CONTENTS

PAGE NO.

Part I. Introduction and Objectives of the Survey

1.1 Introduction ...................................................................................................................................

3
1.2 Objectives ......................................................................................................................................
4
1.3 Basic Concepts and Definitions…………………………………………………….. 6

Part II. Survey Methodology, Data Collection and Processing

2.1 Scope and Coverage ......................................................................................................................

12
2.2 Sampling Frame ............................................................................................................................
12
2.3 Sample Design………………………………………………………………………. 13
2.4 Sample Size and Selection Scheme…………………………………………………. 14
2.5 Training of Field Staff ...................................................................................................................
14
2.6 Field Organization .........................................................................................................................
15
2.7 Data Processing .............................................................................................................................
15
A. Editing, Coding and Verification .................................................................................. 15
B. Data Entry, Cleaning and Tabulation ............................................................................ 15

Part III. Summary of Major Findings of The Survey

3.1 Structure and Performance ..............................................................................................................

17

3.2 Employment ..................................................................................................................................

20

3.3 Raw Materials and Energy Consumption .......................................................................................

23

3.4 Demographic Characteristics of Persons Engaged………………………………… 26

3.5 Ownership and Problems Faced…………………………………………………….. 28

1
 PART III SUMMARY OF MAJOR FINDINGS

TABLE NO. PAGE NO.

Summary Table 3.1 Distribution of Number of Establishments, Number of Persons Engaged, Gross Value of
Production and Value Added by Industrial Group: 2013/14(2006 E.F.Y.) 19

Summary Table 3.2 Permanent Employees as Percentage of Total Persons Engaged by Industrial Group: 2013/14(2006 21
E.F.Y.) .....................................................................................................................................................................

Summary Table 3.3 Number of Persons Engaged, Employees and Labor Cost Per Establishments by Industrial Group: 22
2013/14(2006 E.F.Y.)

Summary Table 3.4 Cost of Raw Material and Energy Consumed as Percentage of Total Industrial Cost 25
and Ratio of Imported to Total Raw Material Cost by Industrial Group: 2013/14(2006 E.F.Y.)

Summary Table 3.5 Number of Persons Engaged by Sex and Type of Worker: 2013/14(2006 E.F.Y.) 27

Summary Table 3.6 Number of Reported Persons Engaged by Literacy Status and Sex: 2013/14(2006 E.F.Y.) 27

Summary Table 3.7 Number of Literate Persons Engaged by Sex and Highest Grade Completed: 2013/14(2006 E.F.Y.) 28

Summary Table 3.8 Number of Persons Engaged By Type and Duration of Training and Sex: 2013/14(2006 E.F.Y.) 28

Summary Table 3.9 Number of Owners of Establishments and Permanent Employees by Sex: 2013/14(2006 E.F.Y.) 28

Summary Table 3.10 Number of Reporting Establishments by Industrial Group and Type of First Major Problem Faced 30
at the Starting of Operation: 2013/14(2006 E.F.Y.)

Summary Table 3.11 Number of Reporting Establishments by Industrial Group and First Major Reason for Not Fully 31
Operational During: 2013/14(2006 E.F.Y.)

Summary Table 3.12 Number of Reporting Establishments by Industrial Group and First Major Reason for Not Working 32
at Full Capacity: 2013/14(2006 E.F.Y.)

Summary Table 3.13 Number of Reporting Establishments by Industrial Group and First Major Reason Faced During the 35
Survey Period: 2013/14(2006 E.F.Y.)

Summary Table 3.14 Number of Establishments by Industrial Group and Type of Government Influence: 2013/14(2003 36
E.F.Y.) ………..……………………………………………………….

Summary Table 3.15 Number of Establishments by Industrial Group and First Major Information Problem: 2013/14 37
(2006 E.F.Y.)

Summary Table 3.16 Number of Establishments by Industrial Group and Main Reason for Not Solving Problem of 38
Shortage of Working Capital: 2013/14(2006 E.F.Y.)

Summary Table 3.17 Number of Establishments by Industrial Group and Cause of Lack of Market: 2013/14(2006 39
E.F.Y.)

Sample weight for small scale

42

2
 Introduction and Objectives

1.1 Introduction

In overall economic development, a critically important role is played by micro, small

and medium enterprises in the developing world. The vast majority of countries rely on
the dynamism, resourcefulness and risk-taking of private enterprises (to which most small
scale manufacturing enterprises belong) to trigger, sustain the process, and form the base
for private sector led of economic growth. In this regard, small-scale manufacturing
industries are playing an ever-increasing role in the manufacturing industrial structure of
the country. Expansion and development of the sector increases agricultural productivity
through providing agricultural inputs and creating demand for agricultural outputs.
Furthermore, small-scale manufacturing industries play a key role in stimulating other
sectors of the economy such as trade, construction and services and in reducing
unemployment. Basic data on manufacturing output, input, employment, fixed assets,
investment and capacity are of paramount importance for designing and formulating
industrial development programs, strategies and policies.

Owing to this fact, and in an effort to provide comprehensive, accurate, reliable and
timely data on a regular basis on the country’s manufacturing sector the Central
Statistical Agency /CSA/ has conducted for the 5th time in 2006 E.F.Y. (2013/14) a
survey on small scale manufacturing industries.

Manufacturing is defined here according to International Standard Industrial

Classification (ISIC Revision 3.1) as “the physical or chemical transformation of
materials or components into new products, whether the work is performed by power -
driven machines or by hand, whether it is done in a factory or in the worker’s home, and
whether the products are sold at wholesale or retail. The assembly of the component
parts of manufactured products is also considered as manufacturing activities.” For this

3
survey grain milling services are also considered as manufacturing activities.

The surveys of manufacturing activities are designed to provide basic information on the
characteristics, structure and performance of Cottage and Handicraft, Small, Medium and
Large Scale Manufacturing Industries. To attain these objectives, manufacturing
establishments are divided into three major groups. These are: -
a) Large and Medium Scale Manufacturing Establishments, engaging
10 or more persons and using power -driven machinery.
b) Small Scale Manufacturing Establishments engaging less than 10
persons and use power -driven machinery.
c) Cottage/Handicraft Manufacturing Establishments performing their activities by
hand (i.e., using non -power driven machinery).

This bulletin presents results of Small Scale Manufacturing Industries survey for the
reference period 2013/14 (2006 E.F.Y.). The report provides information on objectives,
scope, coverage and content, basic concepts and definitions, survey methodology,
training of field staff, field organization and summary tables by structure and
performance and problems encountered by Small Scale Manufacturing Industries.
Furthermore, the questionnaire and estimation procedures for the survey are attached as
an Annex.

1.2 Objectives

The main objectives of Small Scale Manufacturing Industries Survey are to:
a) Obtain basic statistical data that are essential for development policy
makers, planners and researchers by manufacturing industrial group.

4
b) Collect basic quantitative information on employment, volume of
production and consumption of raw materials, structure and performance of
the country’s small scale manufacturing industries.

c) Compile statistical data, which will be an input to the system of National

Accounts (SNA) on small scale manufacturing industries as a whole and by
manufacturing industrial group.

d) Examine the interaction of the small scale manufacturing industries with

the rest of the economy, particularly with the agricultural sector, and collect
data that indicates its share in promoting export production and
consumption of imported raw materials.

e) Obtain the number of persons engaged in small scale manufacturing

industries and find out the major problems that creates stumbling block for
their activities.

f) Fill in other statistical data gap concerning small scale manufacturing

industries.

5
1.3 Basic Concepts and Definitions

i. An Establishment: - is defined as the whole of the premises under the same

ownership or management at a particular address (e.g. a bakery,
sawmill…etc.).

ii. Initial Paid-up Capital: - is that part of the issued capital of an establishment that has
been paid by the owners/shareholders to start the operation.

iii. Current Paid-up Capital: - is that part of the issued capital of an establishment that
has been paid by the owners/shareholders up to the survey period for operation of the
establishment.

iv. Working Proprietors, Active Partners and Family Workers: - include all unpaid
working proprietors, active partners and members of their household who
actively participate in the operation of the establishment.

v. Administrative and Technical Employees: - include salaried directors and

managers, technicians, superintendents, research workers, draftsmen and
engineers, chemists, architects, accountants book-keepers, office machine
operators, receptionists, sales persons, delivery personnel, guards and other
office staffs.

vi. Production workers: - workers directly engaged in production i.e., persons

engaged in fabricating, processing, assembling, maintenance, repair, janitorial,
record keeping, and other associated activities.

vii. Apprentices: - include both production and administrative workers, who are
working to gain experience with or without payment.

