ADIGRAT UNIVERSITY

College of business and economics

Department of Economics

THE ROLE OF MICRO AND SMALL ENTERPRISE IN EMPLOYMENT

CREATION (In case of Adigrat town)

A research proposal submitted in partial fulfilment of the requirement for degree of (BA) in
economics

By: Urgesa Magersa

ID.no : RBE 2547/06

Advisor: Tsigab H.

May, 2016

ADIGRAT, TIGRAY, ETHIOPIA

 Acknowledgment
Above all late me praise and honour the almighty God for the opportunity and capacity given to
me to realize me my appreciation.

Secondly, I would like to express my heartfelt thanks to my advisor MSc. Tsigab Hagos for his
professional guidance, criticism and contractive comment which brought about successful
completion of the paper.

Lastly I would likes to express my deepest gratitude to Nebyat Stationary.

I
 Acronyms
MSEs …………………………. Micro and small enterprise

MOTI…………………………. Ministry of trade and industry

ACSA …………………………. Adigrat central statistical authority

WB ……………………………. World bank

ILO …………………………… International labour organization

CSA ………………………….. Central Statistical authority

FMSESA ……………………. Federal micro and small enterprise strategy agency

REMSEDS ………………….. Regional micro and small enterprise development strategy

II
 Abstract
Micro and small enterprises play a vital role in the development of country’s economy. MSEs are
playing a key role in economic development developing and developed countries through
creating job opportunity, generating income and poverty alleviation their by reducing
unemployment. To this end the primary objective of this study is to assess the role of MSEs in
employment creation and constraint in Adigrat town as reference. In doing so the study use
appropriate descriptive analysis was made by using primary and secondary data and was carried
out on 120 respondent in organized or cooperated MSEs in town. Sample were randomly
selected through in each activity of the sector. Results were analysed and changed to tables and
charts. The finding of the study has shown that there is a socio improvement through
participating in implement creation, saving and income generation, developing entrepreneurs
skill and knowledge, and gender empowering, changing many peoples social issues and also
ways of acquiring business and linking different levels of enterprises to facilitate it is
development. Result indicates that 79.29% of enterprise responded that over all socio economic
improvement of the people was good. Even though MSEs have such great roles in changing
peoples living conditions, they activities of the sector was constrained by many factors like lack
of financial capacity, lack of working and production place, roles and regulatory producers, lack
of capacity to compete larger enterprise and insufficiency of business development services and
socio-economic infrastructures. Though, there are strategy’s to combat problems in the town.
These challenges also leads to importance to put some suggestions for the improvement of the
enterprises activities. In this case enabling environment for MSEs development is very crucial,
especially, to encourage and promote the sector and their should be an integrated effort of
government to lead the support, the need to participate private sectors and non-governmental
organizations in the MSEs development.

III
 TABLE OF CONTENTS

Contents Pages
Acknowledgment........................................................................................................................................I
Acronyms...................................................................................................................................................II
Abstract.....................................................................................................................................................III
CHAPTER ONE........................................................................................................................................1
1. INTRODUCTION.............................................................................................................................1
1.1 Back ground of the study..........................................................................................................1
1.2 Statement of the problem................................................................................................................3
1.3 objective of the study.................................................................................................................4
1.3.1 General objective of the study..................................................................................................4
1.3.2 Specific objective.......................................................................................................................4
1.4 Scope of the study......................................................................................................................4
1.5 Significance of the study............................................................................................................4
1.6 Limitation of the study..............................................................................................................5
1.7 Organization of the paper.........................................................................................................5
CHAPTER TWO.......................................................................................................................................6
2. Review of related literature..................................................................................................................6
2.1 definition and characteristics and small enterprise.......................................................................6
2.1.2 Theories of the success of MSEs...............................................................................................7
2.1.3 MSEs Policy and strategy in Ethiopia.....................................................................................7
2.1.4 Economic significance of micro and small enterprise............................................................8
2.2 Empirical literature review.............................................................................................................9
CHAPTER THREE.................................................................................................................................10
3. METHODOLGY OF THE STUDY...................................................................................................10
3.1 Description of the study area........................................................................................................10
3.2 Date source and collection method...............................................................................................10
3.3 Method of data collection..............................................................................................................11
3.4 Sampling technique and sample size............................................................................................11
3.5 Method of data analysis.................................................................................................................12
CHAPTER FOUR...................................................................................................................................13

IV
 4. Results and discussion.....................................................................................................................13
4.1. Demographic characteristics of MSE’s Respond.......................................................................13
4.1.1. Responses of the MSE’s operators to value of cooperation................................................13
4.1.3. Number of respondents by SEX............................................................................................14
4.1.4 Number of Respondents by Age.............................................................................................15
4.1.5 Educational Standard of the Respondents............................................................................16
4.2 Engaged Activities in MSE............................................................................................................17
4.2.1 MSE Engaged by of type business.........................................................................................17
4.2.2. Source of working premises..................................................................................................18
4.3. The role of MSE’s in creating employment opportunity and its income generation abilities. 19
4.3.1. The labour of MSE’s..............................................................................................................19
4.3.2. Previous activity of people and reasons of shifting to MSE businesses..............................20
4.3.3. Creation of Employment.......................................................................................................21
4.3.4. Saving status, type and amount of money saved by the MSE operators............................22
4.3.5 Social Sector Improvement....................................................................................................23
4.4. Major Problems Faced MSEs......................................................................................................24
4.4.1. Problems Faced MSE’s at the Time of Setting the Business...............................................25
4.4.2. Problems of faces MSE’s while operating the business.......................................................26
4.6. The Role of Government in MSE’s..............................................................................................27
CHAPTER FIVE.....................................................................................................................................29
5. Conclusion and Recommendation......................................................................................................29
5.1. Conclusion.....................................................................................................................................29
5.2. Recommendations.........................................................................................................................30
Reference..................................................................................................................................................33
Appendix..................................................................................................................................................34

V
 CHAPTER ONE
1. INTRODUCTION
1.1Back ground of the study

Micro and small scale enterprise worldwide has recognized as engines of grown and
developmental many countries. The abbreviation mess stands for small to medium enterprise.
Almost every company we know of today begun as on MSEs. MSEs

Globally have a very significant contribution to provision of goods and service to the society.
Without MESs, big companies may not be able to meet the demand for goods and services in an
expanding customer base. Currently there is no accepted worldwide definition of MSEs
(Omar ,Arokiasamy & Ismail, 2009: Hopi, 2006).

