RIFT VALLEY UNIVERSITY

FACALTY OF BUSINESS AND SOCIAL SCIENCE

DEPARTMENT OF ECONOMICS

THE ROLE OF MICRO AND SMALL FOR SOCIO-ECONOMIC

DEVELOPMENT IN CASE OF SEBETA WOREDA

PREPARED BY:
NAME ID.NO
1. KUMSA WEYECHA ----------------------------------RVS/0104/19
2. KETEME MERGA ------------------------------------RVS/0101/19
3. TSIGE DAMANE --------------------------------------RVS/0126/19
4. KALEAB ABEBE---------------------------------------RVS/0099/19
5. KALBESA KUMA ------------------------------------- RVS/0097/19

A RESEARCH SUBMITTED TO THE DEPARTMENT OF ECONOMICS IN

PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE BACHELOR
OF ART (BA) DEGREE IN ECONOMICS

ADVISER: YOBSAN (M.A)

DECEMBER, 2021
SEBETA, ETHIOPIA
Approval Sheet

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

Peppered by:

1. _______________ Signature: ……………

2. _______________ Signature: ……………
3. _______________ Signature: ……………
4. _______________ Signature: ……………
5. _______________ Signature: ……………

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---------------

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 Acknowledgements
We will like to express our special thanks to almighty God, who give us peace and kept as from
all endangers. Next we will like to express our deepest and heart full appreciation for our advisor
Mr. Yobsan for his precious time devoted in reading and correcting our paper and for guiding us
in writing senior essay.

In addition, our deepest gratitude goes to all Ethiopia Insurance Corporation insurance staff and
management customers that have fully cooperated an interview and in filling questionnaires
respectively. Lastly our special thanks extended to all individuals who helped us towards the
completion of this paper.

Table Contents
Contents
Approval Sheet.............................................................................................................................................I
ii
Acknowledgements.....................................................................................................................................ii

Table Contents...........................................................................................................................................iii

Abstract......................................................................................................................................................vi

List of Tables.............................................................................................................................................vii

List of Figures..........................................................................................................................................viii

Acronyms...................................................................................................................................................ix

Chapter One.................................................................................................................................................1

Introduction.................................................................................................................................................1

1.1. Background of the study..............................................................................................................1

1.2. Statement of the problem.............................................................................................................4

1.3 Objective of the study........................................................................................................................5

1.3.1. General objective of the study...................................................................................................5

1.3.2. Specific objective.......................................................................................................................5

1.4 Significance of the study....................................................................................................................5

1.5 Scope of the study........................................................................................................................5

1.6 Organization of the paper..................................................................................................................6

1.7 Limitation of the paper......................................................................................................................6

CHAPTER TWO.........................................................................................................................................7

LITERATURE REVIEW............................................................................................................................7

2.1. Theoretical Review...........................................................................................................................7

2.1.1. Definition...................................................................................................................................7

2.1.2. The role of micro and small scale enterprises............................................................................7

2.1.3. MSEs Policy and strategy in Ethiopia........................................................................................8

2.1.4. Importance of MSEs..................................................................................................................9

2.1.5. Major constraints of micro and small scale enterprise.............................................................11

2.2. Empirical Literature........................................................................................................................12

2.2.1. Actual contribution OF MSEs to the Ethiopian Economy........................................................12

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 2.2.2. Major constrains of Ethiopia’s MSEs......................................................................................12

CHAPTER THREE...................................................................................................................................14

3. RESEARCH DESIGN AND METHODOLGY.....................................................................................14

3.1 Research Design..............................................................................................................................14

3.2 Research Approach..........................................................................................................................14

3.2.1 Qualitative Approach................................................................................................................14

3.2.2 Quantitative Approach..................................................................................................................14

3.3. Type and source of data..................................................................................................................14

3.4. Method of data collection...............................................................................................................15

3.5. Methods of Sampling techniques and sample size..........................................................................15

3.6. Method of data analysis..................................................................................................................16

3.7 Validity and Reliability...................................................................................................................16

3.8 Ethical Consideration.......................................................................................................................16

Chapter Four..............................................................................................................................................17

4. Data analysis and discussion..................................................................................................................17

4.1. Characteristics of sample households.............................................................................................17

4.2. Level and constraints of MSEs.......................................................................................................21

4.3. Contribution made by MSEs for socio-economic development......................................................27

CHAPTER FIVE.......................................................................................................................................29

CONCLUSION AND RECOMMENDATION.........................................................................................29

5.1. Conclusion......................................................................................................................................29

5.2. Recommendation............................................................................................................................29

REFERENCES..........................................................................................................................................31

Appendix...................................................................................................................................................32

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 Abstract
This paper is to study the significance of MSES for socio-economic development in the study
area in reducing poverty and unemployment is very crucial. The case of MSES in the Sebeta
Awas Woreda have been taken to explore their contribution in employment creation and income
improvement and also assess the constraints that inhibit the sector not to develop as required like
unavailability of sufficient capital to run the business and other related problems.

Both the primary(interview questionnaire) and secondary data from the workers or operators of
the business and from the micro and small scale enterprises of Sebeta Awas Woreda respectively
replenished the information need of the researchers for the completion of the study.

The back ground and related literature to these issues are discussed, conclusions and
recommendations are also suggested.

v
 List of Tables
Table 4.1: Educational level .............................................................................................................20

Table 4.2: Types of business ............................................................................................................21

Table 4.3: Reasons to get in to the business .....................................................................................22

Table 4.4: Level of Capital ..............................................................................................................23

Table 4.5: Source of capital .............................................................................................................24

Table 4.6: Reasons for location preference ......................................................................................25

Table 4.7: Types of support .............................................................................................................26

Table 4.8: Anticipated problems ......................................................................................................27

Table 4.9: Present problems .............................................................................................................28

Table 4.10: The income improvement of MSEs respondents ........................................................... 32

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List of Figures
Figure 4.1: The sex structure of respondents ....................................................................................18

Table 4.2: The age structure of respondents .....................................................................................19

Table 4.3: Respondents monthly income before their engagement in to the sector .........................33

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Acronyms

ADLI – Agricultural Development led industrialization

CSA – Central Statistical Authority

FDRE, MWUD – Federal Democracy Republic of Ethiopia Ministry of work and Urban
Development

ILO – International Labor Organizations

MSEs – Micro and Small Scale Enterprises

WB – World Bank

MEI- Micro Enterprise and Industry

viii
 Chapter One

Introduction
1.1. Background of the study

The issue of Micro and Small Enterprises (MSEs) has received a great deal of attention as
priority areas that are crucial for stimulating economic growth in both developed and
developing countries. This has substantial growth in both public and private enterprise in the
development of economic growth (Berihu, 2006). In relation to this Kayode and Afred
(2014) have also pointed out the attention given to MSEs as “Globally, governments are
giving attention to development of MSEs”. Thus, according to Kayode and Afred (2014)
argument, giving a due attention development of MSEs is fighting poverty, creating jobs,
mobilize local resource, reduce migration from rural to urban, and generating income. Thus,
African countries have been faced challenges to fight against unemployment and poverty.
This shows that giving attention to MSEs would have implication for eradicating poverty and
unemployment.

