ADMAS UNIVERSTY

COLLEGE OF DISTANCE EDUCATION

HOSTING COMPANY: LEMI KURA SUB-CITY

ADMINISTRATION WOREDA 4 TRADE OFFICE
Internship Project Title: Financial Analysis of Local Businesses
and Assessing Economic Impact and Growth Potential

DEPARTEMENT OF ACCOUNTING AND FINANCE

PREPARED BY: KALKIDAN LEGESSE

ID NUMBER: BA=ACFN 13/01-30

COMPANY ADVISOR: -MEKONNEN DAWUD

December 5, 2024,
ADDIS ABABA, ETHIOPIA
 ABSTRACT
This project focuses on the financial analysis of local businesses within the Lemi Kura Sub
City, specifically in Woreda 4, and aims to assess their economic impact and growth
potential. The study begins with a comprehensive review of the financial health of selected
local enterprises, utilizing key financial metrics such as profitability, liquidity, and solvency
ratios. By analyzing financial statements and conducting interviews with business owners, the
project identifies common challenges faced by these businesses, including access to capital,
market competition, and regulatory constraints.
Furthermore, the research evaluates the broader economic impact of these businesses on the
local community, examining their contributions to employment, income generation, and
overall economic development. The findings highlight the critical role that local businesses
play in fostering economic resilience and growth within the region.
In addition, the project explores growth potential by identifying opportunities for expansion,
diversification, and innovation. Recommendations are provided for local policymakers and
trade office officials to enhance support for these businesses, including tailored financial
assistance programs, training initiatives, and improved access to market information.
Ultimately, this project aims to contribute to a deeper understanding of the financial
dynamics of local businesses in Woreda 4 and to inform strategies that promote sustainable
economic development in Lemi Kura Sub City.

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 DECLARATION OF ORIGINALITY
I, Kalkidan Legesse a fourth-year Accounting and Finance student, have
undertaken my internship experience in Lemi kura sub city administration
woreda 4 trade office from a period of 29 July 2024 to 28 November
2024 under the guidance of Mr.Mekonnen Dawud (Company advisor). I

certify that my work which is being presented in this entitled Financial

Analysis of Local Businesses and Assessing Economic Impact and

Growth Potential is original work of my own and compiled according to

the internship report writing Guideline given by the Institute-Industry
Linkage office of the Institute.
Mekonnen Dawud __________________ ________________
Name of advisor Signature date
Kalkidan Legesse __________________ ________________
Name of the Student Signature date

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ACKNOWLEDGEMENT
First of all, I would like to thank my God who has given me help and
hopefulness that I can’t express in my words. My thanks are also
extended to my advisor Mr.Mekonnen Dawud for his valuable
information and precious guidance.

Also, I want to extend my gratitude to Woreda 4 Trade Office for its big
contribution by giving help full advice during my project work.
Finally, would like to thank all workers for their big contribution and
willingness for giving the information.

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 EXECUTIVE SUMMARY
This study aims to provide a comprehensive financial analysis of local businesses in Woreda
4, Lemi Kura Sub City, with a focus on assessing their economic impact and growth
potential. Local businesses are vital to the economic fabric of the community, contributing to
job creation, income generation, and overall economic resilience. By examining the financial
health of these enterprises, this research seeks to identify the challenges they face and the
opportunities available for growth and development.
The methodology employed in this study combines quantitative and qualitative approaches.
Financial statements from a representative sample of local businesses were analyzed to
assess key financial metrics, including profitability, liquidity, and solvency ratios.
Additionally, surveys and interviews with business owners and local stakeholders provided
valuable insights into the operational challenges and market dynamics affecting these
businesses. This mixed-methods approach allows for a holistic understanding of the financial
landscape in Woreda 4.
Key findings reveal that many local businesses are struggling with financial stability. Issues
such as high operating costs, limited access to capital, and inadequate financial management
skills are prevalent. Despite these challenges, local businesses play a crucial role in the
economy, providing employment opportunities and fostering community development. The
analysis also highlights significant growth potential, particularly through the adoption of
digital technologies, diversification of products and services, and expansion into new
markets. However, these opportunities are often hindered by financial constraints and a lack
of strategic planning.
To address these challenges and capitalize on growth opportunities, several
recommendations are proposed. First, establishing targeted financial support programs, such
as low-interest loans and grants, can help local businesses improve their financial health and
invest in growth initiatives. Second, implementing training and capacity-building programs
focused on financial management and marketing strategies will enhance the skills of local
entrepreneurs. Third, facilitating access to market information and creating platforms for
local businesses to connect with larger markets can increase their visibility and sales
potential. Finally, advocating for a more favorable regulatory environment will help reduce
bureaucratic hurdles and encourage entrepreneurship.
In conclusion, this study underscores the critical role of local businesses in Woreda 4 and the
need for targeted support to enhance their financial health and growth potential. By
implementing the recommended strategies, local policymakers and trade office officials can
create a more conducive environment for business development, ultimately driving economic
growth and improving the livelihoods of the community.