Micro and small enterprise are defined by number of workers’ employed, capital employed and
sales turnover. MSEs are thus classified by the number of employees and /or by the value of their
assets. The classification of MSEs by size is relevant to sector, a firm of a given size could be
small in relation to one sector where the market is large and there are many competitors where as
a firm of similar proportions may be considering large in another sector with fewer players
and /or generally smaller firm within it. Different countries define MSEs differently for example
in Canada the term if MSEs referee to business with fewer than 500 employees. They further
define a small business as one that fewer than 100 employees. Generally, in Canada MSEs are
any business establishments with 1 to 499 employees and less than $ 50 million in gross
revenues. (Zhen, O’Neill & Morrison, 2009; Cunningham & Rowley ,2007).

The global market dominated by world class compotators in form of multinational and for
developing countries. Small business appears to be the way to be compute such as in 1992,
people working in small business held 53% of all job creation in America between 1988-98,
while large business was newly enlisted (Liedholm, 2000)
In Africa the importance of small enterprise they appears to have been successfully-in sub
Saharan Africa many studies that have been done ,indicates that small business have been plays
an important role in their world markets ,and support their development.

1
In Kenya for example the contribution of (MSEs) to employment, national income, house in
come, and one third of all working persons are employed in MSEs (Liedholm, 2002).

In Ethiopia MSEs Industry’s establishment account for 99% of all manufacturers sectors, 93%
there with in total employ meant and the value of production is as high as 28% from the total
manufactures output. Also the share for the difference between gross value of production and the
value of inputs that output also to the production from outside is staged at 3% of the MSEs sector
constitutes about 3.4% of the GDPS which about 33% of the overall industrial sector
contribution and 52% of manufacturing sectors contribution in Ethiopia economy (Yared, 2007)

In recognition of socio- economic roles of the sector and it potential contribution to country’s
economic development. The development of MSEs sector is becoming a subject of national
importance. The socio-economic role of MSEs sector in Ethiopia are not without constraints.
They face problem of policy and regularity frame works, structural and in situational anomalies,
lack of smooth supply of raw materials and lock of working premises; lack of sufficient to the
market problems. These problems call for government intervention by recognizing and paying
due attention to the promotion and development of MSEs. It is also important to formulate
strategies in ways to address the challenges of unemployment, economic growth, equity, and
overall poverty reduction in the country. The role of MSEs provides significant to the economy
of country in respect of employment and output (Elhom, 2014).

In Adigrat town, like other towns of the country. In Adigrat town MSEs has begun its services in
(2003) under Adigrat MSEs office with five sectors. Such as agriculture, construction
manufacturing, service and trade that MSEs promotion office start to provide some facilities for
the operators of the sectors like cooperative them giving some training and other services
operator. However, impact of such policies has on poverty reduction and creation employment in
the sector is the issue which needs and assessment own survey (AMSEO, 2015).

2
1.2 Statement of the problem
Development of micro and small scale enterprise lead to employment of the majority of labor
force. The contribution of enterprises to the creation of job and to the alleviation of poverty has
been recognized by many third world governments. They have been given prominence in many
development plans as well as in the strategies of many donors (Liedholm, 2002). According to
Federal urban development package of Ethiopia 2005.

‘’In Ethiopia ,the number of people who can work continues to grow rapidly than the ability of
the economy of provide new employment opportunities. Unemployment particularly urban
unemployment, is one of the critical problems, in the country the rate of urban unemployment, in
the country was 26.4% in medium towns and 40% in large urban towns in 2005” .

Poor countries, like Ethiopia, at this time are highly attached with different problems like
poverty, unemployment, backward culture, famine, illiteracy, high population growth rate etc.
MSEs are increasing in number and coverage in Tigray region in general, especially in Adigrat
town. Never the less, according to the information from Adigrat town MSEs Offices MSEs are
hindered by variety of problem which interrelated and tested. The growth and dynamism of the
organization such lack of finance lack of market profitability and infrastructure. With this
profitability in the present nature according to (Elhame study, 2014) the contribution of to MSEs
Employment and income appears to have been increasing over time. To same observer this is an
encouraging sign; market are working, people are finding opportunity to participate in ways that
empower and nourish many people particularly including those that are most disadvantaged. The
micro and small enterprise development strategy has started implementation recently in Ethiopia
to in creation employment, poverty reduction and brings economic development. Due to this,
promotions has MSEs been taken as a tool in adigrat town, like other town in Tigray region
(Elhame study, 2014).

The central question for this study is

 How can MSEs in employment creation in adigrat town?

 What is the role of MSEs in generation employment opportunities in adigrat town?
 Are there any challenges that MSEs in the town face?

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1.3 objective of the study

1.3.1 General objective of the study

The overall objective of the study will be assessed role of micro and small enterprise in
employment creation

1.3.2 Specific objective

 To study the effect of the sector in improving the income level of the people and creating
employment opportunities in Adigrat town.
 To study the problems micro and small enterprise in the town face.
 To examine the role of MSEs with respect to employment.

1.4 Scope of the study

The study would be conducted in Adigrat town at MSEs. The county’s MSEs in generation of
income and job creation are discussed, constraint it faces is annulled and what should be dose to
accelerate its development is provided under data analysis and presentation. The study as of 112
of MSEs registered in Adigrat town under Adigrat micro and small scale enterprise office 112
customers from each owner.

1.5 Significance of the study

In general, it is accepted that MSEs are the most important institutions for economic progress
and grown. These MSEs is institution have a great impact on the lives of the poor. This study
suggests and recommends about the micro and small enterprise in creation employments and
outreach to the poor it can provide the base for other research to related study, it can provide
information to policy makers in the related topics, and it will give constructive suggestion in
order to deliver best micro and small enterprises to the low- income society. The significance of
the study is it provides information and recommendations about identified problem.

4
 1.6 Limitation of the study

The studies have the following limitations; The problem of language to collect data because of
most of the respondent do not give full information the researcher, the unwillingness of the
concerned governmental body to give information about the towns MSEs to respond to some of
questions was one of the problems faced during the study, the lack financial support and lack of
enough of time.

1.7 Organization of the paper

The research paper has been structured to have five chapters arranged sequentially. The first
chapter consists of introduction, the second chapter deals with theoretical and empirical literature
discussion, the third chapter focuses on the deal with methodology which pertinent for the study,
the fourth chapter is presented which analysis and discussion and finally the last chapter is
presented with the conclusion and recommendation that must be made on the bases of the main
finding of the research.

5
 CHAPTER TWO
2. Review of related literature
2.1 definition and characteristics and small enterprise
The issue definition of micro and small enterprises in more than simple semantics effort to define
MSEs has led to different set of definition and under solved debates. Policy makers, research
chars and other involved promotion and development of small business, small scale industry,
small and medium enterprise and the like (Andualems 2004)

The requirement and characteristics of enterprise, Careful definition of macro and small
enterprises is very crucial. Due to this country have their own working definition. Because of
unique economic and organization characteristics small enterprises are well placed to have
important economic social and political reels’ employment creation, resource utilization and
income generation and helping to promote changing in gradual and peaceful manner studies and
theories concerning socio-economic factors effecting small enterprises play critical roles in
development of the industries and economic. The issue of MSEs, has get a great deal of a
attention as priority areas that are crucial for stimulations economic growth in both developed
and developing countries (Mekonnen, 1997).

