ASSESSMENT OF THE ROLE OF MICRO AND SMALL

SCALE ENTERPRISES FOR THE PRODUCTIVITY AND

INVESTMENT (A CASE STUDY IN AKSUM TOWN)

A RESEARCH PAPER SUBMITTED IN PARTIAL

FULFLLMENT OF BACHELOR DEGREE IN BANKING
AND FINANCE

BY: KAWATO SARECHO

ADVISOR: BELAY D.
CO-ADVISOR: SEMER G.

AKSUM UNIVERSITY
COLLGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF BANKING AND FINANCE

MAY 2016

I
 AKSUM, ETHIOPA

II
 ACKNOWLEDGEMENT

I would like to express my hearty gratitude and internal happiness to my advisor

Belay D. for her outstanding and constructive advice as well as comments in
completion of this research paper. My sincere thanks also go to my parents who
help me on my education to reach at this higher educational level and my close
friends who assist me financially and trough advising me frequently and finally, I
would also like to thanks my secretary Bertukan Tilahun who assist me in
writhing and printing this research paper

I
 ABSTRACT

The research papers will entitled “Assessment of the role of micro and small scale
enterprises for the productivity and investment” conducted on a case study basis at
Aksum town. The main objective of the study is the assessment of the productivity
and investment potential of the micro and small scale enterprises. In undertaking
the research work, the researcher use both primary and secondary source of data to
make research finding more credible. To collect the necessary primary data from
the source, interview and questionnaires will be used as appropriate tools of data
gathering. To collect secondary data the researcher will be used unpublished
official documents and trade and industry bureau of Aksum town. The data
gathered will be analyzed by using percentages, tables, charts, and graphs. The
research will be finalized by drawing conclusion, suggesting and possible
recommendation for the problems discovered in the research work.

.
II
 ACRONYM

CAS – Central statistics Authority

MFI – Micro Finance Institution
MSSES –Micro and Small –scale Enterprise
MKT – Market
NGO- Non –Governmental organization

III
 TABEL OF CONTENTS
Contents page
Acknowledgement ---------------------------------------------------------------------------------------- I
Abstract ---------------------------------------------------------------------------------------------------- II
Acronym --------------------------------------------------------------------------------------------------- III
Table of content ------------------------------------------------------------------------------------------- IV
CHAPTER ONE
INTRODUCTION
1.1 Background of the study .......................................................................................................1
........................................................................................................
1.2 Statement of the problem .......................................................................................................4
........................................................................................................

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

........................................................................................................
1.3.1 General objective .......................................................................................................5
........................................................................................................
1.3.2 Specific objective .......................................................................................................5
........................................................................................................
1.4 Significance of the study .......................................................................................................6
........................................................................................................
1.5 Scope of the study .......................................................................................................6
1.6 Limitation of the study ……………………………………………………………..7

CHAPTER TWO
2. Review of related Literature .......................................................................................................8
2.1 Definition of micro &small scale enterprise............................................................................... 8
2.2 Over view of micro and small scale enterprises in Ethiopia..................................................... 9
2.3 The Ethiopian micro& small scale enterprises development strategy ..................................... 10
2.4 Types of small business enterprise .......................................................................................... 11
2.5 Importance of Micro and small scale enterprise ---------------------------------------------------- 11
2.6 Micro and small scale enterprises difficulties and problems ...................................................12
CHAPTER THRE
3. Methodology
IV
3.1 Study area ................................................................................................................................14
..................................................................................................................................
3.2 Sources of data ........................................................................................................................14
..................................................................................................................................
3.3 Types of data ..............................................................................................................................14
..................................................................................................................................
3.4 Methods of data collection ........................................................................................................14
..................................................................................................................................
3.5 Population and Target group ......................................................................................................15
..................................................................................................................................
3.6 Method of sampling and sample size ........................................................................................15
..................................................................................................................................
3.7 Method of data Analysis.............................................................................................................16

CHAPTER FOUR
4. Data analysis, presentation and interpretation ............................................................................17
CHAPTER FIVE
5. Conclusion and Recommendation ..............................................................................................28
5.1 Conclusions ................................................................................................................................28
5.2 Recommendation .......................................................................................................................29
References ...............................................................................................................................30
..................................................................................................................................
Appendix …………………………………………………………………………………. 31

V
 CHAPTER ONE
1. INTRODUCTION

1.1 Background of the study

Micro and small business enterprises are major feature of the economic land scope
in all developing countries to day. The contribution of these enterprises to the
creation of jobs and to reduction of poverty has been recognized by many third
world countries. They have been given performance in many development plans as
well as in the strategy of donors (carlied Hon and Donold c, Mead 1999).