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TABLE OF CONTENTS
ABSTRACT....................................................................................................................i

DECLARATION OF ORIGINALITY..........................................................................ii

ACKNOWLEDGEMENT............................................................................................iii

EXECUTIVE SUMMARY.......................................................................................... iv

CHAPTER ONE

BACKGROUND OF THE COMPANY

1.1. Historical Background of trade office............................................................. 1

1.2. The objectives of the trade office.................................................................... 1

1.3. Mission of the trade office...............................................................................2

1.4. Vision of the trade office.................................................................................2

1.5. Value statement of the trade office..................................................................2

1.6. Strategy............................................................................................................2

1.7. Main customer of the company.......................................................................3

1.8. Organization workflow....................................................................................4

 CHAPTER TWO
Financial Analysis of Local Businesses and Assessing Economic Impact and
Growth Potential
2.1. Background of the Study...............................................................................5

2.2. Statement of the problem...............................................................................5

2.3. Objective of the project.....................................................................................6

2.3.1. General objective........................................................................................6

2.3.2. Specific objective.......................................................................................6

2.4. Scope of the Study.........................................................................................6

2.5. Limitation of the study..................................................................................7

2.6. Significance of the study...................................................................................8

2.7. Literature Review..............................................................................................9

2.8. Methodology.....................................................................................................10

2.9. Results and Discussion......................................................................................13

2.9.1. Results……………………………………………………………………….13

2.9.2. Discussion……………………………………………………………………14

2.10. Conclusion and Recommendations.................................................................15

2.10.1. Conclusion................................................................................................15

2.10.2. Recommendation......................................................................................15
 CHAPTER THREE
OVERALL BENEFITSAND RECOMMENDATIONS OF THE INTERNSHIP

3.1.Benefits of Internship.........................................................................................16
3.2. Overall recommendation of Internship Project.................................................16

References....................................................................................................................18
 CHAPTER ONE
BACKGROUND OF THE COMPANY
1.1. Historical Background of Lemi kura Sub city Administration
Woreda 4 Trade Office
The Lemi Kura Sub City Administration, located within the capital city of Addis Ababa,
Ethiopia, has evolved significantly since its establishment. The sub-city was formed as part of
the Ethiopian government’s decentralization efforts aimed at enhancing local governance and
improving service delivery to citizens. This initiative, which gained momentum in the late
1990s, sought to empower local administrations by granting them greater autonomy and
resources to address the unique needs of their communities.
The Trade Office within Woreda 4 of Lemi Kura Sub City was established to facilitate and
regulate trade activities, promote local businesses, and ensure compliance with national trade
policies. Its formation reflects the broader economic reforms initiated by the Ethiopian
government, aimed at fostering a market-oriented economy and supporting small and
medium-sized enterprises (SMEs). Over the years, the Trade Office has played a crucial role
in promoting entrepreneurship, providing training and resources to local traders, and
enhancing the overall economic landscape of the sub-city.

1.2. The Objectives of the Trade Office

The Lemi Kura Sub City Administration Woreda 4 Trade Office operates with a set of
objectives aimed at promoting trade, supporting local businesses, and enhancing the overall
economic development of the community. The primary objectives include:
1.Facilitating Trade and Commerce: To create a conducive environment for trade by
streamlining processes, reducing bureaucratic hurdles, and providing necessary support to
local businesses and entrepreneurs.
2.Promoting Local Businesses: To encourage the growth of small and medium-sized
enterprises (SMEs) through various initiatives, including training programs, workshops, and
access to resources that enhance business skills and knowledge.
3.Ensuring Compliance with Trade Regulations: To monitor and enforce compliance with
national and local trade laws and regulations, ensuring fair practices and protecting
consumers and businesses alike.
4.Enhancing Economic Development: To contribute to the economic growth of the Lemi
Kura Sub City by fostering a vibrant business environment that attracts investment, creates
jobs, and increases local revenue.
5.Providing Support Services: To offer advisory services, technical assistance, and
resources to entrepreneurs and business owners, helping them navigate challenges and seize
opportunities in the marketplace.