In our country Ethiopia MSEs are given different meaning’s at different times by evolutions the
solution of the time the most importance definitions used in the national level are they given by
central statically authority and ministry of trade and industry. For the purpose of the study, the
definition that given by ministry of trade and industry is used, according to ministry of trade and
industry micro enterprise are those small business enterprise with paid up capital on not
exceeding birr 20,000 and excluding high technical consultancy firm and other high
establishment will small enterprise are those business enterprise with small enterprise are these
business enterprise with paid up capital of above 20,000 birr and not exceeding 50,000 birr and
excluding high technique.

6
Some characteristics of small firm that differentiate from large scale firm are;

Small firm are independent of the vagaries of the international economy system therefore, they
can be vehicles of industrial process in countries with scarcity trained work force capital and
technology resources (IBID, 1997).

Most small firms are unlikely to be able to exert much inherence on the market; they are prices
takers in classical economic sense and dry likely to face significant completion. Small firm are
not public companies, this means they have problems in raising capital and this can significantly
constraint their choice of strategy (IBDD: 2006)

2.1.2 Theories of the success of MSEs

There are many theories that have been used to explain the success MSEs (Mulata , 2007).
Flexible specialization approach (view) it is based on manufacturing of the customer made
predicts by use of multipurpose technology and flexibility production methods operate by skill
workers. Networks approach (view):- it views not as homogenous independent entities. But in
network enterprise, organization innovation via which commodity, labor, money, information
innovation flow this view recognize individual enterprise as dependent on resource its position in
the Networks. Its position influenced its ability to innovate, which is off function of
technological capacity and financial strengthen and by its local political power and influential
contact (Johnson and Matton, 1992)

2.1.3 MSEs Policy and strategy in Ethiopia

Designing and implementation appropriate economic policy’s strategies and legal and regulatory
frame work are prerequisites for creating on enabling environmental to promote MSEs. In
Ethiopia, it could be argued that deliberate effort to promote MSEs is relatively recent. The
ideological policy and regulation of the degrease aimed at curtailing the private sector. In
general, the legal requirement to obtain lines during the dirge were bureau critic with discourage
the participation of MSEs operates. The light foreign exchange control and heavy import
restriction had created scarcity of imported commodities, corrupt and see tins business
community (G/Hiwot and Amha, 2006)

7
One of the measures taken to enhance the operation of MSEs is the issuance of the licensing and
super vision of micro financing institution proclamation (no.40/1996). The principal aim of this
proclamation is to enable MSEs have access to credit focalizes, counseling and income
generating projects through micro finance institutions (G/Hiwot and Amh, 2006)

More recently, in GTP (growth and transformation plan) which is the current development
strategy of Ethiopia (2010- 2015). MSEs Development as also given priority. The GTP has put
the MSEs development has one the given identified growth pillars of the country.

The main objective of MSEs of development strategy environment for development of MSEs:

 Facilitating economic growth and bring about equitable

 Creating long term jobs
 Provide the bails for medium and large scale enterprises
 Promote export and
 Development.
 Balance prudential treatment between MSEs and bigger enterprises

2.1.4 Economic significance of micro and small enterprise.

MSEs have a number of advantages to the economic development of lest developed country
(LDC’s)

In addition, MSEs, one favorable to the west of the population whose income is very low. Given
this lower income level on the associated low effective demand MSEs become ideal to justify
low effective narrow markets (Solomon, 2004)

Micro and small enterprise by virtue their size, location investment capital and their capacity to
generate large employment opportunity to unskilled lob our force provides powerful propellant
effective for rapid growth the sector is also, on instrument bring about economic transaction by
effectively using the skilled and the talent of the people without requesting high level training
much capital and sophisticated technology.

Moreover, small on revering are capable of using capital productive and comparatively high ratio
of value added to fixed than on large enterprise.

8
 2.2 Empirical literature review
The role of MSEs is income and employment generation is increasingly recognized unlike
previous passim option that these are not linked to the modern and formal sector and disappear
once industrial development is achieved (Mulu, 2007)

MSEs are being organized in to urban based and rural based enterprises the firmer helps its
employment objectives is also regarded as commentary to the modern manufacturing industry
sector. The latter emphasized employment as its major objective. It also generates towards
producing goods required by the rural population (2005)

In development countries the informal sector in sector in which most of the MSEs lay is large
source of employment lively hood of particularly urban population. According to (IOL, 2005)
motions in formal employment defined as employment that comprised of both self- employments
in formal enterprise and large employment in formal jobs represents nearly holt or more of the
total non- agricultural employment in all regions of developing world. It ranges from 48% in
North Africa to 5% in Latin America, 65% in Asia and 72% in sub- Saharan Africa. All informal
sectors are also large source of employment for woman than men in developing countries. For
example, in sub-Saharan Africa 84% of when non-agricultural woman is informal employed
compared to 6% of nonagricultural workers (Mulu, 2007) in face of increasing pressure from
globalization. The informal sector activity and employment tend to expand in both developed
and developing countries in last decades. The reason for example of MSEs might be different
between the developed and developing countries. The emphasis of policy takers and donors on
MSEs parts justified for the potential for enhancing poor growth, recently number of sub-
Saharan Africa countries adopted poverty reduction strategies that mainly emphases promotion
of MSEs as major to in creation employment in particular among the urban dwellers (ILO,
2002).

Consequently, governments and the donor community increase them involve cement with micro
and small enterprises assistance programs, that include, improving available of credit, vocational
training and facilitating market services etc.

9
 CHAPTER THREE
3. METHODOLGY OF THE STUDY
3.1 Description of the study area
Adigrat town is located in northern Ethiopia in Tigray national regional state, eastern Tigray
zone at a distance of 898 km from Addis Ababa and 114 km from Mekelle the regional
capital city. Adigrat was founded during the reign of king Serte Dangle by this victory over
Dejazmach kifle wahid. Astronomic location is 1400 20’ north latitude and 390 29’ east
longitudes. The weather neither too hot nor cold so if it favourable for life. Between June and
August, it high level of rain falls. The coldest months are between October and December the
driest season is January to April. It has six (06) Keble. It has an estimated population of 7264
people baled on the (2008) national census conducted by the central statics agency of
Ethiopia (CSA). This town and has a total population of 57,588. Which 26,010 are men and
32,578 are women. The majority of the habitants practiced Ethiopian orthodox Christianity
94.0% are Christian orthodox while 3.02 of population were Catholics and 2.7 were Muslim.

