain-fed
agriculture and livestock production, while the lowlands are largely inhabited by pastoralist
communities who depend on livestock production. 2. To illustrate, Oromia region is almost the
size of Italy; al Oromia national regional state is one of the ten regions in Ethiopia. The region
has 287 rural and 46 town woreda from woredas above 50 million peoples are living in this
region.This sector is the second to agriculture in employment creation both in national and
regional cases (salieayalew, 2007). MSE is one of the institutions given recognition in the
countries industry development plan in general and in the region growth in particular is the fact it
serves as vehicles for employment opportunities at urban centers as it underline the economic
growth.

2
 1.2 Statement of the problem

In sebeta city, so many socio economic problems are usual to observe: particularly in the low
income group of the society. For instance, there are streams of penniless people fall in the street
(waiting from the hand of others). Many female adults engaged in prostitution, many adults
crowded the street without work and also plenteous addicts and mental disordered people are
seen to overwhelm the city. This indicates that the concerned bodies and the MSE itself have
“drown a block” to absorb such socio economic problems of people in the city. Because the push
factor behind these social problems of people are mostly expected to the “uneasy mind” raised
from the base root of economic problems (G/Michael, Getachew and Getaway, 2006). According
to the MSE office in sebeta there are 10998 unemployed peoples are registered I 2004 only.

According to CSA 2006 the employment to population ratio in urban areas of sebeta it was
51.6%. In the same year the unemployment rate of sebeta region was 10.3%. But in 2011 the
employment to population ratio in urban sebeta was about 49.2%. In this year the unemployment
rate in urban sebeta was about 18.7%. This shows that the unemployment rate of urban sebeta
increases at higher rate (81.5%) than the incremental rate of unemployment rate observed in the
rest of the whole region (37%).

Various studies shown about the persistence of poverty and level of unemployment that
characterize Ethiopia in general and the urban area in particular the problem is rampant
especially in urban areas. Meaning these urban areas which are the base for industrial sector is
found to be unsuitable one way that can tackle unemployment problems is enabling the
environment for small micro enterprises provide employment opportunities for the poor
population in which they can generate their income .Other researchers tries to investigate the role
of MSE on household livelihood and determinants of MSEs. But this paper tries to investigate in
extent MSEs reduce unemployment and what are the constraints of MSEs in unemployment
reduction in Sebeta town. So the paper tries to assess the role of MSEs for unemployment
reduction.

3
1.3 Research Question
So as to feel this gap, some of the following questions would raise.

 What are the roles of MSEs towards reducing unemployment?

 What are the constraints of MSEs in Sebeta town?

1.4. Objective of the study

1.4.1. General objective of the study

The general objective of this study is to assess the role of MSEs in Sebeta towards
unemployment reduction.

1.4.2. Specific objectives of the study

The study includes the following specific objectives

 To show the role of Micro and Small Scale enterprises in reducing unemployment in the city.

 To identify the major determinants that affects the expansion of MSEs.

1.5. Scope of the study

The study would confine to micro and small scale enterprises in sebeta town, which is located in
Oromia region. The study would conduct to study the role of micro and small scale enterprises
towards unemployment reduction in the town due to time and income constraint.

1.6. Significance of the study

This study would try to address the role of MSEs towards unemployment reduction its
challenges. And also this study would also important for other researcher, for policy maker and
for those who want to be engaged in this sector to have more information and awareness about
the sector.

4
1.7. Limitation of the study
As the researcher uses primary data or information collected from micro and small enterprise
operators for their source of capital, constraints that they face advantages of MSEs in creating
job opportunity, etc. However, some of the respondents are not willing to give accurate
information because they would relate the data gathering process with tax. Due to this most of
the managers would unable to provide reliable information and unwillingness of respondents has
its own impacts on the study. More ever due to time and finance constraints the respondents too

1.8. Organization of the study

This paper contains Five chapters. The first chapter that presents the introductory part contains
background of the study, statement of the problem, objective of the study, significance of the
study, scope of the study and limitation of the study. The overview of the related literatures is
dealt in chapter two. Chapter three discussed research Methodology whereas chapter Four is
entitled to deal with the data analysis and presentation from the finding. Finally, chapter Five
forwarded some conclusions and present some recommendations for taking measures in order to
solve problems identified. only two sub cities from the total of nine sub cities.

5
 CHAPTER TWO

LITERATURE REVIEW

2.1. THEORETICAL LITERATURE REVIEW

2.1.1. Definition of micro and small scale enterprises

The definition of micro and small enterprises has continued to be a controversial issue with no
general consensus on the part of the various sector of the society (Anderson, 1982). Different

policy makers, researchers and other personals are in the debate in what way to define micro and
small scale enterprises. According to Wolday and Andualem (1997), there are two approaches to
define micro and small scale enterprises. Those are quantitative and qualitative approach.

2.2 Qualitative approach

MSEs are those; which are inherently subjective: broad based and less precise and tend to be of
limited use and their value is only in that they offer conceptual flexibility and breadth of purpose.
Generally, this approach looks in to the operational styles, degree of specialization, overall aims
and objectives, or the relationship with local community etc. to coin a definition for MSEs. Such
qualitative definition are gaining prominence as the perception of PR actioners sees little point in
focusing on characteristics or size of MSEs, but prefers to dwell on their role in development
such as the employment creation, income distribution, poverty reductions.

2.2.1 Quantitative approach

According to this approach, MSE, definitions are relying on clearly defined parameters, which
include some or all of the following points.