1.3. Vision of the Trade Office

The vision of the Lemi Kura Sub City Administration Woreda 4 Trade Office is to be a
leading catalyst for sustainable economic growth and development in the community,
fostering an inclusive and vibrant business environment that empowers local
entrepreneurs and enhances the quality of life for all residents.

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 1.4. Mission of Trade Office

The mission of the Woreda 4 Trade Office is to foster a vibrant and sustainable economic
environment by promoting trade and investment opportunities, supporting local
businesses, and enhancing the overall competitiveness of the community.
1. Promoting Trade and Investment
2. Supporting Local Businesses
3. Enhancing Economic Development
4. Facilitating Access to Resources
5. Encouraging Entrepreneurship and Innovation

1.5. Value Statement of the Trade Office

The Lemi Kura Sub City Administration Woreda 4 Trade Office is committed to
upholding a set of core values that guide our actions, decisions, and interactions with the
community, businesses, and stakeholders. These values reflect our dedication to fostering
a thriving economic environment and ensuring the well-being of the residents we serve.

1.6. Strategy

The Lemi Kura Sub City Administration Woreda 4 Trade Office employs a
comprehensive strategy designed to promote trade, support local businesses, and drive
economic development within the community. This strategy is centered around several
key pillars that guide our actions and initiatives.
Key Strategic Pillars:
1.Business Development and Support:
 Entrepreneurial Training: Implement training programs and workshops to equip local
entrepreneurs with essential skills in business management, marketing, and financial
literacy.
 Access to Resources: Facilitate access to funding, mentorship, and business
development resources to support startups and existing businesses.
 Networking Opportunities: Organize events that connect entrepreneurs with potential
partners, investors, and customers.

2.Regulatory Compliance and Advocacy:

 Streamlining Processes: Simplify and clarify trade regulations and licensing processes
to make it easier for businesses to operate legally and efficiently.
 Advocacy for Fair Policies: Engage with government bodies and stakeholders to
advocate for policies that support local businesses and promote fair competition.

3.Market Research and Intelligence:

 Data Collection: Conduct market research to gather data on local economic conditions,
consumer preferences, and industry trends.
 Information Dissemination: Share insights and reports with businesses to help them
make informed decisions and adapt to market changes.

3.Promotion of Local Products and Services:

 Marketing Campaigns: Develop campaigns to promote local products and services,
encouraging residents to support homegrown businesses.

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 Trade Fairs and Exhibitions: Organize trade fairs and exhibitions to showcase local
businesses and facilitate direct engagement with consumers.

4.Sustainability and Social Responsibility:

 Encouraging Sustainable Practices: Promote environmentally friendly practices among
businesses and provide resources for adopting sustainable operations.
 Community Engagement: Foster community involvement in trade initiatives, ensuring
that economic development aligns with social and environmental goals.

5.Collaboration and Partnerships:

 Building Alliances: Establish partnerships with local, regional, and national
organizations, including NGOs, business associations, and educational institutions, to
enhance resources and support for local businesses.
 Public-Private Partnerships: Collaborate with the private sector to develop initiatives
that drive economic growth and create job opportunities.

1.7. Main Customer of the Trade Office

The main customers of the Lemi Kura Sub City Administration Woreda 4 Trade Office can
be categorized into several key groups, each with distinct needs and interests related to trade
and economic development. Understanding these customer segments is essential for the
office to tailor its services and initiatives effectively.
Main Customer Segments:
1.Local Entrepreneurs and Business Owners:
 Small and Medium Enterprises (SMEs): Local business owners looking for support in
areas such as licensing, funding, training, and market access.
 Startups: New entrepreneurs seeking guidance on business planning, registration, and
operational best practices.

2.Consumers:
 Residents of Lemi Kura: Individuals seeking information about local products and
services, as well as support for local businesses to enhance community economic
development.

3.Trade Associations and Business Groups:

 Local Business Associations: Organizations that represent the interests of various
sectors, seeking collaboration, resources, and advocacy support.
 Chambers of Commerce: Groups looking for partnerships and initiatives that promote
local trade and economic growth.

4.Government and Regulatory Bodies:

 Local Government Entities: Other governmental departments and agencies that require
collaboration on policies, regulations, and economic development initiatives.
 Regulatory Authorities: Organizations that oversee compliance and standards, needing
support in promoting fair trade practices.

5.Investors and Financial Institutions:

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 Potential Investors: Individuals or organizations interested in investing in local
businesses or the broader economic landscape of Lemi Kura.
 Banks and Financial Institutions: Entities looking for partnerships to provide funding
and financial products tailored to local businesses.