6
viii. Seasonal and Temporary Workers: - include workers who are employed for a
whole or a part of the year. These workers are not regularly on the payroll of
the establishment.

ix. Number Employed: - includes all persons on the payroll whether seasonal or
temporary workers. The number of seasonal and temporary workers has been
adjusted to give equivalent of full-time workers.

x. Number Engaged: - includes paid employees, unpaid working proprietors,

active partners, unpaid family workers and paid and unpaid apprentices.

xi. Wages and Salaries: - includes all payments in cash or in kind made to
employees during the reference year in connection with work done for the
establishment (this excludes employee benefits).

xii. Employee Benefits: - refers to the total of commissions, bonuses and cost of
living allowances, medical and educational expenses, etc. Paid by the
employer.

xiii. Total Labour Cost: - includes wages and salaries and employee benefits paid by
the employer during the reference year.

xiv. Revenue from Sales: - represents the total sales value of all products and by-
products during the reference year valued at market price.

xv. Receipt from Industrial Services Rendered to Others: - includes receipt from
manufacturing services done to others on the raw materials supplied by
customers such as grain milling services and repair and maintenance.

7
xvi. Other receipts: - include rental income from lease of machinery and equipment,
income from sales of scrap and the value of fixed assets produced by the unit
for its own use.

xvii. Difference of Stocks in the Value of Finished and Semi-Finished Goods: - is the
net change between the end and the beginning of the reference period in the
value of finished and semi-finished goods.

xviii. Gross Value of Production: - includes the sales value of all products of the
establishment, the net change between the beginning and end of the reference
period in the value of finished goods and the value of work in-progress, the
value of industrial services rendered to others and other receipts. The
valuation of Gross Value of Production is in terms of producers’ values where
indirect taxes are included in the value of sales of the establishment and the
value of subsidies received is excluded.

xix. Raw Materials: - include all raw and auxiliary materials, parts and containers,
which are consumed during the reference year. The value of local raw
materials is the value of locally produced raw materials and is the cost at the
factory, which includes the purchase price, transport charges, taxes and other
incidental costs. The value of imported raw materials is the value of raw
materials produced in other countries and obtained directly or from local
source and is the cost at the factory, which includes the purchase price,
transport charges, taxes and other incidental costs.

xx. Other Industrial Services Rendered by Others: - refer to contract, repair and
maintenance work done by others in the reference year on materials controlled
by establishment. Included are also the cost of all goods purchased and resold

8
 without any transformation during the reference year and the cost of water
consumed.

xxi. Industrial Cost: - Includes the cost of raw materials, fuels, electricity and other
supplies consumed cost of industrial services rendered by others, cost of goods
bought and resold without any transformation or processing.

xxii. Non -industrial Cost: - includes payments like professional fees, postage,
telephone, insurance, advertising, hired transport, rental payments, etc.
(depreciation is excluded).

xxiii. Census Value Added (at Market Price): - is the difference between gross
value of Production and Industrial Cost. Census value Added at market price
minus indirect taxes net (i.e., indirect taxes less subsidies) gives census value
added at factor cost.

xxiv. Value Added in the National Account Concept (at Market Price): - is defined
as the difference between the gross value of production and industrial and
non -industrial costs. To get the same indicator at factor cost indirect taxes
net (i.e., indirect taxes less subsidies) are subtracted.

xxv. Fixed Capital Assets: - are those with a productive life of one year or more
which are intended for the use of the establishment including fixed assets made
by the establishment’s own labour force for its own use. They are valued in
this report at book value end of the reference year, that is the net book value at
the beginning plus new capital expenditure minus those sold and disposed and
depreciation during the reference year.

xxvi. New Capital Expenditure (Investment): - is the cost of new or used capital
equipment bought during the reference period.
9
xxvii. Operating surplus: - is defined here as the difference between values added in
national account concept at factor cost and total wages and salaries and
employee benefits.
xxviii. An Individual Proprietor: - is a person who owns and controls an
establishment.

xxix. Partnership: - is an establishment owned and operated by more than one

person with unlimited liability.

xxx. Share Company: - is a business organization formed by an agreement made

between at least 5 or more persons with limited liability. The shares are
transferable.

xxxi. Private Limited Company: - is a business organization formed, by an

agreement between two or more persons but not exceeding fifty, with limited
liability. The shares are not transferable except with consent of 3/4th of the
members.

xxxii. Co-operatives: - an establishment owned and run jointly by its members with
profits shared between them.

xxxiii. Other Forms of Ownership: - includes legal form of organizations different

from those mentioned above (28 -32), such as establishments owned by joint -
venture, Government, Municipalities, etc.

xxxiv. Urban Dweller’s Association (Kebele): - is the lowest administrative unit in an

urban center with its own jurisdiction. It is an association of urban dwellers
(commonly known as Kebele) formed by the inhabitants, and usually
constitutes a part of the urban center.
10
xxxv. Urban Center: - is in principle defined as a locality with 2006 or more
inhabitants. However, for practical purposes an urban center includes the
following regardless of the number of inhabitants.
a) All administrative capitals
i. Regional capitals
ii. Zonal capitals not included in (i)
iii. Wereda capitals not included in (i) and (ii)
iv. Localities with UDAs not included in (i) - (iii)

b) Municipal towns not included in (a) above

c) All localities which are not included either in (a) or (b) above having a
Population of 1000 or more persons, and whose inhabitants are primarily
engaged in non -agricultural activities

11
 Part II
Survey Methodology, Data Collection and Processing

2.1 Scope and Coverage

The 2013/14 (2006 E.C) Small scale manufacturing industry Survey was conducted
covering those industries producing their goods and services using power driven machine
with man power less than 10 persons. The scope of this study is those manufacturing
industries:

 Ministry of trade,

 Ethiopian revenue and custom authority

 Federal micro and small enterprises development agency MSE profile directory

 Regional bureau of trade and industry and

 Having EEPCO service number for business establishments/enterprises.

However, those establishments, which were not registered on the above listed
organizations, were not included in the study.

In this survey detailed information on number of establishments, number of persons

engaged and number of employees by industrial groups, Sex, nationality and occupation,
initial and current paid up capital, gross value of production, industrial and non-industrial
costs, operating surplus, value added, value of fixed assets, investment, quantity of major
manufactured articles and raw materials by industrial group, number of persons engaged
by literacy status, highest grade completed and type and duration of training for the
country and selected items are presented.

2.2 Sampling frame

The sampling frame for the study was generated and constructed based on the Business
frame obtained from
12
  CSA had collected grain mill service establishments from each wereda trade
office of the entire country,
 EPECO, which is collected by EEPCO Power Gauge readers in collaboration
with CSA focusing on business enterprises having EPECO service number,
 Ministry of trade,
 Ethiopian revenue and custom authority
 Federal micro and small enterprises development agency and
 Regional bureau of trade and industry
The business frame generated was inadequate enough specially to identify those
enterprises, which are really categories as large and small scale manufacturing industries
as well as other non-manufacturing establishments. However, due to effort was exerted to
identify and select among them those manufacturing establishments having less than ten
person engaged (if available) as much as possible.
Finally, around 118,000 establishments as a sampling frame for conducting the 2013/14
(2006 E.C) small-scale manufacturing industries study were identified and being ready
for use.

2.3 Sample Design

The study employed a single stage stratified systematic random sampling design. In order
to do such sampling scheme, the sampling frames were grouped into six main and
priorities sectors of manufacturing categories namely: Textile and garment, Metal work,
Wood work, Leather and leather products, Other manufacturing sector and Grain mills
industries and stratified by region, where, regions are reporting levels. From each region,
systematically random sample of establishments in each group were selected.
However, due to inadequacy of area particulars, lack of reliable measure of size, and lack
of good information on distribution of enterprises within and among regions related to
economic activity classification particularly for the main five categories (. This makes
difficult statistically for determining the effective sample size need for the survey in each
categories and regions. Therefore, in order to cope this situation and to secure eligible

13
number of industries for the study and taking into account the expected high prevalence
of non-response rate. It’s then decided take sample of 20% to 25% for each categories
mentioned above among regions respectively. In addition, the sample distribution among
the regions described below:

Table 1. Number of Sampled Establishment by Priority Manufacturing Sector and by

Region

Sr. Branch Small Scale Manufacturing Industry No. of sampled by priority

no industry sector Establishment and by Region

Textile Wood Metal Leather Flour Others Total for

mills Small scale

1 Tigray 638 16 326 14 102 503 1599

2 Afar 9 17 11 37
3 Amhara 628 15 222 39 923 1390 3217
4 Oromia 154 29 310 17 1231 1330 3071
5 Somali 3 0 4 0 28 12 47
6 Benishangul 1 0 5 0 30 8 44
Gumuz
7 SNNPR 101 2 90 16 251 692 1152
8 Gambela 4 0 1 0 0 10 15
9 Harari 1 0 6 0 0 11 18
10 Addis Ababa 754 24 340 54 163 693 2028

11 Dire Dawa 13 0 6 2 23 35 79

Total 2297 86 1319 142 2768 4695 11307

2.5 Training of Field Staff

The training programs were carried out at two stages. In the first stage, the staffs from the
agency’s branch statistical offices, statisticians, statistical technicians and computer
experts from the head office were trained for about seven days at the head office. In the

14
second stage, enumerators and field supervisors were trained for six days by those trained
in the first stage at the selected 10-branch statistics training center, all over the country.