 Number of employees

 Sales turn over

 Asset, capital, net worth

 Specific industry wide measure, etc.

6
The definition of MSEs are different in different countries; when we see the definitions of MSEs
in European countries the micro enterprises is enterprises which employs persons fewer than 10
and have a turnover or balance sheet annually does not exceed EUR two million while the small
scale enterprises which employees persons fewer than 50 and have an annual turnover or balance
sheet total of 10 million EUY (official journal of Europe, 2003 cited in AndualemGetewa).

When we came to our country Ethiopia, micro enterprises are the smaller business enterprises
with a paid up capital of not exceeding Birr 20,000 and excluding high technical establishments
which they employ persons not exceeding eight whereas, the small enterprises with a paid up
capital of Birr between 20,000-500,000 and those which employ persons not less than 10 and not
exceeding 20 (MOTI, 1997). Most countries define small and micro enterprises in the
quantitative way which includes income paid capital and numbers of employees moreover; there
is no generally accepted definition for micro and small scale enterprises.

According to world bank, micro enterprises are defined as ; individuals or firms with total assets
less than $100,000 and employees less than 10 persons, whereas small enterprises are firms with
total assets or annually sales between $100,000upto3,000,000 and employee 10 to 15 persons

In Ethiopia, according to the Federal micro and small enterprises development

agency(FMSEDA, 2009) micro and small enterprises are defined based on paid up capital,
numbers of employees and the level of technology.

Micro enterprises: are those business enterprises with a paid up capital of not exceeding birr
50,000 and employing not more than 10 workers excluding high technology firms.Small
enterprises: are those business enterprises with a paid up capital of above birr 50,000 up to birr
1,000,000and employing 10 to 50 workers excluding high technology consultancy firms.

According to the new small and micro enterprises development strategy of Ethiopia (published
2011) the definition of MSEs is different for different sectors by their working capital and labor
amount.

7
Figure 1 Definition of small and micro enterprises in Ethiopia
Sr, Enterprise Sector Hired labor capital
no level
1 Micro Industry <=5 $6000 or £4500<=birr 100,000

Service <=5 $3000 or £ 2200 or <= birr

50,000
2 Small Industry 6-30 $ 90,000 or £ 70,000<= birr
1,500,000
Service 6-30 <= birr 500,000

Source: Source of our survey 2021

Background to the situation of micro and small enterprise

The dynamic role of micro and small enterprises in developing countries as engines through
which the growth objectives of developing countries can be achieved has long been recognized.
It is estimated that MSEs employ 22% of the adult population in developing countries (Fisseha,
2006).

In developing countries, MSEs by virtue of their size, capital investment and their capacity to
generate greater employment, have demonstrated their powerful propellant effect for rapid
economic growth. The MSE sector has also been instrumental in bringing about economic
transition by providing goods and services, which are of adequate quality and are reasonably
priced to a large number of people without requiring high level training, large sums of capital or
sophisticated technology (ILO, 2008). The sector has potential to provide the ideal environment
for enabling enterprises to optimally exercise their talents and to attain their personal and
professional goals (MOTI, 1997). In all successful economies, MSEs are seen as an essential
springboard for growth, job creation and social progress. The small business sector is also seen
as an important force to generate employment and more equitable income distribution, active
competition, exploit niche markets and enhance productivity and technical change through the
combination of all of these measures, to stimulate economic development. This is not denying
the importance of large industries and other enterprises for the growth of the Ethiopian economy,

8
there is ample evidence to suggest that the labor absorptive capacity of the MSE sector is high,
the average capital cost per job created is usually lower than in big business and its role in
technical and other innovative activities is vital for many of the challenges facing Ethiopia
(MOTI, 1997).

In Ethiopia, MSE Sector is the second largest employment generating sector following
agriculture (CSA, 2003). A national survey conducted by Ethiopian Central statics Agency
(CSA) in 2005 in 48 major towns indicates that nearly 585,000 and 3000 operators engaged in
micro and small scale manufacturing industries respectively, which absorb about 740,000 labor
forces.

Accordingly, the whole labor force engaged in the micro and enterprises and small scale
manufacturing industries is more than eight folds (740,000 persons) to that of the medium and
large scale manufacturing industries (90,000 persons).this is a contribution of 3.4% to GDP, 33%
of the industrial sector’s contribution and 52% of the manufacturing sector’s contribution to the
GDP of the year 2001 (CSA).

MSEs have been a major engine in the economic growth, innovation and technological progress
(Mulern, 1995 cited in AndualemGetewa).

Micro and small scale enterprises in Ethiopia are, however, confronted with several factors that
affect the performance of MSE. The major factors including financial problems, lack of qualified
employees, lack of proper financial records, marketing problems and lack of work premises, etc.
Besides, environmental factor affects the business which includes social, economic, cultural,
political, legal and technological factors. In addition there are also personal attitudes or internal
factor that affect the performance of MSE, which are related to the person’s individual attitude,
training and technical knowhow (Werotaw, 2010). Generally, there are external and internal
factors which are still affecting the performance of MSEs.