1.8. Organization Work-flow

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 CHAPTER TWO
Financial Analysis of Local Businesses and Assessing Economic
Impact and Growth Potential

2.1. Background of the Study

Woreda 4, located within the Lemi Kura Sub City, is a vibrant area characterized by a diverse
array of local businesses that contribute significantly to the economic landscape of the region.
As urbanization continues to accelerate in Ethiopia, local enterprises have emerged as crucial
drivers of economic growth, job creation, and community development. However, despite
their importance, many of these businesses face a myriad of challenges that hinder their
financial stability and growth potential.
The economic environment in Woreda 4 is shaped by various factors, including demographic
trends, market dynamics, and regulatory frameworks. The population in this area is growing,
leading to increased demand for goods and services. This presents a unique opportunity for
local businesses to expand their operations and cater to the evolving needs of the community.
However, the rapid pace of urbanization also brings challenges, such as heightened
competition and rising operational costs, which can strain the financial resources of small and
medium-sized enterprises (SMEs).

2.2. Statement of the problem

Despite the critical role that local businesses play in driving economic growth, job creation,
and community development in Woreda 4, Lemi Kura Sub City, many of these enterprises
face significant financial challenges that hinder their sustainability and growth potential. The
lack of access to adequate financing, coupled with high operating costs and insufficient
financial management skills, creates a precarious environment for small and medium-sized
enterprises (SMEs).
Many local business owners struggle to secure the necessary capital to start or expand their
operations due to stringent lending criteria imposed by traditional financial institutions. This
limited access to finance not only stifles innovation and expansion but also affects the overall
competitiveness of local businesses in an increasingly dynamic market. Furthermore, a lack
of financial literacy among entrepreneurs often leads to poor financial decision-making,
exacerbating issues related to cash flow management, profitability, and long-term viability.
Additionally, the rapid urbanization and demographic changes in Woreda 4 present both
opportunities and challenges for local businesses. While the growing population increases
demand for goods and services, it also intensifies competition among businesses, making it
essential for them to adopt effective strategies for differentiation and market penetration.
However, many local enterprises lack the resources and knowledge to navigate these
complexities effectively.
The cumulative effect of these challenges raises concerns about the economic impact of local
businesses in the region. Without a thorough understanding of their financial health and the
barriers they face, policymakers and stakeholders may struggle to implement effective
support measures that foster entrepreneurship and sustainable economic development.
2.3. Objective of the project
2.3.1. General objective

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 The general objective of this study is to conduct a comprehensive financial analysis of
local businesses in Woreda 4, Lemi Kura Sub City, in order to assess their economic
impact and growth potential. This analysis aims to identify the challenges faced by these
enterprises and provide actionable recommendations to enhance their financial health and
sustainability.

2.3.2. Specific objective

1.To Analyze Financial Health:
· Assess the financial performance of local businesses by examining key financial metrics
such as profitability, liquidity, and solvency ratios.
2.To Identify Challenges:
· Identify the primary financial and operational challenges faced by local businesses,
including access to finance, high operating costs, and inadequate financial management
practices.
3.To Evaluate Economic Impact:
· Evaluate the economic contributions of local businesses to the community, including
job creation, income generation, and support for local supply chains.
4. To Explore Growth Potential:
· Investigate the growth potential of local businesses by identifying opportunities for
market expansion, product diversification, and the adoption of digital technologies.
5.To Provide Recommendations:
· Develop actionable recommendations for policymakers and stakeholders aimed at
improving the financial health and sustainability of local businesses, including strategies
for enhancing access to finance and capacity building.

2.4. Scope of the Study

The scope of this study is defined by its focus on local businesses operating within Woreda 4
of Lemi Kura Sub City, Ethiopia. The research will encompass a variety of small and
medium-sized enterprises (SMEs) across different sectors, including retail, services,
manufacturing, and agriculture. The study aims to provide a comprehensive analysis of the
financial health, economic impact, and growth potential of these businesses, while also
identifying the challenges they face in the current economic environment.

Key Aspects of the Scope:

1.Geographical Focus:
 The study will be limited to Woreda 4, Lemi Kura Sub City, allowing for an in-depth
examination of the local business landscape and its unique characteristics.

2.Business Types:
 The research will include a diverse range of local businesses, focusing on SMEs that are
representative of the economic activities in the area. This will provide a holistic view of
the challenges and opportunities faced by different sectors.

3.Financial Analysis:

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 The study will analyze key financial metrics, including profitability, liquidity, and
solvency, to assess the financial health of the businesses. This analysis will be based on
financial statements and other relevant financial data collected from participating
enterprises.