The micro and small scale enterprises in the post were not largely distributed
because development strategies were manly focused on modern, medium and large
enterprises. Recently large scale industrialization schemes have been practiced in
many parts of Africa and the developing countries. Similarly most of the profit the
country obtained indifferent form had left hardly as sustainable effect on the
endogenous micro and small scale enterprises.

Like with in Ethiopia about half of the urban work force is employed in the in
formal sector and about 616,696 were employed on cottage (handcraft)
establishment (as CSA survey in 2002 and 2003 year).
The ministry of trade and industry adopted officially definition of micro and small
scale enterprises in Ethiopia is as follows.
Micro and small scale enterprises found in all sectors of Ethiopia economy with
paid up capital (fixed assets) of not more than birr 20,000 excluding high teach
consultancy firms and other high- teach establishment small scale enterprise and
enterprise with paid-up capital of more than birr 20,000 ($2,500) but not more

1
than birr 500,000 but, exclude high-tech consultancy firms and other high- tech
establishment (1 US$ equal about 9 birr, 1 Euro equal about 10 birr in 10/2003)

The central statistics authorize (CSA) attached various definitions to enterprises

indifferent sectors. The central statistics authority based its definition on the size,
employment and extents of automation for small, medium and large-scale
enterprise and used a combination of criteria for defining in formal sector
operators.

Investment is the use of saving to produce future income. The term more
specifically refers to the use of funds to an quire capital good, capital goods are
items that are necessary to produce other goods and services.
Example of capitol goods include factories, offices, machine and computers.
(world Book, 2001).
Productivity refers to the ability to create goods and services by suing available
resources, including labor equipment, land and other natural resources.
Economists frequently measure the productivity of a nations economy. Arise in
productivity may result from better production methods, more equipment and
higher levels of education among workers. Over long periods, productivity growth
can bring dramatic increases in a country’s standard of living. (World book, 2002).
Many people save or invest part of their current income to consume more in the
future. Some do this in directly by letting other invest their funds, while others
invest directly in their own businesses. Investment is vital for economic
development and growth. When people deposit funds in bank accounts or saving
in micro and small enterprises for example bank lend some of those funds to
business firms.
The firms, in turn, use these bank loans to invest in new buildings and equipment
to expand productivity.

2
Profile of Jimma Town

This study was conducted in Jimma town, Oromia regional state. Jimma town
which is located 346 km south west of Addis Abeba. The climate of the area is
sub- tropical and characterized by worm temperature. The total population of the
town estimated 24,257(CSA) and in Jimma town. micro and small scale
enterprises are 642 in Jimma town, micro and small – scale enterprises were
established in Jimma town in 2000E.C.
They are classified in to five sectors, there are manufacturing (175), service (360),
trade (54), urban farming (36), and construction (16), (Jimma Trade and Industry
bureau, 2005).

3
1.2 Statement of the problem
Micro and small enterprises (MSES) allow the rural poor including some of the
most marginalized and vulnerable strata such as rural women, youth, and the
landless to diversify their incomes, create new source of economic growth and
generate additional employment (including self – employment) in rural areas.
The problem that micro and small scale enterprise face include:-
Absence of sufficient working area, market for their product and service, easy
access for bank loan are some of them
The same strata may also be reached through (MSES) support to small- scale local
entrepreneurs, whose business expansion can create new jobs for the rural
poor.MSSE has different benefits beside increasing the productivity and
investment so, as productivity increases, the output of production is increases, job
opportunity should be maintained and reduces employment rate and also
investment expanded by a great contribution to economy as a whole i.e.it narrow
the gap between rich and poor. so asMSE enterprise h as a great contribution in
increasing productivity and investment in the county then, researcher was try to
assesses this role in jimma town in this effect the researcher try to answer the
following key question.
.

1. What are the role that increases the investment and productivity of micro
and small-scale enterprise in town?
2. Does the micro and small scale enterprise in the town have adequate capital
that enables them to stand strong competition?
3. What are the role of micro and small scale enterprises to increase
investment and productivity?

