Abel Alelign Proposal
Abel Alelign Proposal
ID No – UGR/4916/13
First and for most I would like to thank Almighty of God who has helping me to accomplish my
goal. My first and heartfelt gratitude goes to my honored research instructor Dereje.T; he has
given me all about the concept of research. Last but not least, I would like to thank to my family,
who had sent me to school at early time stage of childhood and stood with my side all the time
and for their persistent encouragement and moral support throughout my life..
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Acronym
MSE = micro and small enterprise
TABLE OF CONTENT
III
Acronym ............................................................................................................................................ III
LIST OF TABLE ............................................................................................................................... VI
Abstract............................................................................................................................................. VII
CHAPTER ONE ................................................................................................................................. 1
1 INTRODUCTION ............................................................................................................................ 1
1.1 Background of the Study ....................................................................................................... 1
1.2 Statement of the Problem ...................................................................................................... 2
1.3 objective of the study ............................................................................................................ 2
1.3.1 General objective ............................................................................................................ 2
1.3.2 Specific objective the study ............................................................................................ 2
1.4 significance of the study ........................................................................................................ 2
1.5 Scope of the Study................................................................................................................. 3
1.6 limitation of the Study ........................................................................................................... 3
1.7 Organization of the Study ..................................................................................................... 3
CHAPTER TWO ................................................................................................................................ 4
2. literature-reviews ............................................................................................................................ 4
2.1 Definition and Concepts of MSE .......................................................................................... 4
2.2 Economic and Social Significance ........................................................................................ 4
2.3 Definition of poverty ............................................................................................................. 5
2.4 Concept of Poverty ................................................................................................................ 5
2.5 contribution of MSE’s in economic development................................................................. 6
CHAPTER THREE ............................................................................................................................ 6
3. Methodology of the study ............................................................................................................... 6
3.1 Description of the Study area ................................................................................................ 6
3.2 Data Source ........................................................................................................................... 7
3.3 Data Collection Method ........................................................................................................ 7
3.4 The Method of Sampling ...................................................................................................... 7
3.5 Data analysis ......................................................................................................................... 7
CHAPTER FOUR ............................................................................................................................... 8
IV
4 Data Presentation,Analysis And Interpretation ............................................................................... 8
4.1 The operator’s .................................................................................................................... 8
4.1.1 Educational levels of respondents .................................................................................. 8
4.1.2 Gender despite ................................................................................................................ 9
4.1.3 Age of respondents ......................................................................................................... 9
4.2 General information of wood and metal work sub sectors ................................................... 9
4.2.1 Types of business activities ............................................................................................ 9
4.2.2 Employment opportunities ........................................................................................... 10
4.2.3 Sources of startup capital .............................................................................................. 11
4.2.4 Monthly income from the enterprise ............................................................................ 11
4.2.5 Total monthly income ................................................................................................... 11
4.2.6 Amount of startup capital ............................................................................................. 12
CHAPTER FIVE ...............................................................................................................................13
5. Conclusion and recommendation ...................................................................................................13
5.1Conclusion............................................................................................................................ 13
5.2 Recommendation ................................................................................................................. 14
5.3 Time and Cost budget ………………………………………………...............................14
Reference ...........................................................................................................................................15
V
LIST OF TABLE
Table 4.1 educational level of respondents ………………………………………………..8
VI
Abstract
This paper had been conducted to assess the contribution of micro and small enterprise (MSE) in
mitigating economic in case of Addis Ababa. The study the main data collection tool for this paper was
questionnaire and also data from secondary sources were also conducted.
They study used simple random sampling method for selection of samples from the total population. The
primary data has been taken from wood and metal workers of Addis Ababa and the secondary data was
taken from the micro and small enterprise (MSE) development of Addis Ababa
Logical conclusion were reported by deriving that indicates the relationship between the variables
involved after the data collected then processed any analyzed for effective interpolation to express
feasible finding.
VII
CHAPTER ONE
1 INTRODUCTION
1.1 Background of the Study
Many development countries face many problems that could hinder their development program,
like natural disasters, such as flood, volcanic eruption and manmade problems such as misuse of
resource and in efficient allocation of resources. Ethiopia by any standard of development
criteria is categorized as one of them poorest of the less developed countries. Urban poverty has
a distinct special dimension. Poverty can be caused by luck of money, power, asset, employment
opportunities, skill person’s access to education and health facilities.