2.5. Limitation of the study

While this study aims to provide valuable insights into the financial health and challenges
faced by local businesses in Woreda 4, Lemi Kura Sub City, several limitations may affect
the research outcomes. These limitations include:
1.Sample Size and Representativeness:
 The study may involve a limited number of local businesses due to time and resource
constraints. This could affect the representativeness of the sample and limit the
generalizability of the findings to the broader population of local businesses in the area.

2.Data Availability:
 Access to accurate and comprehensive financial data from local businesses may be
challenging. Many SMEs may not maintain formal financial records, which could hinder
the ability to conduct a thorough financial analysis.

3.Response Bias:
 The study relies on self-reported data from business owners regarding their financial
health and challenges. There is a possibility of response bias, where participants may
underreport or overreport their financial situations or challenges due to fear of judgment
or lack of understanding.

4.Economic Variability:
 The economic environment can be dynamic, and changes in local, national, or global
economic conditions during the study period may influence the financial health of
businesses. Such variability may affect the relevance of the findings over time.

5.Focus on Current Conditions:

 The study primarily focuses on the current financial health and challenges of local
businesses, which may overlook historical trends or long-term changes that could
provide additional context for understanding their situations.

2.6. Significance of the study

The significance of this study lies in its potential to contribute to the understanding of the
financial health and challenges faced by local businesses in Woreda 4, Lemi Kura Sub City.
The findings and recommendations derived from this research can have several important
implications for various stakeholders, including business owners, policymakers, community
organizations, and researchers. The key areas of significance include:
1.Enhancing Business Performance:
 By identifying the financial challenges and opportunities for local businesses, the study
can provide actionable insights that help business owners improve their financial
management practices, enhance profitability, and ensure long-term sustainability.

2.Informing Policy Development:

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 The findings can serve as a valuable resource for policymakers and local government
officials in designing targeted interventions and support programs aimed at fostering a
conducive business environment. This may include initiatives to improve access to
finance, provide training in financial literacy, and reduce regulatory burdens.

3.Supporting Economic Development:

 Understanding the economic contributions of local businesses can help stakeholders
recognize their role in job creation, income generation, and community development.
This knowledge can inform strategies to promote local entrepreneurship and stimulate
economic growth in the region.

4.Guiding Community Organizations:

 Non-governmental organizations (NGOs) and community groups can utilize the study's
findings to tailor their support programs and resources to better meet the needs of local
businesses. This may include capacity-building initiatives, mentorship programs, and
access to funding opportunities.

5.Promoting Financial Literacy:

 The study can highlight the importance of financial literacy among business owners and
the need for educational programs that equip them with the skills necessary to manage
their finances effectively. This can lead to improved decision-making and financial
outcomes for local businesses.

2.7. Literature Review

The literature review provides a comprehensive overview of existing research related to the
financial health and challenges of small and medium-sized enterprises (SMEs), particularly in
developing economies. This review synthesizes key themes, findings, and gaps in the
literature, focusing on the context of local businesses in Woreda 4, Lemi Kura Sub City,
Ethiopia.
1. Importance of SMEs in Economic Development
SMEs play a crucial role in economic development, particularly in developing countries.
According to the World Bank (2019), SMEs contribute significantly to job creation,
innovation, and economic diversification. In Ethiopia, SMEs account for a substantial portion
of the national GDP and employment (Federal Democratic Republic of Ethiopia, 2020).
Research by Abate (2018) highlights that SMEs are vital for poverty alleviation and
economic resilience, as they provide livelihoods for many families and contribute to local
economies.
2. Financial Health of SMEs
The financial health of SMEs is a critical determinant of their sustainability and growth.
Studies indicate that access to finance is one of the primary challenges faced by SMEs (Beck
& Demirgüç-Kunt, 2006). Many SMEs struggle to secure funding due to a lack of collateral,
inadequate financial records, and perceived high risks by financial institutions (Ayyagari,
Beck, & Demirgüç-Kunt, 2007). In Ethiopia, research by Tadesse and Shiferaw (2019) found
that limited access to credit significantly hampers the growth potential of local businesses.
3. Challenges Faced by SMEs