2.2.2 Micro and small scale enterprise development strategy

Industrial development strategy of Ethiopia issued in 2004 which states the private sector will be
the engine of industrial development. The plans have an objective of ensuring equitable wealth
distribution and decentralization of economic power. Then to achieve these objectives it is
advisable to promote the MSEs as an important instrument to create a productive private sector.
In Ethiopia the standard of living is much higher than in the state where heavy investment have
been made in large and medium industries (Hailey, 2003). Enterprise promotion efforts in

9
Ethiopia have traditionally focused on urban based and MSEs. In the 1960s and 1970s a
department within the ministry of industry and tourism was responsible for coordinating
promotion activities which basically consisted of providing training on business management
(UN, 2002).As stated by UN report (2002); in 1997, the handicraft and small scale industries
development agency (HASIDA) was establish to provide training mainly in management and
technical skills and to serve as coordinating agency for government policy on small enterprises.
Shortage of funds and unfavorable government policy toward the private sector in the 1980s
made it extremely difficult for HASIDA to have an impact on the development of local small
enterprises. Since mid-1999 the government has revised the whole issue of small and medium
enterprises promotion in Ethiopia but with more focus on micro and small enterprises. A major
study was conducted with the support of a donor agency which resulted in the preparation of a
national micro and small enterprises development promotion

The Ethiopian government released the country’s first MSE development strategy in November
1997 E.C. The primary objective of the national strategy framework is to create an enabling
environment for MSEs. In adaption to this basic objective of the national MSE strategy
framework, the MOTI has developed a specific objective which includes, facilitating economic
growth and bring about equitable development, creating long term jobs, strengthening
cooperation between MSEs, providing the basis for medium and large scale enterprises,
promoting export and balancing preferential treatment between MSEs and bigger enterprises
(MOTI, 1997). The strategy outlines the policy framework and the institutional environment for
promoting and fostering the development of MSEs and stimulating the entrepreneurial derive in
the country.

2.3 The federal micro and small enterprises development agency

To further ensure the proper institutional coordination for MSE support functions the
government created the new federal micro and small enterprise development agency
(FEMSEDA) in 1998. In addressing above objectives FEMSEDA is expected to provide support
to the regional micro and small enterprises development agencies (REMSEDA). The
FEMSEDA(2006) provide; leadership by delivering ‘training the trainers’ programs to equip
regional agencies, business associations and other professionals to deliver entrepreneurship
training and facilitation services and BDS to MSEs; studying the problem of identifying viable
markets for MSEs and addressing product quality issues, disseminating information to MSEs and

10
advising government on MSE polices and strategies. FEMEDA also operates skills and
technology training facilities, much like incubators where training is offered in wood working,
metal working, garment making and handicrafts. It also provides a marketing outlet for MSE
products in its sales and display center and organizer MSE product exhibitions at national and

The FEMSEDA has been established as an autonomous government institution having its own
legal identity and run by a board of management which includes representatives of the private
sector. Private sector participation in the management of enterprise promotion agency is a new
approach in Ethiopia. The FEMSEDA is directly accountable to the MOTI. In 2000, the regional
governments also provided for the establishment of REMSEDAs to provide extension services to
MSEs at the regional, zonal and woreda level. The MOTI through FEMSEDA provides
institutional support.

2.3.1 The micro and small enterprise sector in Ethiopia

The five-year growth and transformation plan (GTP) has given particular attention to the
expansion and strengthening of micro and small scale enterprises ministry of work and urban
development (MOWUD, 2007).

Table 1 Amount of credit and jobs created through MSEs

2008/09 2009/10 Percentage change

Number of MSEs 73,062 179,543 141.6

Number of total 530,417 666,192 25.6

employment
Amount of credit (in 662.7 814.1 22.8
Millions of birr)

Source: MOWUD, 2021

According to ministry of works and urban development in 2007 the sector is believed to be the
major source of employment and income generation for a wider group of the society. The major
objective of this program, which is creating and promoting MSEs in urban areas, envisages
reducing urban unemployment rate.

11
2.4 Related Empirical Literature

2.4.1 Importance of micro and small scale enterprises

MSEs play a major role in the country’s economic development through their contribution in the
following: rural industrialization, rural development and decentralization of industries, creation
of employment opportunities and more equitable income distribution; use of indigenous
resources; earning of foreign exchange resources; creation of backward and forward linkages
with existing industries and entrepreneurial development.

 They are vital in dispersing industries to the countryside and stimulating gainful
employment. MSEs are more likely to be labor intensive. Thus, they generate jobs in the
locality where they are situated. In this sense, they bring about a more balanced economic
growth and equity in income distribution.

 MSEs are quick in assimilating new design trends, developing contemporary products
and bringing them to the market place a head of the competition. MSEs tend to be for
more innovative in developing indigenous or appropriate technology, which maybe
grown later into pioneering technological breaks troughs.

They are able to effectively increase the local content or the value added in final goods that are
processed and marketed by large manufacturing firms.

Even if there are so many import ant’s from MSEs the primary ones are discussed below.

Potential for resource mobilization

Economic growth in Ethiopia is constrained, among others, by shortage of capital. The country is
in an infant stage of industrialization. Thus much of required investment for industrial sector
should come from domestic saving (Assefa, 2004). Under given suitable opportunities and
perhaps with little assistance, there are large numbers of small entrepreneurs who have the
capacity to establish and manage more efficient enterprises. This is due to the fact there are
reserves of idle saving that could be drawn into productive use if the owner had the choice to
startup small business in their own account. Therefore promoting the development of MSEs is
the paramount importance in utilizing indigenous resources.