MSEs are widely recognized and accepted for their contribution in terms of poverty
reduction, employment creation, and income generating. As a result MSEs become a great
concern to many government policy makers and researchers globally because of their
realization of economic contribution to GDP and tool of poverty reduction (Abraham, 2013;
Admasu, 2012; James et al, 2013; Tassew et al, 2015). Therefore, having recognized the
contribution made by MSEs, direct intervention and support of government and academician
researchers is crucial to enhance the performance of MSEs. Apart from MSEs’ contribution to
employment creation, income generating, and poverty
alleviation, MSEs have also found to play a key role in stimulating other sectors such as
trade, construction, services and agriculture (ILO, 2006; Abraham, 2013; Kayode and Afred
2014). There is also a common interest among economic experts, scholar, practitioners, and
policy makers to identify what factors affecting performance of MSEs because they are
considered to be the back bone of any economy and the engine for economic and
employment performance (Donglin, 2009; Kayode and Afred 2014; Alexander, 2014;
Berihu et al, 2014). In addition, Alexander, (2014) in his study noted that sustainable local
1
economic development and poverty reduction through creation of job opportunity have been
realized when governments of developing countries designed MSEs’ based policies. Tassewet al
(2015) in their study on associated factors of youth owned MSEs survival have also thrown light
on the importance of MSEs as a principal source of growth, generating income,
and employment and are at the heart of an economic activity and development for developing
countries. Therefore, in recognition for MSEs contribution, government intervention and
massive support to the sector can facilitate economic growth, creating long term jobs, and
income generating thereby poverty reduction. For this reason studies aiming at investigating
determinants of MSEs’ performance have become important (James et al, 2014)

The development of micro and small scale enterprise sector in Ethiopia becoming, a subject of
national importance. The socio- economic role of MSEs sector in Ethiopia are not without
constraints. T

he face problem of policy and regularity frame works, structural and institutional anomalies, lack
of smooth supply of raw materials and lack of working premises. these problem call for
government intervention by recognizing and paying due attention to the promotion and
development of MSEs. it is also important to formulate strategies in ways to address the
challenges of unemployment, economic growth, equity and overall poverty reduction of the
country.(Elhom, 2014).

In Ethiopia MSEs has neglected for long until a shift was made to market economic system.
However, especially following the country’s shift to the market economic system, the
government as well as non-governmental organizations (NGOs) and donors have shown
interest in the area to address the problem of unemployment. This shift to market economy
system would mean the strengthening of the private sector which fosters the development of
MSE and the establishment of the Federal Micro and Small Enterprises Development Agency to
pull the country out of its problems of poverty and unemployment. The promotion of this
sector is justified on the grounds of enhancing growth with equity, creating long-term jobs,
providing the basis for medium and large enterprises and promoting exports. The strategy
puts a means to support the MSEs through the provision of infrastructure, technology,
training and working space, financial facilities, supply of raw materials, and access to market
because MSEs are commonly accepted as the right solution to reduce urban unemployment

2
and hence reduce poverty (Mulu, 2009; Abraham, 2013; Berihu et al, 2014). The efficacy of
such interventions, however, depends on identifying key factors that foster or inhibit
development by MSEs and their impact on employment is crucial in order to formulate
effective policies to enhance performance of MSEs (Mulu, 2009; Abraham, 2013 in Ethiopia
(Taddese, 2001; Endashaw, 2005; Mesfin, 2015; Mehari, 2016)
Recognizing the significance of MSEs, the Ethiopia government designed the micro and
small enterprises (MSEs) development strategy to promote the micro and small enterprises
development by the issuance of National Micro and Small Enterprises Strategy in 1997/2011 and
the establishment of the Federal Micro and Small Enterprises Development Agency to
pull the country out of its problems of poverty and unemployment. The promotion of this
sector is justified on the grounds of enhancing growth with equity, creating long-term jobs,
providing the basis for medium and large enterprises and promoting exports. The strategy
puts a means to support the MSEs through the provision of infrastructure, technology,
training and working space, financial facilities, supply of raw materials, and access to market
because MSEs are commonly accepted as the right solution to reduce urban unemployment
and hence reduce poverty (Mulu, 2009; Abraham, 2013; Berihu et al, 2014). The efficacy of
such interventions, however, depends on identifying key factors that foster or inhibit
development by MSEs and their impact on employment is crucial in order to formulate
effective policies to enhance performance of MSEs (Mulu, 2009; Abraham, 2013)

The sector of micro and small scale enterprise in in Sebeta Awas woreda has various complicate and
interlocked constraints and problems which hinder its potential contribution to the socio-economic
development of the country. in Sebeta Woreda , like other towns or Woreda of the country, MSEs has
begun its services in 2001. in Sebeta Awas Woreda , MSEs office with different sectors, such as
agriculture, construction, manufacturing, service , trade and Manning . that MSEs, promotion office start
to provide some facilities for the operators of the sectors, like cooperative them giving some training and
other services operator. however, impact of such policies has on poverty reduction and creation
employment in the sector. the issue which needs and assessment own survey.(Sebeta Awas Woreda MEI
Office)

3
1.2. Statement of the problem.

Poor countries, like Ethiopia, at this time are highly attached with different problems like
poverty, unemployment, backward culture, famine, illiteracy, high population growth rate etc.
(According to Federal Urban Development Package of Ethiopia 2005,)

MSES have great contribution for socio – economic development in any country especially in developing
countries in terms of employment creation, income generation as well as value addition to the economy.
Even though, MSEs are crucial for sustainable development, only a few countries with small population
and great wealth of natural resources have succeed in achieving a high prospect. Furthermore, Ethiopia
formulate a development package with a major objective to give strong support for MSEs and enable to
reduction of unemployment and poverty that means an improvement of socio-economic development.
Besides these, the major objective of the development package of Ethiopia April 2014 Addis Ababa are to
provide credit service of Birr 8,168, 544, 522 for 1,201,579 sectors beneficiaries and enable 3,340,948
beneficiaries to use improved and modern equipment and also create foreign market opportunity for
687,901 beneficiaries engaged on the work field for a region of Ethiopia (Andualem and Abraham 1997).