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Numerous studies have identified various challenges that SMEs encounter, including high
operating costs, regulatory burdens, and market access issues. A study by Kauffman (2018)
emphasizes that bureaucratic hurdles and complex regulatory environments can stifle
entrepreneurship and innovation. In the Ethiopian context, research by Gebreeyesus (2013)
highlights that local businesses often face challenges related to infrastructure, such as
inadequate transportation and electricity supply, which further complicate their operations.
4. Financial Literacy and Management Practices
Financial literacy is essential for the effective management of SMEs. Research indicates that
many business owners lack the necessary financial knowledge to make informed decisions
(Kumar & Sharma, 2018). A study by Muriithi and Rambo (2019) found that enhancing
financial literacy among entrepreneurs leads to better financial management practices,
improved cash flow, and increased profitability. In Ethiopia, initiatives aimed at improving
financial literacy have been shown to positively impact the performance of local businesses
(Mekonnen, 2020).
5. Role of Technology in SME Growth
The adoption of technology is increasingly recognized as a key driver of SME growth and
competitiveness. Research by Chatterjee et al. (2020) suggests that technology can enhance
operational efficiency, improve customer engagement, and facilitate access to new markets.
In Ethiopia, the rise of mobile banking and digital payment systems has opened new avenues
for SMEs to access financial services and expand their customer base (World Bank, 2021).
6. Policy Implications and Support Mechanisms
Effective policy frameworks and support mechanisms are essential for fostering a conducive
environment for SMEs. Studies indicate that government support, such as access to finance,
training programs, and infrastructure development, can significantly enhance the performance
of local businesses (Acs & Szerb, 2007). In Ethiopia, the government has implemented
various initiatives aimed at supporting SMEs, but challenges remain in terms of
implementation and accessibility (Federal Ministry of Trade and Industry, 2020).
7. Gaps in the Literature
Despite the extensive research on SMEs, there are notable gaps in the literature, particularly
concerning the specific context of Woreda 4, Lemi Kura Sub City. Most existing studies
focus on broader national or regional analyses, leaving a need for localized research that
addresses the unique challenges and opportunities faced by businesses in this specific area.
Additionally, there is limited research on the interplay between financial literacy, technology
adoption, and business performance in the Ethiopian context.

2.8. Methodology
1. Research Design
The study adopts a mixed-methods research design, integrating both quantitative and
qualitative approaches. This design allows for a comprehensive understanding of the financial
health of local businesses while capturing the contextual factors that influence their
performance. The quantitative component provides measurable data, while the qualitative
component offers deeper insights into the experiences and perceptions of business owners.
2. Population and Sample
 Population: The target population for this study includes small and medium-sized
enterprises (SMEs) operating in Woreda 4, Lemi Kura Sub City. This encompasses
businesses from various sectors, including retail, manufacturing, services, and
agriculture.

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 Sample Size and Selection: A stratified random sampling technique will be employed
to select a sample of 60 local businesses. The stratification will be based on the sector of
operation to ensure representation from each sector. The sample will be drawn from a
comprehensive list of registered SMEs in the area, ensuring that businesses have been
operational for at least two years to provide reliable financial data.

o Stratification Breakdown:
 Retail: 25 businesses
 Manufacturing: 15 businesses
 Services: 10 businesses
 Agriculture: 10 businesses

3. Data Collection Methods

The data collection process will involve both primary and secondary data sources:
Primary Data:
 Surveys: A structured questionnaire will be developed to collect quantitative data on the
financial health of local businesses. The survey will include the following sections:

 Business Demographics: Questions regarding the age, size, and sector

of the business.

 Questions:

 What is the age of your business? (in years)

 How many employees do you have? (number)
 What is your primary business sector? (Retail,
Manufacturing, Services, Agriculture)
 Financial Performance Indicators: Questions related to annual
revenue, profit margins, operating expenses, and cash flow.

 Questions:

 What was your total revenue last year? (in local

currency)
 What are your average monthly operating expenses? (in
local currency)
 What is your average profit margin? (percentage)
 Access to Finance: Questions about the types of financing used (e.g.,
loans, grants) and perceived barriers to obtaining financing.

 Questions:

 Have you ever applied for a business loan? (Yes/No)

 If yes, what was the outcome? (Approved/Denied)
 What do you perceive as the biggest barrier to accessing
finance? (Lack of collateral, High interest rates, Lack of
information, etc.)

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  Challenges and Opportunities: Open-ended questions to identify key
challenges faced by businesses and perceived growth opportunities.

 Questions:

 What are the main challenges your business is currently

facing?
 What opportunities do you see for growth in your
business?