If this is so the poor people have to engage in income generating activities that can help them to
escape from the vicious circular of poverty. The micro and small enterprise come up as a major
economic land scope in creation of jobs, generating income and reduce unemployment and
economic growth. They were highly depend on labor intensive, activity, domestic markets, for its
raw material and output were believed to facilitate development through promoting entrepreneur
talents enlarging employment opportunities serving as ‘’meddle men’’ for facilitating linkage
among various sectors of the economy, add significant value and bring about pro-poor growth.
In addition to this MSE’s encourage new crating talents and formulate the seed bed from which
new companies can grow and inject spirit of innovation as well as economic and social changes.
Moreover, they require little capital use non sophisticated and comprehensive technology and
easy mobility and optimal use capital, human, material and natural resources. For those and other
good reasons, promotion of MSE’s should receive great emphasize in order to reduce
unemployment and to bring economic progress. (Van Dijk, 2002)
According to trade and industry of Addis Ababa, micro and small enterprises development and
promotion strategy 2008, aims to address challenges of unemployment, socio economic problem
and more importantly it was the instrument in the fulfillment of the global target or reduction the
percentage of people living below the poverty line.
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1.2 Statement of the Problem
It was apparent that developing countries have large numbers of their population living below
poverty line. Despite the scores of modernization and development that have been registered in
the world, the percentage of people living below poverty line was still huge, about one billion
people globally live in household with per capital income less than one dollar per day. (Todaro,
2002)>
Poverty in Ethiopia is deep rooted and old phenomena decrease of drought jamming political
instability, economic mismanagement, in appropriate policies. Due to these factors and many
other problem, poverty become complex to solve easily and within a short period of time. This
was so the government of Ethiopia introduced a new initiative strait against poverty. In this
strategy, the promotion and development of micro and small enterprise are given due to attention
as a way to address the problem of unemployment and economy growth in the country.
However, in Ethiopia, there are so many problems that affect the performance of micro and small
enterprise. Thus these problems also prevail in Addis Ababa city the researcher intended to
assess problems that affect the performance of the business and impact of the micro and small
enterprises in redaction of poverty in Addis Ababa city .
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1.5 Scope of the Study
The researcher wants to explore micro and small enterprise in Ethiopia. However, due to some genuine
limitation such as short period of time, but best limitations, the study area is only confined to Addis
Ababa city. The government of any developing countries focus on micro and small enterprise as a way to
help the poor and to use local resources. However this only study tried to give some ideas on the role of
MSE’s on poverty reduction and restricted its investigation in metal and wood work subsector in Addis
Ababa city.
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CHAPTER TWO
2. literature-reviews
2.1 Definition and Concepts of MSE
Scale of economy and MSE’s depend on the level of the economic and social development and
technological advancements of the countries. Consequently, the definition of micro and small
enterprise vary from countries to countries and use different measures. All over the world,
number of employees or capital investment or both has been as the basis for defining MSE.
Definition of MSE’
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The modification and adoption may gradually develop to the level of manufacturing of
machineries and equipment those used to be imported. According to Joda MSE’s play a great
role in the formation of human capital by providing access to training and a apparent ship at
sustainable low costs than that providing by formal institutions and formal sectors. By taking the
countries level of infrastructure development, the location of row materials the population
growing and the existing pattern of distribution of industries between regions in to account the
importance MSE’s have on question. Additionally MSE’s have a great role in supporting the
country in reduction the population pressure on existing land, more over those are crucial that
they are the main path for poverty alleviation.
The poor have less sources of income than other people. In addition, the income was not enough
to buys necessary foods. The poor must often purchase necessities as soon as they have cash for
most people’s poverty simply means not having enough money to buy things that were
considered necessary and desirable. According Lewis (2003) poverty was defined as the failure
to have some minimum capability and it was not a matter of income of all. Rather it was one of
the production systems or restriction to it was more primitive states, attitude of discouragement,
problem in the mechanism of social integration and adherence to a particular scale of values.
The specification off certain stated consumption norm or a specified poverty line, may do a part
of job, those people whose consumption standard full below the norms or in other way round
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whose income line below the poverty line are presumed as “poor” (2002), the point out that
conceptualization of poverty was the hard task in analysis of poverty. Poverty can be expressed
in distinct conceptual frame work like social, political, cultural and environmental tasks.
Introducing new innovation products that originate in the research laboratories of big business
make a valuable contraception to people’s standard of living the relative importance of big
business in achieving truly significant innovations. The record shows that many scientific break
thoughts have originated with independent inventors and small firms here are some examples of
new products created by small firms are photo copies insulin penicillin’s cotton picker zipper
color film power steering etc.
