Socio Economic Determinants of Growth of Small Manufacturing Enterprises in Addis Ababa

Agaje, Solomon Worku (2004) Socio Economic Determinants of Growth of Small Manufacturing Enterprises in Addis Ababa. Masters thesis, Addis Ababa University.

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Abstract

The Government of Ethiopia is focusing on the small enterprise sector for its role of job creation. The focus stems from the increasing unemployment problem. The objective of this study is, therefore, to identify factors that contribute to the growth of small manufacturing enterprises in Addis Ababa. The study used both a survey and case study methods. The survey method involved 147 SMEs. The sample was taken from formally registered SMEs by the Addis Ababa Trade and Industry Bureau. Among the registered SMEs, leather, textile, fabricated metal and food manufacturing enterprises were selected based on a combination of high proportionate share and economic importance. Data analysis was done using descriptive statistics and a multiple regression methods. Results show that SMEs started with an average paid capital of Br 17,397 and 4 employees. The majority of the owners used to work in another related activity. The majority were motivated to start their business to become financially independent. The sources of finance for the start up were personal saving and family assistance and their major constraints were lack of sufficient capital and working space. Lack of finance was the most constraining factor. The econometric results show that age and start up size of enterprises are negatively related with growth of enterprises at 1% significance level. The extent of diversification and availability of infrastructural facilities were found to influence employment growth at 1% and 5 % significance level. The availability of own premise and the availability of workers with a vocational formal training are positively related with growth of enterprises at 10% significance level. The findings of the study have important implications to the employment creation of SMEs. As away out of financial constraints of SMEs group lending approaches, small and increasing credit, link of credit savings or micro financing institutions through NGOs should be undertaken. The city government has to facilitate the growth of SMEs by accessing necessary infrastructural facilities and working premises. SMEs require educated, well trained, and technologically skilled workers. Creation of awareness of entrepreneurs to follow a product diversification strategy through training, mass media, experience exchange arrangements are vital.

Item Type:	Thesis (Masters)
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HF Commerce H Social Sciences > HM Sociology
Divisions:	Africana
Depositing User:	Tim Khabala
Date Deposited:	27 Aug 2018 13:10
Last Modified:	27 Aug 2018 13:10
URI:	http://thesisbank.jhia.ac.ke/id/eprint/8537

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