The local population 96.55% in the Tigray regional state is pre-dominantly in habited by the
Tigrigna speaking peoples. The Tigrigna language is classified as belong to the Semetic
branch of the Afro-Asiatic family of families of languages. Most other residents hail from
other Afro-Asiatic speaking community, including the Oromo, Amhara, Irob, Afar and
Agaw. These are also a majority Nilo-sahara speaking Kunama Niloted.s

3.2 Date source and collection method

The main source of data is primary and secondary data. The source of data source are
primary data includes the actual information received from individual directly concerned to
the problem for study that was from the owners of MSEs. The primary was collected through
questionnaires and interview was designed to gathering data, because some respondents are
not educated and cannot fulfill questionnaires carefully as the purpose of the study. In
addition, it created directed communication between researcher and respondents and make
the information gathered more reliable and accurate. The respondents of these questionnaires

10
 are individual who the owners of MSEs are. The owner without differentiating their age, sex,
marital status, education level, physical and other things.

Secondary sources data these include all types of published materials about MSEs. An
unpublished document like the financial report of organization that has been serving for
internal use and different records which Charente of published to the society is also used in
study.

Published documents are documents published in generally MSEs or public interest for
externally use. Those sources published and unpublished sources are gathered from report,
economic journal, city of MSEs development of strategy and internet. The source also
gathered from different previous related research topic. The use of secondary source in order
to strengthen the information required and purpose necessary suggestions for the MSEs.

3.3 Method of data collection

Both primary and secondary data are to be used through questioners and interview as much
as possible so to give the respondent full freedom and to detailed information.

Secondary data are to collected careful review of related document, reports economic
journalist cities of MSEs development strategy and internets. The uses of secondary source in
order to strength the information required and purpose necessary suggestion for the in
creation employment.

3.4 Sampling technique and sample size

The data were collected from those who are the owners of MSEs. The sampling techniques
which the researcher used to collect the data were simple random sampling. In order to
determine the total sample for the study, their must be total population identify in the study
area. Out of the total number of MSEs which registered under the Adigrat MSEs office
selected 120 MSEs from the total 8563 owners from each enterprise calculated as follow use
statistical formula;

11
 n= _____N________

1+ N(e)2

n = Desired number of sample size

N = target number of population

e = level of precious 90% confidence=0.1

n =_____N_____ = _____8819_____
1+N(e)2 1+8819(0.1)2

n= ____8819___

1+8819 (0.01)

n= __8819___
1 + 88.19

n= ___8819____
89.19

n =120

3.5 Method of data analysis

After the data collection was fulfilled and checked for the availability of information both from
primary and secondary data. The study used description methods of data analysis.

First, the collected data categorized, next tabulation of data interpreted using both qualitative and
qualitative means of organizing, describing systematically interpreting the collected data while
qualitative analysis uses in their research is using simple descriptive statically analysed such as
organizing the collected data in tabular from in terms of the frequency ratio, means and
parentage expresses using graphs and tables.

12
 CHAPTER FOUR
4. Results and discussion
4.1. Demographic characteristics of MSE’s Respond
4.1.1. Responses of the MSE’s operators to value of cooperation
The researcher described that, 120 respondents were selected from the total target population of
8563 participating MSE’s that researcher accessed and the data are collected and then analysed
in response to the problems posed in the first chapter of this study. The findings are based on the
responses of the owners and employees of the sample MSE’s collected with the help of
questionnaire, in depth interviews conducted with selected owners of MSE and the MES’s
support office officials as well. Therefore, these questionnaire and interviews were organized for
the analysis of the study the response rate was 100% for both interview and questions. The
studied MSF’s owners have been working in groups in each activity of the enterprises and
organized by the government effort and themselves. Majority of them (89.8%) respond that
working in groups have great value like income generating capitals and other resources. Also
used to get financial services, working premises, land/working places, and other business
development services which facilitate working and business growth process. Only 10.2 of them
respond that working in groups has no value, because of absence of agreement between the
operators and absence of working habit in partnership (Table 1).

Table 1 responses of the MSE’s operators to value of cooperation.

Responses whether Number Percent (%)

organization value or not
Yes 90 75
No 30 25
Total 120 100
Source: Own survey 2016

13
4.1.3. Number of respondents by SEX
As a result, the number of women obtained opportunity of jobs shows considerable increment
through time. This helps to reduce unemployed through narrowing the prevailing gap in
employment opportunity between men and women.

Fig 1 Number of Respondents

Sales

38
% 62%
femal male
femal
male

Source: own survey 2016

As a result, the number of women obtained opportunity of jobs shows considerable increment
through time. This helps to reduce unemployed through narrowing the prevailing gap in
employment opportunity between men and women. However, the socio cultural attitude could be
another factor for decreasing participation of female in manufacturing and construction sector in
this study. As indicated from the above pie chart 62% of the respondents are men engaged in
MSEs of Adigrat town and the rest 38% of women participant in the sector. This shows that men
participation and chance to run the business has lead great opportunities in this town. The present
study is supported by Tegegne and Mulat (2005) survey which indicated that about 19% of the
operators were females, of which about 78% was participated in the food and drinks activities. In

14
general, MSE activities are the job opportunity available for women that make them participate
highly in the activity.

4.1.4 Number of Respondents by Age

Categorizing age groups is essential to know can participate in employment in order to lead
successive delimited of the county’s economy. An age group participant in the MSE of the
Adigrat Town is analyzed by the following tables.

Table 2 Number of respondent by Age

Age Number of operators Percent (%)

<15 21 17.5
15-20 30 25
21-25 42 35
>25 27 22.5
Total 120 100
Source: own survey 2016

This indicates that, even though in our country, job seeking of men is higher; the MSE activity is
one option for job opportunity to women. About 21% of the owners participated in MSE’s was
less than or equal to 15 years’ old, about 25% and 35 of the MSE’s operators were between ages
of 15-20 and 21-25, respectively, and the rest 22.5 of them were above 25 years. From this
figure, it is possible to see that unemployed and jobs seekers before engaged in to MSE sector.
Table 2 above, presents the age distribution of the respondents and clearly shows that majority of
them fall in the working age group. Such productive work force is often believed to be an engine
for the overall development of a country. Being dominantly filled by a working Age group alone,
will not prove the sector’s important instrument for the economic development of the country. In
order for the sector to play a significant role in the economy, other issues such as capital, land,
skill, natural resources have a significance role. With this reservation, therefore, it can be drawn
that majority of the MSE owners age are youth who has better energy and speed that would help
to produce more is among the ones the country’s desired economic development can be attained
by.