2.6 Field Organization

All CSA branch statistical offices were involved in this survey. Accordingly, statisticians
from branch statistical offices, field supervisors each supervising on the average three
enumerators depending on the extent of the area to be covered and enumerators
(including reserve enumerators) participated in the survey.

2.7 Data Processing

a. Editing, Coding and Verification

A number of quality control steps were taken to ensure the quality of data of this survey.
The first step taken in this direction was to prepare a questionnaire which was easy to
check the internal consistency and edit both at field and office levels. Furthermore, in the
enumerator’s instruction manual field editing procedures were attached in order to help in
the field editing operation. The editing and coding instruction manual was prepared in
which editors and verifiers were given training. The training program given to the editors
and verifiers lasted for three days. Editors/coders and verifiers performed the coding and
the manual editing and verification activities. The verification was done on 100 percent
basis. Finally, the edited, coded and verified questionnaires were also re-checked on 25
percent basis by statisticians of the Business Statistics Directorate.

b. Data Entry, Cleaning and Tabulation

Edit specifications were prepared for computer internal consistency checking purposes.
The data entry and verification were done on personal computers using Capo (Census and
Survey Processing System) software. About 30 CSA data entry operators and 4 data entry
one statistician and one computer programmer assigned supervisors (in two shifts) for

15
this purpose for 15 working days with close supervision of the activities. Then, the data
entered was cleaned by personal computer using the computer edit specification in
combination with manual editing for some serious errors. Finally, one programmer with
assistance from subject matter personnel processed the tabulation of the results of the
survey using the same software.

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 Part III
Summary of Major Findings of the Survey

3.1 Structure and Performance

Number of establishments, persons engaged, gross value of production and value added
are presented in summary table 3.1. There were 116,604 small-scale manufacturing
establishments in Ethiopian fiscal year (E.F.Y) 2006 (2013/14). Out of the total, the
largest in number, or slightly more than 35 thousand or 30.39 %, were grain mills, 25.4
thousand (21.81 %) manufacturer of food products except grain mill service and
manufacturing OF wearing apparel, dressing & dying of fur establishments numbered
18.12 thousand or 15.61 % of the total, respectively. On the other end, very few small-
scale establishments were engaged in chemical, leather and footwear manufacturing,
while there were none in the machinery and parts manufacturing, a possible area of focus
for policy makers.

During the stated year, all the establishments combined engaged 1,743,470 people, which
is roughly a ratio of 1 to 14.95, i.e., on average 10 small scale manufacturing
establishments engaged 150 people. A further look reveals that in absolute terms, grain
mills employed the most: 540,339 (30.99 %), followed by manufacture of food products
except grain mill services, 373,171 (21.40 %) and manufacture of furniture, 289,853
(16.63 %), in that order.

Gross value of production (GVP) in the stated period amounted to birr 26.2billion, out of
which Food product manufacturers except grain mills contributed 7.71 billion, which is
29.46 % of the total. Metal manufacturers amounting to 4.85 billion birr, which is ahead
of Manufacturers of grain mills GVP reached 4.58 billion. The other notable GVP was,
manufacturer of parts and accessories for motor vehicles & their engines’ GVP (3.48
million) that of trailed by manufacture of chemicals & chemical products and machinery

17
& equipment manufacturing 16.66 million birr or 0.06% of total gross value of
production by small scale manufacturing establishments during the year.
The last, but not the least, or rather the most important indicator presented in summary
table 3.1 is value added, which is the contribution of the small scale establishments to the
gross domestic product (GDP) or the national economy during the year, derived as the
difference between gross value of production and industrial and non industrial costs. In
the year 2006 E.F.Y, the small scale manufacturing establishments’ value added was to
the tune of 10.88 billion birr, out of which again grain mills contributed the lion’s share,
i.e., 2.4 billion birr (22.2 %). Food product manufacturers were a distant second, with a
contribution of 2.18 billion birr or 20.01 %. In the third place were manufacture of
fabricated metal products except machinery & equipment, which contributed a hefty 1.97
billion birr or 18.08 % of the total value, added. In the lower end were parts &
accessories for motor vehicles & their engine manufacturing with birr 1.53 million or
0.01 %, chemical & chemical products manufacturing, birr 5.92 million (0.05 %) and
publishing printing & reproduction of recorded manufacturing with a contribution of birr
8.64 million or 0.08 %.

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 SUMMARY TABLE 3.1 DISTRIBUTION OF NUMBER OF ESTABLISHMENTS, NUMBER OF PERSONS ENGAGED , GROSS VALUE OF PRODUCTION
AND VALUE ADDED BY INDUSTRIAL GROUP: 2013/2014 (2006 E.F.Y)

INDUSTRIAL GROUP Number of Number of Gross Value of Value Added

Establishments Persons Engaged Production
Number % Number % Value % Value %
MANUFACTURE OF FOOD PRODUCTS EXCEPT GRAIN MILL
SERVICES 25,430 21.81 373,171 21.40 7,709,583,946 29.46 4,176,740,413 20.01

MANUFACTURE OF GRAIN MILL SERVICES .... 35,430 30.39 540,339 30.99 4,583,568,294 17.51 2,414,845,427 22.20

MANUFACTURE OF TEXTILES ... 3,416 2.93 49,280 2.83 540,887,939 2.07 320,149,307 2.94
MANUFACTURE OF WEARING APPAREL; DRESSING AND DYING
OF FUR ... 18,199 15.61 246,062 14.11 1,788,873,860 6.83 916,796,765 8.43

MANUFACTURE OF LUGGAGE HANDBAGS AND FOOTWEAR ... 1,113 0.95 16,182 0.93 239,643,908 0.92 171,041,133 1.57
MANUFACTURE OF WOOD AND OF PRODUCTS OF WOOD AND
CORK EXCEPT FURNITURE; MAUFACTURE OF ARTICLES OF
STREW AND PLAITING MATERIALS .... 843 0.72 13,348 0.77 1,063,902,494 4.06 602,362,400 5.54
PUBLISHINGPRINTING AND REPRODUCTION OF RECORDED
MEDIA 96 0.08 1,526 0.09 14,885,923 0.06 8,643,178 0.08

MANUFACTURE OF CHEMICALS AND CHEMICAL PRODUCTS ... 38 0.03 509 0.03 8,914,752 0.03 5,916,413 0.05
MANUFACTURE OF OTHER NON-METALLIC MINERAL PRODUCTS
... 1,709 1.47 29,155 1.67 914,357,846 3.49 383,064,547 3.52

MANUFACTURE OF FABRICATED METAL PRODUCTS EXCEPT

MACHINERY AND EQUIPMENT ... 12,531 10.75 182,115 10.45 4,850,365,952 18.53 1,967,037,662 18.08

MANUFACTURE OF MACHINERY AND EQUIPMENT N.E.C ... 58 0.05 941 0.05 16,656,288 0.06 14,592,845 0.13
MANUFACTURE OF PARTS AND ACCESSORIES FOR MOTOR
VEHICLES AND THEIR ENGINES ... 48 0.04 989 0.06 3,477,322 0.01 1,530,403 0.01

MANUFACTURE OF FURNITURE; MANUFACTURING N.E.C. ... 17,693 15.17 289,853 16.63 4,437,175,507 16.95 1,897,278,931 17.44

TOTAL 116,604 100.00 1,743,470 100.00 26,172,294,030 100.00 10,879,999,423 100.00

19
3.2 Employment

Summary table 3.2 presents employment figures by industrial group. Accordingly, all the
small-scale manufacturing establishments, together, created employment opportunity for
1,743,470 people. A little more than 540.3 thousand were engaged in grain mills, close to
373.2 thousand in manufacture of food products except grain mill services and
289.9thousand in furniture manufacturing. These were the most important three
industrial groups in employment creation. However, wearing apparel manufacturers,
manufacture of fabricated metal products except machinery & equipment and textiles
manufacturers also engaged a sizable number of persons or 246.1, 182.1 and 49.3
thousand people, respectively. The least number of persons engaged were in chemicals,
manufacture of machinery & equipment and parts & accessories for motor vehicles &
their engines manufacturing. Furthermore, out of the 1.7 million, 661.3 thousand or
37.93 % were permanent employees. In absolute terms, again the largest numbers of
permanent employees were in grain mills, i.e. 189.1 thousand, next in line were food
products except grain mill services manufacturers with 154.9 thousand and in the 3rd
high contribution is in manufacture of furniture which is 100.9 thousand permanent
workers engaged. Wearing apparel, dressing & dying of fur manufacturing, manufacture
of fabricated metal products machinery & equipment and wearing apparel manufacturing
were the other important industrial groups in the size of number of permanent employees.