4
 4. Is there any training and capacity building program designed for micro and
small-scale enterprises?
5. What are emphasis given by government to increase their role enhancing
productivity and investment?

1.3 Objective of the study

1.3.1 General objective

The major objective of this study is to assess and analyze the role of micro and
small-scale enterprises for the growth and development of the country in
enhancing:- investment, entrepreneurship and productivity of the society as a
whole.

1.3.2 Specific Objectives

The study has the following specific objectives
1. Identify their role in increasing the investment in jimma town.
2. To identify the source of the capital to expand their business in productivity
and investment.
3. To investigate the emphasize provided by the government and non
government.
4. To analysis their saving practice and creation of capital for further
investment.
1.4 Significance of the study

5
The researcher believes that the study would have the following significances i.e
provided guide line information for policy makers, government officials and other
stock holder to more necessary decision. The finding obtained in this study would
also serves as a basis for further research on the subject matter, and finally the
benefit of this research to the researcher is the first gain to entering how to prepare
the researcher hope fully believe that would make the researcher easily to prepare
the researchers own research. That the researcher publishing different thing in
addition it is key of the partial fulfillment of requirement for the researcher’s
bachelor degree in banking and finance.

1.5 Scope of the study

The study was conducted to assess the role of micro and small scale enterprises for
investment and productivity in Jimma town. this study also cover all those who are
currently participate in business activities as well as those who registered for
micro enterprises, but the study was not included non- registered micro and small-
scale enterprises out of Jimma town. the main reason of excluding this enterprises
are shortage of sufficient information about non- registered enterprise and shortage
of time, cost because of this problem and limited knowledge of the researcher the
study is concentrated in this specific area.

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1.6 Limitation of the study

The following are the main problem and inconveniences of the researcher faced
while conducting research study
 Absence of adequate and sufficient secondary data.
 Absence of enough skilled and experienced employee that kindly provide
required data and information.
 Some respondent who can not able to return filled questionnaires due to
carelessness.
 The expected time of the study was not enough to collect enough data.
 Shortage of finance also make gathering of information difficult.

7
 CHAPTER TWO
2. REVIEW OF RELATED LITERATURE

Definition and concept of micro and small business

2.1 Definition of micro and small scale enterprise

The following definition of micro and small scale enterprise is from the Ethiopia
minister of trade and industry, used to categories the sector for the purpose of
strategy.
 Micro enterprises are those small business enterprises with a paid up
capital of not exceeding birr 20,000 and excluding high technical
consultancy firms and other high-tech establishment.
 Small enterprises are those business enterprises with a paid up capital of
birr 20,000 and not exceeding birr 500,000 and excluding high technical
consultancy firms and other higher tech establishment.
 The micro and small enterprises sector is describes is the notional home at
entrepreneurship. It provides the ideal environment enabling entrepreneurs
to exercise their talents to the full and to attain their goals. In comparison
with other countries, it is known that in all the successful economics,
micro and small- social enterprises are seen as a spring board for growth,
job creation and social progresses at large (Haile G/Tinsie,2003).

8
2.2 Overview of micro and small- scale enterprises in Ethiopia

In Ethiopia the potential source of finance include:- commercial banks, micro

finance in stations, cooperatives, movement project micro and small scale
enterprises. Equity finance is limited because micro and small sale enterprises hive
not enough equality or personal capital for operation. Non governmental
organization (NGO) are to longer involve it least officially, since the issuance of
precondition No 4o/1996, which requires those involvement in the provision of
micro finance to be established as share company (only by Ethiopian national).
Prohibiting them from directly involving themselves in credit and saving activities
.because of their high excess liquidity and low yield on sate asset, banks in
Ethiopia do not find medium and small scale enterprise attractive clients, Mainly
due to high transaction cost and real operates as their mission not is their capacity,
especially their branch network throughout the country. moreover, the delivery of
financial services to micro and small scale operator, which Ethiopian banks are
lacking. Despite the large number of saving and credit cooperatives and multi-
purpose cooperatives in the country (Robinsons,2001).

Government credit program to micro and small enterprise in money countries

used to based on the lending approach which concentrates on reducing poverty
through credit, often provides together with complementary services, such as skills
as training and teaching at literacy and innumeracy, heath, numeration, family
planning and the like. Under this approach, donor and government funded credit is
provided to the poor borrowers, typically at below –market interest rate. The goal
is to reach the poor, especially the poorest of poor. Except for the mandatory
saving, the mobilization of local saving is normally not a significant part of this
approach to micro finance.