12
2.4.2 Removing regional imbalance
The rural urban migration is one cause for the urban areas to become over crowded due to the
lack of social and medical amenities. Small scale enterprises have social and economic
contribution in absorbing labor which reduces the pressure of unemployment. Majority of the
population in less developed countries find their source of livelihood in the small and micro
enterprises. Hence, the urban economies of less developed countries small scale enterprises
provide a major source of urban employment (Todaro, 2004).

2.4.3 Employment creation

One the task of government is to reduce unemployment rate. Thus, technologies that require
more labor should be favored than those which need less labor. Being labor intensive and capital
saving, MSEs could help in solving many of the problems that developing countries are faced
with (Assefa, 2004).

The sebeta town micro and small scale enterprises, to achieve this objective are doing together
which help for a better employment opportunity. Now a day raising unemployment has greatly
contribute to the low standard s of living observed in urban areas of the country like sebeta town.
In this state of affairs promoting the development of MSEs is the only hope that thousands of
people creation of job opportunity. However, the sebeta city administration has under taken MSE
program by organizing the youth into group and solely to reduce unemployment. AS per
available statics from the city MSE office, this sector employed 8713 peoples in the last year
2005 only.

2.4.4 Fostering industrialization process

Certainly, MSEs are the bases for industrial development. Even the famous industrial revolution
of Great Britain was initially accomplished largely through the MSEs which employed modest
capital; few workers were owned and managed by a single individual or family (WB, 1978). The
importance of MSEs has now relatively decreased in these countries and most of the
manufacturing value added is generated in large scale manufacturing industries. But the role of
MSE is still significant in the production of goods that are uneconomical for the large scale
firms.

Although most developing countries have been overlooking the role of MSEs in fostering
industrialization process they still constitute a significant portion of their manufactured value

13
 added. On average, MSE account for about 37% of the total manufacturing value added
generated in the 7 countries below (table 2.3). Contribution of the MSE; to total GDP in these
countries varied between 2.9 to 8.2 %. The MSE, play a comparable role in the generation of
MUA (41 %) and total GDP (2.6 %) in Ethiopia.

Table 2 Contribution of MSEs

Country (period) Manufacturing GDP (%) Total GDP (%)
Bangladesh (1977- 50 4.6
78)
Burundi (1980) 64 8.2
Ghana (1970) 26 2.9
Pakistan (1979-80) 30 4.6
Sierra eon (1975) 43 2.9
Jamaica (1978) 22 3.5
Ethiopia 41 2.6
Source : Our survey 2021

2.4.5 Constraints facing MSE in Ethiopia

MSEs constitute the bulk of the private sector in Ethiopia and definitely the private sector is the
after of the market economic system that can ensure success to the reform programs that the
country has embarked upon. Entrepreneurs both existing and emerging are the actors in this
country and will create wealth and employment and ultimately provide for economic progress. It
is now realized everywhere that private enterprises and individual initiatives are the motivating
force that create economic progress (Andualem, 1997).

However, in present day Ethiopia, although significant studies have been attempted to allow
MSEs to be created; form idable obstacle militate against their development both against the
existing MSE, or those that aspire to setup. Some of the most critical and leading factors
constraining the MSE sector in Ethiopia are briefly presented (Solomon, 2004).

Lack of access to capital and credit

The most serious obstacle to business, particularly in the MSE in Ethiopia is that of raising
investment capital and lack of sufficient loan able funds and facilitates. Hence, financing stands
out as one of the greatest problem facing MSE.

14
The banking system has been reluctant to private loans to MSE, most of who are unable to
adequate collateral (security for loans). Thus, the reforms hamper the creation of new enterprises
and impede the growth and survival existing MSEs. Hence, under financing is a prominent
feature.

2.4.6 Lack of premises, land and infrastructure

For MSE in general, lack of premises is a major problem. The MSE operators are usually
exposed to considerable insecurity concerning location and although there are some attempts
recently can rarely acquire suitable location where they can get easy access to market. Even for
the newly emerging entrepreneurs of MSEs the transaction cost securing premises is almost
prohibitive. The issue land acquisition has growth and survival the existing ones (Andualem,
1997).

The recent promulgation that has made land acquisition on the basis of the lease system has
greatly hindered the chance of MSE, who aspire to startup business. In general, both the land
lease policy and the ethnic base federal arrangement are likely to have a serious impact of
inhibiting the development of entrepreneurship in the country.

The first bars the majority of the indigenous MSE entrepreneurs from attempting to start business
because of lack of financial resources. The second one is considered to greatly restricted mobility
of human resources between the regions (Ayalew, 1995).

It is evident that there is a serious lack of overall infrastructural development, which hinders the
spread of MSE across all regions. This is a vital input if the aspired regional distribution of
enterprises is to materialize (Andualem, 1999).

2.4.7 Lack of market, managerial ability, skilled labor and policy to

enhancement
Various studies conducted on MSE have revealed that there a general lack of knowledge in
entrepreneurial and managerial capacity. It is every doubted whether may of the micro
enterprises realized the need themselves not only that but there are not many institutions that
they can go to acquire the necessary skills.

There are not sufficient institutional facilities that nurture the promotion, growth and
development of MSE in Ethiopia. Consequently, marketing their product effectively is one of the

15
main bottlenecks that MSE face all over the country. There is also a serious shortcoming of
acquisition of information on business opportunity (Tegegne, 2004).