20
 Summary Table 3.2 Permanent Employees as Percentage of Total Persons Engaged
by Industrial Group: 2006 E.F.Y (2013/14)

PERMANENT
NUMBER OF PERMANENT EMP. AS %
INDUSTRIAL GROUP No. OF PERSONS EMPLOYEES TOTAL
ESTAB. ENGAGED PERSONS
ENGAGED
MANUFACTURE OF FOOD PRODUCTS EXCEPT GRAIN MILL
SERVICES 25,430 373,171 154,886 41.51

MANUFACTURE OF GRAIN MILL SERVICES.... 35,430 540,339 189,082 34.99

MANUFACTURE OF TEXTILES ... 3,416 49,280 23,346 47.37

MANUFACTURE OF WEARING APPAREL; DRESSING AND DYING OF
FUR ... 18,199 246,062 99,690 40.51

MANUFACTURE OF LUGGAGE HANDBAGS AND FOOTWEAR ... 1,113 16,182 7,080 43.75
MANUFACTURE OF WOOD AND OF PRODUCTS OF WOOD AND CORK
EXCEPT FURNITURE; MAUFACTURE OF ARTICLES OF STREW AND
PLAITING MATERIALS.... 843 13,348 5,116 38.33

PUBLISHINGPRINTING AND REPRODUCTION OF RECORDED MEDIA 96 1,526 643 42.14

MANUFACTURE OF CHEMICALS AND CHEMICAL PRODUCTS ... 38 509 182 35.85

MANUFACTURE OF OTHER NON-METALLIC MINERAL PRODUCTS ... 1,709 29,155 11,318 38.82
MANUFACTURE OF FABRICATED METAL PRODUCTS EXCEPT
MACHINERY AND EQUIPMENT ... 12,531 182,115 68,410 37.56

MANUFACTURE OF MACHINERY AND EQUIPMENT N.E.C ... 58 941 298 31.63

MANUFACTURE OF PARTS AND ACCESSORIES FOR MOTOR
VEHICLES AND THEIR ENGINES ... 48 989 365 36.89

MANUFACTURE OF FURNITURE; MANUFACTURING N.E.C. ... 17,693 289,853 100,934 34.82

TOTAL 116,604 1,743,470 661,349 37.93

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 Summary Table 3.3 Number of Persons Engaged, Employees and Labor Cost per Establishment
by Industrial Group: 2006 E.F.Y (2013/14)

No. OF NUMBER OF NUMBER OF LABOUR LABOUR

INDUSTRIAL GROUP ESTAB. PERSONS EMPLOYEES COST COST PER
ENGAGED (IN BIRR) ESTAB.

MANUFACTURE OF FOOD PRODUCTS EXCEPT GRAIN MILL

SERVICES 25,430 373,171 164,056 239,463, 034 9,416

MANUFACTURE OF GRAIN MILL SERVICES .... 35,430 540,339 197,051 389,390,182 10,990

MANUFACTURE OF TEXTILES ... 3,416 49,280 23,759 10,440,141 3,056

MANUFACTURE OF WEARING APPAREL; DRESSING AND DYING OF
FUR ... 18,199 246,062 102,652 99,628,902 5,474

MANUFACTURE OF LUGGAGE HANDBAGS AND FOOTWEAR ... 1,113 16,182 7,238 9,590,029 8,614
MANUFACTURE OF WOOD AND OF PRODUCTS OF WOOD AND
CORK EXCEPT FURNITURE; MAUFACTURE OF ARTICLES OF
STREW AND PLAITING MATERIALS .... 843 13,348 6,129 21,340,088 25,320

PUBLISHINGPRINTING AND REPRODUCTION OF RECORDED MEDIA 96 1,526 674 1,499,520 15,620

MANUFACTURE OF CHEMICALS AND CHEMICAL PRODUCTS ... 38 509 182 86,400 2,250

MANUFACTURE OF OTHER NON-METALLIC MINERAL PRODUCTS ... 1,709 29,155 14,306 53,836,358 31,505

MANUFACTURE OF FABRICATED METAL PRODUCTS EXCEPT

MACHINERY AND EQUIPMENT ... 12,531 182,115 74,062 246,897,220 19,704

MANUFACTURE OF MACHINERY AND EQUIPMENT N.E.C ... 58 941 302 2,313,984 40,173

MANUFACTURE OF PARTS AND ACCESSORIES FOR MOTOR

VEHICLES AND THEIR ENGINES ... 48 989 369 770,112 16,044

MANUFACTURE OF FURNITURE; MANUFACTURING N.E.C. ... 17,693 289,853 110,532 382,139,491 21,599

TOTAL 116,604 1,743,470 701,312 1,457,395,461 12,499

22
Labor cost incurred and labor cost per small scale establishments are displayed in
summary table 3.3. Out of the 116.6 thousand small scale establishments in the country
as mentioned earlier, close to 1.7 million people were engaged and among those 701.3
were employed staff and the rest were owners, apprentices or family members engaged in
the business of small scale manufacturing. A total of birr 1.46 billion was spent by the
establishments on the 701.3 thousand employees. Again in absolute terms the largest
amount was that of grain mills (birr 389.4 million), distantly followed by furniture
manufacturing (birr 382.1 million) and the distant third was the amount spent by metal
manufacturers, which was almost 246.9 million. However if we look at labor cost per
establishment, the highest figure is birr 40.2 thousand incurred by machinery and
equipment products manufacturing industrial group and the lowest was that of chemicals
& chemical products manufacturing amounting to birr 2.3 thousand.

3.3 Raw Materials and Energy Consumption

The amount spent by small scale manufacturing establishments for raw materials reached
close to birr 12.4 billion in 2006 E.F.Y. Further investigation of the figures reveals that
manufacture of food products except grain mill services spent the most, i.e., birr 4.9
billion, followed by manufacture of fabricated metal products except machinery &
equipment and furniture manufacturing establishments, which spent 2.6 and 2.2 billion on
raw materials, respectively. One disturbing aspect of raw materials use by the small scale
establishments is that close to 11.23% of the total cost on raw materials is spent on
imported raw materials. Given that these are small scale establishments, this proportion
of imported raw material usage is alarming. The figures in summary table 3.4 further
indicate that, most of the industrial groups spent well over 10.0 % of their total raw
material expenses was on imported raw materials. In this regard, publishing printing &
reproduction of recorded media, manufacture of chemicals & chemical product and
manufacture of parts & accessories for motor vehicles & there engines establishments are
heavily dependent on imported raw materials, as they spent more than half of their raw
materials expenses on imported ones.

23
Coming to energy consumption, all the establishments combined, during the reference
year spent birr 859.4 million on energy, of which the substantial amount (birr 532.3
million), was understandably by grain mills given their dominant number in the
composition of small scale manufacturing establishments in the country and the nature of
their activity, which is energy intensive. A distant second in this was the amount spent
by food product manufacturers, which amounted to a paltry birr 201.6 million in
comparison to that of grain mills. Furniture manufacturers and metal manufacturing
establishments spent birr 51.8 and 43.5 million on energy, respectively during the
reference year. Furthermore, cost of energy consumed to the total industrial cost by the
small scale establishments amounted to 6.06 %. As stated earlier, cost of energy
consumed by grain mills in relation to total industrial cost by the same amounted.

24
 Summary Table 3.4 Cost of Raw Materials and Energy Consumed as Percentage of Total Industrial Cost and Ratio
of Imported to Total Raw Materials by Industrial Group: 2006 E.F.Y (2013/14)

IMPORTED COST OF
AS % OF ENERGY
TOTAL COST
No. OF IMPORTED COST OF TOTAL AS
INDUSTRIAL GROUP OF RAW INDUSTRIAL
ESTAB. RAW COST OF RAW MATER. RAW % OF
MATERIALS COST
MATERIALS ENERGY AS % OF MATERIALS INDU.
COST CONSUMED INDU. COST COST COST

MANUFACTURE OF FOOD PRODUCTS EXCEPT GRAIN MILL

SERVICES 25,430 4,987,052,371 115,249,267 201,592,426 5,286,510,365 94.34 2.31 3.81

MANUFACTURE OF GRAIN MILL SERVICES .... 35,430 791,790,950 226,751,450 532,349,286 1,975,558,054 40.08 28.64 26.95

MANUFACTURE OF TEXTILES ... 3,416 189,336,314 85,548,173 1,914,672 196,248,834 96.48 45.18 0.98
MANUFACTURE OF WEARING APPAREL; DRESSING AND DYING OF
FUR ... 18,199 687,763,359 232,544,493 16,362,748 744,283,931 92.41 33.81 2.20

MANUFACTURE OF LUGGAGE HANDBAGS AND FOOTWEAR ... 1,113 59,181,808 8,726,100 891,165 62,223,665 95.11 14.74 1.43
MANUFACTURE OF WOOD AND OF PRODUCTS OF WOOD AND
CORK EXCEPT FURNITURE; MAUFACTURE OF ARTICLES OF
STREW AND PLAITING MATERIALS .... 843 441,691,498 2,592,394 2,760,248 445,697,630 99.10 0.59 0.62