9
2.3 The Ethiopia micro and small scale enterprises development strategy

Emerged as a promising agenda in the 1980, a verity of reasons have be cited for
the surge of interest in micro and small- scale enterprise development like:-
1. Micro and small –scale enterprise are a better way for poverty reduction.
2. Micro and small – scale enterprise are a plat form for sustainable
development and productivity.
3. Micro and small –scale enterprise are important alters within the trade
sector and plant form for economically empowering women and men
The micro and small- scale sector plays an important role in providing people with
livelihood and income generating opportunities, providing in come and services to
people who can not get employment in the formal sector.

In November 1997 the Ethiopian minister of trade and industry has published
micro and small enterprises development strategy. which enlightens systematic
approach to alleviate the problem and promote the growth at micro and small
enterprise.
Elements of the program include measures with regard to create an enable lineal
frame work and streaming regularly conditions that hinder the coming up of new
and expansion of existing micro and small- scale enterprises.
In addition specific support programs also include measures related to facilitating
access to finance, provision of incentives promotion of partnerships, training,
access to appropriate technology, access to market, access to information and
advice, infrastructure and institutional strengthening of the private sector
associations and chamber of commerce. ( Haile G/ Tinsae, 2003).

10
2.4 Types of small business enterprise

The central statistics authority (CSA) categorized enterprise in to different scales

of operation on the size of employment and natured of equipment. These are :-
 Micro – enterprise :- are business activities that are independently owned
and operated have small share of market, Are managed by owner and
employing five or less employees.
 Small business: - are those enterprise that employee sis(6) to fourth nine
(49)employees. They share the small characteristic with micro enterprises
in other aspects.
 Medium scale enterprise:- are those enterprises which have relatively
higher share of the market and independently or jointly owned or managed
by appointed executives and employee 50to 99 persons(CSA).

2.5 Importance of micro and small scale enterprises

As a part business community, small firms unquestionably contribute to nation

economic welfare. They produce a substantial portion of our total goods and
services. Thus their general contribution is similar to that of big business. Small
firms however, pass some qualities that make them more than miniature version of
big businesses. They provide jobs and completion, aid big business and produces
goods and services.

11
Here are some of the important contribution by micro and small-scale enterprise to
the nation economy.
 Provide of new jobs
 Stimulating economic competition
 Less capital and more labor requirement
 Removing regional imbalance
 Household income improvement
 Enhancing economic growth
 Major sources of employments
 Important acter for economically empower women.
 Are platform for sustain the development and productivity
 Are better way for poverty reduction.
 Provide employment opportunities to people who can not employed in the
formal sector.

2.6 Micro and small- scale enterprises difficulties and problems

Micro and small enterprises are considered as one of the vital units of business for
local or national economy any even in global environment. The most important
role of the micro and small enterprises in the economy is the employment.
It is important to take note that employment is a vital aspect in the economic
development. Because it helps in order to provide every individual or citizen the
source of income which they can use in order to improve their living standards.
If most of the citizens are employed, then the government will receive more tax in
terms of income and the values or things that the people buy. This will help in
order to attract number of investors or multinational companies because of the
great market, which will help in order for the government to focus more on
important economic activities than supporting daily living in the society. (http://
ivythesis. Sypepad.com).

12
In Ethiopia situation micro and small- scale enterprises are faced by various
problem, which are structural, institutional and economic in nature. lack of capital,
market and working promises, marketing problems, shortages of supply raw
materials and lack of quality human resources are the most pressing problems
falling micro and small scale enterprises.

Although the economic policy of Ethiopia pay due emphasis for to the economy,
there are still constraints relate to infrastructure, credit, working premises,
extension services, consultancy, information provision prototype development,
imbalance preferential treatment and may others, which there fore need proper
attention and improvement?(Haile G/ Tinsae, 2003).

13
 CHAPTER THREE

3. METHODOLGY

3.1 Study Area

These study have been conducted in Jimma town located from south west
direction on 345km away from Addis Abeba .