According to G/hiwot and Wolday (2001) of the factors rated as very severe problems of MSE,
the top five are high taxes(51%), inefficient tax administration(41%) , high collateral
requirement(47%) ,lack of business premises(42%) and lack of business support services(41%).
Other factors rated as major severe problems, includes the bureaucratic requirement (red top and
paper work) (23%), the penalties (including kick back to officials) for operating without license,
if and when detected (20%), weak legal enforcement (19%), crime and theft (19%).

2.4.8 Nature and incidence of unemployment

The central statistical agency (CSA) has been providing labor force and related data from
surveys of varying scope conducted since the mid-1970s completed by the 1984, 1994 and 2007
population and housing censuses. However, the results of these survey programs have not been
comparable to enable researchers consistently track developments in the labor market. The CSA
has also launched biannual employment/unemployment survey in October 2003 and April 2004
and for the third time in April 2006. This survey program was intended to cover only urban
areas given that unemployment, particularly youth unemployment has been and is growing
areas of concern for the government (AndualemGetewa, 2014).

Youth unemployment

Youth unemployment is a problem that affects most countries. The ability of youth to engage in
productive activities has both social and economic consequences for an economy. Youth
unemployment is often higher than the unemployment rate of adults highlighting the concerns
that many countries in facilitating the transition from school to work. In developing countries,
youth face not only the challenge of obtaining productive employment, but also obtaining safe
and acceptance work.

Youth employment presents a particular challenge to Ethiopia: the country faces growing youth
land lessens in rural areas and insignificant rural job creation, potentially leading to an increase
in migration to urban areas (WB, 2007). The concern is whether there will be substantial growth
and job creation in urban areas to absorb new labor market participates. This calls for a careful
study of the profile of youth labor markets participants, educational investments, trends in

16
employment by sector, labor markets information systems, the main barriers for youth
employment and the socio economic challenges of youth.

Effective youth employment policies and interventions require although understanding of who
the unemployed youth are, where they are located, and the types of jobs youth are engaged in.

Unemployment and particularly youth unemployment is closely linked to the state of the
economy. In order to provide an overall assessment of the youth labor market it is important to
provide an assessment of Ethiopia’s overall economic situation. In this section we provide a brief
overview of the countries’ economic situation and the current labor market institutions. The
focus of the paper will be on the youth population most international organizations and countries
use the age range from 15-24 to classify youth; the Ethiopian government defines youth as those
between the ages of 15-29.

17
 CHAPTER THREE

3. RESEACH DESIGN AND METHODOLOGY

3.1. Research area description

The OromiaSpecial Zone Surrounding Finfinne (Oromo: speeshaalzooniinaannawaFinfinnee) is one of
the zones of the Oromia Region in Ethiopia that surrounds Addis Ababa (Addis Ababa is known
as Finfinne "natural spring"). It was created in 2008 from parts of North Shewa Zone, East Shewa
Zone, Southwest Shewa zone and West Shewa Zones. The zone was created to support the cooperation
and development of the surrounding areas of Addis Abeba, and to control the urban sprawl of this city on
the lands of Oromia. The administrative center of this zone is in Addis Ababa. the districts and town in
this zone include Akaki, Bereh, Burayu, Holeta Town, Mulo, SebetaHawas, Sebeta Town, Sendafa
Town, Sululta, Walmara, Lega-Tafo, Galaan and Dukem. Sebeta (Oromo : Sabbataa) is a town located in
the Oromia Special Zone Surrounding Finfinne of the Oromia Region in Ethiopia.

18
3.2. Research Design
The design that will be used for this study is a descriptive survey, thus data will systematically collect at a
point in time, analyze and present to give a clear picture of Sebata admisistrative city. A descriptive
research will be used in that it is basically designed to find out the existing situation of a particular
phenomenon of concern. In other words, a descriptive research is the research which deals with the
relationship among non-manipulated variables. In descriptive research, the events or conditions either
already exist or have occurred and the researcher mainly selects the relevant variables for an analysis for
their relationships (Best and James, 1993). This type of research is a systematic attempt to collect
information from members of an identifiable population particularly, employees of sebata admisistrative
city the rationale for using the descriptive survey that is helps in telling what the situation is in a
systematic manner; it involves collection of accurate data for the purpose of determining the current

Nature of the subject of study thus assesses the causes and consequence of food in security in Oromia
Special Zone Surrounding Finfine (The Case Of Sebata administrative city ).

3.3. Research Approaches

The study will use both qualitative and quantitative research approaches in order to achieve the research
on assess the causes and consequence of MSPs in Oromia Special Zone Surrounding Finfine (The case of
Sebata administrative city). This is because of apply descriptive approach is focus on real world question
and applicable. It also answering practical question to provide relatively immediate solution related to
current the causes and consequence of food in security in Oromia Special Zone Surrounding Finfine (The
case of Sebata administrative city

3.4. Sources and type of data

The data for this study is collecting from both primary and secondary sources.

Primary datais through the use of questionnaires and interview guide. This is to help ascertain views and
opinions pertaining to the topic under investigation

The secondary data Secondary sources of data is gather from the office document from 2018 to 2020 in
order to carry a trend analysis to help provide a more comprehensive assessment of

causes and consequence of food in security in Oromia Special Zone Surrounding Finfine (The Case of
Sebata administrative city) over a period of time.

19
3.5 Target Population
3.5.1 Sample Size and Sampling Method
3.5.2 Sample Size:
The sampling technique used for the study random sampling method out of the total households
of the study area. This researcher selected 50 samples from total population by using cluster
sampling method.