PUBLISHINGPRINTING AND REPRODUCTION OF RECORDED MEDIA 96 3,034,320 1,972,032 82,224 4,298,400 70.59 64.99 1.91

MANUFACTURE OF CHEMICALS AND CHEMICAL PRODUCTS ... 38 1,414,262 884,525 25,920 2,403,494 58.84 62.54 1.08

MANUFACTURE OF OTHER NON-METALLIC MINERAL PRODUCTS ... 1,709 469,355,347 4,269,600 7,693,421 490,485,869 95.69 0.91 1.57

MANUFACTURE OF FABRICATED METAL PRODUCTS EXCEPT

MACHINERY AND EQUIPMENT ... 12,531 2,599,546,446 296,464,220 43,468,333 2,682,081,743 96.92 11.40 1.62

MANUFACTURE OF MACHINERY AND EQUIPMENT N.E.C ... 58 1,293,350 96,000 211,296 1,563,782 82.71 7.42 13.51
MANUFACTURE OF PARTS AND ACCESSORIES FOR MOTOR
VEHICLES AND THEIR ENGINES ... 48 1,179,648 649,824 228,576 1,428,442 82.58 55.09 16.00

MANUFACTURE OF FURNITURE; MANUFACTURING N.E.C. ... 17,693 2,187,113,414 419,049,878 51,784,234 2,278,116,806 96.01 19.16 2.27

TOTAL 116,604 12,419,753,089 1,394,797,957 859,364,548 14,170,901,016 87.64 11.23 6.06

25
to 26.9 %, this is the highest, the other notable exception being that of parts & accessories
for motor vehicles & their engines manufacturing industrial group, which spent close to
16 % of their industrial cost on energy.

The other important indicator presented in summary table 3.4 is industrial cost. This is
the sum of raw materials, energy and other costs incurred by small scale manufacturing
establishments during the year. Accordingly the establishments’ total industrial cost was
to the tune of birr 14.2billion, of which on average 84.64 % was spent on raw materials.
Of the stated figure, the sizable amount, or birr 5.3 billion, was spent by manufacture of
food. Fabricated metal products except machinery & equipment industry, Grain mill
services and furniture manufacturing establishments also spent a significant amount
reaching birr 2.7, 2.0 and 2.3 billion, respectively. In relative terms, more than three
fourth of industrial cost of all industrial groups, save that of food industry was on raw
materials.

3.4 Demographic Characteristics of Persons Engaged

Earlier in this document it was stated that a total 1,743,470 persons were engaged in
small scale manufacturing industries in the country during 2006 E.F.Y. Summary table
3.5 presents number of persons engaged by type of worker. The figures in the table show
that, out of the total, 52.34 % were male. Another important feature of the composition
of persons engaged is that 661 thousand persons or close to 37.9 percent were permanent
paid employees, 388 thousand or 22.23 percent paid Apprentices and 338.7 thousand or
19.41 % unpaid Apprentices workers. unpaid family constituted 18.15 % of the total.
Further investigation of the figures, reveals that out of the total 47.66 percent women who
took part in the activities of small scale industries during the year 35.82 % of them were
permanent paid employees, 25.47 % paid apprentice worker, 20.99 % unpaid apprentices
and the rest 17.72 % unpaid family worker (refer to summary table 3.5).

26
Looking into the literacy status of persons engaged, we find that, of those whose literacy
status reported, an encouraging 87.30 % were literate. The figures in summary table 3.6
also show that, 89.90 percent of male participants are literate, while the figure for females
stands at 79.30 % as being literate. Furthermore, slightly more than 20.70% of the female
participants are illiterate, while the corresponding figure for men stands at 10.10 %.

Summary Table 3.5 Number of Persons Engaged by Sex and Type of

Workers: 2006 E.F.Y (2013/14)

MALE FEMALE BOTH SEX

Type of worker

NUMBER % NUMBER % NUMBER %

Unpaid Family Worker 169,363 18.55 147,344 17.72 316,707 18.15

Unpaid Apprentices 164,160 17.98 174,520 20.99 338,681 19.41

Paid Apprentices 176,102 19.29 211,744 25.47 387,846 22.23

Permanent Paid Employees 363,484 39.81 297,865 35.82 661,349 37.91

Seasonal and Temporary Workers* 40,027 4.38 - - 40,027 2.29

TOTAL 913,136 100.00 831,473 100.00 1,744,609 100.00

Summary Table 3.6 Number of Reported Persons Engaged by Literacy Status

and Sex: 2006 E.F.Y (2013/14)

MALE FEMALE BOTH SEX

LITERACY STATUS

NUMBER % NUMBER % NUMBER %

LITERATE 230,086 89.90 64,807 79.30 294,893 87.30

ILLITERATE 25,890 10.10 16,928 20.70 42,818 12.70

TOTAL 255,976 100.00 81,735 100.00 337,711 100.00

Summary Table 3.7 Number of Literate Persons Engaged by Sex and

Highest Grade Completed: 2006 E.F.Y (2013/14)

27
 MALE FEMALE BOTH SEX
HIGHEST GRADE COMPLETED

NUMBER % NUMBER % NUMBER %

Grade 1-3 16,721 7.30 4,857 7.50 21,578 7.40

Grade 4-6 48,505 21.30 13,494 21.00 61,999 21.20

Grade 7-8 47,139 20.70 12,527 19.50 59,666 20.40

Grade 9-12 46,916 20.60 14,535 22.60 61,451 21.00

Above 12 37,528 16.50 10,152 15.80 47,679 16.30

Not Stated 31,198 13.70 8,817 13.70 40,015 13.70

TOTAL 228,007 100.00 64,380 100.00 292,387 100.00

3.5 Ownership and Problems Faced

The figures in summary table 3.8 present sex compositions of owners of small scale
manufacturing establishments. Accordingly, 66.60 % of owners of these establishments
are men, while the remaining 33.40 % are female.

Summary Table 3.8 Number of Owners of the Establishments

by Sex: 2006 E.F.Y (2013/14)

OWNERS OF PERMANENT
SEX ESTABLISHMENT EMPLOYEES

NUMBER % NUMBER %

MALE 157,407 66.60 363,484 54.96

FEMALE 78,955 33.40 297,865 45.04

TOTAL 236,362 100.00 661,349 100.00

What are the major problems faced by small establishments during the start of their
operation? The response to this question could be found in summary table 3.9. Out of
the 115.5 thousand reporting establishments to this particular question, 42.7% cited lack
of sufficient capital as a first major problem faced, 22.0 % put the blame on no problem
faced, while 13.00 % gave other problem as major reason. It is worth noting here that
1.60 percent of the reporting establishments mentioned ‘access to credit facilities, while
1.8 % stated that lack of foreign exchange during operation.

28
The other important issue investigated during the survey was, why are the small scale
manufacturing establishments not fully operational during the survey year? The answers
are displayed in summary table 3.10. In total 46.4 thousand establishments responded to
this question, which could mean these were those who were not fully operational, or they
were out of those who were not operational, responding to this particular question. Thus
the reasons vary widely. Close to a twenty five of the reporting establishments were out
of operation for part of the year due to shortage of electricity and water, while absence of
market demand were forced close to 19.4 % the reporting establishments not to operate
the whole year. On the other hand 15.30 %, 10.40 % of establishments gave other
problem and shortage of supply of raw material as the major reasons, behind this
performance. Because of newly established has strained 9.9 % of the establishments not
to operate the whole year.
Results of capacity utilization by the small scale manufacturing establishments are
displayed in summary table 3.11. Absence of market demand was reported as a major
reason behind below-capacity performance by 39.4 % of the establishments. Other
problem and shortage of supply of raw material were 24.90%,16.5% respectively were
also mentioned as the major reasons, for under capacity performance by these
establishments. Shortage of foreign, lack of adequate skill, absence of credit facility and
shortage supply of spare part was mentioned as a major reason for low capacity
performance by very few establishments. Finally, “lack of working premises” was given
by 10.10 % of the establishments.

29
 Summary Table 3.90 Number of Establishments by Industrial Group and Major Problem Faced
at the Start of Operation: 2006 E.F.Y (2013/14)

TYPE OF PROBLEMS

LACK OF
LACK OF OBSTACLES ABSENCE TOTAL
LACK OF ACCESS TO LACK OF SMOOTH NO
SUFFICIENT FROM GOV. OF NUMBER
FOREIGN CREDIT INFORMA- SUPPLY OF PROBLEMS
INDUSTRIAL GROUP EXCHANGE
INITIAL RULES AND
FACILITIES TION RAW
ADEQUATE OTHERS
FACED
OF
CAPITAL REGULATIONS SKILLS ESTAB.
MATR.

