ADDIS ABABA UNIVERSITY

SCHOOL OF GRADUATE STUDIES

THE ROLE OF MICRO AND SMALL ENTERPRISES IN POVERTY

ALLEVIATION IN GULELE SUB CITY, ADDIS ABABA ETHIOPIA

BY EPHREM SETEGN

DECEMBER, 2010
ADDIS ABABA
 ADDIS ABABA UNIVERSITY SCHOOL OF GRADUATE
STUDIES

THE ROLE OF MICRO AND SMALL ENTERPRISES IN POVERTY

ALLEVIATION IN GULELE SUB CITY, ADDIS ABABA ETHIOPIA

BY: EPHREM SETEGN

ADVISOR: DR. R.B. SINGH

A PAPER SUBMITTED TO THE SCHOOL OF GRADUATE STUDIES

OF ADDIS ABABA UNIVERSITY IN PARTIAL FULFILLMENT OF
THE REQUIREMENT FOR THE DEGREE OF MASTER OF ARTS IN
PUBLIC ADMINISTRATION
 Table of Contents
Pages

Acknowledgement………………………………………………………………... i
Acronyms ………………………………………………………………………….. ii
List of Tables ……………………………………………………………………… iii
List of Figures……………………………………………………………………… iii
List of Appendices…………………………………………………………………. iv
Abstract ……………………………………………………………………………. v
CHAPTER ONE
1. Introduction ……………………………………………………………………. 1
1.1 Back ground of the study ……………………………………………………… 1
1.2. General Overview of the Study Area …………………………………………. 2
1.2.1. Gulele Sub City………………………………………………………….. 4
1.3. Statement of the Problem……………………………………………………… 5
1.4 Objectives of the study…………………………………………………. 7
1.4.1. General Objective…………………………………………………….. 7
1.4.2. Specific Objectives…………………………………………………… 7
1.5 Research Questions…………………………………………………………….. 7
1.6 Justifications and Significance of the Study…………………………………… 7
1.7 Scope of the Study……………………………………………………………... 8
1.8 Limitations of the Study ……………………………………………………….. 8
1.9 Organization of the Study……………………………………………………… 9
CHAPTER TWO
2. Literature review……………………………………………………………….. 10
2.1. General Theoretical Literatures on Poverty
and Micro and Small Enterprises....................................................................... 10
2.2 Definitions of Micro and Small Enterprises …………………………………… 12
2.3 Theories on Micro and Small Enterprises ……………………………………. 14
2.4. Definitions of Poverty…………………………………………………………. 15
2.5 The Poverty Situation in Ethiopia……………………………………………… 19
2.6 The Role of Micro and Small Enterprises in Poverty Alleviation…………… 24
2.7 Barrier on Micro and Small Enterprises Activities…………………………… 28
2.8 Country Experience…………………………………………………………... 29
2.9. The policy Environments on Ethiopian Micro and Small Enterprises………… 31
2.10 Problems of Micro and Small Enterprises Activities in Ethiopia…………… 33
2.11. Conceptual Framework of the Study………………………………………… 35
CHAPTER THREE
3. Research Methodology………………………………………………………… 36
3.1 Research Design and Procedure…………………………………………….. 36
3.2 Data Types and Source ……………………………………………………. 36
3.2.1Types of Data…………………………………………………………... 36
3.2.2 Data Sources…………………………………………………………... 37
3.3 Sampling Procedure………………………………………………………… 37
3.3.1 Selection of Sub city…………………………………………………. 37
3.3.2 Selection of Woredas …………………………………………………. 37
3.3.3 Selection of MSEs and Respondents………………………………….. 38
3. 4. Data Collection Methods and Tools……………………………………….. 39
3.4.1 Primary Data Collection…………………………………………….... 39
3.4.2 Secondary Data Collection…………………………………………… 40
3. 5. Data Analysis ……………………………………………………………... 40
CHAPTER FOUR
4. Data Presentation, Interpretation and Analysis……………………………… 40
4.1 General Informations about the Respondents………………………………...... 42
4.1.1 Age of Respondents…………………………………………………… 42
4.1.2 Marital Status of Respondents………………………………………… 43
4.1.3 Educational Status……………………………………………………. 43
4.1.4 Family size sample respondents……………………………………… 45
4.1.5 Respondents‟ Job before Joining MSEs………………………………. 46
 4.1.6 Respondents Duration of Stay in their Respective MSEs……………... 47
4.2 Capital and Income Conditions of Micro and Small Enterprises and the
Respondents…………………………………………………………………….. 47
4.2.1 Initial and Current Employment and Capitals of Micro and Small
Enterprises and year of Establishments…………………………………… 47
4.2.2 Income of Respondents………………………………………………. 48
4.2.2.1 Respondents Income before Joining MSEs……………………… 48
4.2.2.2. Respondent's Income after joining MSEs……………………… 49
4.3 Micro and Small Enterprises Role in Improving the Quality Of Life of
Managers/Operators and Other members of the enterprises 52
…………………………………………..
4.3.1 The Role of Micro and Small Enterprises in Improving the Quality of
life of Managers/Operators and Other members of the enterprises 52
…………………………………
4.4 Constraints and Problems of Micro and Small Enterprises……………………. 62
4.4.1 Major Problems during Start Up and Operation Level of Micro and
Small Enterprises……………………………………………………………. 62
4.4.2. Major Problems in Different Sectors…………………………………. 64
4.5 Follow-Up and Evaluation…………………………………………………….. 67
4.6 Possible Solutions for the Problems…………………………………………… 68
CHAPTER FIVE

5. Summary, Conclusion and Recommendations……………………………….. 70

5.1 Summary and Conclusions …………………………………………………….. 70
5.2 Recommendations……………………………………………………………… 72
References
Annexes
 ACKNOWLEDGEMENT
I owe a big debt of gratitude to my advisor Dr.R.B.Singh for his strict follow up and
constructive comments and suggestions from the beginning to the finalization of the study.
He is indeed friendly and professional who provided me with fabulous ideas which truly
were productive for the successful accomplishment of my academic endeavor.

My grateful thank also goes to my brothers, Getachew, Adugna and Akililu, although our
mother deceased one year before I started this education, you all supported me in many
aspects especially Getachew I really heartedly thank you very much for every thing that
you did for me.

Tsedey, Getachew and other, staff members of Addis Ababa Micro and Small Enterprise
Agency, are duly acknowledged for the material and informational supports which is
pertinent for the study. I indebted also to thank the institutions like, Addis Ababa City
Micro and Small Enterprise Agency and Gulele sub-cities' and the five Woredas’ Micro
and Small Enterprise Office and their staffs who supplied me with necessary information..

Of course without the moral, material and other supports of my staffs this thesis may not be
possible to reach at this point, among others – Emagnu Amare, Mahtem Merawi, Lemma
Eshetu, Daniel Solomon and other staff members- I thank you all for your support.

My lovely friends at AAU-Henok Getachew,Bisrat Alemayehu, Deribe Assefa and

Yohannes Tekalegn, I am delighted with the discussion and comment that you raised for
my thesis. I should say thank you for your golden ideas. Last but not least, my thanks also
goes to Haimanot Bekele, Tirunesh Tesfaye ,Lewtayesh Alemayehu and Helen Bogale who
all are typed the manuscript timely.

i
 Acronyms

AACIB -Addis Ababa Culture and Information Bureau

AADB –Addis Ababa Demographic Bureau
ACB -Addis Ababa Communication Bureau
ADLI - Agricultural Development Led Industrialization
CSA-Central Statistical Authority
FGDs- Focus Group Discussions
GNP-Gross National Product
GSC-Gulele Sub City
HICES- Household Income Consumption Expenditure Survey
HIV/AIDS- Human Immune Virus/Acquired Immune Deficiency Syndrome
ILO - International Labor Organization
KII- Key Informant Interview
MOFED-Ministry of Finance and Economic Development
MOI -Ministry Of Information
MOTI- Ministry of Trade and Industry
MSEs – Micro and Small Enterprises
MSEDACA - Micro and Small Enterprises Development Agency of the City Administration
MSEDOSS- Micro and Small Enterprises Development Office of the Sub City
MSEDPP- Micro and Small Enterprises Development Programs Packages
MWUD - Ministry of Works and Urban Development
PASDEP - A Plan for Accelerated and Sustained Development to End Poverty
UK- United Kingdom
UNCTAD- United Nations Conference on Trade and Development
USD- United States Dollar
WMS - Welfare Monitoring Survey

ii
 List of Tables
Pages
Table 3.1: Distribution of Sample MSEs and Respondents by Woredas…………….. 39
Table 4.1: Age of respondents and Percentage ……………………………………. 42
Table 4.2 Material Status of Respondents………………………………………...... 43
Table 4.3 Family Size of the Sample Respondents…………………………………. 45
Table 4.4 Job of Respondents before Joining MSEs……………………………...... 46
Table 4.5: Duration of stay in MSEs………………………………………………... 47
Table 4.6: Monthly Income of Respondents before Joining MSEs………………… 49
Table 4.7: Respondents Income after joining MSEs………………………………... 50
Table 4.8: The Sources of Saving Of the Respondents……………………………... 53
Table 4.9: Saving Places of Respondents…………………………………………... 53
Table 4.10: Expenditures of the Respondents on different basic items after
involving in Micro and Small Enterprises……………………………… 55
Table 4.11: Responses Given By the Respondents as Measures to
Food Shortage…………………………………………........................... 57
Table 4.12: Ownership of the Houses of Respondents‟ ……………………………. 58
Table 4.13: Housing Facilities of the Respondents…………………………………. 59
Table 4.14: Quality of Schooling and the Capacity of managers/ operators and
other members of the enterprises for Paying after Joining in Micro and
Small Enterprises …................................................................................. 60
Table 4.15: Sources of Money for Medication and the Capacity of the Respondents
to Get Medical Treatments……………………………………………… 61
Table 4.16: Constraints and Problems of MSEs Faced at Start Up and Operational
Level …………………........................................................................... 63
Table 4.17: Problems in Each Sector (Cross Tabulation Result), Multiple
Responses is Possible…………………………………………………… 64
Table 4.18: Follow-up and Evaluation by Concerned Bodies……………………... 67

iii
 List of Figures
Figure 4.1: Educational level of the respondents ………………………………….. 44
Figure 4.2: Respondents Purpose of Saving………………………………………... 54