15
Table 3 The Martial Status of the Respondents

Marital status Number Percent (%)

Married 36 30
Unmarried 56 46.7
Others (divorced and 28 23.3
widowed )
Total 120 100
Source: own survey 2016

Most of the sampled owners 46.7% of MSE’s were not married. Young age operators but have
no jobs before they were engaged in MSE’s activity. On the other hand, about 30 of them were
married. The divorced and widowed people were about 23.3. this indicated that above half
percent of the owners of enterprises were young unmarried on the working age that have positive
attitude to work in MSEs sector (Table 3).

4.1.5 Educational Standard of the Respondents

The study on the analysis of job creation opportunity in MSE for educated unemployed persons
of the town revealed with different types of levels of education has equal right to participate in
MSE’s. Even if minimum education and technical qualification is important rule of be employed
MSEs and their main concern is to be task to which it is visible also considered as criteria to be
employed, it means that high level of human capital and research and development are positively
associated with the performance of firms. They promote the growth of firm’s low level of
activities to large and better enterprises. “Understanding the level of respondent’s education
helps in identifying and determining the development approaches to be followed (Alkali. W,
2010).” Form study indicated in the town, the MSE sector has created employment opportunity
for those who were not illiterate (28.33%) and also for those who attended only the primary
school (30%) which totally covers about (58.33%) of the total sampled MSEs operators. On the

16
other hand, the level of education attended by operator’s shown that 70.45% of the enterprise
operators were literate that ranges from primary school to above certificate (fig2)

Fig 2 Educational Standard of the respondent

Educational Standard of the respondent

36
34
30 29
28.33
24.17
21
17.55

5
2 3
illiterate 1 primary school junior&secondary school certificate & above

number percent % Series 3

Source: Own survey 2016

This figure indicated that is it less than what was reported by CSA publication for the country
where it has shown that 74.49% of those engaged in small-scale manufacturing were literate
(CSA, 2003/04). This sample figure indicated that majority of the operators in MSEs were
illiterate and low level of educational status, and the entrepreneur’s skills, knowledge and higher
level of education needed was low in the activities of MSE’s sector. This implies that people
having low level of skill can participate and perform the MSE’s Activities.

17
 4.2 Engaged Activities in MSE
4.2.1 MSE Engaged by of type business
The MSEs in Adigrat town was organized by different types of business from which the research
was conducted on some of them as industry, service, trade, construction, urban agriculture. The
summery of MSEs by types of business has given in following table.

Table 4 MSEs engaged by type of business

Types of business Number of members Percent (%)

Industry 36 30
Service 25 20.8
Trade 28 23.3
Construction 20 16.7
Urban agriculture 11 9.17
Total 120 100
Source: own survey, 2016

As indicated in above table industry business have higher share that accounts for 30% followed
trade 23.3% and the remaining shared by services, construction and urban agriculture which
accounts 20.8, 16.7 and 9.17 respectively.

4.2.2. Source of working premises

In order to run the business working premises are very essential are very essential especially for
the business consider in this research the source of working premises are analysed as following
table.

Table 5 Source of working Premises

Types of Privately Rented from Inheritance Rented from From family Total
business owned private gov’t and friends
Industry 4 4 3 4 15
Service 12 5 4 7 6 34
Trade 7 7 3 5 22
Construction 3 6 7 7 23

18
Urban 4 3 5 10 4 26
Agriculture
Total 30 25 22 24 19 120
Percent (%) 25 20.83 18.33 20 15.83 100
Source: own survey, 2016

As indicated in the above table 20% of MSE’s working premises are rented from government,
25% of MSE’s working premises were owned by private and the rest 20.83%, 15.83%, 18.83%
are though donation from private persons, from family and friends and though inheritance
respectively to run the business. From this we can conclude that if new MSEs are established and
engaged in service, privately owned rented from private important working premises business.
Government also plays important role in working premises of business.

4.3. The role of MSE’s in creating employment opportunity and its income
generation abilities
4.3.1. The labour of MSE’s
In Ethiopia, the challenge of employment generation is equivalent to achieving the objective of
sustained growth and reduction of poverty. In fact, the reduction of unemployment and ensuring
sustainable growth is not a simple activity, and it takes long time to achieve goals. From the total
operators engaged in the enterprises, about 42.9% of the total employment cooperated was
accounted by both industries (22.23%) and trade (17.29%) in this case the result of the study
indicated that, various types labour of enterprises’ activities have significant contribution to both
owners and hired labour force which constituted about. Services and construction sectors
contributed 14% and 9.9% engaged. This might be due to absence of working premises for urban
agriculture and majority of the town people activities were depending on trade and commerce.
Not only the owners but also hired labour in the one that engaged small business in the town.
MSE’s are the one that hire labour is the one that hire more labour force, which was about 30%
of the total employees in the sampled enterprises. This covers about 30% persons per
establishment and this table indicated that the owners and hired labour force was highly engaged
in MSEs (table 6). In short, MSE sector comprise more labour force it means more reflection of
the product composition of production in those countries than inherent labour intensity of small

19
enterprise firms. “according to the study made by sound grass and Biggs (1998) depicted that the
fact that small enterprise employs a large share of the labour for in developing country.

Table 6 Labour force composition of MSE’s

Organized owners Hired labour Total

Types of Number Percent Number Percent Number Percent
business (%) (%) (%)
Industry 27 22.23 8 6.85 35 29.17
Service 17 14 8 6.85 25 20.47
Trade 21 17.29 6 5.14 27 22.5
Constructio 12 9.9 9 7.71 21 17.5
n
Urban 8 6.59 4 .42 12 10
Agriculture
Total 85 70 35 30 120 100
Source: own survey 2016

4.3.2. Previous activity of people and reasons of shifting to MSE businesses.

Most of the operators working MSE have been engaged previously in different activities and
more than half percent of them were unemployed. As indicate in table 4.7 about 52.27% of the
operators were unemployed before joining the MSE activities. According town (2016) conducted
in Adigrat town, about 73.86% of the MSE operators have no jobs before they engaged into
MSE’s. The rest 20.7% was in self –owned informal activity, 14.6% in self-owned formal
activity, 7.3% in civil service and 4.88% in urban agriculture before they shifted to formally
organize cooperative and hired labor in the MSE’s. consequently, their reasons of shifting to
MSE’s sector were MSEs small business investment was a source of income and create job
opportunity (15.23%), to get high income (25%), lack of alternative (15.91%), interest in the

20
activity (14.77%) and adaptation from family tradition (9.09%). This study indicated that MSEs
are the major alternative option for job opportunity for

Table 7 Previous activity of peoples and reasons of shifting to MSE business.

