Assessment of Factors that Affecting the Success of

Micro and Small Enterprise in: The Case of Lideta

Sub-City, Woreda 2

A research summited for the partial fulfillment of the requirements

for the bachelor of art degree in business management

Prepared by:
Girmosa Lammesa. ID: 0024/11
Jemal Tigabu. ID:
0033/11

HabteMariyam Neriy ID: 0026/11

Advisor: Hailu Tadesse

Department Of business Management

Rift Valley University
Abichu Campus
May/ 2022
Addis Ababa
2
Abstract
This research paper was aimed at investigating factors affecting the
organized youth in of MSEs with a special emphasizes on construction
sectors in Lideta Sub-city, Woreda 02 Addis Ababa. In order to meet the
objectives of the study, data collected through questionnaires were
analyzed using statistical analysis such as descriptive analyses.
Information was gathered using a two point questionnaire from a sample
of 80 micro and small organized youth in MSC operators and through an
interview conducted with 4 micro and small scale operators. The sample
operators were selected using systematic sampling techniques;
Information from an interview was analyzed using descriptive
narrations. Which seem to affect organized youth of MSE in sub base
work in lideta sub-city which include: inadequate financial support,
improper documentation and recordkeeping, luck of job description and
luck of clear mission and vision. Financial factors and improper
document keeping were the major factors that significantly affected
success of sub base work. Based on the findings it was recommended
that micro finances institutions should improve access to finance through
offering a better lending terms and conditions and government to
establish a centrally recordkeeping give access to training in order to
improve success of MSEs in lideta sub city.

i
Acknowledgements
The successful completion of this study was done with the support of
Almighty God to whom we owe a great gratitude, as we shall continue
to remain thankful to him. Our heartfelt thanks go to our Advisor Mr.
Hailu Tadesse for his commitment on the thesis at each stage and for
making invaluable comments and suggestions that guided us
thoroughly towards its good end. We further wish to thank for the
lideta sub city Micro and Small Enterprises Office for their
cooperation and kindness in providing access to information and to
lideta Sub City Micro and Small Enterprise operators for giving their
time to respond questioners. Finally, we tanks to our families and
friends for their kind support during our study.

ii
Acronyms /Abbreviations

FMSEDA Federal Micro and Small Enterprise Development Agency

GEM Global Entrepreneurship Monitor

GTP Growth and Transformation Plan
MOFED Ministry of Finance and Economic Development
CSA Central Statistics Agency
ETB Ethiopian Birr/Local currency
NGO Non-Government Organizations
GDP Growth of Domestic Product
NMSESE National Micro and Small Scale Enterprise Strategy of
Ethiopia
USA United States of America

iii
Contents
Abstract........................................................................................................................................................i
Acknowledgements.....................................................................................................................................ii
Acronyms /Abbreviations...........................................................................................................................iii
CHAPTER ONE..............................................................................................................................................1
1. INTRODUCTION.......................................................................................................................................1
1.1. Background of the study..................................................................................................................1
1.2 Statement of the problem...................................................................................................................3
1.3. Basic research question........................................................................................................................5
1.4 Objectives of the study......................................................................................................................5
1.4.1 General Objective.......................................................................................................................5
1.4.2 Specific Objectives.....................................................................................................................5
1.5 Significance of the study.......................................................................................................................5
1.5 Delimitation of the study.......................................................................................................................6
1.6 Delimitation of the study.......................................................................................................................7
1.7 Limitation of the study.......................................................................................................................7
1.8 Organization of the study...................................................................................................................8
CHAPTER TWO.........................................................................................................................................9
2. LITERATURE REVIEW........................................................................................................................9
2.1 Concepts and definitions........................................................................................................................9
2.2 Importance of micro and small scale enterprise...............................................................................11
2.1.1 Problems of micro and small enterprises..................................................................................12
2.1.2 Factors affecting the growth of micro and small enterprises.....................................................13
2.1.3 Special contribution of micro and small scale enterprises.........................................................14
2.3 Empirical literature..........................................................................................................................14
CHAPTER THREE...................................................................................................................................16
3. RESEARCH METHODOLOGY...........................................................................................................16
3.1. Description of the Study Area............................................................................................................16

iv
3.2. Research design..................................................................................................................................17
3.3 Sampling Technique and Sampling Size..............................................................................................17
3.4. Data Collection...................................................................................................................................18
3.5.1. Primary Data Collection...............................................................................................................18
3.4.2. Secondary Data Collection..............................................................................................................18
3.5. Procedures of data collection..............................................................................................................18
3.6 Data analysis........................................................................................................................................18
3.6.1. Data Processing...............................................................................................................................18
3.6.2. Descriptive Analysis........................................................................................................................19
CHAPTER FOUR.....................................................................................................................................20
4. DATA PRESENTATION, ANALYSIS AND INTERPRETATION......................................................................20
4.1 Introduction.........................................................................................................................................20
Table 1: Frequency and percentage distribution of respondents by sex, marital status and educational level
.................................................................................................................................................................. 20
3.2 Financial capacity of sub base enterprises...........................................................................................22
3.3 Market Situation..............................................................................................................................26
3.4 Management and recordkeeping of enterprises....................................................................................27
CHAPTER FIVE.......................................................................................................................................35
4. CONCLUSION AND RECOMMENDATION.....................................................................................35
4.1 Major finding.......................................................................................................................................35
4.2 Conclusion...........................................................................................................................................35
4.3 Recommendation.................................................................................................................................36
REFERENCES..............................................................................................................................................38
APPENDICES..............................................................................................................................................39
Annex I: Guidelines for MSE Office............................................................................................................39
Annex II: Survey Questionnaires................................................................................................................39
I. General Information...............................................................................................................................39
III. Market Situation...................................................................................................................................40
IV. Enterprise Management and Record Keeping......................................................................................41
V. Technical and Financial Support from the Government........................................................................42

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CHAPTER ONE
1. INTRODUCTION
1.1. Background of the study
The advantage of micro and small scale enterprise is a very recent phenomenon
in Ethiopian history many scholars argued that it is engine for any country in
springing the growth and development of economy NMSESE (national micro and
small scale enterprise strategy of Ethiopia (1997). As it has been evidenced by the
empirical experience of certain developed countries micro and small scale
enterprises are the steeping stone of the viable economic development .The
development organization that was officially established by the federal
government of Ethiopia pro.131/1998, the overall objective of this developmental
organization is to insure the creation of enabling environment for micro and small
scale enterprises, so that they strongly contribute to the economic and social
development of the country CSA.(2003-2006).