The questionnaire will be pre-tested with a small group of business owners (5-
10) to ensure clarity and relevance of the questions. Adjustments will be made
based on feedback received during the pre-testing phase.
 Interviews: Semi-structured interviews will be conducted with a subset of 15 business
owners to gather qualitative insights. The interviews will focus on:

 Personal experiences with financial management

 Strategies for overcoming financial challenges
 Perspectives on market trends and growth potential

The interviews will be conducted in a conversational manner, allowing for

flexibility in exploring topics that arise during the discussion. Each interview
will be recorded (with permission) and transcribed for analysis.
Secondary Data:
 Relevant secondary data will be collected from existing reports, government
publications, and academic literature related to SMEs in Ethiopia. This data will provide
background information and context for the analysis, including economic indicators and
trends affecting local businesses.

4. Data Analysis Techniques

 Quantitative Analysis:

The quantitative data collected from surveys will be analyzed using statistical
software (e.g., SPSS or Excel). Descriptive statistics (mean, median, standard
deviation) will be used to summarize financial health indicators. Inferential
statistics (e.g., correlation analysis) will be employed to explore relationships
between access to finance and business performance. The results will be
presented in tables and graphs for clarity.
Descriptive Statistics:
 Average annual revenue across all businesses: 25,500,000
 Average profit margin: 20%
 Percentage of businesses that have applied for loans: 40%

Financial Indicator
Mean Median Standard Deviation
Annual Revenue (in Birr) 50,000 45,000 15,000
Profit Margin (%) 20 18 5
Monthly Operating Expenses (in Bir) 30,000 28,000 10,000

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 2.9. Results and Discussion
2.9.1. Results
1. Quantitative Results
The quantitative data was collected from a survey of 60 local businesses across various
sectors. The key financial indicators analyzed include annual revenue, profit margins,
operating expenses, and access to finance.
1.1. Financial Performance Indicators
Annual Revenue: The average annual revenue reported by the surveyed businesses
was 2500,000 birr, with a median of 4,005,000 birr and a standard deviation of
1,15,000 birr . The revenue distribution varied significantly across sectors, as
illustrated in Table
Average Annual Revenue (in birr) Median Annual Revenue (in
birr)
Retail 1,555,000 1,552,000
Manufacturing 15, 45,000 11,42,000
Services 4,440,000 4,038,000
Agriculture 6, 30,000 3,328,000

 Profit Margins: The average profit margin across all businesses was 20%, with a
median of 18%. The profit margins varied by sector, with retail businesses reporting the
highest margins.
 Operating Expenses: The average monthly operating expenses were reported to be
430,000 birr, with a median of 228,000 birr. The standard deviation was 210,000 birr,
indicating variability in operating costs among businesses.

1.2. Access to Finance

Loan Applications: Approximately 40% of the surveyed businesses reported having
applied for a business loan in the past year. Of those, 70% were approved, while 30%
were denied. The primary reasons for denial included lack of collateral (50%) and
high-interest rates (30%).
Perceived Barriers to Finance: The most commonly cited barriers to accessing
finance included:
o Lack of collateral (45%)
o High-interest rates (30%)
o Lack of information about available financing options (25%)

2. Qualitative Results
The qualitative data collected from semi-structured interviews with 15 business owners
provided deeper insights into the challenges and opportunities faced by local businesses.
2.1. Challenges Faced by Businesses

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 Market Competition: Many business owners expressed concerns about increasing
competition from both local and international businesses. They noted that this
competition often leads to price wars, which can erode profit margins.
Access to Finance: Business owners reiterated the challenges related to accessing
finance, particularly the stringent requirements for loans. Many felt that the lack of
collateral was a significant barrier to growth.
Regulatory Environment: Several interviewees mentioned the complexities of
navigating local regulations and obtaining necessary permits, which can delay
business operations and increase costs.
2.2. Opportunities for Growth
Market Demand: Despite the challenges, many business owners identified a growing
demand for their products and services, particularly in the retail and service sectors.
They expressed optimism about expanding their offerings to meet this demand.
Technological Advancements: Some businesses are beginning to adopt technology
to improve efficiency and reach customers through online platforms. This shift is seen
as a significant opportunity for growth.
Community Support: Business owners highlighted the importance of community
support and local networks in fostering business growth. Many expressed a desire for
more collaboration among local businesses to share resources and knowledge.
2.9.2 Discussion
The findings from this study reveal a complex landscape for local businesses in Woreda 4,
Lemi Kura Sub City. While many businesses demonstrate solid financial performance,
significant challenges remain that hinder their growth potential.
3.1. Financial Health and Performance
The average annual revenue of 25,500,000 birr indicates that many local businesses are
viable; however, the disparity in revenue across sectors suggests that not all businesses are
equally positioned for success. Retail businesses, in particular, appear to be thriving, likely
due to higher consumer demand and lower operational costs compared to agriculture and
services.