Previous Number Percent (%) Reason to shift Number Percent

activity (%)
Agriculture 6 8.33 Family tradition 11 9.2
Self-owned 26 21.67 Interest in activity 21 24.2
informal
sector
Self-owned 19 15.83 To get high income 29 24.2
formal sector
Civil servant/ 12 10 MSEs/ small investment high 39 32.5
service income and creates jobs
Unemployed 53 44.17 Lack of alternative 20 16.7
Total 120 100 Total 120 100
Source: own survey 2016

4.3.3. Creation of Employment

There is probably some through in this study in researcher attempt to get some information that
may show the quality on Adigrat town context. According, researcher asked respondents
(Owners of MSEs) as way they got in their respectively specific business activities (summarized
in table below in because) case of the owners of MSE

Table 8 Creation of employment reason

No Reason Frequency Percentage

21
 1 Skilled this activities 23 19.1
2 Parents/ relative 11 9.1
3 Un employment 50 -41.67
4 Financial intensive 36 -30
5 Others reasons - -
Total 120 100
Source: own survey 2016

As above table indicate of the respondents in the sample have no job before they engaged in to
these enterprises. This show that most the operators have got job opportunities from this sector.
About 18.85% respondents respond that they engaged in the sector, because they had skilled in
this activity. Financial incentive, are raised as a reason by

Additionally, the researcher attempt of get some information that may shows micro and small
enterprise (MSEs) advantages for customers to utilize skill and skilled labor in return of increase
employment opportunity.

4.3.4. Saving status, type and amount of money saved by the MSE operators
As the study indicated the operators of MSEs were not only getting income for current purpose
but also or saving some of their income either for future consumption or further investment.
About 70% of the operators responded that they have saving account, while 30% of them have
no saving account (Table9). MSEs are sectors that initiate most people to develop businesses and
accumulate capital. This result indicated that MSE activities make operators to get profit which
leads them to save some their income for economic growth.

Table 9 Saving habits of MSE’s operators

Number Percent (%)

Yes 84 70
No 36 30
Total 120 100
Source: own survey, 2016

22
Though saving is an important tool in the business activity, the amount to be saved is also very
crucial for further investment. As majority of the enterprises owners (40.83%) responded that
their amount of saving per month was less or equal to 100.00 ET. Birr, only 13.33% and 18.33%
of them were saving from 201-300 and above 300 ETB per month, respectively. However, it is
possible to see that MSE activities are a source of saving, even if the amount of saving varies
according to the type of activity and the economy of owners. Their saving patterns were also
individual (39.17%) and communal (35.83) which indicates that working in partnership develops
the culture of saving, and investing together makes them to strengthen their capacity for
additional activities.

Table 10 Type and amount of money saved by the MSE operators

Types of saving Number Percent Amount of saving Number Percent (%)

per month
Personal 47 39.17 0-100 49 40.83
Communal 43 35.83 101-200 33 27.5
Other/no saving 30 25 201-300 16 13.33
Total 120 100 Above 300 22 18.33
Total 120 100
Source: own survey 2016

4.3.5 Social Sector Improvement

Micro and small enterprises not only contribute to the economic growth but also have greater
roles in the changes of social dimensions like education, health, and social capital. The MSE
owners had different levels of perceptions on social issues improvement. They respond that there
was a change in educating their family after they engaged in the enterprise. About 20% and 35%
of the owners/respondent have a very good and good improvement in educating their family
respectively (Table 11). This shows that more than half percent (55%) of them have got
improvement or income to educate their family through involving in MSE activities. In the
people’s life. The study revealed that about 15.83% and 36.7% of the MSEs responded that their
levels of health status improvement were very good and good, respectively after they were
engaged in MSE’s. these table indicated that majority of the peoples engaged in the sector have
got income improvement to take care of their family health. In general, participating in MSE

23
 sector brought positive changes on the people’s health status. The other social issue is social
capital in which the society can be characterized in their area. The MSE owner’s perception
regarding the rates of social capital/society relationship changes after they were participated in
the sector were good (42.5%), very good (38.33, fair (10.83) and bad (8.33%) in order of
decreasing levels. In this the majority of respondents had a positive social capital in their life
(Table 11)

Table 11 Social sector Improvement

Level of social issue improvement

Types of social Very good Good Fair Bad/weak
issues
Number Percent Number Percent Number Percent (%) Number Percent (%)
(%) (%)
Family education 24 20 42 35 27 22.5 27 22.5
Health status 19 15.83 44 36.7 46 38.33 11 9.17
Social capital 46 38.33 51 42.5 13 10.83 10 8.33
Overall socio 24 20 49 40.83 29 24.17 19 15.83
economic changes
(Negative/Positive)
Source: own survey 2016

4.4. Major Problems Faced MSEs

In most developing countries like Ethiopia, MSEs face a wider range of constraints and problems
and they are unable to address the problems they face on their own, even in effectively
functioning market economics. Even though efforts to promote the development of MSEs are
available, the MSEs are still being challenged with different levels of problems. To solve this
problem effectively it is helpful to know problems according to its severity that MSEs faces.

24
 Consistent with this, MSE owners in Adigrat town were constrained by a number of problems
both at the time of starting business and also during the time of operation of their business.

Accordingly, the survey conducted Adigrat city on the sample size indicated that owners were
constrained with lack of working place/not commercial area, insufficiency of finance or credit
facility, high cost of raw materials, in adequate supply of inputs, production/technical problems
rules and regulations procedures, according to their severity at the time of business start-up or
before joining the business operation (Table 12). Through government support to promote and
encourage the sector development is available for cooperated people during the business start-up,
these and other factors were challenging people’s entrance to the MSE’s activities. This slowed
the sector operator’s activity not started on time. Lack of working and production places
specially traders and producers of agriculture products, lack of credit facilities and insufficiency
of creditors in the town, and lack of commitment of operators to continue with the activity they
were organized in and searching other alternative jobs were the major challenges they were
facing during under taking business activity in the study area. For instance, number of
respondents who faced with insufficiency of working capitals, lack of working places, lack of
credit and inadequacy of inputs, insufficient working premises, lack of knowledge and skills,
problems in government procedures, and infrastructural problems the other problem MSE’s.

4.4.1. Problems Faced MSE’s at the Time of Setting the Business

To identify the major difficulties at the establishment of the business, the respondents were asked
the problems they were faced based on their response: types problems are summarized by the
following table

Table 12 Problems face MSE’s at starting the business

Types of Shortage of Shortage Shortag Lack of Lack of Gov.t’s Total

business initial of credit e of raw equipment knowledge and rule and
capital material information regulation
Industry 4 2 3 2 2 2 15
Services 9 3 5 9 3 3 32
Trades 7 6 - - 4 4 21
Construction 7 - 10 - - - 17

25
Urban 4 15 5 6 2 4 35
agriculture
Total 31 25 23 17 11 13 120
Percent (%) 25.83 20.83 19.17 14.17 9.17 10.83 100
Source: own survey 2016

During start up MSE’s factors that which hinder the normal functioning of MSEs, include lack of
working capital, low business development service include training, consultancy and advisory
services, marketing assistance. As indicated by above shortage initial capital is main problem in
the area which accounts for 25.83% of MSEs were faced while operating their business. The next
problem faced MSEs at operation of business is shortage of credit to start the business which
accounts for 20.83% the rest 19.17%, 10.83 and 9.17% of MSEs a problems were from shortage
of raw material, lack of working place, market problem and gov’t rule and regulation
respectively. In Malawi a study made by (Mead, D,C and Liedlholm, C. 2000) credit was
identified as the most pressing problem and access to raw materials was listed as important.