MANUFACTURE OF FOOD PRODUCTS EXCEPT GRAIN MILL

SERVICES 394 10,627 1,296 269 768 2,966 595 2,150 6,202 25,267
MANUFACTURE OF GRAIN MILL SERVICES ....
410 9,229 3,059 474 717 1,357 1,242 6,618 11,891 34,995
MANUFACTURE OF TEXTILES ...
38 1,647 113 38 94 301 207 245 696 3,378
MANUFACTURE OF WEARING APPAREL; DRESSING AND DYING
OF FUR ... 508 9,363 1,157 301 329 593 1,063 1,741 2,945 18,001
MANUFACTURE OF LUGGAGE HANDBAGS AND FOOTWEAR ...
24 455 78 24 71 149 39 94 165 1,098
MANUFACTURE OF WOOD AND OF PRODUCTS OF WOOD AND
CORK EXCEPT FURNITURE; MAUFACTURE OF ARTICLES OF
10 323 88 29 39 69 20 108 147 833
STREW AND PLAITING MATERIALS ....
PUBLISHINGPRINTING AND REPRODUCTION OF RECORDED
MEDIA - 58 - - 10 - 10 - 19 96
MANUFACTURE OF CHEMICALS AND CHEMICAL PRODUCTS ...
- 10 10 - 10 - - 10 - 38
MANUFACTURE OF OTHER NON-METALLIC MINERAL PRODUCTS
... 58 672 115 77 96 154 48 240 221 1,680
MANUFACTURE OF FABRICATED METAL PRODUCTS EXCEPT
MACHINERY AND EQUIPMENT ... 200 6,745 760 238 523 637 181 1,663 1,473 12,417

MANUFACTURE OF MACHINERY AND EQUIPMENT N.E.C ...

10 48 - - - - - - - 58
MANUFACTURE OF PARTS AND ACCESSORIES FOR MOTOR
VEHICLES AND THEIR ENGINES ... 10 19 - - - - 10 - 10 48
MANUFACTURE OF FURNITURE; MANUFACTURING N.E.C. ...
384 10,061 1,027 374 442 1,181 307 2,141 1,632 17,549
TOTAL
2,043 49,256 7,704 1,823 3,097 7,406 3,721 15,008 25,400 115,458
Percentages
1.8 42.70 6.70 1.60 2.70 6.40 3.20 13.00 22.00 100.00

30
 Summary Table 3.10 Number of Establishments by Industrial Group and Major Reason
for Not Being Fully Operational During: 2006 E.F.Y (2013/14)

Major Reasons

Shortage of
Shortage of

Shortage of

Shortage of
Absence of
Established

spare parts

regulations
machinery
supply of

electricity
demand

from gov.
Obstacles

exchange
supply of

market
materials

Frequent
working
Lack of

Lack of
rules &
foreign
Newly
INDUSTRIAL GROUP

capital

failure
water

Total
raw
MANUFACTURE OF FOOD PRODUCTS EXCEPT
GRAIN MILL SERVICES 1,334 1,872 86 1,651 422 595 48 163 336 1,450 7,958

MANUFACTURE OF GRAIN MILL SERVICES .... 422 845 1,690 1,920 269 7,718 1,971 141 256 1,958 17,190

MANUFACTURE OF TEXTILES ... 85 132 9 263 104 66 9 28 66 245 1,007

MANUFACTURE OF WEARING APPAREL; DRESSING
AND DYING OF FUR ... 602 414 47 1,590 518 452 28 113 734 1,647 6,145
MANUFACTURE OF LUGGAGE HANDBAGS AND
FOOTWEAR ... 86 63 - 165 31 39 - 8 39 47 478
MANUFACTURE OF WOOD AND OF PRODUCTS OF
WOOD AND CORK EXCEPT FURNITURE;
MAUFACTURE OF ARTICLES OF STREW AND
PLAITING MATERIALS .... 39 98 10 59 29 49 10 10 10 59 372
PUBLISHINGPRINTING AND REPRODUCTION OF
RECORDED MEDIA - - - 10 - 10 - - 10 - 29
MANUFACTURE OF CHEMICALS AND CHEMICAL
PRODUCTS ... - 10 - 10 - - - - - 10 29
MANUFACTURE OF OTHER NON-METALLIC
MINERAL PRODUCTS ... 86 86 19 221 67 288 10 29 38 96 941
MANUFACTURE OF FABRICATED METAL
PRODUCTS EXCEPT MACHINERY AND EQUIPMENT
... 827 380 48 1,387 399 884 67 133 276 675 5,073
MANUFACTURE OF MACHINERY AND EQUIPMENT
N.E.C ... - - - 10 - 10 - - - - 19

MANUFACTURE OF PARTS AND ACCESSORIES

FOR MOTOR VEHICLES AND THEIR ENGINES ... - - 10 10 - - - - - 19 38
MANUFACTURE OF FURNITURE; MANUFACTURING
N.E.C. ... 1,104 922 96 1,699 509 1,373 115 163 259 902 7,142

TOTAL 4,586 4,821 2,015 8,994 2,348 11,483 2,258 788 2,024 7,107 46,422

Percentages 9.9 10.40 4.30 19.40 5.10 24.70 4.90 1.70 4.40 15.30 100.00

31
 Summary Table 3.11 Number of Establishments by Industrial Group and Major Reason
For not working at full capacity, 2006 E.F.Y (2013/2014).
TYPE OF REASONS

INDUSTRIAL GROUP SHORTAGE SHORTAGE ABSENCE ABSENCE SHORATGE LACK OF LACK OF OTHERS TOTAL
OF SUPPLY OF OF OF OF ADEQUAT WORKING NUMBER
SUPPLY OF SPAREPART MARKET CREDIT FOREIGN E PREMISES OF
RAW MATR. S DEMAND FACILITY EXCHANGE SKILL ESTAB.

MANUFACTURE OF FOOD PRODUCTS EXCEPT GRAIN MILL

SERVICES 5,981 211 7,728 461 10 134 1,555 2,966 19,046
MANUFACTURE OF GRAIN MILL SERVICES ....
2,573 2,957 11,046 307 13 486 666 13,363 31,411
MANUFACTURE OF TEXTILES ...
527 38 1,120 132 - 38 339 471 2,663
MANUFACTURE OF WEARING APPAREL; DRESSING AND DYING
OF FUR ... 2,117 263 7,180 800 28 471 2,447 2,531 15,837
MANUFACTURE OF LUGGAGE HANDBAGS AND FOOTWEAR ...
282 16 282 24 - 16 157 141 917
MANUFACTURE OF WOOD AND OF PRODUCTS OF WOOD AND
CORK EXCEPT FURNITURE; MAUFACTURE OF ARTICLES OF
167 - 147 59 - 20 137 118 647
STREW AND PLAITING MATERIALS ....
PUBLISHINGPRINTING AND REPRODUCTION OF RECORDED
MEDIA 10 - 29 - - - 19 10 67
MANUFACTURE OF CHEMICALS AND CHEMICAL PRODUCTS ...
- - 38 - - - - - 38
MANUFACTURE OF OTHER NON-METALLIC MINERAL PRODUCTS
... 221 29 672 106 - 10 240 259 1,536
MANUFACTURE OF FABRICATED METAL PRODUCTS EXCEPT
MACHINERY AND EQUIPMENT ... 1,482 171 5,054 684 29 67 1,853 1,872 11,210

MANUFACTURE OF MACHINERY AND EQUIPMENT N.E.C ...

- - 19 - - 10 10 19 58
MANUFACTURE OF PARTS AND ACCESSORIES FOR MOTOR
VEHICLES AND THEIR ENGINES ... - 10 10 - - 10 - 10 38

MANUFACTURE OF FURNITURE; MANUFACTURING N.E.C. ...

2,947 192 5,549 845 58 173 2,515 2,794 15,072
TOTAL
16,306 3,886 38,874 3,416 137 1,432 9,937 24,553 98,541
Percentages
16.5 3.90 39.40 3.50 0.10 1.50 10.10 24.90 100.00

32
Earlier in the report we discussed about the problems faced by small-scale
establishments, now let us look at the problems faced by the establishments during the
survey period. The responses by the establishments are summarized in summary table
3.12. The majority of the establishments responded to this particular question. Out of
those who responded to this particular question, blamed electric supply was cited as a
major problem by 24.9 % of the establishments, and also 24.9 % of them talked about
market demand for their products, shortage of raw material, close to 13.40 %, shortage of
raw material and 9.40 % pointed out working capital as a major concern to them, during
the survey period. The other notable reasons given by the establishments were, 0.80 %
referred to problem with employees, 2.10 % frequent machinery failure, and 2.30 %
shortage supply of spare parts, respectively.
The other area investigated during the survey, was whether there were administrative
issues related to the government, hampering a smooth running of a small-scale
establishment. The results are presented in summary table 3.13. Very few of the
establishments responded to this question, i.e., only 16.5 thousand of them. The figures
in the table show that out of these 6.96 thousand, 42.0 % mentioned lack of working
premises as a major problem, followed by getting license 36.8 % and 10.70 % brought up
others problem as a major problem, respectively.
Business, be it large or small can fail, or get into trouble or face a bumpy road due to
number of reasons, and lack of information among them, if not a major one. During the
survey, establishments were asked whether they faced this kind of problem, and their
responses are encapsulated in summary table 3.14. Again as in the previous table, very
few responses were recorded for this question, only 3.4 thousand responses, out of 14.4
thousand or 23.8%. Nevertheless, 33.4 % of those who responded to this question, cited
lack of sufficient market information as a major problem, while a fifth of them (23.8 %)
revealed lack of information to decide which type of activity to engage in as a major
problem, and 13.6 % brought up lack of information about suitable technology to their
activity as a culprit. Worth noting here is also that, 11.9% mentioned lack of

33
information, where to get appropriate training, while 8.1% put the blame on lack of
information as to where to get machinery.