Micro and small scale enterprises defined differently in different place and time.
Micro enterprises are business enterprises found in all sectors of Ethiopian
economy with paid up capital not exciding 20,000, excluding high technological
consultancy firms other high technological establishments. Small enterprises are
business enterprise with paid up capital of more than 20.000, but not more than
birr 500,000 excluding high technological consultancy firms and other high
technological establishment Ibid,(2003-2006).

The central statistical authority attached various definitions to enterprise in

different sectors, CSA based its definitions on the size, employment and extent of

1
automations for small, medium and large scale enterprises and used a
combination of criteria for defining informal sector operators , however as
indicated in the national small scale strategy short coming in drafting of this
definitions may have meant that some capital intensive establishes , which
should fail solely under medium or large scale enterprises , may possible have
within the scope of the definitions for the medium and small scale sectors Hailey,
(2003).

On the top of hole micro and small scale enterprises are pivotal resource for the
development of Ethiopia, not only for the contributions that it makes for
poverty alleviations and job creation, but also the sectors base for
entrepreneurial endeavor, potential for new business development and played
pivotal role in development goals such as improving living standard, reducing
unemployment rate, fosterages linkage among various economic sectors and easy
to begin and expand, labor intensive , require small capital, low technology, little
know how and facilitate import and export transaction among a countries Ibid,
(2003). The aim of MSE development and the provision of MSE services are to
enable the entrepreneurs to take advantage of market opportunities and improve
the access to skill development opportunities that strengthen entrepreneurial
capabilities. Micro and small enterprise in Ethiopia are, however, confronted with
several factors that affect the performance of MSE. The major factors include
financial problems, lack of qualified employees, lack of proper financial records,
marketing problems and lack of work premises, etc. Besides, environmental factor
affects the business which includes social, economic, cultural, political, legal and
technological factors. In addition there are also personal attitudes or internal
factors that affect the performance of MSE, which are related to the person’s

2
individual attitude, training and technical know-how (Werotew, 2010:226-37).
Generally, there are external (contextual) and internal factors which are still
affecting the very performance of MSEs.

Ethiopia, as one of the sub-Saharan developing country has integrated MSEs as a

strategic tools in the Growth and Transformation Plan (GTP) and forwarded a MSE
development strategies to promote the sector. However the sector confronted
several factors that affected its performance to grow and develop to its potentials
(Werotew, 2010:226-37).

Therefore the purpose of this study was to assess the major factors that affected
the successes of MSEs in lideta Sub city woreda 02 the light of the Mses.
Development strategies of Ethiopia, within the context of Addis Ababa business
environments.

There are previous research works conducted on MSEs, most of them was
focused from the success, and growth point of view, and conducted several years
ago hence there was a time gap observed due to the regency of information and
the progressive policies and strategies in the promotion of MSEs, the study was
hopefully filled the information gap created due to the longevity of study.

1.2 Statement of the problem

Now days in almost all economies of the world especially in developing countries
like Ethiopia, micro and small scale enterprises are crucial and key factors for
sustained growth and development Okpara and inLynn, (2007). MSEs are
generally regarded as the driving force of economic growth, job creation and
through which accelerated economic growth and rapid urbanization to be

3
realized .In Ethiopian context as to the Ethiopia global journey of current
government's strategy, Growth and transformation plan micro and small scale
enterprises are the bridge to achieve the goal of government MOFED, (2011).

Despite this contributions of micro and small scale enterprises their major barriers
to growth and development appraisal to be shortage of both equity and financial
debt. Thus according to ladder,(1996) one other important problem that MSEs
often face lack of access to capital and adequate financial resource also plays
significant constraint on growth and development .

A number of micro and small scale enterprises are likely to increase in Addis
Ababa lideta sub-city because of several factors like improvement of government
policy in the sector. However there are a number of factors affecting the growth of
micro finance and small scale enterprises in the lideta sub city. Therefore this study
attempted to identify the different factors that influence the Successes of MSEs and
also tried to analyze which factors among the different were significantly affected
the success of MSEs in Lideta Sub City. To guide the study towards the attainment
of its objective, a number of research questions were developed.

Those who are engaged in this business have no adequate beginning capital
The ways of financing and organizing the business by the government body
have some problems
During the establishment of micro enterprises there is no market assessment
and market study before the project is implemented
They have lack adequate technical and managerial skill
Lack appropriate technology

4
1.3. Basic research question
1. Is there adequate capital for newly formed micro finance and small scale
enterprises?
2. Is there any market assessment and market study by institutions, before
organizing and establishing the business?
3. Is there any program to upgrade their business scale in capital
management and allocating method of record keeping system?

1.4 Objectives of the study

1.4.1 General Objective

The main objective of the study assessment of factors that affecting Success of
Micro and small Enterprise in lideta sub city, Woreda 02.

1.4.2 Specific Objectives

The specific objectives of the study were to:

 To assess the financial capacity to run their activities

 To assess the impact of marketing and market situations
 To assess the government activities in organizing and financing micro
and small enterprises.
 To examine the record keeping and the entrepreneurial ability of
owners

1.5 Significance of the study

The study would be expected to provide baseline information concerning the factor
affecting the success of micro and small scale enterprises in lideta sub-city to

5
contemporary researchers, governmental and nongovernmental organization. So
that it can develop certain strategies to up lift or minimize those problems.

The finding of the study would significant in identifying the various problems of
micro and small scale enterprises that hinder their growth. The researchers hope
that suggestion and recommendation of the study will help the concerned body by
providing high light of the information about the sector such as:

Providing valuable information for governmental and interested body to take

corrective measures.
The finding of the study will be important to the academicians and
researchers who can use it as spring board for other research.

1.5 Delimitation of the study

The FMSE office followed similar institutional frame work, policies, procedures,
promotional packages and created similar political-legal business environments in
all woreda of Addis Ababa. Hence, the study conducted in one of the woreda of
Addis Ababa i.e. lideta sub city, the outcome of the study is applicable to all MSEs
in Addis Ababa.