Moreover, the MSEs of Sebeta Awas Woreda contribute a lot through creating job opportunity to a
number of people and they use of the indigenous resource of the Woreda as input for their production
activities. However, some of the MSEs become inefficient due to various factors such as lack of finance
and credit, problem in marketing and demand for their product, the technique for production, institutional
support and infrastructure problem. even though MSEs of Sebeta Awas Woreda has great contribution in
building up of urban industrial production activity and improving the economic growth of the Woreda
(Twon) by reducing the level of poverty and un employment of the woreda which results improving the
living standard of the society. but currently some of the MSEs of the Woreda become there is no
sufficient accessibility to finance and credit services by the government and nongovernment bodies and
also there is no enough support in terms of technology that is the MSEs of Sebeta Awas Woreda do not
perform their activities on their full capacity. (from Woreda MEI Office 2013)

1.3 Research Questions

Therefore, this study would try to answer the following questions.

 What are the significance of MSEs for socio- economic development in Sebeta Awas Woreda?

 What are the contribution of MSEs in employment generation and economic security?

4
  What are constraints does the MSEs of the town encounter?

1.3 Objective of the study

1.3.1. General objective of the study

The general objectives of the study are to assess the significance of micro and small scale enterprise for
social and economic development in Sebeta Awas Woreda.

1.3.2. Specific objective

The specific objectives of the study would focus on:-

 To evaluate the contribution of micro and small scale enterprise on employment generation and
creating economic security.

 To evaluate the performance of micro and small scale enterprise in Sebeta Awas Woreda.

 To forward policy recommendations based on the finding of the study.

1.4 Significance of the study

The researchers believe that understanding of the role of micro and small scale enterprise in economic
sectors is important. In general this study has the following significance.

 The result of the study would help the policy makers to formulate certain policy in light of
changing condition to resolve the problem of micro and small scale enterprise.

 The study was provide better understanding of the current status of MSEs which help to create
awareness and to take positive action by government and other bodies.

 It could be used as sources of document for other researchers.

1.5 Scope of the study

The study would conduct in Sebeta Awas Woreda MEI Office. it deals with the significance of micro and
small scale enterprise for socio economic development of the woreda . However, due to time and resource
constraints the study will focus on the significance of micro and small scale enterprise for socio –
economic development in the Sebeta Awas MEI Office.

5
1.6 Organization of the paper
The paper was having five chapters . The first chapter deals with introduction part and the second is
concerned with literature review. The third chapter deals with about methodology and sources of data.
The fourth chapter deals about discussion and results and The final chapter is concerned with conclusion
and recommendation.

1.7 Limitation of the paper

In the process of conducting this research a number of constraints are occurred. The major factors which
limit the study was lack of response on time from concerned bodies, shortage of time, financial
constraints, lack of updated data, shortage of organized information about the sectors was the major
limitation which faced during the study.

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 CHAPTER TWO

LITERATURE REVIEW
The history of small business has been one of the most controversial stories in economic
development in the world. It is not known when MSEs start. The role of small business in an
economy has frequently been undermined and misinterpreted this is because that many
governments emphasize on the attraction and promotion of large enterprises by thinking that
most of the economic development or income comes from large industries

2.1. Theoretical Review

2.1.1. Definition
Definition of micro and small enterprise has been based on such as either quantitative or qualitative, never
the less, many developing countries apply, the first one, qualitative definition are based on the specific
parameters which include factors as the number of employees, capital and sales turnover, type and
ownership (paul burns and Jim Dewhurst, 1996).

The term enterprise is used toward all industrial, commercial, agricultural, service rendering and financial
intermediaries. In another way micro enterprise are business activities that are independently owned and
that have a small share of market, managed by owner and employing five or less people. Small scale
industry means any manufacturing formulation, alteration, prefabrication and preparation activities
organized with capital ceiling and carried using mainly motive power driven machinery and equipment
with a view to selling products and including engineering services (IBID).

CURRENTLY, the government of Ethiopia in its federal micro and small enterprise strategy define micro
and small enterprise automations as follows; Micro enterprise are those business enterprise with paid up
capital of not exceeding birr 20,000 excluding high technology consultancy firms and other high
technology establishment. Small enterprise are those business enterprise with paid up capital of above
birr 20,000 and not exceeding birr 500,000 excluding high technology consultancy and other high
technology establishment (CSA, 2006).

2.1.2. The role of micro and small scale enterprises

The development of micro and small scale enterprise for rural poor is desirable for many reason. In
addition to providing the poor with purchasing power, these small scale production activities lay the
foundation for improved rural living standard, thereby stemming rural urban migration. Not only, do they
address the issue of poverty food security at the gross rates level by teaching the poor new skill and thus
making themselves relevant, they also help generate greater savings for increasing the importance of the

7
normally marginalized rural food, especially in the formulation of development policy additional
employment and demands generated through the adoption of labor intensive technology which in turn
contributes to reducing pressure on land and the environment. An early steps in helping the fact to embark
an viable income generating activities by providing them with the capital necessary, redid schemes have
been the most effective in promoting private famers, land less families and the poorest woman (Almagir
and Arara, 1999).

2.1.3. MSEs Policy and strategy in Ethiopia

Economic policies, strategies and legal and regulatory framework are prerequisite in order to create a
conductive environment to promote MSEs. Gebrehiwot (2004), has argued that in Ethiopia deliberate
efforts to promote MSEs is relatively a recent phenomena. During the Derg regime, due to its ideology.
Policies and regulations the environment was not conductive for the I private sector. Restrictive policies
favoring, state organization in using foreign exchange and bank loans, limits on single borrower loans,
restriction on license and investment, absolute poverty given to the public sector in access to trained,
qualified manpower, etc… were in place. In general, during the derg regime the legal requirements to
obtain license were bureaucratic and in effect discouraged the participation of MSEs operations. Foreign
change control and heavy restriction had created scarcity of imported commodities and corrupt and rent
seeking business community (Gebrehiwot, 1997).