34
 Summary Table 3.12 Number of Establishments by Industrial Group and Major Reason
Faced During the Survey Period: 2006 E.F.Y (2013/14)
TYPE OF REASONS

INDUSTRIAL GROUP NO SHORTAG SHORTAGE ABSENCE LACK FREQUEN LACK OF PROBLEMS OBSTACLES OTHERS TOTAL
PROBLEM E SUPPLY OF OF OF T WORKIN WITH FROM GOV. SHORTAGE ESTAB.
S OF SPAREPART MARKET WORKI MACHINE G EMPLOYEES RULES AND OF
FACED SUPPLY S DEMAND NG RY PREMISE REGULATIONS ELECTRICIT
OF CAPITA FAILURE S Y
RAW L
MATR.

MANUFACTURE OF FOOD PRODUCTS EXCEPT GRAIN

MILL SERVICES 2,534 7,171 230 6,211 1,565 173 2,304 317 643 2,390 1,526 25,066
MANUFACTURE OF GRAIN MILL SERVICES....
2,010 1,702 1,882 6,899 666 1,843 998 154 422 17,216 1,293 35,085
MANUFACTURE OF TEXTILES ...
405 555 47 828 499 28 395 19 66 311 226 3,378
MANUFACTURE OF WEARING APPAREL; DRESSING AND
DYING OF FUR ... 1,477 1,402 132 5,731 2,522 160 2,343 94 508 2,531 1,016 17,917
MANUFACTURE OF LUGGAGE HANDBAGS AND
FOOTWEAR ... 63 204 16 306 118 16 204 16 39 39 71 1,090
MANUFACTURE OF WOOD AND OF PRODUCTS OF WOOD
AND CORK EXCEPT FURNITURE; MAUFACTURE OF
ARTICLES OF STREW AND PLAITING MATERIALS .... 69 196 - 137 88 - 98 - 49 127 59 823
PUBLISHINGPRINTING AND REPRODUCTION OF
RECORDED MEDIA 10 - - 29 10 - 10 - - 29 - 86
MANUFACTURE OF CHEMICALS AND CHEMICAL
PRODUCTS ... 10 - - 19 - - - - 10 - - 38
MANUFACTURE OF OTHER NON-METALLIC MINERAL
PRODUCTS ... 96 259 19 566 134 10 182 38 10 221 144 1,680
MANUFACTURE OF FABRICATED METAL PRODUCTS
EXCEPT MACHINERY AND EQUIPMENT ... 589 1,159 105 3,715 1,682 48 1,834 143 295 2,328 380 12,274
MANUFACTURE OF MACHINERY AND EQUIPMENT N.E.C ...
- 10 - - 19 - 10 - - 19 - 58
MANUFACTURE OF PARTS AND ACCESSORIES FOR
MOTOR VEHICLES AND THEIR ENGINES ... 10 - - - - - 10 10 - 10 - 38
MANUFACTURE OF FURNITURE; MANUFACTURING N.E.C.
... 749 2,688 202 4,147 2,294 86 2,419 163 605 3,446 566 17,366
TOTAL
8,020 15,347 2,632 28,588 9,596 2,363 10,806 953 2,646 28,667 5,281 114,899
Percentages
7 13.40 2.30 24.90 8.40 2.10 9.40 0.80 2.30 24.90 4.60 100.00

35
 Summary Table 3.13 Number of Establishments by Industrial Group and Type
of Government Influence: 2006 E.F.Y (2013/14)

TYPE OF GOVERNMENT INFLUENCE

GETTING
LICENCE
REQUIRES LACK OF ABSENCE
INDUSTRIAL GROUP LONG WORKING OF TAX OTHERS TOTAL
PROCESS PREMISES EXEMPTION

MANUFACTURE OF FOOD PRODUCTS EXCEPT GRAIN MILL

SERVICES 1133 1123 346 346 2947

MANUFACTURE OF GRAIN MILL SERVICES.... 2483 1050 410 870 4813

MANUFACTURE OF TEXTILES ... 47 151 75 38 311

MANUFACTURE OF WEARING APPAREL; DRESSING AND DYING OF
FUR ... 743 1449 311 169 2672

MANUFACTURE OF LUGGAGE HANDBAGS AND FOOTWEAR ... 63 102 16 16 196

MANUFACTURE OF WOOD AND OF PRODUCTS OF WOOD AND
CORK EXCEPT FURNITURE; MAUFACTURE OF ARTICLES OF STREW
AND PLAITING MATERIALS.... 88 59 20 10 176

PUBLISHINGPRINTING AND REPRODUCTION OF RECORDED MEDIA 10 10 - - 19

MANUFACTURE OF CHEMICALS AND CHEMICAL PRODUCTS ... - - 10 10 19

MANUFACTURE OF OTHER NON-METALLIC MINERAL PRODUCTS ... 77 115 19 10 221

MANUFACTURE OF FABRICATED METAL PRODUCTS EXCEPT

MACHINERY AND EQUIPMENT ... 713 1017 190 162 2081

MANUFACTURE OF MACHINERY AND EQUIPMENT N.E.C ... - - - - -

MANUFACTURE OF PARTS AND ACCESSORIES FOR MOTOR

VEHICLES AND THEIR ENGINES ... - - - - -

MANUFACTURE OF FURNITURE; MANUFACTURING N.E.C.... 730 1882 336 144 3091

TOTAL 6086 6956 1731 1773 16546

Percentages 36.8 42.00 10.50 10.70 100.00

36
 Summary Table 3.14 Number of Establishments by Industrial Group
and First Major Information Problem: 2006 E.F.Y (2013/14).

appropriate training
Lack of information

Lack of information

Lack of information

Lack of information

Lack of information
where to get license
market information
Lack of sufficient
about appropriate
to decide type of

where to get

where to get
machinery

machinery
activity

others
Industrial Group Total

MANUFACTURE OF FOOD PRODUCTS EXCEPT GRAIN MILL

SERVICES 845 384 192 278 1037 58 154 2947

MANUFACTURE OF GRAIN MILL SERVICES.... 755 589 346 474 666 102 141 3072

MANUFACTURE OF TEXTILES ... 104 122 38 47 188 38 19 555

MANUFACTURE OF WEARING APPAREL; DRESSING AND DYING
OF FUR ... 621 226 263 376 743 56 122 2409

MANUFACTURE OF LUGGAGE HANDBAGS AND FOOTWEAR ... 39 24 24 47 55 - 16 204

MANUFACTURE OF WOOD AND OF PRODUCTS OF WOOD AND
CORK EXCEPT FURNITURE; MAUFACTURE OF ARTICLES OF
STREW AND PLAITING MATERIALS.... 20 - 10 20 78 - 10 137
PUBLISHINGPRINTING AND REPRODUCTION OF RECORDED
MEDIA - - - - - 10 - 10

MANUFACTURE OF CHEMICALS AND CHEMICAL PRODUCTS ... - 10 - - - - - 10

MANUFACTURE OF OTHER NON-METALLIC MINERAL PRODUCTS
... 67 10 10 67 144 10 48 355
MANUFACTURE OF FABRICATED METAL PRODUCTS EXCEPT
MACHINERY AND EQUIPMENT ... 371 247 124 152 836 105 114 1948