The study focused only on the construction sectors of sub-base mainly for the
reasons of, data from construction enterprises are easily measurable and the second
reason is that the pre assessment study showed that the selected manufacturing
sectors are commonly available in all sub cities of Addis Ababa, for all enterprises
are established under almost similar business environments, so the outcome of the
study is applicable to all sectors of Mses.

6
1.6 Delimitation of the study

The FMSE office followed similar institutional frame work, policies, procedures,
promotional packages and created similar political-legal business environments in
all woreda of Addis Ababa. Hence, the study conducted in one of the woreda of
Addis Ababa i.e. lideta sub city, the outcome of the study is applicable to all MSEs
in Addis Ababa.

The study focused only on the construction sectors of sub-base mainly for the
reasons of, data from construction enterprises are easily measurable and the second
reason is that the pre assessment study showed that the selected manufacturing
sectors are commonly available in all sub cities of Addis Ababa, for all enterprises
are established under almost similar business environments, so the outcome of the
study is applicable to all sectors of Mses.

1.7 Limitation of the study

Like all research the study might face the following limitations,

There was financial and time constrain

 unwillingness of respondent to respond the questions

 It is very important to note that these limitations were doing not have
any significant
 Interference with the outcome of the study.

7
 1.8 Organization of the study
This study paper organized in five chapters, the first chapter comprised of
Background of the study, Problem statement, Objectives of the study, Research
Questions, Significance of the study, Limitation of the study. Chapter two presents
the theoretical and empirical related literature to the study, while chapter three
provides research methodology. Chapter four data presentation, analysis and
interpretation and chapter five concluded and suggested some recommendations.
Outlines reference and appendix.

8
CHAPTER TWO

2. LITERATURE REVIEW

2.1 Concepts and definitions

Micro and small scale enterprises: In Ethiopian context the definition of micro
and small scale enterprise is given as; Micro enterprises are business enterprise
found in all sector of Ethiopian economy with paid up capital not exceeding 20,000
excluding high technological consultancy firms and other high -tech
establishments.

An enterprise: can be defined as an undertaking engaged in production and/or

distribution of goods & services for commercial benefits, beyond subsistence
(household) consumption at the household level.

Cooperatives: association of at least 10 individuals, who are grouped, organized

for the same organizational objectives (from the same area).

Factors: A factor is a contributory aspect such as political-legal, working

premises, technologies, infrastructures, marketing, financial, management and
entrepreneurial influences that affect performance of micro and small enterprises.

Formal enterprises: are defined as establishments principally engaged in

production of marketed goods and services but formally registered at respective
government agencies to undertake the business and hence have licenses to operate.

Growth oriented Micro and Small Enterprises (MSEs): are MSEs engaged in
production of goods and services in the sectors given priorities in the economic
development of the country in most policy and strategy documents of the
government (e.g., MoFED, GTP, 2010).

9
Micro Enterprise: when the numbers of its employees (including the owner or
family) are not greater than 5 & total asset is ≤ 100,000 ETB for industrial sector
and ≤ 50,000 ETB for service sector (MSEDS, 2011).

Small Enterprise: means a business engaged in commercial activities whose

capital is not exceeding birr 1.5million and 6-30 employees for industries and
500000 for service other than high technology and consultancy service institutions.

SUB-BASE: a maturity of aggregate and native soil, and the sub course –the first
layer of asphalt.

SUCCESS: Achievement of an action within specified period of time or within a

specific parameter.

CAPITAL: Refers to the financial resource that businesses can use to fund their
operations like cash, machinery, equipment and etc.

BOOKKEEPING: The recording of financial transactions and is part of the

processes of accounting in business.

Micro and small scale enterprises: The definition of micro and small scale
enterprise is still controversial. There is no generally accepted definition of micro
and small scale enterprises. Micro and small scale enterprises in one country may
be small or medium enterprise in other country. This is depends on the stage of
economic development of the country.

A national micro and small scale enterprises strategy of Ethiopia was issued in
1997. The industrial development strategy of Ethiopia issued in 2003, clearly states
that the private sector would be the engine of development. It also indicate that
promoting MSEs is one of important instruments to create productive private
sector and entrepreneurship, that is why government will give due emphasis and

10
priorities to promote these sector. The strategy also stresses that every effort will
made to support these sector by providing infrastructures (working premise and
land).

In Ethiopian context the definition of micro and small scale enterprise is given as;
Micro enterprises are business enterprise found in all sector of Ethiopian economy
with paid up capital not exceeding 20,000 excluding high technological
consultancy firms and other high -tech establishments. Small enterprises are
business enterprise with paid up capital of more than 20,000, but not more than birr
500,000, excluding high- tech consultancy firms and other high technological
establishments CSA, (2003-2006).

2.2 Importance of micro and small scale enterprise

According to Balue, (2003) in a labor abundant and capital scarce country like
Ethiopia small business have come to occupy a significant position in providing
employment opportunities and increase capital formation in the country. The
following are importance of micro and small scale enterprises.

Distribution of income: - The income generated in large number micro and small
scale enterprises is depressed more widely in community than the income
generated in a few large enterprises. Thus, the incoming benefit of micro and small
scale enterprise is delivered by a large segment of population while the large
encourage monopoly capital and concentration of economic power in this way,
micro and small scale enterprises about an equal distribution of income and wealth
Ibid.(2004).Foreign exchange earnings:- small business facilitates substantial
foreign exchange, saving and earnings. A wide variety of consumer and simple

11
producer good can be produced economically in micro and small scale enterprises
basis.

Economic transformation: - Micro and small scale enterprises plays strategic role
in the progress of country. There includes the industries by large repo sent a stage
in economic transition from traditional to modern.

2.1.1 Problems of micro and small enterprises

According to Balue, v. (2003) micro and small enterprises facer many problem in
the area of their operation.

Shortage of raw materials: - Procurement of raw materials of required quality

and qualitative price is the most serious faced by these sectors.

Inadequate finance: - Most of micro and small scale enterprises depends on

external finance or non-institution, financial assistance by the various agencies,
like financial corporations and commercial banks often fall much short of their
requirement Balue, V.(2000).

Outdate method of production:- Most of small scale business in developing

country has production method of low technological level. Old method of
production has resulted in their continued low productivity and poor quality of the
good lack of managerial skill small business are owned by one person or small
group of people and managed by their owners. Who with all management usually
with the other little help. The lack of resource to employee technological craft to
handle these matters.