To determine the sample size, then we used a simplified formula to calculate sample sizes as
provided by Yemane Formula (1977). This formula to calculate the sample size is shown below.

N
n= 2
1+ N ( e)

Where: N=the study population

e = the level of precision the sample size

1= Designates the probability of the event occurring

N
n= 2 ; Where ‘e’ equal to 0.14, there for
1+ N ( e )

n=10998/1+10998(0.1)2

n =10998/1+10998*0.01

n =10998/1+109.98

n=10998/110.98

n= 99

20
3.6. Sampling Method: -

The selection of entities is bases on non-random sampling technique due to the difficulty of
examining all the entity type and the inconvenience to meet all within the specific time period.
Thus, non-random sampling technique is employs to acquire the needed information through
structured questionnaire from the selecting entity type. The samples methods will use include the
systematic sampling and purposive sampling techniques. The systematic random technique will
use to determine and select respondents from the sample frame for the study.

3.7. Data processing and analyzing

The researcherhas collect both quantitative and qualitative data from sample respondents. The
data will collect through closed-ended questionnaires. The data for this study will analysethrough
descriptive statics. The interpretation is makingwith the help of frequency table, frequency and
percentage. On other hand, for better analysis the 5 rank of Likert scales responses of the
questionnaires be make to categorize into five scales (strongly agree, agree, undecided, disagree,
strongly disagree). Finally, the data collect through unstructured interview open-ended
questionnaire and document analysis are present and analyse qualitatively by organizing,
categorizing and forming themes based up on their major concepts.

21
 CHAPTER FOUR

4. Data Analysis and Interpretation

4.1 Socio economic and Demographic characteristics of the respondent

The survey had conducted on 40 MSE operators those are engaged in "5" line of business
activity (service, construction, urban agriculture, manufacturing and trade). Then, the enterprise
operators were asked to answer the question honestly when they were at the work. The
questioner includes questions that relates to the demographic character of respondents. The socio
economic and the demographic characteristics of operators in the sample revolve at age, sex,
educational level and job experience of the operators. The age of the respondents ranges between
20 to 37 years old have of an average of about 24.96 that is equal to 25. In relation to the
educational level, the mean educational level of them is close to 10 with the minimum of 0
educational level and 15 years of educational level at maximum. Whereas the operators job
experiences is with the mean of year of 2.

4.1.1 Sex distribution of respondents

As the survey result indicates 54.5% (54 respondents) are male operators whereas 45.5% (45
respondents) are female operators. This implies that females are the most frequently unemployed
than males. This is due to backward cultural attitude towards them and they lack due attention.
Let's see below clearly in the table

Table 3 sex distribution of the respondents

Sex No of respondents Percentage
Male 54 54.5
Female 45 45.5
Total 99 100
Source; own survey, 2021

22
4.1.2 Age structure of respondents
Almost all of the respondent's age groups are above 15 up to 37 years old as we see from the
table below.

The Ethiopian government defines youth as whose age is between 15 up to 29. According to
Ethiopian government definition of youth; the survey indicated 35.4% of the respondents are
youth. The remaining 64.6% are an age group above 29 years old. This matches with the fact that
more than half individuals are an economically active; the more he or she has chance for job
opportunity in MSEs. But there is also an extent at which have the age of above 29 can also
operate in the MSEs. Let us see in table blow

Table 4 age structure of the respondent

Age No of respondents Percentage
15-29 35 35.4
Above 29 64 64.6
Total 99 100
Source; own survey, 2021

4.1.3 Educational level of respondents

As the survey results 65%of the respondents had at least some high school educational level
(above grade 9) and while 32.5% of the operators have an educational level of grade (1 up to 8).
This implies that the opportunity to be employed in the formal sector is low, rather than they
have more job opportunity chance in MSEs, 20% of the respondents have an educational level of
above grade 12 i.e. graduates of TVET and other fields. Besides this 2.5% of the respondents are
illiterate. In this age group there is no much more employment opportunity outside the informal
sector at all.

Finally, as the survey shows 80% of the respondents (below grade 12) have no success to higher
learning institutions and lack other choices in urban town. Let us see below in table

23
Table 5 Educational level of the respondents
Educational level No of respondents Percentage
Illiterate 1 2.5%
1-4 3 7.5%
5-8 10 25%
9-12 18 45%
Above 12 8 20%
Total 40 100%
Source; own survey, 2021

4.1.4 The pre enrolment of the respondents

It is obvious that all MSE operator had not employed before there entrance in to the sector. Some
where they are unemployed but searching for a job. As the survey result from the total
respondents 50.5% of them had a job; whereas the remaining 49.5% of the respondents were
unemployed before they entrance in to the business. This means that, MSEs are more invites
those who are not employed than those who had a job that they use it as a choice. The
implication for this result is that MSEs are mostly the job opportunities creates compared to their
expansionary role of employment.