After the downfall of the Derg regime in (1991) drastic measures taken to transform the command to a
market led economy, many of which are obstacle to MSEs. Directly or indirectly the main micro-
economic reforms that affects the development of MSES includes among other are

 Adoption of market economic policy

 Devaluation of the local currency

 Formulation of a new labor law

 Financial sector reforms including the opening of private bank;

 Insurance companies and micro finance institutions

There are also MSEs focused measures including the issuance of national MSEs strategy and design a
frame work for institutional arrangement in 1997 (IBID).

The 1997 national MSEs strategy figure out the various plaices, structural and institutional related
problems that constrained the role of the MSEs sector in contribution to national economy. Thus,

8
primarily aims at creating enabling legal, institutional and other supportive environments for the
development of MSEs. The specific objectives of the strategy include the following.

 Facilitating economic growth and bring about equitable development

 Creating long term (sustainable) jobs

 Strengthening cooperation between MSEs

 Providing the basis for medium and large scale enterprises

 Promoting exports and

 Balancing preferential treatment between MSEs and bigger enterprises

Fundamental principles that guide interventions by stockholders stated in the strategy are as follows:

 Support to the MSEs operators will be based on the agricultural development led industrialization
(ADLI) and private sector development.

 Support services should, as much as possible, is based on fees

 Addressing marketing problems of MSEs operators will be given due consideration.

 Emphasis will be given to the advancement of women

 The staff of the institute zones should be adequately skilled and trained.

 The private sector will be involved in the supply of commercial boss of MSEs operations (quoted
from Oromia micro and small business enterprises development and promotional strategy, 1999).

2.1.4. Importance of MSEs

I. creation of employment

Employment is one of the major objectives of the national development policy of a country. Thus,
technologies that require more labor per unit of out put should be favored than those which need less
labour. Being labor intensive and capital saving, small industries would help in solving many of the
problem faced Ethiopia. Unemployment is one of the most problem of the country, small enterprises have
a great potential to absorb the growing numbers of unemployed and underemployed population. Since
small enterprises are labours intensive they create more employment per unit of capital invested they also
use more unskilled labour force than the large ones. Because small industries could be dispersed in rural

9
areas they can help reduce the flow of unemployment people from the rural areas to urban centers
( Elhom , 2014).

II. Potential for resource mobilization

Economic growth in Ethiopia is constrained, among other thing by shortage of capital. Thus, much of the
required investment for the industrial sector should come from domestic saving owning to the absence of
financial institution in the rural areas which could mobilize idle family savings, such a saving could be
invested in unproductive activities. Thus one of the main development objectives of the country is to
mobilize under utilized savings and transform them into more productive resources, so that the problem
of shortage of capital could be alleviated (Assefa, 1997).

III. Entrepreneurship Development

MSEs, which are characterized by acquisition of income through specialized activities, self-employment
sometimes family or apprentices with a certain level of experience, mostly worked in a competitive
market can create entrepreneurial spirit (Zewdu 2004). Initially unskilled workers develop their
entrepreneurial and managerial talents by exercising in MSEs that are relatively easy to start and manage
(Abraham, 1997).

IV. Income equality

There is a strong belief that micro and small business enterprises serve as a vehicle for introducing more
equitable income distribution (ILO, 1987). MSEs by making use of predominantly local resource engage
in the production of goods and services of mass consumption and stimulate the growth of the economy
(Feiruz, 2005). The MSEs operator produce goods and sells to lower income groups and others MSEs.
Operators that are consumer and at the same time producers. There enterprises contribute to equity by
producing goods and services that are widely affordable (WB, 2002).

V. contribution to consumers

MSEs Produce relatively chapter goods and services locally using labour intensive methods satisfying the
needs of particularly the poor people hence contributing to the variety of consumer goods. The low level
of price is due to the fact that the products are produced using local resources, more labour and very little
sophisticated technology (Andualem, 1997).

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2.1.5. Major constraints of micro and small scale enterprise
Even though MSEs has a great role contribution role contribution for socio – economic development, it
flake critical constraints both at start up and the operation level, some of these constraints are as follows
(FDRE, MWUD 2006).

I. Lack of clear and program of national policy

Despite the strategies, most intervention list policies regarding MSEs are in appropriate and in practical.
For instance, most government polices have tendency over regulate and limit the growth of private sector
enterprise and they over bureaucratized and unfriendly support some business. (Yared, 2007).

II. Lack of access to capital and credit

This means lack of adequate investment capital, lack of sufficient loan and in sufficient financial market
interms of facilitating financial resources are the major obstacles in doing business, particularly in
informal sector. Most micro and small scale enterprise are highly risky ventures involving excessive
administrative costs and lack of experience in dealing with financial institution and do not have attack
record of credit worthiness with banks. Most micro and small scale enterprise is unable secure collateral
requirements. As a result of absence in financing the creation new enterprises and the growth and survival
of existing one’s will be improved. Most MSEs do not have access to micro finance institutions and most
banks are reluctant to avail credit facilities to MSEs unless they have acceptable collateral.

III. Lack of premise and land for MSEs

Lack of premise is unquestionable a serious problem. Most informal operators do not get access to
suitable location while they can get easy access to markets. The issue of acquisition and transaction cost
has become very prohibitive to the emergency of new enterprises and to growth and survival of existing
one’s. The issue of land provision and the land lease system has greatly constrained the chance of micro,
small, medium enterprise, who aspire to start up business. (FDRE, MWUD 2006).

IV. Lack of entrepreneurial, managerial and other skill.

This is also an other problems of MSEs, which leads to problem in production due to the un familiarity of
workers with rapid changing technology, lack of coordination production process and in ability to
troubleshot failures on machinery and equipments is a critical problem that MSEs are facing since they
cannot offered to employee specialist in the fields of planning, finance and administration, quality control,
and those with technical knowledge, moreover, MSEs lack resources required for research and
development and there is an in adequate technical and entrepreneurial skill. (Hailay, 2007).

11
V. Lack of sufficient marketing and promotional support and arbitrary and subjective taxes
system.

There are no sufficient institutional facilities that improve the promotion, growth and development of
MSEs marking products effectively as well as assessing and acquiring information on business
opportunities are the major bottle necks that MSEs face all over the countries. As a result the design and
quality of products of MSEs are below standard. Most MSEs particularly the small scale operation are
subjected to subjective taxes system as most of them do not have proper accounting system taxation based
on estimation of earning and is highly subjective.

VI. Lack of informal and information business cooperation among enterprise.

Large public enterprise and the few the foreign affiliates do not give some of their operation to local
MSEs The legal and institutional mechanisms to encourage the expansion of business linkages sub
contrasting managements is at its infant stage.