Lack of marketing facilities:-Micro and small enterprises faces problems in the

matter of marketing his product. Due to want to adequate co-operative or other

12
marketing facilities and intelligence often suffers from marketing facilities and
intelligence; often suffer from remunerative price of their goods in the open
market. In free market economy especially with stiff competition marketing is a
key factor for the success of small business. Besides, a bulk of units one engaged
in the production of consumer goods competition from large scale enterprises
though the government has researched certain items, for exclusive production by
small business (hill..1987). There is complete violation of his mil by large
enterprises. Using the latest production technology and having access to all modern
facilities of managing industrial unit are in a position to easy out sell the micro and
small scale enterprises sector. For the later it is always a losing proposition Balue
V.(3003).

Government support:-For successful development of small business government

involvement is the essential one. Micro and small scale enterprises face difficulties
at every stage of their activities, whether it is by using materials for production,
Organizations of production, selling to product in the market or sustaining the
period between period marketing and production.

2.1.2 Factors affecting the growth of micro and small enterprises

Industries experience cycle of economic growth and contraction based on many
factors. These included the overall health status. Consumer preference even
seemingly unrelated world news and events Ibid (2000).

Interest rate:- Interest rate affects growth of MSEs in several ways, in large
industries such as vehicle manufactures or cruise companies, an increase in interest
rate prevent customers from borrowing at finance the purchase of these products
and services.
High interest rate also prevents companies from investing in new capital and
expansion of currency strength; the value of USA dollar compared to other foreign
13
currencies such as Yuan, Yen and pound is important even for the companies that
do not import export goods consumers have choice to purchase goods and services
produced in United States or in other countries. If the USA dollar strengthens,
companies in the industry that purchase input from other countries are able to be
more competitive in purchasing, industrials and processing such as the
strengthening or walking of dollar.

Government intervention: Many industries are regulated by the government in one

form or other some industries are more heavily regulated them and new laws and
rules can shake up an industry and depress growth Ibid, (2003).

Environmental impact: - Economic growth in industry can be affected only by the

environmental impact but also by consumer perceptions of that products produced
in the industry. For example the market for apparel declined drastically over the
course and killing small animals for their fur was the in humans and poor use of
hand Ibid, (2003). Overall economic health: - The economic state of a country and
consumer confidence can also spur the growth of micro and small scale enterprises.
In recessionary time consumer limiting their purchase to the essentials, fore going
luxury or big ticket items Ibid,(2003).

2.1.3 Special contribution of micro and small scale enterprises

As pan of business community, small firm produce a sustained portion of our total
good and services. Thus their general economic contributions is similar to that of
big firms they make exceptional contributions as they provide new jobs, introduce
innovation, stimulate coagulation, and produce goods and services efficiently
Hailey , (2003).

14
 2.3 Empirical literature
The MSE sector is important as it is a major source of employment outside
agriculture, it contributes significantly to GDP and it is often referred to as the
breeding ground for entrepreneurs. According to the CSA survey (1997) a total of
1.13 million people were employed in the MSE sector. MSEs Employee a labor
force eight times larger than medium and large scale industries. According to the
same survey, cottage and small manufacturing businesses account for 94% of total
employment in the manufacturing sector.

Micro enterprises account for 97% of all manufacturing establishments and for
19% of the gross value of production in the sector. Medium and large scale
manufacturing has a share of only 0.1% of the establishments but 73%of the gross
value of production.

There is huge gap in available information and data regarding the size and
contribution of the MSE sector. The most comprehensive data sets are generated
through surveys by the CSA carried out in selected regions of the country once
every two years. Occasional sample surveys are under taken by other organizations
such as the EDRI. These surveys only provide partial picture of the sector and the
numbers of MSEs owned by men and women in rural and urban areas. The
changes in numbers or types, etc. over a period of time, the numbers that survive
and die, the MSEs that graduate from microenterprise to small and medium
enterprises, etc. are not known. Self-employment accounts for over 80% of
employment in the informal sector. According to the 2006 CSA survey a total of
997,380 persons were engaged in informal sector operations, of which 198,027
(20%) were employees. Similarly, there were 39,027 small scale enterprises
engaging129, 588 persons (CSA 2006). Over 99% of the micro businesses are
15
owner operated. The MSE sector is very diverse and the three dominant types of
businesses according to the CSA urban informal sector sample survey (2003) are:
crafts and trade (49%); street vending, cleaning, washing (25%); and service
workers, Shop and market sales workers (21%). Grain mills (31%), furniture
(21%) and metal products (19%) dominate the small scale industries. (CSA2006).

The small scale manufacturing industries are significantly dependent on imported

materials, which account for 40% of total raw material costs.

The MSE sector is characterized by a low-skill labor force. According to the1997

CSA survey 59% were illiterate and only 20% had received elementary education,
though this may have changed over the past decade or so. According to the CSA
2006 survey of small scale manufacturing industries82% of the persons engaged in
small-scale manufacturing are literate. Fewer than 40% are educated to 12th grade
and above.

The amount of start-up capital for 75% of informal businesses was less than Birr
250 (CSA 2003 Urban Informal Sector Survey); 89% of start-up capital was from
own savings, borrowing from friends and assistance from families

And friends. Only 0.12% borrowed from Banks and only 1% from micro finance
institutions. A further 2% came from government or NGOs, with the source of the
remainder unspecified. Lack of sufficient capital is the major problem faced by
these informal sector businesses. Other constraints faced by MSEs include lack of
access to adequate premises and necessary raw materials, inadequate skills,
obstacles from government regulations such as high taxes, and an
inadequate/uncertain market.

16
CHAPTER THREE

3. RESEARCH METHODOLOGY

3.1. Description of the Study Area

Under this section a number of external and internal factors were taken into
account to identify the major factors affecting organized youth of MSEs. This
section provides an overview of the study’s the chapter discusses procedures and
activities under taken, that includes research design, questionnaire design, data
collection, sampling strategy, data processing and analysis and instrument
development.

3.2. Research design

The study applied descriptive type of research; in order to enable to describe the
state of affairs as it existed at the time of study period .Then the study described
and critically assessed the factors affecting the organized youth of MSEs in Bole
sub-city. All relevant Data were collected from a single point in time through cross
sectional method. A qualitative and quantitative method of data collection was
applied.