3.2 Sources of data

The study have been used two sources of data those were primary source and
secondary source.
The views and opinions of peoples that own business used as primary source and
official documents, records related to the case under study have been secondary
sources.
3.3 Types of data
There are two types of data to be used in the study. These are primary and
secondary data.
3.4 Methods of data collection
In the data collection process different types of data collection methods have been
used in the study, these were vary according to the sources of data that have been
used

To collect primary data, the researcher have been unstructured interview,

questionnaires and these questionnaire have been two types’ i.e open ended
questionnaire and closed ended questionnaire.
Secondary data have been collected from books, unpublished official documents,
annual reports and from certain written materials about small business in trade and
industry bureau of Jimma town.

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3.5 Population and target group

The target population for the researcher to conduct the study was the owner of
micro and small- scale enterprise in Jimma town. Currently there are 641 owner of
MSSE’S in the town

3.6 Method of sampling and sample size

The techniques of sampling have been stratified sampling to be obtain a
representative samples. Because the sample population be draw from a total
population of owners of the sector does not constitute a homogeneous group.
Under this techniques, the total population have been classified in to sectors,
which were individually more homogeneous than the total population. Then the
sample units were selected from the sectors by random sampling technique.

The technique of sampling have been an estimation of about 5% of the total

population. The sample for each stratum have been selected based on the number
of population of each sector.
Total population (N) = nl+n2 +n3 + n4 + n5 sample size (n) of the total population
n = estimated percentage x total population (N)
n = estimated percentage (x) x N
= 5% x 641
n = 32

Number of sample from each stratum was computed by the formula, ni

15
= number of population from stratum x simple size
Total population (N)

Where ni = n1,n2,n3 ….. n5 simples for cash stratum

The sample size of catch stream are calculated as follows.
n1 = 16 x32 = 1 construction sector
641
n2 = 175 x 32 = 8 manufacturing sector
641
n3= 54 x32 = 3 trade sector
641
n4 = 360 x 32 = 18 service sector
641
N5 = 36 x 32 = 2 urban farming sector
641

3.7 Method of data analysis

In the study process different types of raw data have been collected by using
interview and questionnaires. This raw data were processed, analysized and
interpreted. The collected data were edit, classified, error will be omitted, examine
and analyzed. So to facilitate the interpretation of raw data, finally the data were
effectively processed, analyzed and interpreted by using different tables,
percentages, charts, graphs ---------- etc and lastly leads to conclusion and
recommendation of the study.

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 CHAPTER FOURE
4. DATA ANALYSIS, PRESENTATION AND INTERPRETATION

The data collected mainly through questionnaire and interview are presented using
tables, pie chart and bar graph.
The researcher design and distribute 32 (thirty two) questionnaire for enterprise
owner’s and among the distributed questionnaire twenty seven (27) was correctly
collected and five (5) questionnaires were not returned back. Due to the fact that
the enterprise member absence from working area, because of they were busy in
under taking their require business entities and some are carelessness.

The presented data was analyzed in detail in selection; the questionnaires were
filled by the owner of the micro and small scale enterprises. The analysis has been
made on the basis of percentage of respondents who have provided the same
answer to a given question. Similar question which are answered by respondents
are analyzed simultaneously. But for questions which are not similar, their
analyses were presented separately.
Sex Distribution of respondents
Pie Chart 4.1 sex distribution of respondent

26%

Male
Female

74%

Source: - primary data (questionnaire)

17
As indicated in the above pir chart 74% (20) of the respondent were male and
26%(7) of the respondent were female who are currently per forming in the
MSSES in the Jimma town. so, from the finding in the chart it can be concluded
that most of the respondent are male. So this shows that its have negative impacts
on the productivity of small business enterprise as, female are more naturally have
good talent than male in wise use of resource.
Age Distribution of the respondent
Table 4.1 age distribution of respondent
S.No age category Fervency Percentage
1 18 - 35 19 70.37%
2 36 -50 7 26%
3 51 -65 1 4%
4 > 65 0 -
Total 27 100%
Source: - primary data (questionnaire)

Based on the above table the 70.37% (19) of the respondent were with in the age
category of 18 -35 years old. 26% (7) of the respondent were with in the age
category of 36 50 years old. 4%(1) of the respondent lies under the age group of
51 -65 years old. This age group category (18-35) include most of small –scale
enterprise.

As the above table indicated that more than half of the respondents are youth and
productive. Especially the age group b/n 18 -35 years old was highly productive
and youth who can devote much to contribute for his own and economic
development of the country.