Stimulating economic competition many economists beginning with Adam smith have
expounded the values inherent in economic competition in competitive justness situations
individuals are driven by self-interest to act in a socially desirable manner competition acts as the
regulator that transforms forms their self interest in to service if competition was to have cutting
edge there was need for small firm (Lied holm carl,
CHAPTER THREE
3. Methodology of the study
3.1 Description of the Study area
Latitude and longitude coordinates are: 9.005401, 38.763611.
Addis Ababa is the capital of Ethiopia and one of the largest cities on the African
continent, with a few million people of various origins and occupations currently
living there. Addis Ababa is located in the very central part of the country and it is a
key center of transportation, logistics, and commerce.
.
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3.2 Data Source
The research has used both primary and secondary data. To achieve the stated objectives, the
researcher collect the primary data from more educated, less educated workers and from officials
of trade and industry and secondary data also be collected from published and unpublished
sources which were related with the topic.
n=N/1+N(e2)
n=sample size
n=N/1+N(e2)
n=172/1+172(0.05)2
n=172/1+0.43
n=172/1.43
n=120
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CHAPTER FOUR
4 Data Presentation,Analysis And Interpretation
4.1 Social and demographic characteristics of respondents
This section is concerned with the description of characteristics of the sample respondents. The
finding provides data on age structure, and family size and educational level of the target
respondents,
Generally, the table show as that when comparing wood and metal work subsector with other
MSE’ sectors most of the owners and operators are grade 4-8 complete or little of them are grade
9-12 and college graduates. This indicates wood and metalwork small-scale manufacturing is
more technical which needs basic operating skills than other subsectors.
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4.1.2 Gender despite
Women’s contribution is not adequately addressed and their participation in share of benefits
from the development is still limited. It is very important to consider gender issue as integrated
development strategy to combat poverty.
Based on the above table in relation to sex distribution all of the 120 respondents are males
because women’s are not activated in wood and metal works. In the surveyed women’s
contribution for wood and metal work manufacturing activities are zero.
Age structure as it’s reviewed in table 4.3, 50% and 20% of the respondents are age between 18-
29 and 30-39 respectively. This show as that the most activities and productive labor force (the
the age of 40-49 the remaining 16 or 13.33% are 50 and above.
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No Types of activities
Number Percentage (%)
1 Wood work 52 43.33
2 Metal work 36 30
3 Wood and metal 32 26.67
work
Total 120 100
Source: own survey 2018
Based on the sources found from the respondents a large portion of respondents or 43.33% were
involved in wood work activities. Those enterprises include house and office furniture producing
enterprise, house parts such as bed and hand tool producing and sofa houses.
Based on the above table, 30% or 36 respondents replied that no have any employees, because
working in wood and metal work is done only by itself. 30% replied that 6-10 employees and
followed by 26.67% or 32 respondents replied that 2-5 employees. 10% of the employees have
12 respondents from 11-15 employees and the last 3.33% or 4 respondents replied only one
employee. Most of the enterprise as shown in the above table no have employees and have
employees (6-10) persons are the most cover. In the contribution of MSE’s in creation
employment is lot, this attracts the attention of policy academicians towards these enterprise as
an important department and unemployment reduction tool.
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4.2.3 Sources of startup capital
This section presents the major sources of capital to start up their business activity the results of
the survey are summarized in the table below.
No The source of
startup capital Number Percentage (%)
1 Personal sources 56 46.67
2 Bank loan 28 23.33
3 Family and fried 16 13.33
4 Local money 4 3.34
Lenders
Loan and personal 16 13.33
combination
5 Total 120 100
Source: own survey, 2018
on the base of table 4.10, out of the respondents around 56 (46.67%) indicated that there most
importance sources of startup capital was personal capital sources is followed by 28 (23.33%)
borrowing from banks, which are about 16 (13.33%) and 16 (13.33%) is the remaining
importance sources of startup capital identified during the survey were family and friends and
loan and personal combination respectively. The rest local money lenders identified 1 respondent
(3.34%)
No Monthly income
from enterprise Number Percentage (%)
1 400-700 32 26.67
2 700- 950 48 40
3 950-1200 40 33.33
Total 120 100
Source own survey, 2018
On the above table, 48 (40%) of the respondents are gain monthly income from enterprise
between 700-950, 40 (23.33%) of the respondents are gain monthly income from the enterprise
from 950-1200 and the remaining 32 (26.7%) of the respondents are gain from the enterprise
from the beginning 400-700 monthly income.