2.2. Empirical Literature

2.2.1. Actual contribution OF MSEs to the Ethiopian Economy.

According to the 1997 CSA report micro enterprises provided employment opportunities to 877,370
individuals (89.75%) of the industrial employment. Large and medium and small scale enterprises on the
other hand, account for about 9.34 and 0.91 percent of industrial employment respectively. (CSA , 1997).

About 47% and 42% of the MSE were engaged manufacturing and petty trading respectively, the remaing
in 11% were employed in traditional informal activities (6% on community and personal services and the
remaining 5% in the area of agriculture and hunting forestry, fishing, mining and construction and
transport activities) of the small enterprise operators about 85% were engaged in manufacturing of food,
wood work and fabricated metal. Interms, of gross value of industrial production micro enterprise
contributed about 64% while the share of the large and medium small scale enterprise was about 27% and
9% respectively (Gebrehiwot and Wolday, 2004).

2.2.2. Major constrains of Ethiopia’s MSEs.

Of factors reacted as very sever problems the top five are high taxes, inefficient /arbitrary tax
administration, high collateral requirement, lack of in adequate business premise and lack of business
supports vices in that order. Considering factors that are rated as major problem or higher taxes 3(52.2%),
high collateral requirement (47.1%) inefficiency/ arbitrary tax administration (43.8%), lack of adequate

12
business premise (41.5%) ,lack of adequate access to credit (38.5%) figure out prominently. Other factors
rated as major of very sever problem by a good numbers of MSEs include.

Bureacratic requirements (23.1%), penalities operating with out licesne, if and when detected (19.7%),
weak legal enforcement (19.3%), crime and theft (18.5%), computation (15.5%), entry regulation (15.1%)
and in ability to use the institutional enforcement mechanism legal and judicial system and policy
(14.8%) this contracts with clearly with the situation in Kenya, where issue of tax, business premise and
bureaucratic requirement (regulation), harassment do not appear as a major problem (Gebrehiwot and
Wolday, 2004).

13
 CHAPTER THREE

3. RESEARCH DESIGN AND METHODOLGY

3.1 Research Design
Research design refers to the framework of market research methods and techniques that are
chosen by a researcher. The design that is chosen by the researchers allow them to utilise the
methods that are suitable for the study and to set up their studies successfully in the future as
well. The design of a research can be either qualitative, quantitative, or mixed. Under these
research designs, researchers can choose between different types of research methods;
experimental studies, surveys, correlational studies, or quasi-experimental review studies.

3.2 Research Approach

The qualitative approach and quantitative approach are the two major approaches when
determining the nature of a research project. Kumar (2005) has differentiated qualitative and
quantitative research methods depending on the intention of the research, data gathering
procedure and analysis of data.

3.2.1 Qualitative Approach

A qualitative research search for collected data so as to illustrate distinction in a situation,
phenomenon or dilemma by the use of an unstructured and flexible methodology and analyzes
them in a rather descriptive and non-quantifiable way.

3.2.2 Quantitative Approach

The purpose of a quantitative study is to count the degree of difference in a phenomenon or
condition through the use of a structured or planned and prearranged methodology and
investigates them with some statistical procedures.

3.3. Type and source of data

The data to be used for the study is gathered from two sources of information. It is both from primary and
secondary sources.

Primary sources: - these includes the actual information collected from individuals directly concerning the
problems for the study that is from the operators engaged in MSEs and from those who are members of
MSEs.

14
Secondary source:- these collected from published and unpublished materials about micro and small scale
enterprises that is gathered from report, business plan, annual planning, books and the cities of MSEs
development strategy.

3.4. Method of data collection

Different method of data collection is used according to the source of data. The primary data was
collected through interview questionnaire which is designed for gathering data because some respondents
are not expected to be educated and cannot fill questionnaire carefully as designed for the purpose of
study. In addition it creates direct communication between researchers and respondents and makes the
information gathered more reliable and accurate. The researchers and his enumerates asked the
questionnaire prepared in English language by translating to which the language they can. Secondary data
was collected through reading, looking primarily from different published and unpublished documents.

3.5. Methods of Sampling techniques and sample size

The data was collected from those who are engaged in micro and small scale enterprise. The sampling
technique which the researchers take to collect the data would be used simple random sampling. Out of
the total number of micro and small scale enterprise which is registered in the Sebeta Awas Woreda MEI
office selected 72 the number of respondents from total population of MSEs 256. Then, the following
process would be follow The researcher use Yamane formula (1967) to get the number respondents as
follows

n=N/1+N(e)2

n=sample size

N=total population of MSEs

e=level of precious 10%

n=N/1+N(e)2

n=256/1+256(0.1)2

(0.1)2=0.01

n=256/1+256(0.01)

n=256/3.56

n=72
15
so, in the study would be used 80 number of respondent from the total number of MSEs 256.

3.6. Method of data analysis

The data that have been collected from both primary and secondary data source is presented and analyzed
through descriptive method of data analysis. The rationale behind using this method of data analysis is
that it allows describing, summarizing and presenting the qualitative and quantitative data. Generally, the
collected data have been analyzed through tables, percentages, and charts to describe the finding which
help to draw interpretation and conclusion.

3.7 .Validity and Reliability

Reliability and validity are the two most important and fundamental features in the evaluation of
any measurement instrument or tool for a good research. The purpose of this research is to
discuss the validity and reliability of measurement instruments that are used in research. Validity
concerns what an instrument measures, and how well it does so. Reliability concerns the faith
that one can have in the data obtained from the use of an instrument, that is, the degree to which
any measuring tool controls for random error.

3.8 Ethical Consideration

The research weight ethical consideration to maintain objective participants in the study are
entirely voluntary and fully informed about the objective of the study questions are presented in
a manner that we tend to skew the result or force a certain outcome answer the questionnaires are
designed in manner that avoid any information that we allow the participants to be identified in
the future proper acknowledgement are credit are given for all contribution to the research to
avoid claims of plagiarism or impropriety.

16
 Chapter Four

4. Data analysis and discussion

This part of the research focus on the presentation of data analysis and discussion on the
collected data in January and interpretation on the result as been mentioned in methodology. The
data were collected from respondents by simple random sampling through interview
questionnaire from 80 respondents out of the total number of micro and small-scale enterprises.
The result and the analysis of the finding were presented as follows;

4.1. Characteristics of sample households

4.1.1. Gender wise classifications of respondents

The sex structure is one of the demographic factors that affect the economic activity of
respondents in the study area as indicated in the following graph.

Chart 4.1. the sex structure of respondents

Key
45% Male
55% Female

Source:- own computation based on survey conducted on Sebeta Awas Woreda , 2021 .