3.3 Sampling Technique and Sampling Size

To select samples of enterprises from the total population of 8 MSEs, we have
taken 80 members. A systematic sampling technique was applied to get 20 of
representative enterprises from each enterprise that was considered in this study.
Although there are no general rules, the sample size usually depends on the
population to be sampled. In this study to select sample size, a list of the
population formally registered by the woreda 02 MSE office until October 2019
was used. A list containing names, address and the type of MSE business engaged,
of the total population of the study area was found from the MSE office .A total

17
population of 80 members of an enterprises we would have taken every 4 th
elements of the list and have 20 respondents. The sample size selected here was
considered as representative of sub-base enterprises..

3.4. Data Collection

3.5.1. Primary Data Collection

Primary data collected from organized youth on sub base work of MSE members
through questionnaire and interview. Besides to that, an interview questions having
four open questions was developed.

3.4.2. Secondary Data Collection

Complete information about the MSE operators of the study area, Policies, reports
and newsletters had been reviewed to make the study fruitful.

3.5. Procedures of data collection

The complete list of operators were arranged by enterprise and numbers
representing the list were written on paper and rolled and put in a hut for draw, the
required number of samples from each enterprise was drawn using systematic
technique. Then the name and address of the number drawn taken from the list.

3.6 Data analysis

3.6.1. Data Processing

In the data processing procedure editing, encoding, classification and tabulation of
the collected data was made manually. Data clean-up was made to detect, errors
and omissions in responses and checking that the questions were answered
accurately and uniformly. Numerical assigned to reduce responses into a limited
number of categories or classes. Data having the common characteristics was
18
placed together and in this way the entered data was divided into a number of
groups. Finally, tabulation and graph were used to summarize the raw data and
displayed. Transformation of the processed data to look for patterns and
relationship between and/or among data groups by using descriptive analysis.

3.6.2. Descriptive Analysis

Descriptive analysis is used to reduce the data in to a summary format by
tabulation and measure of central tendency. The reason for using descriptive
statistics is to compare the different factors. Besides, the interview questions were
also analyzed using descriptive narrations.

19
CHAPTER FOUR

4. DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1 Introduction
In this part of findings which have been collected through questionnaire and
interview are presented. From the distributed 20 questionnaires 18 were properly
filled by the respondents and returned back, but 2 questionnaires were not returned.
There for, the non response rate is 10% while the response is 90%.

3.1 General Information of the respondents:

Table 1: Frequency and percentage distribution of respondents by sex, marital

status and educational level
Descriptions Number of respondents Percent (%)

Sex Female 13 72.2 %

Male 5 27.8 %

Total 18 100 %

Marital Single 11 61.1%

status
Married 7 38.9%

Divorced 0 0

Widowed 0 0

20
 Total 18 100%

Educational Can’t read & write 0 0

level
Can read & write 1 5.6%

1-8 0 0

9-12 1 5.6%

Certificate& 0 0
diploma

Degree & above 16 88.8%

Total 18 100%

Family Male head 7 38.8%

status
Spouse 0 0

Female head 1 5.6%

Child 6 33.3%

Other 4 22.2%

Total 18 100%

As the above table shows that 72.2% of the respondents are Males and the
remaining 27.8% are females. This shows most of the SMSs users are women’s. So
it is good for economic benefit of women’s.

When we see the marital status of the respondents the majority 61.1% is single and
38.9% are married. But there is no divorced and widowed respondent.

21
 This table Shows as the educational background of the respondents among 18
respondents 5.6% are can read & write and other 5.6% found at secondary level
but the majority 88.8% of the respondents have degree and above status. This
implies that most enterprise have educated members. So they have potential to
work more.

When we see the status of the respondents in their family 38.8% are male heads,
5.6% are female heads, 33.3% are child and the reaming 22.2% other status like
nephew, adopted children, aunt.

3.2 Financial capacity of sub base enterprises

Table 2: Distribution of respondents by position, and need, source &
adequacy of capital
Descriptions Number of respondents Percent
(%)

Chair person 4 22.2%

Position Cashier 0 0

Accountant 1 5.6%

Member 8 44.4%

Other 5 27.7%

Total 18 100%

Need of Yes 17 94.4%

22
 capital No 1 5.6%

Total 18 100%

Source of Woreda 02 & own saving 12 70.8%

capital
Our own only 0 0

Woreda 02 only 2 11.7%

lideta sub city 3 17.7%

Other Source 0 0

Total 17 100%

Adequacy of Yes 11 61.1%

capital
No 7 38.9%

Total 18 100%

As it is displayed in Table 2, 22.2% of the respondents are Chair person in their

enterprises 5.6%, 44.4% are accountant and members respectively. But the
remaining 27.7 % have other responsibilities; like deputy chairperson and auditors.
This shows most of the respondents responsibilities is members of the enterprises it
is good to manage their enterprises.

As we mention above table shows that 94.4% of the respondent believe that the
need of capital for their enterprise.

But the remaining 5.6% respondents said that they did not want capital for their
enterprise. This implies they have not adequate capital. If they got available capital
they will work more efficiently. According to the above table 70.8% of the

23
respondents said that their source of capital is Woreda administration and their
saving, 11.7% only Woreda 02 administration and 17.7% of lideta sub city. It is
better the government link them to other financial institutions and lenders.

As shown on the above table 61.1% of the respondents said that they began their
work with adequate capital. But the reaming 38.9% said that they did not have
adequate Capital. This shows most of the enterprises have adequate initial capital.

Table 3: Capital and mission/vision of the enterprises

Descriptions Number of respondents Percent (%)

Capacity to manage & yes 14 77.7%

work with more capital
No 4 22.3%

Total 18 100%

Inadequacy of working yes 13 72.2%

capital affect revenue and
No 5 27.8%
successes
Total 18 100%

Source of matching fund Members contribution 14 77.7%

sponsorship 1 5.6%

Did not save any 3 16.6%

amount for matching
fund

Total 18 100%

Does the enterprise mission yes 6 33.4%

24
 and vision No 12 66.6%

Total 18 100%

According to the above Table 77.7% of the respondents said that their enterprise
have potential to run More capital but the other 22.3% said that they do not have
potential to run more capital. This implies if they will get adequate capital they
have capacity to work more.