4.4.2. Problems of faces MSE’s while operating the business

In addition to the problems facing at setting the business MSE’s suffer while operating the
business. The natures of the problems are the same in both cases. The degree of the problem,
facing at the time of operation and its affection the activity of MSE’s to the business ability.
Hence, these problems can be summarized as in the following figure.

Fig 4 problems of faces MSE’s while operating the business

26
 26.46%

21.46%

15.55% 15.55%

11.55%
9.53%

shoratge of initial shortage of credit shortage of raw lack of working market problem Gov't rule and
capital material palce regulation

percent

Source: own survey 2016

As indicated by above shortage initial capital is main problem in the area which accounts for
26.46% of MSEs were faced while operating their business. The next problem faced MSEs at
operation of business is shortage of credit to start the business which accounts for 21.46% the
rest 15.55%, 15.55%, 9.53% and 11.55% of MSEs problems were from shortage of raw material,
lack of working place, market problem and gov’t rule and regulation respectively. Regarding to
the constraints also confirmed by (Zaid, N and Tourban, K 2003) also lack of market and
shortage of capital found out to be the most pressing and leading problems facing in MSE.

4.6. The Role of Government in MSE’s

Regional government has the of specific and maximum support needs to the sector. The role
expected from government into solve the problem of MSE by providing working premises,
providing marketing linkage, market and raw material, information and tax problems of the
sector.

Provision of working premises

One of the problems existed in Adigrat town is access to get working place. Even if free land is
available, the municipally could not give for MSE’s and even it give plant of land for number

27
MSE’s. most access to finance of enterprises are forced to work in renting house and
uncomfortable to do business area.

Training the Workers

In order to alleviate the problems of lack of knowledge and problems of skilled manpower,
MSE’s needs to work cooperatively with education and training institution of government and
private business. So government interventions needs to engage in the development of technical
capabilities of MSEs training and how MSE’s able to utilize relevant information and
government marketing training opportunity is expected from government.

The subject of government marketing assistance on measures designed to create linkage between
small business and range business and also between rural areas and urban centers. This linkage
helps the success of the sector by increasing access to market information and utilize the
opportunity available to them. Therefore, skill development formulating bared on governments
role can facilitate MSE’s success.

Development training program which emphasis on the accusation the accusation, through joint
venture preparing and providing learning package and provision of local consultancy and advisor
services for the sector is pivotal. Moreover, to solve the drawn back of expense and problems of
product management of MSE’s needs training support from government. Training of product
opportunity guidance at the project consumption stage, cost pricing and account record keeping
at optional from stage in expected government. Hence, MSEs are able to generate more income
and also reduce unemployment.

Solving the Financial Problem of the sector

Access to finances the income constraint of MSEs at all to solve the financial problems of the
sector MSE’s needs governments support to achieve its accelerated growth. In such a way that
the government’s strategy is to solve financial problems of MSEs in terms of loan, promotional
activity and support service. Hence, microfinance institution are initiated, sponsored and
financed by government. It can collaborate with relevant financial institutions so as to facilitate
wise selection, proper appraisal and timely delivery of the credit facilitate for the sector.

Effort and Strategy of Government

28
The performance of MSEs is taken as the indicator of effective government strategy. To the
study tried explain the effort made by government and its importance for the sound activity of
the sector especially in creating and expanding employment opportunity. The main objective of
government’s strategy is to accomplish the major tasks which are concerned with the
development of MSEs by providing appropriate service, like training service credit, working
place, market information and advice.

The focal areas of activities are TVT graduates, unemployed youth, females house hold head and
school dropout unemployed peoples are given special attention. Therefore, the major activities
life announcement will be able to create and facilitate the awareness of unemployed towards the
importance of MSE’s.

CHAPTER FIVE
5. Conclusion and Recommendation
5.1. Conclusion
The MSEs of Adigrat towns can be considered as instruments to in employment creation in the
town. The study focuses on MSEs in employment creation and its constraints in Adigrat town by
reviewing five sectors. The sectors were industry, trade, service, construction, urban agriculture.
Based on this, the findings and results of the survey, the activities of MSE’s of in Adigrat town
are insufficient in contrast to the prevailed, strict and sever unemployment. If even created
employment opportunity shows improvement parallel to expansion of the sector, the MSEs can
play significant role in realizing socioeconomic development and MSE’s are important sectors in
creating significant job opportunities for a number especially, for those who have low income

29
and minimum skills in the town, and comprises many women in all of its activities or empowers
women’s capacity.

As result indicate in area where living situations of majority people levels of income and
conditions of consumption are very weak and the number of unemployed is increasing from day
to day, MSE’s have great roles especially in improving the income level of the poor peoples and
generating employment opportunity for many people in towns specially for those who have
minimum skills, low capital, empowering women capacity, making people intends to save
money, developing the operators skills and knowledge ,improving people’s living conditions and
social issues, and contributing to integrating different business levels, establishment of larger
businesses and partnership for the study area.

Though the sector has such and like roles, in general its development is at low stage as they are
facing different challenges. Regarding sustainability of the business, majority of MSE’s are
sustainable because of they are supported by the society, do not affect the environment and get
demand for their product. Constraints are faced during the operation and start-up of MSE’s like
financial problems and shortage of work premises as mentioned by majority of respondents. And
an efficient service delivery system from government and its institution are also one of the
challenge are bureaucratic nature to get working promises, low quantity and quality of different
business development services and socio-economic infrastructures highly contributed to the slow
growth of MSE’s the Adigrat town.

5.2. Recommendations
Based on the major findings mentioned in the analysis, a number of policy recommendations
have been drawn with the view to improve the role of micro and small enterprises in contribution
to employment, income generation and its constraints.

1. Access of Credit

Although savings are one of the means of accumulation of capital, often savings alone cannot be
sufficient for running and expanding business operations, thus, there is a need for creating lines
of credit. The support of MFIs and banks should be encouraging through varying methods, such
as widening the kind or range of collaterals, providing credit by making longer repayment,
increase the amount of loan provided for group based lending.