List of Appendices
Annex I: Research Questionnaire for Managers/ Operators
Annex II: Research Questionnaire for Other members of the enterprises
Annex III: Questions For Key Informant Interview and officials
Annex IV: Check list for Focus Group Discussions Guide questions
Annex V: Addis Ababa City Administration Micro And Small Enterprise
Development Agency List Of Micro And Small Enterprises Of The
Ten Sub Cities In The Six Sectors Up to March 9, 2010
Annex VI: Table Showing Total Number Of MSEs In Each Woredas And
Sectors
Annex VII: Table Showing Sample Respondents (Managers/ Operators And
Other members of the enterprises) In Each Sector In The Sampled
Woredas’
Annex VIII: List of Selected MSEs and Total Numbers of Participants of the
Sample MSEs
Annex IX: Total Respondents Asked and Returned the Questionnaires
Annex X: Initial and Current Employment and Capitals of Enterprises
Annex XI: A proclamation to amend the Addis Ababa City Government Executive
and Municipality Services Organs
Annex XII: Map of Gulele SubCity
Annex XIII: Sampled Woredas of Gulele Sub City

iv
 ABSTRACT

Since the 1970s there has been a strongly growing interest in considering the role of Micro
and Small Enterprises (MSEs) as a viable strategy for the poor. Ethiopia is also one of the
countries where MSEs has been given due consideration as a safety net for the poor to help
them overcome the adversities of poverty in post 1991.

MSEs, as mentioned above, is basically set up with the goal of poverty alleviation. Hence,
the situation whether the objective of these MSEs is met merits special consideration by
way of impact assessment. Although several studies have been conducted so far, the impact
of MSEs on poverty reduction still remains an issue to be addressed. This study tries to
answer three important questions: are MSEs able to increase the income of the
Managers/Operators as well as the other members of the enterprises who are taking part in
MSEs of the sub city?;can MSEs contribute in alleviating poverty of the
managers’/operators’ as well as the other members of the enterprises’ who are taking part
in MSEs of the study area? and what are the constraints and problems with regards to
MSEs operation in Gulele sub city?

With the above objectives in mind, the research work employed questionnaires, key
informants; focus group discussions, and observations to obtain primary data. In addition,
secondary sources of data have also been used. Eventually, using a mix of qualitative and
quantitative tools, the study found out that MSEs has played positive role in income,
creation of employment and improving the quality of life of the participants , either the
managers/operators or other members of the enterprises of the MSEs in the study area.
However, shortage of start up capital; high interest rates; lack of skilled personnel;
inadequate support from Government/NGOs; unaffordable tax and /or rent and lack of
production place are among the major constraints for the operation and growth of MSEs.

Hence, there is a need for strengthening the MSEs growth by expanding the micro- finance
institutions and providing especial financial support for the sector. Government and NGOs
support should also be focused on training and consultancy services or in general
informative services concerning market, documentation or accounting system.

v
 CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
Developing countries are facing multi dimensional problems like extreme poverty,
unemployment, low per capita income, and unequal income distribution. As a result,
development strategies were developed at different times to pull these countries out of their
problems of poverty. Like many developing countries, Ethiopia is also suffering from
severe poverty, unemployment, income inequality and lower per capita income.

In response to the mentioned problem, in post 1991, Ethiopia exercised decentralization

reforms and developed different strategies for development. The Ethiopian government
issued the National Micro and Small Enterprises Strategy in 1997 and established the
Federal Micro and Small Enterprises Development Agency in 1998. The country‟s
industrial policy in 2003 and the poverty reduction strategy program in 2006 have singled
out MSEs as major instruments to create a productive and vibrant private sector and reduce
poverty among urban dwellers (MOFED, 2006 and MoTI, 1997).

Moreover, in the five year A Plan for Accelerated and Sustained Development to End
Poverty (PASDEP) programs (2005/06-2009/10), MSEs have got great attention for the
alleviation of urban poverty and unemployment (MOFED, 2006). Boosting of the
Ethiopian economy through employment creation is considered as an important tool to
change the poor in income generation because they are operated at local level with small
start up capital and indigenous knowledge.

MSEs can play a role in improving the socio-economic condition of the poor since they
create employment opportunity that enable them to generate their income which in return
leads to access for socio-economic merits such as education, better health condition, good
housing and nutrition. Therefore, cognizant of the role of MSEs in employment creation

1
and income generation for the poor, the government is advocating for the importance of
these enterprises for enhancing development and growth by identifying youth and women
as a target group for relevant support measures (MOTI, 1997). Institutionalizing the MSEs
is one of the ways to facilitate this condition. Due to this the government take the MSEs as
a core development partners and paved the way for the formation of an agency (MSEs
Development Agency) that will facilitate their function and give technical assistance,
training, etc at federal or regional level under trade and industry ministry and bureaus
respectively.

For instance, according to the Addis Ababa Trade and Industry Bureau reports (2005),
there were about 179,000 MSEs employing about 251,081 workers, producing goods and
services for low and middle income societies. These enterprises are engaged in different
sectors and institutionalized under private MSEs and the government MSEs Development
Programs Packages (MSEDPP). These sectors are: food processing, textile, wood and
metal work, construction, municipal services, urban agriculture and others.

However, the sector faces lot of constraints such as policy problems, lack or in adequate
trainings, lack of credit and loan, lack of working space, poor production techniques and
input access constraints, lack of information, inadequate market linkage etc.. These
problems are highly restricting the contribution of MSEs for socio-economic development
in Addis Ababa in general and in Gulele sub city in particular. Despite these challenges the
MSEs sector contribute much for alleviating the poverty of the participants in the study
area, by creating jobs and in return increase their income and fulfilled their basic needs.
On the basis of this fact the study will attempt to assess the role that MSEs play in
improving the livelihood of the poorer section of residents in Gulele sub-city, Addis
Ababa.
1.2. General Overview of the Study Area
Addis Ababa was founded in 1886 during the reign of Emperor Menilik II. It was first
developed around the National Palace. Empress Taytu played a significant role in founding

2
Addis Ababa. Since then, it has become the cultural, political, economic and service hub of
the country. The city has a total area of 540 square kilometers. (AACIB, 2006)

According to the census of 2007, the population of the city was 2,738,248 out of which
1,304,518 are males and 1,433,750 are females. The family size in the city is 4.1 (CSA,
2007). With regard to age distribution, the working population (15-64)1 has a lion share of
the total population i.e. 73 percent, 35percent for male and 38percent for female (ibid).
Therefore, the city administration should give great attention to female and youth since
they have greater number as well as active section of the society, so that they can access to
employment opportunity.

The city provides various economic activities ranged from large industry, commerce and
business in the formal sector to petty-trading, retail trading, street vending, shoe shining
services and other services in the informal sector, including MSEs. A report by Addis
Ababa City Administration indicates that about 24percent of the city formal labor force is
engaged in industry sector. Service and agricultural sectors contribute for 72.2 percent and
2.6percent respectively. On the other hand; about 60percent of the human resource of the
city is engaged in informal sector and about 50percent of the population in the city lives on
monthly income of less than 200 birr (CSA, 2004 & AACIB, 2006). The report also
indicates that 32.1percent of the population is unemployed. Basic social services like water
supply, toilet facilities, sanitation, sewerage and lighting facilities are also in critical
shortage.

According to the city administration report, from 2005-2009 on average 58,000

employments was created yearly (ACB, 2009:40). In this regard, Micro and Small
Enterprise Development is one of the priority areas of Addis Ababa city Administration for
creating jobs. In the city, there are 127,318 informal micro enterprises which employ
167,000 labors. In addition, there are 51,684 cottage and small industries employing 83,000

1
According to International Labor Organization the working population or active section of the societies fall
under the age range of 15-64 (ILO, 2003)
3
workers. There were 137,000 licensed micro enterprises up to 2006. The city
Administration has an agency which gives various services for this sector (AACIB, 2006).
Currently the administrative system of Addis Ababa is subdivided into ten Sub Cities and
116 (one hundred sixteen) Woredas2. Gulele is one of the sub-cities of Addis Ababa,
which is the main focus area of the study. The following subsection will provide the
background information about Gulele sub city.