18
Marital status of respondent
Table 4.2 Marital status of respondent
S.No Description Fervency Percentage
1 Single 12 44.44%
2 Married 15 55.56%
3 Widowed - -
4 Divorced - -
Total 27 100%
Source: - primary data (questionnaire)

Based up on the above, table, 55.56%(15) of the respondents were married and
living with their families. On the other hand, 44.44% (12) of the respondent are
single . Where as there is no the respondent divorced or windowed. As the above
table indicate the majority of the respondent were married and constitute highiest
percent.

Education status of respondent

19
 Bar - graph (4.1) educational status of respondent

Based on the above bar graph, 48% (13) of the respondent who are operating in
MSSES in Jimma town have secondary education level. 29.63% (8) of the
respondent have primary education level. 7.41% (2) of the respond were illiterate
and conducting their business operation through long term experience very few,
7.41%(2) of the respondent were college diploma holders from governmental and
privet institution. 7.41%(2) of the respondent were first degree holders from
governmental institution and currently establishing their own business in MSSES.
So, from the finding the researcher can concluded that majority of the respondent
have secondary education level and good experience about their business. The
some portion of these respondent have a lot of information accumulated through
their long exposure and experience.

Size of family distribution

20
 Pie chart (4.2) family size of respondent

14.80%

40.70% Morethen three

One
22.23% Two
Three

22.23%

Source: - primary data (questionnaires)

As indicated in the above pie- chart 40,74%(11) of the respondent were have more
than three family members in their household and served from business operation
they conduct. 22.23 %(6) of the respondent were having two family member in
their household. 22.23%(6) of the respondent were having one family member,
meaning one business owner and one who directly or indirectly benefited from the
business operation. Another 14.8%(4) of the respondents were having a family
size of three member who were directly benefited from their business
establishment. So, from the finding the researcher can concluded that most of the
respondent have more than three family size.

Types of Business undertaking

21
 Bar- graph (4.2). types of business under taking

50.00%
44.45%
45.00%

40.00% 37%
35.00%

30.00%

25.00%

20.00%

15.00%

10.00% 7.41% 7.41%

4%
5.00%

0.00%

Retailer carpentor welder Polisher other

Source:- primary data (questionnaires)

Based on the above bar graph, 44.45%(12) of the respondent were running their
business operation in the retailers of daily consumable goods and services. 7.41%
(2) of the respondent were working in the town at carpentering equipment.
7.41%(2) of the respondent were welder among the member of this group some of
them are graduated from technical and volitional college, the remain were gain the
knowledge from long experience and training. 4%(1) of the respondents were
organized in polishing the town’s road and hotels found in the town. Another
37%(10) of the respondent were organized and established in other business
operation like drawing, pointing, car washing and e.t.c.
From the above bar graph the researcher concluded that more than half the
respondent under take their business in trade, among traded commodity
consumption goods and services is the main one.

4.7 Source of beginning capital for business

22
Pie - chart (4.3) indicate the source of capital for business

7.40%

22.23%

Self
Family
Loan

70.37%

Source:- Primary data (Questionnaires

Form the above pie- chart, 70.37% (19) of the respondent obtained their beginning
capital to run their business from self capital. 22.23% (6) of the respondent
obtained their financial resource from their families. 7.4%(2) of the respondent
obtained their beginning capital to run their business by loan from micro finance
and commercial bank. so, from the above information the researcher can conclude
that more than half of the respondent (MSSE owner ) are obtain their initial capital
from self capital.

4.8 Size of respondents capital

23
 Table 4.3 size of capitals for respondent
S.No Description Fervency Percentage
1 Below 2000 birr 7 26 %
2 2000 -5000 birr 9 33.33%
3 5000 -10,000 birr 6 22.22%
4 Above 10,000 birr 5 18.5 %
Total 27 100%
Source: - primary data (questionnaire)

Based on the above table 33.33% (9) of the respondent indicated that they have
monthly turnover of between 200 -5000 birr, on the other hand 26% (7) of the
respondent have reported a monthly turnover of below 2000 birr, many of them
are retailer and polisher’s. 22.22% (6) of the respondent indicated that their capital
size were between 500 -10,000 birr, finally 18.5% (5) of the respondent have
reported monthly turnover of above 10,000 birr. are wholesalers, coblestone and
some retailes. So, from the finding the researcher can concluded that most of the
respondents capital size between 2000 -5000 birr.