As table shows that 72.2% of the respondent s believed that inadequacy of capital
was affect their revenue but the remaining 27.8% believed that inadequacy of and
revenue does not have relationship. Those who believe the effect of the
inadequacy of capital mention some criteria their points for argument For example;
when the capital increases the productivity and market scope of the enterprise also
increase. They also said that the higher the capital the higher the speed of
productivity of the higher revenue to be collected. So capital is a critical for their
success.

Most enterprises fund source is member’s contribution as shown on the table 4.3
77.7% of the respondents confirm this. 5.6% of the respondents said that the
generate fund from sponsor ship and 16.6% do not save any amount for matching
fund. This data is contrary with the idea that discussed in the literature part. That
idea said that most of micro and small scale enterprises depend on external finance.

As the above table shows that 66.6% respondents said that their enterprises have
not vision and mission. But 33.4% said in opposite.

25
But those who said yes do not have clear vision and mission. This indicates they
don’t know what will do and why they do so clear mission and vision is the
important part of their success.

3.3 Market Situation

Table 4: Market situation
Descriptions Number of respondents Percent (%)

Assessment to availability of Yes 16 88.8%

market
No 2 1.2%

Total 18 100%

Sort out market accessibility Yes 17 94.4%

No 1 5.6%

Total 18 100%

Plan to work more and grow Yes 15 83.3%

No 3 16.7%

Total 18 100%

We can understand from Table 4 that 88.8% of respondents said that their
enterprise made market availability assessment. But the reaming 11.2% did not
make market availability assessment. This shows they can forecast their profit and
losses. It is good for their success.

26
This data shows us that 94.4% of the respondents checked out the market is
accessible and suitable for their business and the reaming 5.6% did not checked
whether the market is suitable or not. When we discussed the problems of micro
and small enterprises in the literature lack of marketing facilities are shows as a
major problem .But here most enterprises said that there is suitable market facility.

According to the collected data 83.3% of the respondents said that they have plan
to do more, work and grow but the remaining 16.7% of the respondent did not have
plan to do more. This shows most of the enterprises have plan to do more

3.4 Management and recordkeeping of enterprises

Table 5: Enterprise management body and duties & responsibilities
Descriptions Number of respondents Percent (%)

MSEs have Management body Yes 14 77.7%

No 4 23.3%

Total 18 100%

Duties and responsibilities of Yes 17 94.4%

management
No 1 5.6%

Total 18 100%

All MSEs members have job Yes 8 44.5%

description
No 10 55.5%

Total 18 100%

Efficiency and effectiveness of job Yes 16 88.8%

description
No 2 11.2%

27
 Total 18 100%

Implication of job description in Yes 0 0

success of the enterprise
No 2 100%

Total 2 100%

According to Table 5, 77.7% of the respondents said their enterprises have

management body but 23.35 did not have management body or leaders. This
indicates most of enterprises have management body it is good to manage their
business.

This table shows us 94.4% of the respondents are member of management body
but the remaining 5.6% are members. More than 94% of the enterprises are
managers, deputy manager’s secretary and other, so good for decision making and
give us the information.

As show on table 5 45.5% of respondents said that they have job description but
55.5% doesn’t have job description. Most of them are facilitators of trade
relationship, managers, and do audit reports. Some of them have no job
descriptions this affect their business.

88.8% of the respondents believe that the discharge their job description efficiently
and then remaining 11.2% did not

As the above data shown us 11.2% of the respondents those who did not discharge
their job description efficiently said that discharging job description and successes
have not any relationship.

28
 Table 6: Enterprise Bank signatories, Record keeping practice & record
keeping
Descriptions Number of respondents Percent (%)

Bank signatories Manager, accountant,& Cashier 10 55.5%

Manager & Accountant 7 38.8%

Manager and Cashier 0 0

Only manager 1 5.5%

Total 18 100%

Record keeping Yes 17 94.4%

practice
No 1 5.6%

Total 18 100%

Manage record Manage 4 23.5%

keeping
Accountant 10 58.8%

cahier 0 0

All 3 17.6%

Total 17 100%

According to the above Table 55.5% of the respondents said that their signer for
bank are Manager, Accountant & Cashier, 38.8 % said manager and accountant
and 5.5% said only manager is bank signer. This shows most of the enterprises
bank signatories are formal.

29
This table shows us that 94.4% of enterprises have record keeping system but the
remaining 5.6% did not have record keeping. This implies their record keeping is
good. So they will continue by this.

According to the collected data 23.5% of the respondents’ record keeping is done
by managers, 58.5% accountants, and 17.6% by Cashiers. This indicates most of
the enterprises recordkeeping is done by accountants, but it should more better to
manage by all.

Table 7: Documentation
Descriptions Number of respondents Percent (%)

Documentation Properly documented and file 7 38.8%

Documented but no properly 10 55.5%

filed

No proper documentation and 1 5.5%

file

Total 18 100%

Keeping records With the manager 3 16.6%

With the accountant 7 38.8%

With the cashier 1 5.5%

Here and their among the 7 38.8%

manager, accountant & Cashier

Total 18 100%

30
When we see the quality of documentation 38.8% of the enterprise keep their
document properly, 55.5% documented but not properly filled and 5.5% do not
have proper documentation. This indicates most of the enterprises are not keep
their document properly. So it is better the government to give training for them
how to keep their document properly.

As indicated on the table 4.25 16.6% of the enterprises keep their document with
the manager, 38.8% keep with accountant, 5.5% keep their documents with the
cashier and the remaining 38.8% did not have proper document keeping system.

According to the key important document keeping of most enterprises are weak.
This is due to lack of office and office materials.

This graph shows clearly that majority of the respondents i.e. 77.7% have regular
meeting to hear physical and financial reports but the remaining 22.3% did not
have regular meeting.

The key information also support this idea most of them confirm that they have
regular meeting to hear physical and financial reports and to collect input ideas
from their members. So regular meeting is very needed for their success.