1.2.1. Gulele Sub City

Gulele sub city is one of the ten newly organized sub cities in Addis Ababa. The sub city is
bordered by Oromia regional state in the North, Kolfe Keranio Sub city in the West, Yeka
in the East and Arada and Addis Ketema sub cities in the south. (Addis Ababa,
2009:130).Gulele sub city has a population of 346,026 with household size of 4.2. The sub
city has a total area of 3224.85 hectare (CSA, 2007).Topographically the sub city is
mountainous. This mountain is covered with forest and it is part of the city‟s green area.
The forest has both economic and environmental usage. Gulele sub city has cold climatic
condition than the other parts of the city. There are number of religious places. In terms of
health, the sub city has two federal hospitals, one higher clinic, three health center, six
health posts and about 28 private clinics. Concerning education, the sub city education
bureau has managed to stop shift system. Student- class room ratio reached to 1:57 in
elementary schools and 1:61 in secondary schools, student –book ratio has reached 2:3.
(ACB, 2009:25).

The sub city is composed of self-employed household heads engaged in weaving

activities; tailoring, collecting and selling firewood, trading ready made cloths; petty
trading, and daily laborers are major actors in the study area, followed by government
enterprises, private institutions and other members of the enterprises, and the unemployed
household heads. According to the 2008 report, the sub city faces multidimensional social

2
In recent past the Addis Ababa City had 99 kebeles but now they renamed as „Woredas’
on Proclamation number 21/2010, therefore, here after, the researcher used „Woredas’
instead of „Kebeles‟. for more information see Annex XI.
4
and economic problems. It includes, unemployment, homelessness, HIV/AIDS, street
children, prostitution, and other social evils are flourishing at an alarming rate.
Accordingly, the sub city has put in place the necessary regulatory and policy direction to
encourage the poor to participate in economic and social development. Therefore, MSEs
are taken as one of the basic means and bridge towards this ends (GSC, 2008). With regard
to MSEs activities, the sub city in 2008/2009 in different sectors of MSEs create 7800
permanent and 16376 temporary employment opportunity (ACB, 2009:130).

1.3 Statement of the Problem

Although poverty reduction has remained the declared core objective in the government‟s
poverty reduction programs, it has been given inadequate emphasis to the problem of urban
dwellers. The government‟s efforts to improve the living conditions of the rural population
have relatively begun to bear fruit, whereas the incidence and severity of poverty have
intensified in the urban areas in the recent past (MOFED, 2006).

Addis Ababa has become the largest and most populous city in Ethiopia being more than
14 times bigger than that of the second larger city Dire Dawa (MWUD, 2006). It contains
about 26percent of total urban population of the country. However, Addis Ababa is one of
the least developed cities in Africa facing a major challenge of urban poverty and slum
proliferation (ibid.) Like any other major cities of Africa, Addis Ababa is presently
suffering from a host of social and economic problems including widening income
disparity, deepening poverty, rising unemployment, severe housing shortage, poorly
developed physical and social infrastructure and the proliferation of slums and squatter
settlements (UN-HABITAT, 2008).
Rapid urbanization has been accompanied by growing number of poor people and a
parallel increase in the social and economic needs of local communities. Unemployment
remains high whilst nearly half of the population earns less than what is needed to buy
enough food for basic subsistence. One fifth of the city‟s population has no access to safe
drinking water while many people lack adequate toilet facilities and waste disposal systems
(Gebremedhin, 2006:5).
5
Moreover, there are critical problems related to income and employment in Addis Ababa.
For instance, about 60percent of the city dwellers earn very low income of less than 74.5
USD per month per household (Bihon, 2006:16 and A.A.D.B., 2008), which do not meet
the internationally accepted poverty line of a dollar per person a day3. On top of this, the
unemployment rate of the city is more than 40 percent and this aggravates the poverty
situation of the residents Bihon(2006:31). Beside this most of the house holds spent more
than 50 percent of their income on food (ibid.).

For this reason, MSEs is recognized by the government as one of the potential sector to
alleviate poverty in Addis Ababa in general and in Gulele sub city in particular. They
provide employment opportunity and income generating scheme to those who do not have
access to the formal sector employment. It is also regarded as a tool for supporting the
economic and social conditions of the poor, especially for the youth and women, by
allowing access to education and health facilities and improves their living standards
sustainably.

In contrary to the mentioned benefit the sector faces a lot of constraints such as policy
problems, lack or in adequate trainings, lack of credit and loan, lack of working space, poor
production techniques and input access constraints, lack of information, inadequate market
linkage etc.. These problems are highly restricting the contribution of MSEs in socio-
economic development of the poor in the study area, Gulele sub city. This study therefore
,try to analyze the role of MSEs in poverty alleviation in Gulele sub city, Addis Ababa by
taking MSEs‟ and their Managers/Operators as well as the other members of the
enterprises who are take part in the sub city‟s as a unit of analysis.

3
The standard of a dollar per person a day is introduced by the World Bank in the 1990 World
Development Report (World bank,2000)
6
 1.4 Objectives of the Study
1.4.1. General Objective
The overall objective of this research is to assess the role of MSEs in poverty alleviation in
Gulele sub city, Addis Ababa.

1.4.2. Specific Objectives

In particular, the specific objectives of this study are:
 To assess the contribution of MSEs in the improvement of income of the
managers‟/operators‟ as well as the other members of the enterprises‟ , who are taking
part in MSEs of the sub city,
 To assess the role of MSEs in alleviating poverty in the study area.

 To identify the major constraints and problems on MSEs operation in Gulele sub city ,
and

1.5 Research Questions

The major questions to be answered in this research are the following:

1. Are MSEs able to increase the income of the Managers/Operators as well as the other
members of the enterprises who are taking part in MSEs of the sub city?
2. Can MSEs contribute in alleviating poverty of the managers‟/operators‟ as well as the
other members of the enterprises‟ who are taking part in MSEs of the study area?
3. What are the constraints and problems with regards to MSEs operation in Gulele sub
city?
1.6 Justifications and Significance of the Study

Currently, the role of micro and small enterprise sector in terms of employment creation
and poverty alleviation has been well recognized in many developing countries including
Ethiopia. Because most of the large number of the youth in urban areas of the country
including Addis Ababa is unemployed and dependent on their families. Hence, to give due
7
attention to MSEs sectors for reducing unemployment and poverty is indisputable.
According to World Bank report (2007), unemployment in urban areas was 14percent and
youth unemployment was 20percent. Women are especially disadvantaged in the labor
market with higher employment opportunities. The problem of unemployment, income
inequality, low per capita income and low living conditions are evident in the study area.
Thus, the development of MSEs can assist in reducing unemployment and increase the
income of individuals who participated in the sector and improve the problem of income
inequalities.

Consequently, the study can be used to show the role of MSEs in poverty alleviation and
their problems in the study area and help the government and other actors to focus on
MSEs as one of the intervention for the fight against poverty. The study could also assist
the planners and practitioners to give emphasis on MSEs in their development programs
and projects and to arrive at appropriate solutions to the problems on MSEs and thereby to
alleviate poverty.

1.7 Scope of the Study

In order to address the research objectives, the study is delimited spatially and
operationally. The study is limited to Addis Ababa, Gulele sub city as a research setting. It
is also delimited to those MSEs who have been registered under the MSE development
strategy of Ethiopian government and licensed by each Woredas service center in the sub
city. However, although there are various private MSEs, the researcher not included, in the
study. The reason for excluding private MSEs is that, it is difficult to get their list which
would help for sampling.
1.8 Limitation of the Study

The main problem during the survey period was shortages of data. The problem, in fact, is
not only a matter of shortage of data but also a question of reliability of the data. This
problem is mainly attributed to the fact that most micro and small enterprises do not pay

8
attention to documentation of records on various business aspects. Particularly, it is hardly
possible to get an organized record on financial matters like sales, revenues and
expenditures. Such data even if they exist, the Managers/Operators mostly not willing to
provide them because of many reasons, like fear of high rate of tax levy being the major
one. In relation to this, some of MSEs Managers/Operators were totally not willing to fill
the questionnaires. Due to this problem all the distributed questionnaires could not be
returned, due to these reason the number sampled MSEs and respondents reduced 4, which
otherwise would have been included in the group of sample MSEs and respondents
examined.