24
4.9 Types of encouragement and incentive given by government unit
Bar – graph (4.3) shows the type of encouragement by the government unit.

35.00% 33.33% 33.33%

30.00%

25.00%

20.00%

15.00%
11.11% 11.11%
10.00%
7.41%

5.00% 3.70%

0.00%
place & material mkt &opportunities Training loan tax exemption Others

Source: - Primary data (questionnaires)

Based on the bare-graph, 33.33% (9) of the respondent responded that government
encourages them through providing appropriate working area and material.
33.33%(9) of the respondent assertd that they obtained motivation promotion, and
encouragement from the government in the form of providing market opportunity
to them. 11.11% (3) of the respondent indicated that they obtained support from
the government in the form of short- term training, on the other hand 11.11% (3)
of the respondent responded that they obtain financial as in the form of loan from
the government with minimum interest rate charge. 7.41%(2) of the respondent
indicated that they obtained encouragement from the government in the form of
tax exemption (tax free). So, from the finding the researcher can concluded that
government encouragement of this business is good especially place, material and
market opportunities program helps the member to improve their profitability and
experience.

4.10 Current market opportunity

25
Pie – chart 4.4 displays the type of market opportunity

11%

Customer mkt
26%
Product mkt
Newmkt

63%

Source:- Primary data (Questionnaires

Based on the above pie- chart, 63% (17) of the respondent indicated that they have
access to market to the near by customer. On the other hand 26% (7) of the
MSSES (most of them are wood work and meta l worke enterprises) have to
access to product market. 11% (3) of the respondent responded that they have
access of new market especially in coblestone establishment and construction, so,
the above information leads to conclude majority (more than half) of the
respondent have access to customer market opportunity. This is very true that most
retailer, cafeteria owners, fast food shops and beauty salons have continuous flow
of customers one over the other.

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4.11 Profitability of MSSES
Table (4.4) profitability of MSSES
S.No Description Frequency Percentage
1 Very highly profitable 6.75 25 %
2 Average profitable 13.23 49 %
3 Low profitable 5 19%
4 Loss 2 7%
Total 27 100%
Source: - primary data (questionnaire) and secondary data (written document

Based on the above table, 25% (6.75) of the respondent indicated that there
operation is highly profitable and have better position in terms of investment and
expansion. Another 49% (13.23) of the respondent stipulated that their operation
yields on average profit. On the other hand,19%(5) of the respondents confirmed
that the profit margin that they are yielding is low i.e they are operating its break
even. Only 7%(2) of the respondent responded that they suffered loss due to
absence of the required product/ service quality, market opportunity, experience
and knowledge in the area. Generally the researcher concluded that profitability
and loss was not a matter of chance but knowledge in area, experience, better in
customer service management and market creating, delivery of service and product
as per customer requirement is basic for profitability.

CHAPTER FIVE

5. CONCLUSION AND RECOMMENDATION

27
Micro and small- scale enterprises are their own contribution for production,
distribution and exchange of goods and services at high, medium and lower. Micro
and small- scale enterprises are motive factors for poverty reduction, sustainable
and steady development, growth and productivity of the country. Thus based on
the research analysis the following points are for warded.
5.1 Conclusions
 From business activities exercised in the town of Aksum above 25% is
covered by MSSE’S and as well as 2.5% of the total population directly or
indirectly involved in micro and small- scale enterprises indifferent sectors
like wood work, metal work, construction, promotion, retailing, cafeteria
and beauty salon.
 As MSSE’S are a high role in minimizing unemployment rate, specially
for youngs, for enhancing productivity and investment does not give high
emphasis for further growth and development.
 Due to lack of aducate and sufficient market opportunity, most of MSSE’S
are demotivated to enhance their production.