Table 8: Transparency of the management, adequacy & effects of technical

support
Descriptions No of respondents Percentage (%)

Transparency of Yes 18 100%

management
No 0 0

Total 18 100%

31
 Technical support Yes 16 88.8%

No 2 11.2%

Total 18 100%

Adequacy of the support Yes 15 72.2%

No 5 27.8%

Total 18 100%

Effects of inadequate Yes 10 55.5%

supports
No 8 44.5%

Total 18 100%

This Table reverse that the transparency of the management body. All of the
respondents said that their management is transparent. This shows that the
enterprises have a good opportunity for success. According to the above table
88.8% of the enterprises receive technical support from the government and the
remaining did not get any technical support. Most enterprise get trainings on
kaizen, attitudinal change, computer skill, auditing, and also get on site supports on
market modality, loan, retirement and machine support. This shows that the
government give attention for technical support this should be strengthened.

According to table 8 72.2% of the respondents said that technical support is

adequate but 27.8% said it is inadequate. The key information also confirmed that
the technical support from the government is adequate.

Table 8 shows that 55.5% of the respondents said inadequate in technical supports
have negative impact on the successes of their enterprise while the other said they
32
did not affect their success. Those who said the inadequate technical support
hinders success of the enterprise argued that due to inadequate support loss of time
and money will occur. So technical accessible is better.

Table 9: Support requisition and government support

Descriptions No of respondents Percentage (%)

Request supports Yes 14 77.7%

No 4 22.3%

Total 18 100%

Government Yes 11 61.1%

responses
No 7 38.9%

Total 18 100%

According to Table 9, 77.7% of the enterprises requests support from the

government but the remaining 22.3% did not request. This implies most of the
enterprises need support from the government. As the data we collect clearly the
government response for 61.1% of the enterprises were good but there were no
support for 38.9% of the enterprises. This shows government support is good for
enterprises this also improve their success.

Table 10: Financial support from government, requirement for support and
fund allocation
Descriptions No of respondents Percentage (%)

33
 Yes 8 44.4%

Get financial support No 10 55.6%

Total 18 100%

Requirement for 80% 2 25%

support capital

90% 2 25%
capital

other 4 50%

Total 8 100%

Comfort ability Yes 11 61.1%

No 7 38.9%

Total 18 100%

When we see financial supports, the majority said that there is no financial support
from the government but 44.4 receive financial support. On the literature it said
that most of the micro and small scale enterprises depend on external finances.
There for the government financial support is essential for the successes of
enterprises. This table shows that 25% of the enterprises required 80% of their
capital, for financial support ,other 25% 90% of their capital, 50% said
governments wants other requirement for financial support.

34
61.1% of the respondents are not happy with the fund allocation but the remaining
38.9% said that they are comfortable by the fund allocation. Therefore government
fund allocation is not adequate this affect their success.

CHAPTER FIVE

4. CONCLUSION AND RECOMMENDATION

4.1 Major finding

In adequacy of capital; As finding 94.4% of the respondent believe that the need
of capital for their enterprise. This implies they have not adequate capital. 72.2%
of the respondent s believed that inadequacy of capital was affect their revenue

Luck of Financial support; this research shows that the majority that means 55.5
% of the enterprises said that there is no financial support from the government.

Improper documentation; 38.8% of the enterprise keep their document properly,

55.5% documented but not properly filled and 5.5% do not have proper
documentation.

Lack of clear mission and vision; this research shows that 66.6% of the
enterprises have not vision and mission. But 33.4% said in opposite.

But those who said yes do not have clear vision and mission. This indicates they
don’t know what will do and why they do so clear mission and vision is the
important part of their success.

Lack of job description; according to this research 55.5% of the enterprises don’t
have job description.

4.2 Conclusion
After we tried to assess the factors affecting the success of organized youth in
lideta sub city. We found that most enterprise have the potential to run the business

35
but there are some factors, which hinder their success. Most of the enterprise
members and management bodies are youths they found between 18-35 ages. This
shows they have potential to work more. The other findings of our research 88.8%
of the enterprise members are degree holders. So they should work more and
successes. Most enterprises have not clear vision and mission .On the other hand
66.4% of the enterprise did not have vision and mission.

The work of most enterprises needed initial capital but the government did not give
financial support for enterprises. The technical support from government is very
good but its positive impact on the enterprise is very low b/c of luck of close
supervision.

There is transparency of management in most enterprises. 55.5% of the enterprises

members do not clear job description for their members. So they should have job
description. We also found that the improper documentation in the enterprises
which is one factor that hinder success. So the concerned body /government give
them training how to document their document.

Generally, lack of clear vision and mission, financial support from the government
and other concerned bodies, well organized. Technical support, lack of clear job
description and improper documentation are found the reason for affecting the
success of organized youth in Lideta sub city woreda 02 of MSEs.

4.3 Recommendation
 The enterprises set clear mission and vision for those enterprises.
 The concerned body should have to allocate adequate budget for their
success.
 All members should have job description and responsibilities for their
success that we advise.

36
  The government should have support them financially.
 The government provides training for them how to keep their document
properly. And they should have proper documentation
 All enterprises should have regular meeting to hear physical, financial
report and discussion.

37
REFERENCES
CSA - Central Statistics Authority, (1996). “Report on Urban Informal Sector Sample
Survey,” Addis Ababa.
CSA - Central Statistics Authority, (2003). “Report on Small-scale Manufacturing
Industries, “Addis Ababa.
CSA - Central Statistics Authority, (2006). “Survey of small scale manufacturing
industries” Addis Ababa
Eerotew Bezabih Assefa, (2010), “Entrepreneurship: An Engine for Sustainable Growth,
Development, Prosperity and Good Governance,”Genius Training and Consultancy
Service, Addis Ababa, Ethiopia.
.Eshetu Bekele & Mammo Muchie. (2009), “Promoting micro, small and medium Enterprises
(MSMEs) for sustainable rural Livelihood,” Development, Innovation and International
Political Economy Research, DIIPER Research Series Working Paper No. 11.
Geberehiwot, A. (2006). Micro and small enterprise Development in Ethiopia. A.A
Kehl, (2000). Organization of production. India
Okpara, (2007). The value of creativity and innovation in entrepreneurship. Asia
Okpara, J. (2007), “Factors constraining the growth and survival of MSEs in Nigeria
; Implication for poverty elevation”, Management Research Review Vol. 34 No. 2.
Terry H, (1987). Author of good omens.
Teshome Mulat, (1994), “Institutional Reform, Macroeconomic Policy Change and the
. Development of Small Scale Industries in Ethiopia.” Stockholm School of
Economics, Working Paper No.23, Stockholm
Theoretical development since 1972.” Asien, Africka, Lateinamerica.
Van Dijk, M.P. (1996), “The urban informal sector as a new engine for growth:
Werotew, (2010:226). Taring and technical know- How.
World Development Report (2008) agriculture for development - overview (Chinese)
Ibid,(2003-2006). “High technological consultancy firms and other high technological
establishment”
Zeleke Worku. (2009), “Efficiency in Management as a Determinant of Long-term
Survival in Micro, Small and Medium enterprises in Ethiopia.” Problems and