The above diagrams shows that the enterprises are owned by both sex, male and females, out of the total
sample enterprises 40(55%) are owned by male, where as the remaining 32(45%) are under the ownership
of females. This indicated that most of the MESs of Sebeta Awas Woreda is dominated by male as
17
compared to female participants. This shows that most of the time in developing countries females are
work to doing inside the house like preparing food, child care mean while male are work to do outside the
house for income generation for livelihood.

The collected data also indicates that Sebeta Awas Woreda’s MSEs sector have created job opportunities
for those both sex respondents.

4.1.2. Age wise classification of respondents

Graph 4.2: The age structure of respondents

Percentage(%)

70%
63.75%

60%

50%

40%

30%
30%

20%

10%
6.25%

0%
Age
15-45 45-65 >65
Source: own computation based on survey conducted on Sebeta Awas Woreda, 2021.

As the above graph shows that out of the total sample enterprises 48(63.75%) of the respondents of the
survey are between 15-45 age group which includes economically active population and most owner of
the enterprises includes under this age groups and 21(30%) of the respondents of the survey are between
45-65 age groups which includes economically active population and also has along life experience
related with their workrs. The remaining 3(6.25%) of the respondents are categorized under the age
groups above 65 years which is not active man power participating in the sector. This indicate that most
of the employees or participants of the MSEs of the town are productive age group. Therefore, those
people are contribute a lot for socio-economic development of the town by reducing, the level of poverty
and unemployment of the town which results improving the living standard of the respondents.

18
4.1.3. Educational background

The educational level of the society can facilitate its productivity and creativity on economic
activities. This survey has identified the educational level of respondents in table as follows.

Table 4.1. Educational level

Educational level No of respondents Percentages

illiterate 3 4

completed elementary school (1-8) 12 17

completed high school (9-12) 36 50

completed technique school 12 17

college or university gradate 9 12

Total 72 100%

Source: own survey 2021

According to the survey result on the above table 3(4%) of the respondents are illiterate
(meaning those who cannot read and write) 12(17%) are completed elementary school, 36(50%)
are completed high school, 12(17%) are also completed technique school and the rest of 9(12%)
of the respondents are college or university graduate. This indicates that all most all respondents
are above elementary school. So, those people have a little knowledge how to manage about their
business activities. We can observe from the above table or respondents completed high school
are highly participant of MSEs in Sebeta Awas Woreda because most of the people who are not
get chance to continues their education regarding to their performance or low performance in
their education they choice to get into the business to generate income for survival.

Also the MSEs sector has opened good employment opportunity for those are graduated of
college or university and technical training institution. So, the MSEs of Sebeta Awas Woreda
contribute a lot through creating job opportunity to a number of people.

19
Table 4.2: Types of the business

types of business No of respondents percentages

Rural agriculture 10 `14

trade 20 28

service 14 20

manufacturing 22 30

construction 6 8

Total 72 100%

Source: own survey 2021

The above table contains the information about the types of the business which is the
respondents are engaged in. Also the above table shows that 10(14%) of the respondents of the
survey are engaged in urban agriculture, 20(28%) are engaged in trade (meaning those who are
engaged in whole seller and retail trade), 14(20%) are engaged in service sector, 22(30%) of the
respondents are engaged in manufacturing (meaning those how are engaged in wood work, metal
work and others) and the remaining 6(8%) of the respondents of the survey are engaged in
construction. This indicates most of the enterprises are engaged in manufacturing, trade and
service sectors respectively because of availability of customer and accessibility of raw materials
for those three above sectors. But all above sectors is supported by MSEs bureau of the town
because of the great contribution of those above sector for socio-economic development of the
town.

20
Table 4.3: Reasons to get into the business

The Reasons To Get Into The Business No of respondents percentages

to get income for survival 40 55

capital requirements is survival 17 24

parents in this business 7 10

no other alternatives 8 11

Total 72 100%

Source: own survey 2021

The above table shows that the reason for number of respondents to come in to the business. One
reason for this is to get income for survival which accounts 55% of the total respondents. The
other reason is also capital requirement to run this business is small that accounts 17(24%) of the
total respondents. Additionally, there are a number of parents which are in this business that
accounts 7(10%) of the total respondents.

The remaining 8(11%) from the total respondents engaged in this business because they have no
other alternative works. Generally, the greatest percentage share is taken by number of
respondents who have the reason to get income for survival.

Since, the number of respondents have low income that can not led their life in good manner. So,
the main purpose is to get the livelihood income.

4.2. Level and constraints of MSEs

4.2.1. Capital requirement

Capital is one of the factor of production. So, capital is the significant factor while the enterprises
to get in to the business. This survey has identified the level of capital required for respondents in
table as follows

21
Table 4.4: Level of capital

Level of Capital No of respondents percentages

less than 20,000 42 58

20,000-50,000 28 39

above 50,000 2 3

Total 72 100%

Source: own survey 2021

As the above table shows that 42(58%) of the respondents are used less than 20,000 capital when
they start this business, 28(39%) of the respondents are also used between 20,000-50,000 capital
for run their activities and the rest 2(3%) of the survey of the respondents are used above 50,000
capital for the sake of start this business. This shows that most of the enterprises are used small
amount of capital while they started their business because of the problem of adequate finance
for the business activities.

The success of any business greatly depends on the availability of adequate finance for both
short-term and long term activities designed (kieso and Weygand, 1998).

4.2.2. Source of capital

Table 4.5: Source of capital

source of capital No of respondents percentages

from personal saving 30 42

from micro enterprises 21 29

from family 18 25

from bank loan and other 3 4

Total 72 100%

Source: own survey 2021

22
In the above table 4.5 response of respondents concerning the source of their capital 30(42%)
pointed out the source of their own personal account (saving), 21(29%) of the respondents
pointed out that their source of capital is credit from micro-enterprises, while 18(25%) of them
have it from their family and the rest 3(4%) raise their capital from banks and other lending
institution. This shows that most of the responded that they have got from their own sources
(such as family saving and personal saving) because of the fear of inability to pay, which comes
from market related problem and other constraints, and the sample operators also reasoned that it
is too difficult to process, don’t want to incur dept. and inadequate collateral to get credit form
banks.