MANUFACTURE OF MACHINERY AND EQUIPMENT N.E.C ... - - - 10 10 - - 19

MANUFACTURE OF PARTS AND ACCESSORIES FOR MOTOR
VEHICLES AND THEIR ENGINES ... - - - - - - - -

MANUFACTURE OF FURNITURE; MANUFACTURING N.E.C. ... 595 346 154 240 1046 144 192 2717

TOTAL 3416 1956 1159 1711 4803 522 815 14382

Percentages 23.8 13.60 8.10 11.90 33.40 3.60 5.70 100.00

37
 Summary Table 3.15 Number of Establishments by Industrial Group
and Main Reason for Not Solving Problem of Shortage
of Working Capital: 2006 E.F.Y (2013/14).
Main Reason

repayment time
Permitted Loan

takes long time

Loan process
High interest
insufficient

Unable to

was short
collateral
provide

Others
Loan
Industrial Group Total

was

rate
MANUFACTURE OF FOOD PRODUCTS EXCEPT GRAIN MILL
SERVICES 192 115 86 67 144 48 653

MANUFACTURE OF GRAIN MILL SERVICES.... 243 77 38 77 64 51 550

MANUFACTURE OF TEXTILES ... 66 38 19 9 9 - 141

MANUFACTURE OF WEARING APPAREL; DRESSING AND DYING
OF FUR ... 245 198 113 94 207 56 913

MANUFACTURE OF LUGGAGE HANDBAGS AND FOOTWEAR ... 39 16 8 - 8 - 71

MANUFACTURE OF WOOD AND OF PRODUCTS OF WOOD AND
CORK EXCEPT FURNITURE; MAUFACTURE OF ARTICLES OF
STREW AND PLAITING MATERIALS .... - 10 20 10 20 - 59
PUBLISHINGPRINTING AND REPRODUCTION OF RECORDED
MEDIA 10 - - - 10 - 19

MANUFACTURE OF CHEMICALS AND CHEMICAL PRODUCTS ... - - - - - - -

MANUFACTURE OF OTHER NON-METALLIC MINERAL PRODUCTS
... 48 19 10 - 38 - 115
MANUFACTURE OF FABRICATED METAL PRODUCTS EXCEPT
MACHINERY AND EQUIPMENT ... 228 238 29 105 152 67 817

MANUFACTURE OF MACHINERY AND EQUIPMENT N.E.C ... - - - - 10 - 10

MANUFACTURE OF PARTS AND ACCESSORIES FOR MOTOR
VEHICLES AND THEIR ENGINES ... - - - - - - -

MANUFACTURE OF FURNITURE; MANUFACTURING N.E.C. ... 461 490 58 77 298 96 1478

TOTAL 1531 1199 380 439 959 318 4826

Percentages 31.7 24.80 7.90 9.10 19.90 6.60 100.00

38
 Summary Table 3.16 Number of Establishments by Industrial Group
and Cause of Lack of Market: 2006 E.F.Y (2013/14)

Cause of Lack of Market

foreign product in quality

Unable to compete local

Unable to compete local
foreign product in price
Unable to compete

Unable to compete

product in quality

product I price

Others
Total

Industrial Group
MANUFACTURE OF FOOD PRODUCTS EXCEPT GRAIN MILL
SERVICES 192 144 1584 3005 5866 10790

MANUFACTURE OF GRAIN MILL SERVICES .... 192 64 742 1946 11648 14,592

MANUFACTURE OF TEXTILES ... 122 216 179 423 706 9344

MANUFACTURE OF WEARING APPAREL; DRESSING AND DYING
OF FUR ... 734 555 1722 2512 3820 596

MANUFACTURE OF LUGGAGE HANDBAGS AND FOOTWEAR ... 39 71 149 125 212 314
MANUFACTURE OF WOOD AND OF PRODUCTS OF WOOD AND
CORK EXCEPT FURNITURE; MAUFACTURE OF ARTICLES OF
STREW AND PLAITING MATERIALS .... 20 10 39 108 137 82
PUBLISHINGPRINTING AND REPRODUCTION OF RECORDED
MEDIA 10 - - - 19 29

MANUFACTURE OF CHEMICALS AND CHEMICAL PRODUCTS ... - - - 10 10 19

MANUFACTURE OF OTHER NON-METALLIC MINERAL PRODUCTS
... 19 29 125 288 422 883
MANUFACTURE OF FABRICATED METAL PRODUCTS EXCEPT
MACHINERY AND EQUIPMENT ... 323 371 827 2204 2936 6660

MANUFACTURE OF MACHINERY AND EQUIPMENT N.E.C ... - - - - 10 10

MANUFACTURE OF PARTS AND ACCESSORIES FOR MOTOR
VEHICLES AND THEIR ENGINES ... - - - - - -

MANUFACTURE OF FURNITURE; MANUFACTURING N.E.C. ... 384 403 1142 2784 3197 7910

TOTAL 2035 1862 6509 13405 28,982 52,793

Percentages 3.9 3.50 12.30 25.40 54.90 100.00

39
Summary table 3.15 displays number of establishments by a major reason for not
solving the problem of shortage of capital. Earlier in summary table 3.12, during the
question about the major problem faced during the survey period, 10.8 thousand or
9.4% put their problem on lack of working capital. Now only 4.8 thousand responded
to the reasons as to why they have not solved the problem of working capital. Close
to 31.7 % said the loan permitted was not sufficient, pretty close to this size or 24.8 %
talked about their inability of providing collateral and 19.9 % of them complained
about the lengthy time it takes to process a loan. There was a complaint about the
time required to repay a loan by 9.1 % and high interest rate was mentioned as a
problem by 7.9 % of the small-scale establishments.

Finally, an attempt was made to investigate the reasons behind the lack of market
mentioned as a major problem faced during the survey period, and the responses are
presented in summary table 3.16. Their inability to compete in the local market in
prices was mentioned by almost 25.4% the establishments, followed by in-ability to
compete with local products in quality (12.3%) and in-ability to compete with
imported products in price (3.5 %), respectively.

40
 Appendix I
Number of Sampled Establishment by Priority of Small Scale
Manufacturing Sector and by Region
Sr. Branch Small Scale Manufacturing Industry No. of sampled by
no priority
industry sector Establishment and by Region
Textile Wood Metal Leather Flour Others Total for
mills Small scale

1 Tigray 638 16 326 14 102 503 1599

2 Afar 9 17 11 37
3 Amhara 628 15 222 39 923 1390 3217
4 Oromia 154 29 310 17 1231 1330 3071
5 Somalie 3 0 4 0 28 12 47
6 Benishangul- 1 0 5 0 30 8 44
Gumuz
7 SNNPR 101 2 90 16 251 692 1152
8 Gambela 4 0 1 0 0 10 15
9 Harari 1 0 6 0 0 11 18
10 Addis Ababa 754 24 340 54 163 693 2028

11 Dire Dawa 13 0 6 2 23 35 79

Total 2297 86 1319 142 2768 4695 11307

41
 Estimation Procedures of Total, Ratio and Sampling Errors

The following formulas were used to estimate the required variables by reporting levels.

1. Estimate of Total Yˆh in Major and Prior sector of manufacturing Domain

(Category I) is given by

Yˆh = =

Where,

is the basic sampling weight

42
 Estimate of Total Yˆh in Other than priority sector of manufacturing Domain

(Category II)

Yˆh = =

Where,

is the basic sampling weight

The following notations were used in the formula:

M h = Total number of enterprise in stratum h obtained from the sampling frame.

M hi = Total number of enterprises in small scale establishments type i for major domain or
in center i for other domain, stratum h obtained from the sampling frame.
E hi = Total number of enterprises obtained from the survey of small scale establishments

type i stratum h for major domain/in sample center of small scale establishments
type i stratum h for other domain.
ehi = Total number of enterprises successfully covered in small scale establishments’ type i

stratum h for major domain/in sample center small scale establishments type i stratum
h for other domain.
nh  Number of successfully covered by type of small scale establishments for other
domain and for major domain in stratum h.
N hi  Total number of small scale establishments’ type i in stratum h for major /in other
center stratum h obtained from the sampling frame
nhi  Total number of sampled and covered small scale establishments type in sampled

small scale establishments type i for major / center in stratum h

Yhik  The observed value of characteristic y for enterprises k, in small scale establishments

type i, stratum h for major domain/ other domain stratum h.

Note: Estimate of total, Yˆ , is obtained by summing up stratum/domain total estimates.

43
Yˆ   Yˆh
h

2 Sampling Variance of the Estimates:

Sampling variance of estimate of stratum total are given by the

following formulas:

The variance of domain or reporting total estimate is:

2
 


 
nh
nh Yh
Var (Y h )   Y hi  nh
nh  1 i 1  
 
in which

Ŷhi   Whi  y hik

j k

V (Yˆ )  V (Yˆh )
h

SE (Yˆh )  Var (Yˆh )

3 Coefficient of Variation (CV) and Confidence Interval (CI)

The following formulas were used to calculate CV and CI of the domain (reporting
level) total.
The coefficient of variation (CV) of domain total in percentage is:


VAR (Yh )
CV (Yˆh )  
*100
Yh
and Ninety-five percent confidence interval (CI) of domain total:
Yˆh 1.96* SE (Yˆh )
4 Ratio Estimates:

Yˆ Yˆ
Rˆ h  h and Rˆ 
Xˆ h Xˆ

44
Where: the numerator and the denominator are estimates of domain totals of characteristic y
and x, respectively.

  1
     
Var Rˆ h  2 Var Yˆh  Rˆ h2 Var Xˆ h  2 Rˆ h Cov Yˆh , Xˆ h
ˆ
Xh


45