Although the aforementioned problems have happened, the researcher applied different
method of data collection techniques to keep the reliability and the validity of the data that
determine the end result of the whole thesis. Therefore, what the researcher did was,
instead of concentrating only on the survey data, he triangulates the data that is gathered
through survey with the informations that have obtained from different FGDs, interviews
of Key informants, and different reports (published and unpublished concerning the issue
under study) so as to make the data representative and the outcome of the research findings
credible.
1.9 Organization of the Study
The thesis is organized in to five chapters. The first chapter presents information about the
introductory part including back ground of the study, general overview of the study area,
statement of the problem, objective of the study and research questions, justification and
significance of the study, scope and limitation of the study. The second chapter includes
Related Literatures Review that is both Conceptual and Theoretical Literature and
Empirical Literature on MSEs are discussed. The third chapter explains the methodology of
the study. The fourth chapter focuses on the Data Presentation and Analysis of the findings
and the fifth chapter forwards the summary and conclusion as well as recommending
points.

4
Sampled MSEs reduced from 48 to 31 and this entails for the reducing of sampled respondents from 147
to 105 and this in return leads to for the decreasing of the 48 sampled managers/ operators and 99 sampled
other members of the enterprises to 31 and 74 respectively. See annex VIII and annex IX
9
 CHAPTER TWO
Literature Review

In this chapter, theories, concepts, approaches, definitions and related works done by
different scholars about MSEs and poverty related issues are assessed and discussed with
references of different perspectives in various countries. It is widely known and accepted
that MSEs contribute a lot for poverty alleviation and to achieve development in
developing countries in general and in Ethiopia in particular.

2.1. General Literatures on Poverty and Micro and Small

Enterprises

Different theories were formulated to reduce poverty and to promote the manufacturing
sector at different times since 1960s. The modernization theory was one of them, which
were developed during 1950s and 1960s for the objective of reducing poverty through GNP
growth. MSEs were viewed as marginal and unproductive sectors that evade tax and with
little potential for growth or entrepreneurial capacity. The development strategy at the time
aimed at to diffuse modernization from core developed areas to less developed or
developing peripheries. To realize its objectives, injection of investments and import
substitution through industrialization were made in practice to achieve the intended GNP
growth in third world countries (Thorbecke, 2000:3 and Tokman, 1978:1075).

However, this approach was criticized for not recognizing the local capacities and efforts of
developing countries to pull them out of poverty. In addition, it was an output
maximization approach to reduce poverty without considering other parameter like income
distributions, unemployment and the persistence growing poverty. Hence, because of those
problems, the strategy had failed to achieve the intended objectives and the reversal effect
such as widespread poverty, unemployment and income inequalities are flourished.
However, due to the change in the world economic climate; in the late 19705 through 1980s

10
MSEs received more attention from donors, and governments. They are become critically
important component for Africa‟s urban economies (ibid.)

In response to the above problem, another strategy was developed in 1970s. The primary
aim of this strategy was to improve the living standard of the poor through increased
employment opportunities. As a result, promotion of the private sectors and MSEs had
great attention to reduce the problem of unemployment and poverty, since they have
potentials to absorb huge labor force and increase the income of Individuals (ILO, 1972).

The importance of MSEs, including medium entrepreneurs is contributing to job creation

and output growth and sustainable development is now widely accepted in developing and
developed countries in post 1970s. Their development can deepen the manufacturing
sector and foster competitiveness. It can also help to achieve a more equitable distribution
of the benefits of economic and there by help to give solutions for some of the problems
associated with uneven income distribution. With this advantage of MSEs, therefore, can
alleviate poverty and helps as a seedbed for development of medium and large-scale
enterprises in urban settings ( Rudjito, 2003:27).The government of developing countries
have also been supporting to MSEs through various programmes, like credit schemes and
provision of training (Tambunan, 2006:132)

For reducing poverty, two schools of thoughts were also emerged in 1970s. These
development models are called "Development from above" and "Development from
below‟‟. The advocators of “Development from above" argues that development has to be
under taken from core developed centers to less developed countries (Zewdie, 1985:246).
In the “Development from below” approaches, the essence of development was seen in
terms of equity and efficiency. According to Chamber (1994:963), this new approach
helped to start to solve the problems from its grassroots and to use local capacities,
technologies and knowledge. Because effective development policies and initiatives were
made and implemented in sub-regional and local levels, like by developing and
proliferating of MSEs to help the poor.
11
 2.2 Definitions of Micro and Small Enterprises

There are two major approaches to define MSEs. They are the Qualitative and Quantitative
approaches. The Qualitative Approaches look in to the operation styles, degrees of
specialization, over all aims and objectives or the relation ship with community to coin a
definition for MSEs. This approach is inherently subjective, broad based and less precise
than quantitative approach. It offers conceptual flexibility and breadth of purpose. It is
better when one is focusing more on the development of MSEs such as creations of
employment, income distribution, poverty reduction etc. rather than size of MSEs
(Andualem, 1997:7). In contrast to the qualitative approach, the Quantitative Approach
relies on clearly defined parameters like number of other members of the enterprises, sales
turn over, asset, capital, net worth and the like. The approach is essential to identify
specific target groups for inclusion or exclusion of certain preferred treatments (ibid.).

In general, there is none accepted definition for MSEs. The definitions, given vary from
country to country and even within the same country. All use a range of terms to describe
MSEs, for example, small businesses, small manufacturing enterprises, small firms, small
enterprises, small-scale industries, micro enterprises, the informal sector, cottage and
handicrafts, tiny businesses, other income generating activities etc... Different countries
also used different criteria for the classification, such as number of other members of the
enterprises, assets, and other members of the enterprises‟ capital, sales turnover or a
combination of the above to determine the size of enterprises (Gebrehiwot and Wolday,
2004:4). This lack of consistent definition of MSEs led to confusion to distinguish between
one segment and another and bring significant implications on the structure of interventions
and promotional supports that could be provided to the sector. As a result, different
countries adopt their own criteria to define MSEs. In the UK, for instance, the Bolton
committee (1971) recognized the diversity of the sector and described small enterprises as
manufacturing businesses employing 200 workers or less. In the same manner, the

12
construction sector employing 25 workers or less, road transport which has 5 vehicles or
less and mining employing 25 workers or less are considered as MSEs. In the US, the small
business administration qualitatively defined a small business as one which is
independently owned and operated and which is not dominant in its fields of operation. For
statistical purposes, a small business is defined by the administration as one, which has
other members of the enterprises less than 500 workers (Andualem, 1997:3).

In the Middle East region, according to the United Nations study (1970), a small-scale
manufacturing industry covered 5 to 49 other members of the enterprises. In South East
Asia, MSEs are divided based on capital assets or full time workforce. For example, for
Philippines, Malaysia, Singapore and Thailand, MSEs are those employing 5-49 workers.
When we see the sector in Africa, in Mauritius, MSEs are defined as a unit employing less
than 25 workers and having a fixed investment in machinery and equipment not more than
45,000 USD. In Congo, they use number of other members of the enterprises for the
classification and defined MSEs as constituting 5 to 19 workers (ibid: 5). In Ethiopia,
according to Rweyemamu (1964:17), small-scale enterprises are defined as those with
capital investments up to 100,000 birr and employing 10 to 15 workers. Andualem
(1997:8) also defined micro enterprises as owners manage business activities that are
independently owned and operated, have small share of the market and employing 5 or less
workers, while, Small enterprises are those employing 6 to 9 workers.

In Ethiopia, MSEs are defined by the Central Statistics Agency and the Ministry of Trade
and Industry which are the basic applicable definitions. As CSA, 1999b; 2000 (cited in
Tegegne and Meheret , 2010:13) the Agency categorize and defined MSEs for the purpose
of compiling statistical information on the sector. Based on this, organizations which are
employed less than ten persons and using motor operated equipments considered as small-
scale manufacturing enterprises. Furthermore, as cited by the same researchers, the agency
categorized the enterprises in micro-enterprise in to informal sector operations and cottage
and handicraft industries as:
13
  Cottage and handicraft industries are those establishments performing their
activities by using non-power driven machines;
 While the informal sector is defined as household type establishments or
activities which are non registered companies or cooperatives operating with
less than 10 persons

In the same token, the Ministry of Trade and Industry also categorize the MSEs sector into
micro enterprises and small enterprise for the purpose of a strategy (MOTI, 1997) as:

Micro Enterprises are those small business enterprises with a paid-up capital of not
exceeding Birr 20 000, - and excluding high technical consultancy firms and other high
tech establishments.
Small Enterprises are those business enterprises with a paid-up capital of above 20,000
and not exceeding Birr 500 000, - and excluding high technical consultancy firms and other
high tech establishments.

In general, the Micro and Small Enterprises Sector is described as the national homes of
entrepreneurship. It provides the ideal: environment-enabling entrepreneurs to exercise
their talents to the full capacity and to attain their goals. In comparison with other
countries, it is known that in all the successful economies, MSEs are seen as a springboard
for growth, job creation and social progress at large.

2.3 Theories on Micro and Small Enterprises

Different theories were developed on the development of MSEs at different times. For
example, according to Tambunan (2006:121), two theories were developed. These are the
classical and the modern theories.
The Classical theory - states that poverty and the importance of MSEs development
correlate positively. In the course of rapid economic development, the economic share of
MSEs declined; while those of large and medium enterprises dominate the economy. In

14
other words, the higher the proportion of people living in poverty, the more will be the
contribution of MSEs in reducing poverty. This theory however, is criticized for
neglecting the economic growth of MSEs through networking and clustering,
agglomeration. It only focused on the relationship between levels of income and the growth
of MSEs. Because of these short coming of the theory, the modern view was developed in
1980s.