4.2.3. Preference of location

Table 4.6: Reasons for location preference

Reasons for Location Preference no of respondents percentages

To get raw materials 25 35

To get customers 43 60

To get loan 4 5

Total 72 100%

Source: own survey 2021

The information in table 4.6 contains the response of the respondents why they choose their
present business location and from the information in the table 25(35%) of them said that they
prefer their present business location because of its nearness to get raw materials, 43(60%) of the
respondents said that they prefer the location thinking high number of users are found in the area
or to get customers easily, while the reaming 4(5%) replies that it is preferable to get loan from
other business men and financial organization. As the researcher see from the above respondents
responses most of the participant prefer their business location to get customer easily because
customer is one of the key factor for their business enterprises. Business is noting without
customer for the product of the enterprises.

23
4.2.4. Government support for the businesses

Table 4.7: Types of support

Types of Support No Of Respondents Percentages

Consultancy 32 44

Material aid 6 8

Work shops 30 42

Others like security 4 6

Total 72 100%

Source: own survey 2021

Table 4.7 refers to respondent’s opinion regarding to government support to wards their
enterprises. Out of the total respondents 32(44%) of the respondents replied that the government
is supporting replied that the government is providing material aid, 30(42%) replied the
government give workshops or training to employees of the MSE and the remaining 4(6%)
replied the government is supporting them in other supports like security. Even though the
figures show that the government is supporting to some extent consultancy is the most focused in
government as compared to other support. This shows that government bodies has not adequate
support for those enterprises. So that they need the government to do more than what it is doing
now.

24
4.2.5. Anticipated problems in the businesses

Table 4.8: Anticipated problems

Anticipated Problems No of respondents Percentages

To be new for the business 6 8

To be new for the area 8 11

Getting customers 24 34

Financial problem 34 47

Total 72 100%

Source: own survey 2021

The paper also attempts to analyze the business anticipated problems in running their business.
Regarding this, the above table indicates that 6(8%) of the respondents anticipate a problem to be
new for the business, 8(11%) of them expect a problem to be new for the area, 24(34%) of the
sample respondents a anticipate a problem of getting adequate customers for their activities and
the remaining 34(47%) of them anticipate financial problem in the running of their business.
Therefore, these problems impeded the smooth running of the sector and affects the efficiency
and productivity of the sector and there by reduce income or profit and also impedes the growth
of the MSEs of the town.

25
4.2.6. Present Problems of the Businesses

Table 4.9: Present problems

Types of problems No of respondents percentages

Finance 35 49

Work place 19 26

skilled man power 4 6

Demand (marketing) 14 19

Total 72 100%

Source: own survey 2021

A business to be competent should differentiate its products/ services from that of other business
engaged in the same kind of business activity (william J. stanton, 1994).

Finance is the life blood of any business. Without finance business cannot undertake their
operational activities and for successful business operation they need to have sufficient capital
(weygandt, kieso and kemmel,2005).

Lack of suitable market and production areas inhibit the expansion of projects by existing firms
and can also acts barriers to anew enterprises. So as to have successful business operation any
business owner should develop customer relationship management. That is the business owner
must identify the ways in which their customer buy use their products to maintain their customer
sticking to their needs and wants. In Ethiopia in general and the study area in particular, MSEs
have serious problem in marketing their products (Philip R. Cateora and John L. Graham, 1999).

According to the collected data, around 35(49%) of the respondents replied that they have
financial problems to manage their business, 19(26%) of the respondents faced a problem of
getting enough workspace, 4(6%) replied that they are constrained by lack of trained manpower
and the remaining 14(19%) of them constrained by demand problems. From the above analysis
we can observed that the most severe present major problem is financial problems and lack of
suitable market and production places is one of the main problems of MSEs in the town. Most of

26
the respondents that faces these problems are now operating their activities in their home or in
their residence. As a result, most of the operators stated that they don’t sell their products
immediately as they wanted and also forced to small at lesser prices. This makes them not to get
enough profit from their sector. The other reason stated for the lack of demand in the town is
increased number of competitors those who participate in illegal way activities. Which highly
affects those MSEs registered under the Sebeta Awas Woreda trade, manufacturing,
construction, farming and service and pay necessary tax for the government.

4.3. Contribution made by MSEs for socio-economic development

Many have been said regarding the significant role of MSEs in the growth and development of
an economy. To mention some; they display a remarkable capacity to absorb labor thus
contributing to easing the pressure of unemployment, providing income earning opportunity for a
large proportion of the population there by meaning contribute to a more equitable distribution of
income. In addition, MSEs produce relatively cheaper goods and services, using locally available
inputs and labor-intensive methods, satisfying the needs of the people (especially the poor) hence
contributing to the variety of consumer goods. Besides they develop a pool of sallied and semi-
skilled workers that will be basis for future industrial expansion. They relatively show less need
for developed and costly infrastructure than the medium and large ones. And one of the major
characteristics of MSEs is they ell as for country by reducing unemployment.

4.3.2. Income generation

One of the contribution of MSEs is that they are means of generating income. In Sebeta Awas
Waoreda, most of the respondents either have no any means of getting income or have minimum
income before they engaged in to this sector. But after they engage in to this MSEs sector,
88.75% of the operators responded that they have got income improvement and only 11.25% of
the operators have responded negatively as indicated in the following table.

27
Table 4.11: The income improvement of MSEs respondents

Do you get income improvement since you No of respondents percentages

engaged on the sector?

Yes 68 94%

No 4 6%

Total 72 100%

Source: own survey 2021

Asked also to specify their monthly income organization, most of the respondents monthly
income is less or equal to 300 birr which includes 40(55%) of the sample MSEs respondents and
28(37.5%) of them responded that their monthly income lies between 300-5 00 birr. Only 4
(7.5%) of the respondents responded that their monthly income is greater than 500 birr. From
this, there is an income improvement after their engagement in to the sectors.

Source: own survey 2021

28
 CHAPTER FIVE

CONCLUSION AND RECOMMENDATION

5.1. Conclusion
The significance of micro and small scale enterprises, in addition to reducing unemployment to
sustainable economic development is not minimal. And also the primary objectives of MSEs is
to improve and expand the performance of micro and small scale enterprises in the region there
by reducing poverty, and meeting other social and economic goals, by creating an enabling
environment for the development of the sector.

In the study area (Sebeta Awas Woreda) where the number of unemployment is increasing from
time to time the micro and small scale enterprise has opened a huge employment opportunity for
many people especially for those who has completed high school (52.5%), graduate technique
school (16.25%) and those who have minimum capital and skills. In the study area, 256 peoples
engaged in this sector and most of them have no job before they engaged to the sector. Most of
the respondents (88.75%) also responded that their income is improved after they engaged in to
the sector.