Table 6 the pre enrolment of the respondents

Job status No of respondents Percentage
Employed 50 50.5
Unemployed 49 49;5
Total 99 100
Source; own survey, 2021

4.1.5 Source of capital requirement

Source of capital requirement for startup for line of business comes from different direction. As
the survey results 50% (20 respondents) are got the fund from their own saving. And 30% (12
respondents) are got from micro finance institutions and the other five respondents (12.5%) are
got from family fund. There are also three respondents who got the fund from others sources like
gift, inheritances which they constitute 7.5 percent. From the result, we conclude that micro

24
finance institution contributes less credit to the MSE but that most of operators’ source of capital
was their own saving, that the MSE operators are financing. See from the following graph below.
120
100 Percentage
80
60
40
Percentage
20
0

25
4.2 Advantages from entering into micro and small enterprise
MSEs are the most important sector in creating job opportunity for much of the population. That
it is not the only advantage other advantages such as health and educational budget, source of
income and being away of self-independence as the survey result indicates, 35.4 %
(35respondents) replay that as they become self-independent. Whereas 30.3% (30 respondents)
they replied as a source of income. The 20.2% (20 respondents) are replied as it helped him or
her to expand budget for education and health care. Beside the remaining 14.1% (14respondents)
all fullest fill there all need requirement. This shows micro and small enterprises are important
for the individuals become self-independence and for the source of revenue. Let's see below the
table.

Table 7 Advantage of from entering into MSEs

Advantage No of respondents
service manufacturin trade constructio Urban Total percent
g n agricultu age
re
Self- 7 9 10 5 4 35 35.4
independent
Source of 10 8 7 2 3 30 30.3
income
Health and 11 9 20 20.2
educational
budget
Other 4 3 7 14 14.14
Total 32 20 26 14 7 99 100

Source; own survey, 2021

26
4.3.3 Credit in accessibility constraint
The micro and small enterprise managers (operators) not only face the above constraints but also
the credit inaccessibility for different reasons like that of lack of collateral and unjust procedure
of micro finance institutions (MFIs). As the survey result indicates 45% of them lack of credit
due to lack of collateral. Whereas the 25% of them lack of credit due to unjust procedure of
MFIs. Those who lack any response from source of fund accounts are 15%. While the remaining
15% of the operators replied as they had not faced such constraints.

Table 8 credit related constraints to the MSE, operators

Constraints Number of Percentage
respondents
Unjust procedure of 30 30.3
MFIs
Lack of collateral 25 25.3
Lack of any 24 24.24
response
No problem 20 20.2
Total 99 100
Source; own survey, 2021

Generally, form the table we can understand that the credit availability in Sebeta town is low due
to the above listed factor.

4.3.4 Capacity of the government support

Government play an important role by giving support for the MSEs by making the work of
government, more popular and giving tangible assistance to those associations

Table 9 capacity of the government support

Items Is there is enough Number of the Percentage
government respondents
support?
1 Yes 46 46.5
2 No 53 53.5
Total 99 100
Source; own survey, 2021

27
from the table above it can be analysed 24 respondents (60%) of the MSEs managers replays
“no” and believe that governments help is not much enough according to them, they try to solve
their problems by own self government support is not much satisfactory. On the other hand the
MSEs are not used properly follow government instructions in managed way but given by
government is as much as capacity it is enough.

28
 CHAPTER FIVE

5. Conclusion and Recommendation

5.1Conclusion
This research provided a comprehensive description of the main role of micro and small
enterprises in reduction of unemployment. In Ethiopia, MSE sector is the second largest
employment generating sector following agriculture. The MSE sector is characterized by highly
diversified activities which can create job opportunities for a substantial segment of the
population Sebeta city administration has undertaken MSE program by organizing the youth into
group and solely to reduce unemployment. On the basis of the findings of the study the following
conclusions are drawn.

As the survey result indicates 40 sampled MSEs, Provides employment opportunities for 161
individual labour workers. Therefore, MS

.Es are likely to create employment opportunities for large stock of the population in the city. In
addition to this, MSEs are important being a source of income, in self-independence and
increasing the social and other expenditures or budget.

Even if MSEs have the above importance but there are also various problems that affect the
expansion of MSEs. As the survey indicates, lack of raw materials, lack of working premises and
market problems were the major bottlenecks for micro and small enterprises to commence their
activities. The constraints can be seen from two directions. Such as, start up constraints and the
constraint during operation.

As the survey indicated, in relation to the major constraints of the MSE operators are licensing
problems 40.7%, followed by market related problems 29.62%, and shortage of raw materials
11.11% in the business start-up. Whereas during operation lack of customers 40%, infrastructural
problem 20% and high wage payment for employee constitutes 12.5%.

Although the formal financial institutions have taken various measures to strengthen their
operation and expand their services, they could not address the financial needs of micro and
small enterprises satisfactorily. It is thus necessary to design special instruments and mechanisms
to meet the financial requisites and there by promote the development of MSEs. For instance, the
establishment of leasing industries for creating easy access to secure produced goods might be an

29
alternative solution to solve the financial problem of the sector, particularly for the new start-ups.
In this regard, a micro financing proclamation has been promulgated, which specifically caters
for the financial requirements of the MSEs. Therefore, government will further encourage and
create the enabling ground for the wants of such MSEs targeted financial institutions. Given its
own constraints and with the recognition of the goals and priorities stipulated in this strategy, the
government will continue to encourage other donor agencies' effort to help micro enterprise
funding agencies. Generally, the study shows that the importance of micro and small enterprises
in contributing to job creation is now widely accepted in urban and rural area. Like that of, in
Sebeta town MSE has tangible contribution to generate employment opportunities.

5.2 Recommendation
Based on the main findings discussed above, some policy recommendations which have policy
implications are drawn in order to attain the development goals and to make the enterprise
operate well. To reduce unemployment problem and to foster the employment opportunities
government and other conscious organizations have to play an active role in providing the
technical assistance and training, subsidizing operators.