30
 2. Provide work place

The construction of market sheds and common facility center’s as suitable locations by
assistance of the government, donors and private sector could help to address this problem. Thus,
government with support from donors could engage in constructing shades of MSE’s to address
the problem of work place, coupled with measures to encourage private investors to engage in
construction of premises suitable for entrepreneurs. In this regard, the government should
provide certain incentives for private investors such as tax relief for some time and availing of
lease- free land, etc. creating work premises would benefit MSEs in reducing costs of high rent,
reducing displacement, reducing cost of high rent, reducing displacement, reducing closures of
enterprise. In addition, if MSEs have a constant work place, they can draw long year strategic
plans regarding expansion of the business.

3. Marketing Assistance

With regard to marketing support, the following measures need to encourage by the government.

 Linking MSEs with medium and large firms to serve as market outlets.
 Provision of training on quality improvement and cost reduction modalities.
 Provision of information on market opportunities and appropriate improved
technologies.
 Construction of display centres and provision of advertising support.
 Establishment of market information centre’s
4. Business Development Services

31
Provision of business development services such as training such as training technical and
managerial, advisory and counselling services are very crucial for sustainable growth of MSE’s.
in this regard support agencies need to tailor their training and advisory service to meet the
specific needs and situation of MSE’s. support organizations can also play facilitating roles by
referring and linking MSEs to other organizations for special skills training. The managerial
trainings can be how to record, how to do the debit and asset etc. the technical training should be
given depending on the type of the business and sector so that it will help MSE’s to supply goods
and services in quality and quantity thereby get demand for their products. Both these trainings
should be given to new as well as existing MSE’s.

5. Improving Educational System

The roomier regional state of trade and industry should participate in designing and
implementing good educational policy that can help youngsters to be innovators and self-
employed. The unemployment rate and low income can be reduced highly if there is a good
educational policy, which encourages job and high productivity there by increases income.

6. Copping Strategies to Curb Problems

The Adigrat town administrative undertaking some copping strategies to solve problems that
MSE operator were facing. Initiating people themselves to be organized in the form of
cooperative in MSEs activities to build their human, capital and other resources, as the common
language called “Unity is Strength” for growth was one strategy taken. Also providing working
and production areas in specified area/places to minimize the land and urban plan problems by
the administration through organizing peoples in the form of cooperative and constructing shade
houses to the MSE operators with low credit and cost by the city municipality were the other
copping strategies.

Secondly, the town administration has started to enhance and promote the construction of
commercial market houses, building houses to provide the MSE owners in the form of rent
according to the income capacity of people.

32
Third personal/individual houses rent development promotion for encouraging of micro and
small enterprises activities, and introducing, and promotions of different supporting institutions
were appreciated and promoted to develop and encourage the capacity of MSE’s.

Lastly but not least, is promoting peoples to work and show their skill, cultural and other
Materials on bazaar, festivals and cultural and other exhibition programs are some of the
copping.

Reference
 Elhame, T. (2014). Factor affects the growth of small and medium scale enterprise. Case
study of Addis Ababa.
 Liedholm , C.(2000).The dynamics of micro and enterprises in developing countries,
world development, London 26(1),61-74

33
 Liedholm , C.(2002). Small firm dynamics evidence from Africa and Latin America,
small business economics, 18, 227-242.
 Yared ,D.(2007).Role of micro enterprises in poverty alleviation in urban Ethiopia the
case study of Yak sub city. Senior essay paper, Ethiopia civil service college (ECSC)
Addis Ababa Ethiopia.
 Michael P.Todaro (2002) economic development, India, new Delhi.
 Central statistics authority (CSA),(2003) .Report on small-scale manufacturing industry,
Addis Ababa, Ethiopia
 ILO (2005), support for growth oriented women entrepreneurs in Ethiopia.
 Andualem T.(1997). Small scale enterprise and entrepreneurship development in
ethiopia, A.A.
 World Bank (2002). The role micro and small enterprise in economic development in
developing countries.
 Mekonen Ayalew (1997), the links between small scale and large scare industries in
Ethiopia, Addis Ababa.
 Own Survey, (2015) Adigrat MSEs office, Adigrat Ethiopia.
 Tegegne G. and Mulat, D. (2005). Micro enterprises in small: Towns: natures and
performance, Amhara region, Ethiopia. Pp 100.
 FEMSEDA (2004), role of micro and small enterprise in the economic development of
Ethiopia. Addis Ababa Ethiopia

Appendix
College of Business and Economics

Department of Economics

Questionnaire

34
Dear- respondents

I am a 3rd year economics student at Adigrat University and I am conducting a research for the
fulfilment of BA degree in economics. The purpose of this questionnaire gather relevant
information regarding the objective of the research, role of micro and small enterprise in
employment creation in Adigrat town. To be used for Academic research. So believe that there in
nothing behind the study and all your response will be kept select. Hence your kindly requested
to privet the necessary information carefully and precisely for question listed below, “” in both.

“Thank you in advance for your cooperation”

Keble_______________________

1. Sex: Male Female

2. Age <15 15-20 21-25 >25
3. Marital status: Married Unmarried Other (divorced, windowed)
4. Level of education: Illiterate Primary School (1-6)
Junior and secondary school (2-12) Certificate and above
5. Whether organizational have value? Yes No
6. If you say ‘yes’ for question number 5 how? Mention some point
________________________________________________________________________
___________________________________________________________.
7. What are your previous activities?
Agriculture Self owned informal activities Self owned formal activities
Civil servant/services

8. What is the reason of shifting MSEs businesses?

Family tradition MSEs/small investment brings Interest in the
activities High income and create job To get high income
Lack of alternative
9. Where did you get the source of your working premises?
Privately owned Rent from government

35
 Rent from private Inheritance From others
10. How MSEs in employment creation in the town?
Justify
________________________________________________________________________
_____________________________________________________.
11. Do you think that business enterprises create any opportunities to the people?
Yes No
12. If yes, on question number 12 what are the main opportunities?
________________________________________________________________________
________________________________________________________.
13. Do you think that business enterprise generate income? Yes No
14. If yes, on question number 14 how can it generate income
________________________________________________________________________
________________________________________________________
15. What types of problems you faced at the time of setting the business?
Shortage of initial capital Lack of equipment Shortage of credits
Lack of information and knowledge Shortage of material
Gov’t rule and regulation
16. Is the problem number 16 faced at the operating the business? Yes No
17. Present you start saving? Yes No
18. If yes, question number 18 in what type you are saving?
Personal Communal Other
19. What is your saving amount per month?
0-100 101-200 201-300

20. What is your social status in participating in MSEs sectors?

Very good Good Weak Fair
21. How labor force is composed to run this business?
Permanently hired workers temporarily hired workers
22. Do you think that role of government is in a business enterprise? Yes No

36
23. If yes on question number 23 mention some point
________________________________________________________________________
_________________________________________.
24. How do you recommend for the successful of micro and small enterprise in creating
employment opportunity?
________________________________________________________________________
________________________________________________________________________
_____________________________________________.

37