38
 Perspectives in Management, 7(3):1-9.

APPENDICES
Annex I: Guidelines for MSE Office
1. What problems did you face while running MSEs in relation to?
Document keeping?
Do you have regular meeting?
Do you get adequate technical support from the government?
Do you get adequate financial support from the government?

Annex II: Survey Questionnaires

Survey Questionnaires to Conduct Research, Entitled “Factors Affecting Success of
Organized Youth in Micro & Small Enterprises in Lideta Sub-City, Woreda 02”
Note: Introduce yourself and describe to the interviewee that this information is only for
Research purpose!

I. General Information
Sex of the respondent: 1. Male 2. Female
Marital status of respondent: 1. Single 2. Married 3. Divorced 4. Widowed
Age of the respondent: ________________ years
Education level of the respondent: 1. cannot read or write 2. Can read and write 3. 1-8
4. 9-12 5. Certificate and diploma 6.Degree and above
Status of respondent in a family: 1. Male Head 2. Spouse 3. Female Head
Family size: Male _______ Female _________ Total ____________
Position in the Enterprise: 1. Chair Person 2. Cashier 3. Accountant
4. Member
II. Financial Capacity
Does your works need capital? 1. Yes 2. No
2.1 Where is the source of capital to run the business? 1. Woreda 02 & our saving 2. Our own
only

39
3. Woreda 02 only 4. Lideta Sub-City 5. Other sources (Specify)
__________________________________________________________________

2.2 Were there any lengthy bureaucratic processes to access the fund? 1. Yes 2. No

2.3 Do you think that the capital with which you are running your business is adequate?

1. Yes 2. No

2.4 Does your enterprise have capacity to manage and work with more capital, (if available)?

1. Yes 2. No

2.5 Can we say inadequacy of working capital affects your revenue, and then success?

1. Yes 2. No

2.6 If Q2.6 is yes, could you explain more?

___________________________________________

___________________________________________________________________________
_

2.7 What was the source of matching fund from your enterprise side? 1. Members contribution

2. Sponsorship 3. We did not save any amount for matching fund

2.8 Does the enterprise mission and vision? 1. Yes 2. No

2.9 Can state mission and vision of the enterprise briefly?

Mission_______________________________________________________________________
_

Vision________________________________________________________________________
_

III. Market Situation

3.1 Upon establishing this MSE, have you made any assessment to availability of markets for
your

Products / services? 1. Yes 2. No

40
3.2 Have you checked that these sorted out markets are accessible? 1. Yes 2. No

3.3 As a member of this MSE, do you have a plan to work on more works and grow? 1. Yes 2.
No

IV. Enterprise Management and Record Keeping

4.1 Is your SME has management body like manger, accountant, cashier etc.? 1. Yes 2. No

4.2 If Q4.1 is yes, do these management bodies have specific duties and responsibilities? 1. Yes
2. No

4.3 Do all MSE members have job descriptions? 1. Yes 2. No

4.4 If Q4.3 is yes, can you tell

4.5 Yours? _________________________________________________

______________________________________________________________________________
_

4.6 Do you all discharge your job descriptions efficiently and effectively? 1. Yes 2. No

4.7 If Q4.5 is no, do these have implications on success of the enterprise as a whole? 1. Yes
2. No

4.8 Who are bank signatories? 1. Manger, Accountant & Cashier 2. Manager & Accountant

3. Manger & Cashier 4. Only manager

4.9 Does your enterprise practices record keeping? 1. Yes 2. No

4.10 If Q4.8 is yes, who manages that? 1. Manger2. Accountant 3. Cashier 4. All

4.11 How do you see documentation of enterprise files? 1. Properly documented & filed 2.
Documented but no proper filing 3. No proper documentation and filing

4.12 Where the enterprise does keep its documents? 1. With the manager 2. With the
accountant 3. With the cashier 4. Here and there among the manger, accountant and
cashier

41
4.13 As an enterprise, do you have regular meeting to hear physical and financial reports, and
discuss on the same? 1. Yes 2. No

4.14 Is your enterprise management is transparent? 1. Yes 2. No

4.15 If Q4.13 is no, can you explain a bit? ____________________________________________

______________________________________________________________________________

4.16 Do you think that this lack of transparency could be dangerous for sustainability and
success of the enterprise? 1. Yes 2. No

V. Technical and Financial Support from the Government

5.1 Did the enterprise get technical supports like trainings, coaching, on-site supports etc from
the gov’t (Woreda 02)? 1. Yes 2. No

5.2 If Q5.1 is yes, can you tell specifically?

Trainings
on___________________________________________________________________

Coaching
on___________________________________________________________________

On-site Supports
on____________________________________________________________

5.3 Do you think these supports are adequate? 1. Yes 2. No

5.4 If Q5.3 is no, what do you think lacking?

___________________________________________

______________________________________________________________________________
_

5.4 Do you think that these inadequacies of technical supports affect success of your enterprise?

1. Yes 2. No

5.5 If Q5.4 is yes, how?

____________________________________________________________

42
5.6 Have you requested/recommended to the gov’t that we lack these and that capacities, to
enable the gov’t provide and fill the gaps? 1. Yes 2. No

5.7 If Q5.6 is yes, did you get responses from the gov’t? 1. Yes 2. No

5.8 Did the enterprise access financial supports from the gov’t (Woreda 02)? 1. Yes 2. No

5.9 If Q5.8 is yes, what are they? 1. 80% of our capital need 2. 90% of our capital need

3. Others (specify) ___________________________________________________________

5.10 Are you comfortable with fund allocation? 1. Yes 2. NO

Thank you for your time and information!!!

43