To reduce the problem of unemployment, the Sebeta city administration and Sebeta town micro
and small scale enterprises development agency should play a vital role in terms of providing
jobs for those who have stopped operation and for those who are strange for the business. This
has an effect of decreasing their saving potential and living standard, so the agency should work
carefully in reducing the problem. And in reducing the shortage of capital, the financial
institution should better review their lending regulation in a comfortable way to the customers.
The group lending which exposes the customers for the lack of loan partner should be seen or
revised. Some of the micro and small scale enterprises operators are located in a place where
there is no space to promote to advertise their products. For that reason, they lacked customers
and enter in a completion that they cannot run out of the problem. Therefore government and
other nongovernmental organization should work in collaboration with the MSEs, and Sebeta
town micro and small scale enterprises development agency should also work together to allow
the operators a place of exhibition center, price and product incentives should al so have a role to
initiate the operators. Generally, the employment growth in MSEs in Sebeta town, emphasizes
should be given for enterprises to create more jobs opportunity. And in order to solve working
capital problem for MSEs, banks and micro finances should be allocate sufficient amount of

30
funds for the expansion of MSEs for employment growth, working premise and market problem
should be collaboration with the city administrators.

REFERANCE
Andersen, (1982) small industry in developing countries of discussion of issues.
AndualemGetewa, 2005. The role of micro and small scale enterprises in Adama town,
Adama
AndualemTegegne, 1997. Small scale enterprises and entrepreneurship development in
Ethiopia.
AssefaAdimasie, 1997. A comparative analysis
AyalewZegaye, 1995. Entrepreneurial development in Ethiopia
CSA, 2003. “report on small scale manufacturing industries survey”, Addis Ababa
CSA, 2007. “Result of the survey on informal sector conduct in Ethiopia”.
GebrehiwotAgeba and WoldayAmha, 2001. Micro and small enterprises development in
Ethiopia, strategy, regulatory changes and remaining constraints.
GetachewAbebe and Getachew Belay, 1997. Micro business development in Ethiopia.
ILO, 2002. Women and men informal economy; a Stastical picture. Geneva
SalieAyalew, 2007.Empirical impact assessment of business development service micro and
small enterprises in towns of Amhara regional state, Addis Ababa University.
MOTI, 1997. Micro and small enterprises development strategy of Ethiopia. Addis Ababa
TegengeGebreegziabher and MulatDemeke. Micro enterprises in small towns. Amhara
region, Ethiopia; Nature and performance
Todaro.P,Michael, 2000. Economic development in the far. Eighth edition. Longmance
London
WB, 2002. The role of MSE in economic development of developing countries
WB, 1978. Employment and development of small enterprises sectors policy paper.
Washington D.C
Mead D.C and Liedholm. 1998. The dynamics of micro and small enterprises in developing
countries: World development
Mead D.C and Liedholm. 1998. The dynamics of micro and small enterprises in developing
countries: World development

31
 Appendix
RIFT VALLEY UNIVERSITY

Department of Economics

Questionnaire
Dear respondents

This questionnaire is designed to collect data for a research paper that is a partial permanent of
BA degree in economics. The purpose of the research is to study about the nature and role of
micro and small scale enterprise towards unemployment redirection in case of Sebeta town. The
questionnaire is meant for a study which is pure for academic purpose. I would like to remind
you that the success of this academic research depends on poor genuine responds to the question
below.

Instruction

I. No need of writhing your name

II. Please circle it among the chooses
III. Write short and precise answer on the space provide whenever possible
1. Characteristics of the respondent
1.1. sex A. male B. female
1.2. Age______________
1.3. Educational level
A. 1-4 B. 5-8 C. 9-12 D. above 12

1.4. work experience_____________________

2. In which business type are you engaged?___________________
3. Have you had any job before you enter in to this business?
A. yes B. No

4. What was your source of capital for start-up?

A. Loan from Bank B. from saving C. from family fund

32
 D. from MFI E. others

5. Have you ever been received any government incentive?

A. yes B. No

6. If your answer for question no 5 is yes what kind of incentive?

A. financial B. training C. Technological help

D. Market place E. other

7. Is credit accessible for you? A. yes B. No

8. If your answer for question no.7 is no what do you think is it for?
A. unjust procedure of MFIs B. lack of collateral C. no problem D.
others

9. Have you faced any problem when staring up your business?

A. yes B. No

10. If your answer for question No 9 is yes what kind of problem?

A. lack of skill B. licensing problem C. market problem

D. Non availability of raw material E. others

11. Have you had problem during operation? A. yes B. No

12. If your answer for question no11 is yes what kind of problem?

A. lack of customer B. lack of skilled worker C. shortage of raw material

D. infrastructural problem E. high wage payment for employees F. others

13. Have you employed others in your enterprise? A. yes B. No

14. If your answer for question no 13 is yes please state how many males and females are
employed? A. male B. female

15. If your answer for question no 13 is No please justify why?

______________________________________________________________________________
____________________________________________________________________

33
16. Is your way of life improved being engaged in the business?

A. yes B. No

17. If your answer for question no 16 is yes, in what way?

A. by increasing the health and educational budget

B. source of income C. self-dependence D. all

18. If your answer for question no 16 is no. please specify why is it happened?

______________________________________________________________________________
______________________________________________________________________________
_______________________________________________________________________

1. Mead D.C and Liedholm. 1998. The dynamics of micro and small enterprises in
developing countries: World development

34