The Modern Theory- postulates that the major reason for the emergence of the notion of
flexible specialization was the long debate of how to interpret the new global pattern of
production caused by globalization forces and industrial restructuring. Global production
had transformed from mass to individual production system and flexible specialization is
the result of this debate. Hence, according to Tambunan (2006:122) in the modern theory
have three characteristics;
 Flexible and Specialization -firms in the community form part of a bounded community
which outsiders are largely excluded.
 High level of competitive innovation - there is a continuous pressure on firms in the
community to promote innovation in order to keep an edge of their competitors and;
 High level of cooperation - there is a limited competition among firms in the
community over wages and working conditions encouraging greater cooperation among
them.
In general, according to Tambunan (2006:124), the flexible specialization on MSEs states
those MSEs grow faster than large enterprises with the process and are important source of
invention, efficiency and innovation. They are also capable of standing the competition
with large enterprises. Hence, in the courses of development, the economic share of MSEs
increases or in other words, MSEs contribute a lot for poverty alleviation; while, it declines
in the classical theories.
2.4. Definitions of Poverty
Since 1900s, social scientists and economist were concerned much on consumer demand
and family budgeting studies and they were not motivated by the concern with poverty and
related nutritional problems. During the 1960s, the economists, public officials and the

15
public were giving rapid and better concern to poverty and they were studying about the
different causes of it. As a result, more data was collected on the subject and different
definitions were developed (Mills and Hamilton, 1994:21).Unlike the past decades, there
have been shifts in the poverty were understood. Now a day, the emphasis is more on
assessing poverty in a multidimensional approach extending beyond the narrow income /
consumption approach and to look at the non-monetary dimension of poverty, in particular
education and health status, vulnerability to stocks, and unemployment (Fekadu, 2001:3)

According to Forcheh (2003:121), poverty is defined as lack of basic means to live,

shortage or lack of access to resources by the poor, chronic deprivation of resources,
choices, capabilities, security and power required to achieve better standard of living and
other civil, economic, social, political and cultural rights. ILO (2005), defined poverty as a
multidimensional deprivation of human capabilities including consumption and food
security, health, education, rights, voice, security, dignity and decent work. It includes
both material and non-material deprivations. World Bank (2007), also defined poverty, as it
is not only lack of income but also vulnerability and powerlessness. It is described by lack
of income, low level of achievements in health and education, vulnerability, risks and
insecurity. Moreover, MOFED (2006:18) also see poverty in broader terms, two
dimensions of poverty have been identified: income and non-income dimensions of
poverty.

The above dimensions of poverty can also be broadly categorized into two groups. These
are monetary and non- monetary dimensions

MONETARY DIMENSIONS OF POVERTY

When estimating monetary measure of poverty, one may have a choice between using
incomes or consumption as an indicator. Some argue that provided the information on
consumption obtained from household survey is detail enough, consumption will be a
better indicator for poverty measurements than income. The welfare-monitoring unit

16
established to monitor the impact of many development programmes, e.g., uses
consumption instead of income to measure the level of monetary measure of poverty. In
poor agrarian economies, incomes for households may fluctuate during the year, in line
with the harvest cycle. In urban economies with large informal sectors as well, income
flows may be erratic, which implies that it may be difficult for households to correctly
recall their income. If house holds, consume their own production or exchange it for some
other goods, which is frequently the case and it might be difficult to price this. In addition,
people may not report their actual income (Fekadu, 2001:8)
NON-MONETARY DIMENSIONS OF POVERTY
The traditional approach to poverty measurement uses the monetary approach. Poverty,
however, has many dimensions. Poverty is associated to not only to insufficient income or
consumption, but also to insufficient outcomes with respect to health, nutrition and literacy,
to deficient social relations, to insecurity, and to low self-confidence.
Taking health and nutrition, e.g., the health status of household members can be taken as an
important indicator of well-being. One can also focus on the nutritional status of children
as a measure of outcome. Regarding education, the level of literacy can be used.
Comparing the number of years of education completed to the expected number of years of
education that should be in principle completed in another alternative for assessing
educational poverty. (ibid: 10)

In the light of the broader conceptualization of poverty ; which is a many sided

phenomenon; in which people encounter various kinds of deprivations, including lack of
access to education , employment, health services , adequate housing , infrastructural
facilities , social protection and personal security. Urban people in poverty are those
without sufficient education, secured employment, stable incomes, savings, proper housing
and important networks. They are the people that are vulnerable to changes in demand in
the labor market, in prices of basic goods and services, in unanticipated natural and human
made disasters, and who cannot afford adequate housing (Emebet, 2008:13).

17
To Coudouel, Hentschel and Wodon (cited in Fekadu, 2001:5), poverty refers to whether or
not households or individuals have enough resources or abilities today to meet their needs.
This aspect is based on the comparison of the individual‟s food and basic non-food needs
with some defined threshold (also called poverty line) below which they are considered as
being poor. Two types of poverty line may be identified:

Relative Poverty line, which is defined in relation to the overall distribution of income or
consumption in a country and it, reflects the extent of inequality in that particular country
(ibid: 7) and;

Absolute poverty line that reflects some absolute standard of what households should be
able to meet their basic needs. For monetary measures, these absolute poverty line are
based on estimates of the cost of basic needs (i.e., the cost of nutritional basket considered
minimal for the healthy survival of typical family), to which a provision is added for non-
food needs. some argue that for developing countries , considering the fact that large share
of the population survive with bare minimum or less , it is often more relevant to rely on
the absolute poverty line than the relative poverty line. (ibid)

Hence, these variations in the definition of poverty are due to the different conceptions of it
by different researchers and scientists and these lead to differences in the methods and
indicators used to estimate and differentiate the level and extent of poverty on poor people
living at different corners of the world. In this regard, many alternative measures of
poverty exist but the following three are commonly used (MOFED, 2006:21-22):
Incidence of Poverty (Head Count Index) refers to the proportion of total population living
below poverty line, i.e., the share of population that cannot afford to meet minimum food
requirement and non-food needs.
Depth of poverty (Poverty Gap) refer to how far off households are from the poverty line.
It captures the mean aggregate income or consumption shortfall relative to poverty line
across the whole population. It is obtained by adding up all the short falls the poor and

18
dividing the total by population. It gives the total resources needed to bring all the poor to
the level of poverty line (divided the number of individuals in the population)

Poverty Severity (squared Poverty Gap) shows the severity of poverty by squaring the gap
between the expenditure of the poor individual and the poverty line. It takes in to account
not only the distance separating the poor from the poverty line (poverty gap), but also the
inequality among the poor. Furthermore, it places a higher weight on those households who
are further away from the poverty line. Therefore, for this study, the above definitions and
measurements of poverty may be used or referred in the subsequent chapters.

2.5 The Poverty Situation in Ethiopia

Ethiopia is one of the least developing countries in the world in almost any ranking of
indices related to the stage of developments. The World Bank (2007) report indicated that
with regard to the Human Development Index Ethiopia, has the minimum record; one of
the six lowest out of 175 countries in the world and 91st out of 94 developing countries.
The life expectancy at birth of the country also as low as 46 years ; lower than the world
average of index of 77 years .

MOFED (2006) also indicated that the per capita income is as low as 0.41 USD a day,
which is lower than the international standard of poverty line, 1USD/day per individual.
The severity of poverty further could manifest through problems of unemployment, income
inequalities, infant mortality, low life expectancy, illiteracy and in general, these all
indicate a wide spreading of poverty. Due to this, most of the population trapped in low
productivity employment with little opportunity for increasing income. Furthermore, as
noted above, one of the dimensions of well-being is the monetary dimension of poverty
called lack of opportunity or material deprivation.

The income dimension of poverty is being measured by real consumption expenditure

valued at 1995/96 national average prices in Ethiopian Birr. Both real per capita household
consumption expenditure and real per adult household consumption expenditure are
reported along with family size and the level of calories consumed. The level of real total

19
per capita household consumption expenditure stood at 1,255 Birr (US$146) in 2004/05
with food accounting for 577 Birr and the rest 678 Birr for non- food (MOFED, 2006).
Hence, here the poor represents the proportion of the population whose consumption falls
below the poverty line, that is, the share of the population that cannot afford to buy a basic
basket of foods and essential non-food items.

The level of poverty line used to calculate poverty indices is 1,075 Birr at 1995/1996
national average constant prices. This threshold income suggests that people having an
income level below this would be incapable of meeting their basic needs for daily
sustenance. This poverty line was determined during the 1995/96 poverty analyses. It was
based on the cost of 2,200 kilocalories per day per adult and essential non-food items. The
food poverty line is 647.81 Birr at 1995/96 national average constant prices. The food
poverty line is defined by choosing a bundle of food typically consumed by the poor. The
quantity of the bundle of food is determined in such a way that the bundle supplies the
predetermined level of minimum caloric requirement (2,200 kilocalories). This bundle is
valued at local prices or at national average prices. Then a specific allowance for the non-
food goods consistent with the spending of the poor is added to the food poverty line
(ibid.).