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No Total monthly
income Number Percentage (%)
1 500-800 24 20
2 900-1100 56 46.67
3 1100-1400 40 33.33
Total 120 100
Based on the table 4.11, 56 (46.67%) of the respondents are gain total monthly income from 900-
1100. Because the respondents are gain additionally from others and 40 (33.33%) of the
respondents are gain total monthly income from 1100-1400 respondents are not changed from
table 4.10 because they are not gain additionally. 32 (20%) of the respondents are gain monthly
income from 500-800
No Amount of startup
capital Number Percentage (%)
1 1000-3000birr 24 20
2 3000-6000 birr 32 26.67
3 6000-9000 24 20
4 9000-40,000 28 23.33
5 Above 40,000 birr 12 10
Total 120 100
Source: own survey, 2018
On the base of above table about 32 (26.67%) of the respondent have startup capital 3500-6000
and about 28 (23.33) of the respondents have 10,000-40,000 startup capital. This is followed by
1000-3000 and 7000-19,000 with similar percentage. The rest 12 (10%) of the respondents are
startup capital above 50,000 and they are owned by rich enterprise.
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CHAPTER FIVE
5.1Conclusion
MSE’s in general and wood and metal work enterprises in particular instruments to influence the
whole situation towards creating employment opportunity and income improving not only this
but also they have a great role to play in reducing poverty based on the discussion and analysis
the major findings are summarizing as follow. As we see in the analysis part that out of 120
samples taken 100% are man, which owned and operate the small scale metal and wood work
enterprises, like wise this research indicates that wood and metal work sub sector creates
employment for the poor people from these 43.33% are between 18-19 years old. In addition, the
remaining 56.67% is for peoples aged between 30-49 and above. In addition, majority of the
operators about 33.33% have an educational level of< 4 th grade.
On the sources of startup capital, most of the sources gain from personal source about 46.67%.
These respondents are majority of monthly income. In wood and metal work, 90% demands of
these products are seasonal and the remaining 10% are not seasonal. When we took in the cause
of poverty, poverty is caused by lack of human capital the less a curry input for their businesses
as 100% of the respondents are agreed with MSE’s opportunity. As the financial aspects, 66.67%
of the respondents are taken loan from microfinance or financial institutions. As the last, the
main problem or obstacle for the wood and metal sub sector is lack of market about 83%. This
problem is majority of other problems.
5.2 Recommendation
According to the fact and believe of the researchers the following suggestions and forwarded
aimed at improving the level and skill of small manufacturing entrepreneurs particularly wood
and metal enterprise owners or operator in Addis Ababa.
The main problem of MSE`s is lack of market by reducing inflation, as a result peoples to
bought the product of wood and metal sub-sector. And for the remedy of shortage of
human capitals so the government should improve access to credit programs aimed at
supportive MSE`s business enterprises. However the financial institutions is should relax
and formulate credit policies that recognize MSE`s to borrow from their intuitions using
other means rather than collateral equipments.
Finally, business development service (BDS) should help in areas of training consultancy and
networking should help wood and metal work enterprises to deal with their marketing problems
and help to collate local resources efficiently. TIME AND COST BUDGET
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1.7 Time Budget
No Activity Months
1 Topic selection 1
2 preparation of research 15
proposal
5 Submission of proposal 20
6 Data collection 17
7 Data analysis 3
Personal cost
Researcher
Transportation 3
3 9 40
Pen 3 5.00 20
Miscellaneous expense 50
Total 300
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Reference
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Ernst, UFW (2004); hidden source of growth; looking at micro enterprises through the
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students edition, Me Graw-Hill
Haly gebretisue 2012The modification and adoption may gradually develop to the level
of manufacturing.
Gerry Finnegan(2002) micro and small enterprise development and poverty elevation
(Lewis 2003) poverty is define as the failure to have some minimum capability.
Lied holm Carl(1999) small enterprise and economic development, London
Millers (2002) poverty inequality and conflict
Oscar lives (1984) the culture of poverty scientific America
Todaro (2000). Economic development
Van Dijk (2002) the role of finance and business development service in micro and small
enterprise development in Ethiopia.
WBR 2000 the most common dimensions of poverty such as loan income, health,
education.
Wolday( 2002) The adoption of market economy policy devaluation of accuracy.
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rate of Infant mortality.
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