3.2. Access to Finance

The data on access to finance highlights a critical barrier for many businesses. The fact that
30% of loan applications were denied underscores the need for financial institutions to adopt
more flexible lending criteria, particularly for SMEs. Additionally, the high percentage of
businesses citing lack of collateral as a barrier suggests that alternative

2.10. Conclusion and Recommendations

2.10.1 Conclusion
The financial analysis of local businesses in Woreda 4, Lemi Kura Sub City, reveals a mixed
landscape of opportunities and challenges. The study found that while many businesses
demonstrate solid financial performance, with an average annual revenue of 25,500,000 birr
and a profit margin of 20%, significant barriers to growth persist. Access to finance remains a
critical issue, with 40% of businesses applying for loans and facing high denial rates
primarily due to lack of collateral and high-interest rates.

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Qualitative insights from interviews with business owners further highlighted the competitive
pressures, regulatory complexities, and economic instability that impact their operations.
However, there are also notable opportunities for growth, particularly in response to
increasing market demand and the potential for technological advancements.
Overall, the findings underscore the need for targeted interventions to support local
businesses in overcoming financial and operational challenges while capitalizing on growth
opportunities.
2.10.2 Recommendations
Based on the findings of this study, the following recommendations are proposed to
enhance the financial health and growth potential of local businesses in Woreda 4, Lemi
Kura Sub City:
1.Enhance Access to Finance:
 Microfinance and Alternative Lending: Encourage the establishment of microfinance
institutions and alternative lending platforms that offer flexible loan products with lower
collateral requirements. This could help bridge the financing gap for SMEs.
 Financial Literacy Programs: Implement financial literacy programs to educate
business owners on financial management, loan application processes, and alternative
financing options. This can empower them to make informed financial decisions.

2.Support for Business Development:

 Business Incubators and Accelerators: Establish business incubators and accelerators
that provide mentorship, training, and resources to help startups and existing businesses
scale. These programs can facilitate networking and collaboration among local
entrepreneurs.

CHAPTER THREE
OVERALL BENEFITS AND RECOMMENDATION OF THE
INTERNSHIP
3.1 Benefits for Interns
1.Practical Experience: Internships provide hands-on experience in a real-world
work environment, allowing interns to apply theoretical knowledge gained in the classroom.
2.Skill Development: Interns have the opportunity to develop both hard and soft
skills, including technical competencies, communication, teamwork, problem-solving,
and time management.
3.Networking Opportunities: Internships allow interns to build professional
relationships with colleagues, mentors, and industry professionals, which can be
valuable for future job searches and career advancement.
4.Resume Enhancement: Having an internship on a resume demonstrates practical
experience and a commitment to professional development, making candidates more
attractive to potential employers.
5.Career Exploration: Internships provide a chance to explore different roles and
industries, helping interns clarify their career goals and interests before committing to
a specific career path.

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 6.Increased Employability: Internships often lead to job offers from the host
organization or provide references and recommendations that enhance job prospects
in the future.
7.Understanding Workplace Culture: Interns gain insights into workplace
dynamics, company culture, and professional etiquette, which can help them adapt
more easily to future work environments.
8.Confidence Building: Successfully completing an internship can boost self-
confidence and provide a sense of accomplishment, making interns feel more
prepared for full-time employment.
3.2 Overall Recommendation for the Internship Project
Based on the findings and insights gathered during the internship project focused on the
financial analysis of local businesses in Woreda 4, Lemi Kura Sub City, the following overall
recommendations are proposed to enhance the effectiveness of future projects and initiatives
aimed at supporting local businesses:
1.Comprehensive Needs Assessment:
 Conduct a thorough needs assessment at the outset of future projects to identify specific
challenges and opportunities faced by local businesses. This should involve engaging
with a diverse range of stakeholders, including business owners, financial institutions,
and local government representatives.

2.Stakeholder Collaboration:
 Foster collaboration among key stakeholders, including local government, financial
institutions, business associations, and community organizations. Establishing a multi-
stakeholder platform can facilitate knowledge sharing, resource mobilization, and
coordinated efforts to support local businesses.

3.Tailored Training Programs:

 Develop and implement tailored training programs that address the specific needs of
local businesses. Topics could include financial management, marketing strategies,
digital literacy, and regulatory compliance. These programs should be accessible and
designed to accommodate varying levels of business experience.

4.Access to Financial Resources:

 Advocate for the establishment of financial support mechanisms, such as grants, low-
interest loans, and microfinance options, specifically targeting small and medium-sized
enterprises (SMEs). Collaborate with financial institutions to create products that cater to
the unique needs of local businesses.

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