5.2 Recommendation

28
 Thus study revealed that there is no appropriate and enough training
program given to the owners of micro and small-scale enterprise. Hence,
the researcher that proper training and development, opportunity should be
given to owners of micro and small- scale enterprises about business
operation, how to carry out business activity, how to keep book of record,
how to manage resources in the proper way, how to create products
services, communicating economic unit from point of production to
ultimate user or customer.
 Capital is the life blood of any business. But the owners of small business
face lack of capital. In order to minimize this problem. Financial
institutions are supposed to provide aducate and sufficient fund for micro
and small scale enterprises.
 There should be sufficient and enough market opportunity accessible to
micro and small- scale enterprises in order to sell their goods and services.
Thus the government should settle the market problem of micro and small-
scale enterprises in the Aksum town by advertising their product.
 The government should encourage and design incentive or reward
mechanism for those entrepreneurs who are most initiative and creative in
their production distribution, marketing activities and those who are
devised new ways of doing things.
 The trade and transport bureau of Aksum town preparing and conducting
like panel discussions and meeting early or quarterly with the owners of
small business concerning the business activities like operate the business.
How to manage and how to promote as well as how to improve the
activities of their business.

REFERENCES
29
1. Haile G/Tinsae 2003): Entrepreneurship and small-scale business management Addis
Ababa.
2. Carl Lied Hon and Donald C. Mead 1999)
3. World Book, 2001
4. Aksum, trade and Industry bureau, 2005
5. Http://ivythesis typepid com
6. CSA survey in 2002 and 2003 year

APPENDIX
JIMMA UNIVERSITY

30
 COLLEGE OF BUSINESS AND ECONOMICS
DEPIRTMENT OF BINKING AND FINANCE

QUESTIONNSIRE TO BE FILLED BY MICRO AND SMALL SCAL

ENTERPRISE OWNER IN JIMMA TOWN.

The objective of this questionnaire is to secure first hand data necessary to conduct
research under the title “assessment the role of micro and small- scale enterprises for the
productivity and investment a case study in Jimma town. Thus, the instrument is designed
to collect a case study in bite town. Thus, the instrument is designed to collect data that is
purely for academic purpose. The researcher can assure your response will be kept
confidential.

Thank you for your cooperation in advance

1. Sex A. Male  B. Female 

2. Age A. 15 – 35  B. 36 -50  C. 51 -65  D. above 65 
3. Marital status A. single  B. married 
C. Widowed  D. Divorced 
4. Level of education.
A. Illiterate  B. primary  C. secondary 
D. college diploma  E. Degree
5. Size of the family
A. One  B. Two  C. Three  D. More thon three 
6. What type of business you undertake
a. Retailer b. carpenter c. welder  d. polisher  e. others 
7. From where do you obtain financial source for your business?
A. Self  B. Family  C. loan from financial institution 
D. others 
8. Where do you save your daily and monthly revenue?
A. Bank  B. Saving and credit associations  C. Ekub 
D. At home in lock pallet  E. Others

31
9. Do you have adequate knowledge about your business?
A. Yes  B. No 
10. If yes to Q,9 from where do you obtained ?
A. Family  B. Short- term training  C. School 
D. University  E. Others 
11. How much your current capital balance?
A. < 2000 Br  B. 2000-5000 Br  C. 5000-10,000 
D.> 10,000 B 
12. Do you have special skill and experience in you duty?
A. Yes  B. No 
13. If yes to Q.12, what type of special skill do you have?
A. Entrepreneur  B. Excellent inter personal relationship 
C. Better opportunity to source of resource 
D. Other 
14. What type of encouragement you acquire from government?
A. Training  B. Tax exemption  C. Place and material support 
D. Access to information  E. Others 
15. What benefit you acquired from government body?
A. Tax exemption  B. Access to loan 
C. Access to market  D. Access to information  E. Others 
16. Do you have adequate and enough market opportunity?
A. yes  B. No 
17. If yes to Q.16, what type of market your obtain?
A. New product to existing customer  B. Product market 
C. Customer market  D. New production to new market 
18. Do you believe that micro and small scale contribute great role in the country
economic development? A. Yes  B. No 

19. Do you think that tax free micro enterprise in fair?

A. Yes  B. No 
20. If yes to Q19 in what way ? __________________________________________
________________________________________________________________

32
21. What is the benefit of organized under small- scale and micro enterprise?
__________________________________________________________
__________________________________________________________
__________________________________________________________
22. What do you think that the government tries to do?
__________________________________________________________
__________________________________________________________
__________________________________________________________
23. Do you believe that current financial institution availability and mode of providing
loan is fair? A. Yes  B. No 
24. If no Q,23 how and what to be taken and why to be taken and by whom?
_________________________________________________________
__________________________________________________________
___________________________________________________________

33