In general the MSE sector has a great contribution in poverty reduction especially creating
employment opportunity and improving the income level of most people of the study area.
According to the respondents, some of the major problem they faced after their engagement in
this sector is lack of sufficient working capital that inhibits them not to expand their business,
market problem, production place problems and other related problems. So, if these major
problems are solved and the sector has given high consideration by government, NGOs and
private sectors, the MSE sector plays a great role in the economic development of the town as
well as for out country and speed up the millennium development goal of the country planned to
be achieved.

5.2. Recommendation
Even though the MSEs play a major role in reducing poverty, reducing rate of unemployment
and also contribute for sustainable economic development, they are constrained by a multitude of

29
problems such as lack of working capital, production and marketing place problems, inadequate
market or demand problems, lack of sufficient credit and others. Therefore, there should be an
integrated effort of government, Private sector and NGOs to solve these problems and put the
MSEs in the rapid growth path. Accordingly, the following are some of the issues that should be
addressed by the concerned bodies.

 The formal banks which is found in the worweda like commercial bank of Ethiopia and
construction and business bank should simplify their bureaucracy and fit the need of the
enterprises for solving their shortage of capital. If all those conditions are applied, the sector
will develop rapidly with great potential employment and income generation to large number
of people.

 Encouraging the establishment of more training, technical and demonstration center that
provides training and basic technical services to MSE operators.

 Constructing different cluster or industrial zones where the operators can produce and solve
market place problems and to construct market centers, small shops and giving for the MSE
operators at minimum rent.

 Access to infrastructures must exist and the operators of MSEs should improve their ability
in conducting the business.

 Establish market information centers that would collect, analyze, store and disseminate
market related information such as prices, sources of inputs, potential market, consumer
needs etc.

 Giving training about the advantage of co-operative operation for owners of MSEs.
Generally, if the above points listed above applied practically by government bodies, NGOs
and private sectors, the MSEs of the town will grow rapidly through creating job
opportunities, income generation. As a result, the concerned bodies should tries to solve
those problem to come consistent growth in the enterprises.

30
 REFERENCES
1. Abraham Tekeste, 1997. “Factors intensity and efficiency of small scale enterprises in Ethiopia.”
Paper presented at the six annual conferences on Ethiopian economy, small scale enterprises
development, edited by wolday Amha, G.H.R chipande and Andualem Temene, Addis Ababa.

2. Andualem Tegene, 1997. “Small scale enterprises and entrepreneurship development in Ethiopia.”
concepts, definitions and major issue, Nazreth, Ethiopia.

3. Assefa Admassie, 1997. A comparative analysis of the development of small scale industries in
Region 14 with other regions.

4. CSA, (2000/1). Informal sector survey, Addis Ababa.

5. CSA, (2006). Report on small scale manufacturing survey, Addis Ababa.

6. FDRE, MWUD, (2006). Industrial and urban development package, Addis Ababa.

7. Feriuz Yimer, 2005. “Performance of micro enterprises”. The case study of roadside traders in Gulele
kefle ketema. A seniour essay, Addis Ababa University.

8. Gebrehiwot Ageba, 1997. An analysis of financial sector and credit policies. During the Derg period
and post Derg reforms. Ethiopian Journals of economics, volume VI, No 1, April.

9. Gebrehiwot Ageba and walday Amha, (2004). Impact and regulatory challenges of micro and small
scale enterprises in Ethiopia.

10. Kieso and weygandt, 1998. Intermediate accounting, 9th edition.

11. Paul burns and Jim Dewhurst (1996). Small business and entrepreneurship, 2 nd edition.

12. Philip R. cateora and John L.Graham, 1999. International marketing.

13. weygandt, Kieso and kemmel, 2005. Accounting principle, 8th edition.

14. William J. Stanton, 1994. Fundamentals of marketing, 10th edition.

15. World Bank, 1987. World development report, World Bank Washington

D.C.

31
Appendix
Questionnaires

Bule Hora University

College of business and economics

Department of economics

This questionnaire is designed to asses the significance of micro and small scale enterprise for socio-
economic development in Bule Hora town. The objective of this questionnaire is to gather information
which help us to analysis the This significance of micro and small scale enterprise for socio- economic
development in Bule Hora town.

Dear respondents, the success of this paper heavily depend on your response to the questions affected
here.

Thanks for your cooperation in advance!

Section 1

Back ground information on the respondents

1. Sex

Male c Female c

2. Age / in year

15 – 45 c 45 – 65 c Above 65 c

3. Educational status

Illiterate c Completed elementary school (1-8) c

Completed High school (9 – 12) c

Complete Technique school c

College or university graduate c

Section 2

32
Questions related to basic questions:-

2.1. Questionnaires related to the level and major constraints of MSEs in the town.

1. In which types of business you are engaging?

A. Garment B. Manufacturing C. Service

D. Construction service E. Municipal activity F. Urban agriculture

G. Trade Activity H. Others (mention)

2. What is the reason for you to get in to this business?

A. To get income for survival

B. Capital requirement to run this business is small

C. Little or no regulatory restriction

D. Parents in this business

E. No other alternatives

F. Other (state)

3. A what level of capital you are running your business?

A. Less than 20,000 B. 20,000 – 50,000 C. Above 50,000

4. From where you get finance for your business operation? (you can select more than one)

A. Personal saving

B. Credit from relatives

C. Credit from banks

D. Credit from micro finance

E. From family

F. Others if any (what are they)

5. Why you choose this location

33
 A. To get raw material easily

B. To get customers easily

C. To get loan

D. If any

2. To what extent you expect the government to support your business?

A. Consultancy

B. Material aid

C. Work shops

D. Security

E. Other/ if any, specify

3. What are problems expected during the running of the business?

A. To be new for the business

B. To be new for the area

C. Getting client (customers )

D. Financial problem

E. If any

4. What is the present basic problem of your business?

A. Financial

B. Skilled man power

C. Work space

D. Demand (marketing)

2.2. Questionnaire related to the contribution of MSEs in the economy.

34
1. What is the contribution of MSEs for socio-economic development of the town?

2. In which category your monthly income categorized?

A. 0 – 300

B. 300- 500

C. Above 500

If you compare your income before you started the business and often you started the business, have
you got any income improvement?

A. Yes c B. No c

3. Is the income you got from the business sufficient to fulfill yours and families basic necessity?

5 what your major problem that your facing now to expand your business further?

A lack of access to capital and credit

B lack of skill to perform the business

C lack of sufficient marketing system

D lack of goverement supporting through providing tax system

E all are our problems

35