According to the 2004/05 HICES, the proportion of poor people (poverty head count index)
in the country is estimated to be 38.7percent in 2004/05. In the same year, the proportion of
the population below the poverty line stood at 35.1percent in urban areas. The poverty gap
index is estimated to be 7.7percent for urban areas. Similarly, at the national level poverty
severity index stood at 0.027 and 0.026 for urban areas. By any measure; most Ethiopians
live under harsh conditions. Indicators of access to education and health service, nutrition,
and access to water and sanitation, also remains extraordinarily low compared to at least to
the Sub-Saharan Africa (SSA) level (MOFED, 2007).
With regard to the dropout rate, the two major reasons for dropout cited in both primary
and secondary schools were 'sickness' and 'need to work'. Among the primary school

20
dropouts, about 27percent reported leaving school because they were sick ,and about
26percent because they needed to work, with similar findings at the secondary level.
(MOFED, 2006)
In connection with Utilization of health service, around 15percent of the households have
not used health services at all because the service charges are 'too expensive'. Concerning
the nutritional status, Anthropometric measurements (weight and height) are used to assess
the degree of malnutrition among population groups. Children are chosen for the purpose
of anthropometric analysis because they are more susceptible to nutritional deficiencies,
which could be an indication of lower welfare status of households. Concerning nutritional
problem, the issue of wasting, stunting and underweight are the common troubles that
should get enough attention by responsible bodies (ibid.).

Concerning unemployment, MOFED (2006) reported there is high unemployment rate due
to the demographic bulge of young people in Ethiopia, which accounts for 50.2percent of
the total population and lack luster of job creation by MSEs. Women, in this regard, are
especially disadvantaged in the labor market with higher employment opportunities. Hence,
for all the above-cited problems in Ethiopia, MSEs could be one of the options for the large
parts of the low-income population to improve their income and living standards.

In the same token, Addis Ababa also, as the capital city of the country, is showing two
contrasting urban features. On the one hand, it is a city enjoying the privileges of
modernization by housing a higher concentration of economic and social facilities per
population than similar centers else where in the country. On the contrary, it is a city whose
healthy urban development is hampered by too many spatial, sectoral and structural
impediments. Hence, poverty has become rampant and wide spread in the city. According
to World Bank findings, about 60percent of the urban dwellers were found to have fallen
below the poverty line (Abebe, 2001:11)
Recent estimates do not seem to show significant improvement in the over all poverty
situation in the city. Like other context, the issue of poverty in Addis Ababa also related
with a phenomenon involving issues related to income, labor market, public infrastructures
21
and services, shelter, social exclusion, etc. In this regard, a comprehensive view of these
dimensions is requisite for obtaining a better understanding about the magnitude of poverty
in the city like the condition of housing , level of income as well as employment and the
physical and social infrastructures that the residents get could be manifest the standard of
living of the people (ibid).

The household income and expenditure survey conducted by CSA (2004) reveals that
41.5percent of the households in Addis Ababa earn income less than Birr 4100 per year
(about Birr 342 per Month). 19.6percent falls in the range of Birr 4200-6599 per year (350-
550 Birr per month) bringing the total of those earning less than Birr 550 per month to
61percent. According to the same source, a little over one –third or 34.5 percent of the
households spend less than birr 550 a month. Even though distribution of income does have
its own limitation in measuring the sufficiency of ones own income of meeting the
expected standard of living, several attempts have been made to compute the family
poverty line of Addis Ababa. Regardless of differences in their respective estimations, all
sources indicate that the magnitude of the problem is increasing rather than decreasing.
According to recent national labor force survey made in 2004, during luring facilities and
seemingly „vibrant‟ employment opportunity the number of migrants in Addis Ababa is
said to account for about 46.9percent of the population resulting in an unemployment rate
of 34.7percent. For this reason, unemployment nowadays has become one of the critical
challenges confronting the city Administration (A.A. C.A., 2003).

Another area whereby the severity of the poverty situation is vividly reflected is in the
production and provision of shelter. Due to misguided policy of the ex-military regime, the
housing supply has fallen far too short of the demand. For a potential demand of 460,000
housing units, what is currently available for residential purposes is about 238,000 leaving
a deficit of 222,000 houses (ibid.). Out of this stock, about 82percent of the houses are
constructed of wood and mud. About 60percent of the units have no more than two rooms
per unit. Besides, replication of similar ‘chica’ units is estimated to cost a minimum of Birr
30,520, which in effect is far beyond the affordability of 85percent of the City population.
22
Furthermore, due to the commercialization of the formal financial institutions, the chances
of securing loans even at a subsidized at the prevailing market interest of 10.5percent is
becoming a remote possibility. Moreover, due to the inability of the bulk of the city
residents to pay frozen rents for governmental owned houses in time the interest of the
private sector, to vigorously enter, into the construction of rental houses has turned out to
be minimal. In effect, such a shelter condition is generating a state of homelessness in the
city whose precise figure is beyond any ones reach (Abebe, 2001:12)

The education profile is no different from what has been mentioned so far. In spite of high
percentage gross enrollment achievements registered in the city, many of the schools in
Addis Ababa are discovered to be over crowded and much below the recommended
standards. The attrition rate, which is increasing due to lack of financial assistance, child
labor at home and lack of closer parental supervision ,call for urgent attention. As regards
the health status of the city residents, Addis Ababa does not seem to fare well. In a 1996
Welfare Monitoring Survey, when we see the health status it was discovered that about
5.1percent of the children were classified as wasted, 21percent under weight and 49percent
stunted. Hence, malnutrition has become a chronic problem of concern (ibid).

Furthermore, Berhanu and Befekadu (2005:125) in their report on the Ethiopian Economy
clearly stipulated that the major causes of urban poverty including Addis Ababa as shortage
of income, poor performance of town and city administrations, rural to urban migration and
lack of employment opportunities are some of the aggravating factors for the proliferation
of urban poverty. For instance, lack of employment opportunity is a major reason for low-
income situation of the majority of the population. Unemployment and under employment
are serious problem in Ethiopia in general and in Addis Ababa in particular. According to
1999 National Labor Survey report, the unemployment levels are 8.02percent at the
national level while it is 26.4 percent in urban and 5.14percent in rural areas (CSA, 2000).
Level of unemployment including underemployment in urban areas is quite high and this
definitely is associated with high level of urban poverty. Various factors can explain why
unemployment level is generally high in urban areas. The primary reason is the fact that
23
urban centers in Ethiopia have little economic dynamism and their economic base is largely
services and trade. Hence, the absorptive capacity of these areas is limited, whereas they
are characterized by high natural population growth and inflow of migrants from rural
areas (ibid). The effects of poor performance of the agricultural sector indicates a growing
rural-urban migration with concomitant urban problems associated with poor management,
lack of infrastructures, inadequate service delivery and other typical dimensions of urban
poverty. For tackling the poverty, the report also suggests that MSEs as one of the solution
for alleviating urban poverty (Berhanu and Befkadu, 2005:141). This is also substantiated
by Urban Development strategy which consider „supporting of MSEs and job creation‟ as
one pillar for alleviating urban poverty in line with - Integrated housing development;
Improved access to land infrastructure and services; and Promoting urban-rural and urban-
urban linkages.(MOFED,2006:162)

2.6 The Role of Micro and Small Enterprises

In Poverty Alleviation

MSEs are important in the economy of many countries especially in the developing nations
like Ethiopia. As mentioned earlier, the sector can play a major role in employment
creation, increasing the income of the poor and women and for improving income
distributions.

According to Geiger and Armstrong (1964:59), small-scale enterprises are significant in

developing countries to achieve economic growth with out sacrificing humanitarian values.
MSEs can increase the availability of scarce resource for use; help to mobilize indigenous
resources, money, skills and human energy. In order to start or expand on enterprise of his
own, a man and his family are willing to save instead of consuming a portion of their
income that otherwise would not be available for productive investment and more
important to work conscientiously and for longer hours than most people are willing to do
in other types of employment. According to the same authors, MSEs are crucial
intervention to expand employment. The establishments of small enterprises automatically
24
create additional employment opportunities, which, in many cases, would not otherwise
exist. There was a growing concern in most developing countries that large numbers of
semi-educated young people all leaving the rural subsistence economy faster than jobs are
being created for them in the urban modernized economy. Accordingly, unemployment has
been growing in cities and towns and MSEs are tend to be labor intensive and are
absorbing huge labor force.

Hussmans and Meharan (2005:5); MSEs can spark of socio-economic revival as they need
little capital to operate but can contribute much for they work with minimum simple and
inexpensive equipments and management skills. They can be adapted quickly and create
quick self-employment and jobs much needed by the enumerable job seekers. Geiger and
Armstrong (1964:63) also explained that MSEs could contribute a lot to foster economic
independence in developing countries. Small enterprise can accelerate the achievement of
economic independence. Because most developing countries are dependent on foreign
resources for development ( for example, foreign funds, raw materials, technicians spare
parts and the like), which are too expensive and uncertain due to the fact that their
availability and continuity can not be connected upon to the same extent as can those of
indigenous resources. As a result, the developments of small enterprises help to reduce the
proportion of foreign capital and skills and help to replace by indigenous ones. Hence,
small enterprises provide a way of hastening this replacement beyond the rate at which it
would occur through reliance solely or mannerly upon other form of economic activity.
The development of MSEs can also improve efficiency: when a person works for
himself/herself using his/her own funds and skills, he/she has greater incentive to make the
best use of his time, equipment, materials and labor than if he /she works for the state.
Andualem (1997:9) also indicated that encouraging innovation and incentives are other
major contributions of MSEs. They are more likely to adopt technological and managerial
innovation and to take advantage quickly and imaginatively of new economic
opportunities. Under conditions of competition, owners of enterprises have strong
incentives to adopt technological and managerial innovation and seek out and undertake the
new economic activities which are continually appearing in the course of economic
25
development and upon which further economic growth depends. According to the same
author, the development of small-scale enterprises helps in development and strategic
planning like by developing financial assistance programs to entrepreneurs, assessing the
nature and activity of financial assistance institutions and examining the operating policies
and programs. Assessing the needs or being a source of information for technical
assistance, like training and education, expanding government programs, establishing
development and productivity centers, providing information services, preparing training
courses, establishing technical secondary and advanced schools, encouraging the training
program of foreign companies, expanding general education and entrepreneurial
development, could also contributed for developing MSEs and so that to put in changing
entrepreneurs life.
The same researcher also identified different socio-economic importance of MSEs, such as
absorbing enumerable capacity of labor, providing income earning opportunities,
contributing for more equitable distribution of income, satisfying the variety of cheap
goods, less cost and infrastructural requirements of the sector to start the business,
motivating the opportunity for investments, injecting competition to the economy
constituting as center of innovation, providing various linkage, relying on indigenous
resources, flexibility to adapt to the changing market and their being seed beds to the
entrepreneurial development. (ibid.). In addition, Loop (2000:17) explained MSEs have a
significant contribution in creating employment opportunities for the poor in urban areas.
Accordingly, he estimates the percentage of people engaged in such sectors in some SSA
(Sub Saharan Africa) countries during the 1990s as 70percent of employment in Accra,
61percent in Addis Ababa, 26percent in DareSelam and 46percent in Kampala (ibid.).

The importance of MSEs for women is also unquestionable. According to World Bank
(2007), most women are not found engaged in outdoor employment opportunities in
Ethiopia. They are deprived from higher decision-making positions, equality of
inheritances, decent works and other economic activities in developing countries in general
and in Ethiopia in particular. As a result, since MSEs are started with low financial capital
and credit and have the capacity to absorb huge low-level income populations, they can
help women to have easy access to employment and be the owner of the enterprises. Their
26
income earning capacity can increase gradually and contribute a lot for their families. They
can also emerge out of their traditional roles, get ample experiences from their work places,
and further educate themselves.

The basic contributions of MSEs are also believed to be income generation and
employment creation. Liedholm and Mead (1999) have identified and summarized the
following as the contribution MSEs

1. Contribution to household income and welfare;

 Providing income maintenance for those with few options;
 Providing basis for growth in income and welfare through asset accumulation,
skill development and access to more rewarding economic opportunities; and
 Providing employment opportunities;
2. Contribution to self confidence empowerments of the individuals
 Recognition of the dignity of individuals;
 Spreading the vision, that change is possible.
3. Contribution to social change, political stability and democracy
 Through increasing confidence in local representative community based
institutions
 Through developing of individuals feelings of responsibility and participation in
governance;
 Through creating institutional structure reflect, people‟s needs and objectives.
4. Contribution of distributional or developmental objectives
 Providing new opportunities for the Poor;
 Providing new opportunities for the woman
5. Contribution to demographic change
 Through reduction of birth rate
 Through reduction in rural-urban migration

27
 2.7 Barrier towards Micro and Small Enterprises Activities

MSEs account the bulk of economic activities in most developing countries. However, they
face many critical problems such as lack of adequate infrastructures, inadequate training in
entrepreneurial management skills, lacks of information on business opportunities, social
and cultural impacts, lack of developments of appropriate regulatory structures and
excessive corruption. Geiger and Armstrong (1964:18) classified the problems of MSEs
into sociological and economical aspects.

The sociological aspects: during the 1950s and 1960s, most developing countries were in
need of money for their bid for independence from neo-colonialism and saved extensive
investment for prestige and to support their extended families rather than investing on
MSEs. The colonial powers were not also motivating the indigenous people positively and
their attitude towards the development of MSEs was not good. The extended family
system of African countries was also another problem. Whereby, the entrepreneur had
obligation to provide jobs for all their relatives and shared his outputs or income with other
members. Hence, this created both psychological and financial problems to start the
business and even profitable enterprises were closed because their capital was taken rapidly
out from the enterprises to support the extended families. Furthermore, the enterprises were
occupied by large proportion of relatives, which was beyond the economic needs of the
enterprises for labor, and employed relatives may not possess the skills necessary for
efficient performance.

The Economic Aspects: some of the economic problems of MSEs identified by Geiger
and Armstrong (1964:20) includes: inadequate saving, lack of startup capital and credits,
inadequate skill and inefficient methods of production, difficulty of finding appropriate
employees who have the appropriate training and experiences. Problems in distribution of
out puts and competition with large industries, lack of labor supply and low productivity of
labor and poor management also the other constraints. To Hallberg (2000), lack of
adequate business development services like labor management training, extension,

28
consultancy and counseling services, marketing and information services, technology
development and diffusion mechanism to improve business linkage etc. hinders the
development and effectiveness of MSEs.

Moreover, Mannan (1993) in his work identified the major constraints of small enterprises
in three broad heading:

I. Physical, economic and technical constraints, which include shortage of physical and
social infrastructures, lack of adequate finance to provide for fixed and working capital,
lack of foreign exchange, marketing problem.
II .Institutional and promotional constraints, lacks of well-formulated comprehensive
policies and institutional set up.
III. Policy constraints, lack of special policy support to small enterprises (Mannan,
1993:114). On the bases of this literature, one can see the country‟s‟ performance on the
MSEs sectors.
2.8 Countries Experience
Fielden and others (2000:62) studied barriers encountered during MSEs start up in North
West England. New MSEs encounters many barriers, which affect their success and
growth. These include lacks of investment in new business; lack of ongoing support, lack
of flexibility, and lack of recognition of their problems, there are substantial problem with
employee recruitment, lack of training, competitions etc. These problems are straightened
by lack of access to business networks (ibid).

A study focused on central Asia, Kyrgyzstan and Uzbekistan indicated two categories of
barriers faced by MSEs, internal barriers with in the enterprises themselves and the barriers
include limited own resources of entrepreneurs, limited possibilities to identify business
opportunities, lack of market economy experience, lack of understanding modern business,
weak ability to cope with risky and unpredictable market situation. The major external
barriers are inappropriate rules and norms of taxation and limited availability and rigorous
condition of credit (Huebner, 2000:29).
29
In Burkina Faso, based on the 1990 survey on MSEs there were 90,000 established micro
enterprises between 1985 and 1992 and the sector is estimated to have contributed
30percent of the Gross National Product (GNP) which exceeded agricultural sector (20-45
percent), and the modern secondary sector (23-86percent) in the same period. Moreover,
the MSEs sector employs 77percent of the non-agricultural population and 8.6percent of
the total active population of Burkina Faso (UNCTAD, 2005). Similarly, the MSEs
constitute an important segment of the Indian economy, contributing around 39percent of
the country's manufacturing out put and 34percent of its exports in 2004 and 2005. The
sector also provides employment for around 29.5 million people in rural and urban areas
(ibid).

According to Wangwe (1999:4), the economic contribution of the MSEs sector in Tanzania
was about one million enterprises engaging three to four million persons, that all about
twenty to thirty percent of the lobar force of the country. Liedholm and Mead (1999:66)
studied the contribution of small enterprises job to household and national income in
Kenya. The study was based on a nationwide stratified random sample of all types of
MSEs amounting 2,247 existing enterprises. Two third of MSEs generate returns below
the minimum wage. This indicates that though MSEs have significant contribution to
poverty alleviation, they are not sufficient to move the household out of poverty. They
contribute 20percent of all the household income and in general contribute 12-14percent of
GDP of all the country (ibid.).

In general, the development of MSEs was a very slow process in developing countries. It
was tackled by different problems in most of those countries and their socio-economic
importance was not understood until recently. In Ethiopia also similar situation have been
existed, which will be seen in the next subsection. Hence, great attention should be given to
the development and expansion of MSEs in developing countries, including Ethiopia since
they do have great potentials for poverty alleviation and achieve better standards of living
of the people.

30
 2.9. The policy Environments on
Ethiopian Micro and Small Enterprises

In post 1991, unlike the predecessors‟ regimes of Hailesellasie and the Derge, Ethiopia
exercised decentralization policy and entered into the market economy. In addition, the
country developed different policies towards poverty reduction. The Agriculture
Development Led Industrialization (ADLI) was developed to increase the productivity of
the agricultural sector and thereby forming both backward and forward linkages to the
industrial sector. It was intended to achieve rapid growth in the agricultural sector and
finally to promote and develop the manufacturing sector (MOI, 2006).

After ADLI, a Five-Year Development Strategy 2005/06 - 2009/10 named PASDEP

developed, which was focusing mainly on poverty reduction both in rural and urban
Ethiopia was developed. In this strategy, reducing the unemployment level and increasing
the income of individual were the focus areas. Hence, as an instrument, MSEs were given
great attention to achieve those objectives in urban Ethiopia (MOFED, 2006). As a result,
different strategies were developed towards the promotion of MSEs. The 1997
Development strategy document and the report of industrial development strategy of
Ethiopia were some of the outcomes of policies towards MSEs. In the document, great
emphasis was given to MSEs and enabling institutional and policy environments were
made easier and supportive to promote and expand the sector (ibid.).
Now a day in Ethiopia, according to MOTI (1997) report, great attention is given for
the development of MSEs, as they are believed they can achieve rapid development
through reducing unemployment and income inequalities and improving the living
standards of the people at large. To achieve those objectives, target sub sectors are selected
by the federal agency of Micro and Small Enterprises based on large market size,
employment absorption capacity, short period of return over investment and the high role
they play for poverty reduction. These sub-sectors include metal and woodwork, food
processing, textiles and garment, construction materials production, municipal activities,
31
Urban Agricultures and others. Hence, different stakeholders are also made to work in the
promotion of MSEs and offices are allocated up to weredas levels to provide one-stop
services to all the existing and emerging enterprises.

Moreover, according to national MSEs strategy, the Ethiopian MSEs sector is characterized
by highly diversified activities, which can create job opportunities for substantial segment
of the population. Accordingly, Ethiopia adopted its first MSEs Development strategy in
1997; the primary objective of the national strategy framework is to create an enabling
environment for MSEs. Its specific objectives include facilitating economic growth and
bring about equitable development, creating long-term jobs, strengthening cooperation
between MSEs providing the basis for medium and large-scale enterprises; promoting
exports, and balancing preferential treatment between MSEs and bigger enterprises. The
intended MSEs, support include creating legal framework, improving access to finance,
introducing different incentives schemes, encouraging partnerships, improving access to
appropriate technology, information, advice and markets, and developing infrastructure (
Gebrehiwot and Wolday, 2001 :6and 2004: 8).

The implementation of the strategy is planned to follow five stages. These are awareness
creations, needs identification and implementation planning, resource identification,
training of support agency staff and strengthening the business and entrepreneurial culture.
The strategy indicated criteria for prioritizing MSEs for support. MSES which are based on
local raw materials and labor intensive having greater inertia and inter-sectoral linkages
(particularly with agriculture), import substitution and export capacity, MSEs engaged in
activities that facilitate and promote tourism (MOTI, 1997)
In general, according to MOTI (1997) and MOI (2006), governmental bureaus, Micro
Financing Institutions, Technical and Vocational Training Centers, productivity
empowerment units, different NGOS, MSEs Councils, the project support units etc are
made to work for the promotion of MSEs in Ethiopia. As a result, it is possible to
understand from the above discussed policies that the current government is giving great
attention for the sector to alleviate the abject poverty, unemployment and to achieve better
income distributions.
32
 2.10 Problems of Micro and Small Enterprises
Activities in Ethiopia
With regard to the MSEs sector in Ethiopia, it was neglected so long. The socio cultural
and political problems were the main obstacles for the development of the sector. For
example lack of enterprise culture, lack of positive attitude towards MSEs and the out
casting of those people or group of people engaged in the sector etc. One example on the
out casting of those groups of people was the consideration of weavers and leather
producers as if they have 'evil eyes' and can kill every people other than their own groups
when they focus on immediately and as a result hindered the development and expansion of
the sector in Ethiopia(Adil , 2007: 16).

Rweyemamu (1980:18) identified that there were about 52,000 small scale and cottage-
manufacturing establishment employing about 223,000 workers in 1957 in Ethiopia.
However, those establishments were highly discouraged by those bad cultures towards
enterprises. Their importance for poverty alleviation was not well recognized. It was after
1980s that the importance MSEs for poverty alleviation, improving production,
empowering people and reducing unemployment had been getting betters attentions than
ever before.

In the 1990s, after the adoption of decentralization and market economy, the private sectors
including MSEs, were provided promotional support by the Ethiopian government. The
already existing MSEs as well as the emerging ones were indiscriminately encouraged. As
a result, many NGOs were diverting their interest from relief activities and tried to support
grass root developments of enterprises to stimulate their growth and expansion (Getachew
and Getachew, 1997:157). Because of those supporting measures, the 1996 /97 survey of
CSA showed that the number of MSEs reached about 590,000 in the country, of which
99.4percent were micro enterprises (CSA, 2003).

Although MSEs accounts for 99.8percent of the total establishments employing 94.7percent
of the workers, like other developing countries, the sector in Ethiopia faces critical
problems and challenges both at the operational and startup levels (Assefa, 1997:108 and
33
Andualem, 1997:8). Andualem (1997:10) stated the problems on MSEs in Ethiopia both at
the existing and emerging enterprises. Some of these include lack of access to financial
capital and credit, problem of raising investment capital, lack of sufficient loan, funds.
Facilities like access to premise and land, considerable insecurity on business owners.
Concerning location and acquiring of lands that are not suitable to get easy access to
markets, lack of training on entrepreneurial and management skills, training institutions
and centers, infrastructures, sufficient market and market linkage and promotional
supports, business information, specific national policy to enhance the development of the
sector and problems on the education system. He also added entrepreneurs face the socio
cultural constraints such as enterprise culture, lack of positive attitude towards the sector,
excessive Corruption and lack of business cooperation among enterprises.

Similarly, the Trade and Industry Bureau of Addis Ababa (2005) conducted an assessment
survey in 2002 on 11,000 enterprises and identified problems like lack of working place for
production and marketing, shortage of credit and finance, regulatory problems, poor
production techniques, input access constraints, lack of information, inadequate
management and business skills, inadequate training and absence of appropriates strategies.

Though MSEs face many problem like mentioned above; they have economic, social and
political significances that they need special attentions to make them efficient and so that
they may contribute a lot for development endeavors of developing countries in general
and in Ethiopia in particular. Needless to say, MSEs have great potential to achieve the
desired development and to alleviate poverty and unemployment. They do have the
capacity to increase the level of income of individuals and to improve the living standards
of the larger poor because they need low start up capital and their potential to absorb the
huge proportion of the uneducated or the low educated work force, which is the reality in
the poor countries like Ethiopia.

34
In conclusion, MSEs are important means in poverty alleviation through employment
creation and income generation for low-income groups with limited opportunities, which is
the focus area of the study that the research will discuss and analyze further in the
following chapters.

2.11. Conceptual Framework of the Study

Through reviewing the previous works, the researcher attempts to develop a conceptual
framework for this study. The variables that this study focused on are the MSEs role to
generate income and employment opportunities for the poor so as to alleviate their abject
poverty. Start up and Working capital are among the factors that will have an influence for
the sustainable performance of MSEs in different sectors so as to reach to the needed
outcomes. Further more if the outcomes of MSEs achieved positively, the enterprises under
study will expand, diversify their product and may finally transform themselves to medium
and large enterprises. This is shown in the following diagram.

35
 Conceptual framework of the study which indicating the role of MSEs in alleviating poverty of the poor in different sectors

Factor affecting the role of MSEs

Start up Capital

Working Capital
Outcomes
 MSEs‟ Profit increased
 Saving increase Prospects
Production/ Market place  Participants‟ Income Increase Intended objectives of MSEs strategy
 MSEs‟ Capital increase Will be achieved
 Employment Opportunity  Expansion of the Enterprises
enhanced  Improvement in productivity
 Quality of life of the  Diversification in production
Market Linkages
Participants improved( access  Transformed into medium and
to basic needs will be getting large enterprises
better like food , education
,health and other facilities. )
Interest Rates etc

(Source: own drawing, 2010)5

5
by summarizing the whole literatures in the preceding sections, 2010)
36
 CHAPTER THREE
3. Research Methodology
3.1. Research Design and Procedure

The Study was designed for investigating the contribution of Micro and Small Enterprises
in alleviating poverty in Gulele sub city. The study employed qualitative and quantitative
approaches to capture the in-depth and wider data and information for a thorough analysis
and understanding of the role of MSEs in alleviating poverty.

Qualitative approach has involved methods such as Focus Group Discussions (FGDs) and
Key Informant Interview (KII) while quantitative approach included survey questionnaires.
The target population has been the other members of the enterprises and
Managers/Operators, who are engaged in MSEs of Gulele sub city. The required data for
the study were collected through primary and secondary sources by using different
techniques.

3.2. Data Types and Sources

3.2.1Types of data

Quantitative and qualitative data were collected from different sources through various
methods. Primary as well as secondary types of data were gathered for the analysis of the
study. The importance of collecting and considering primary and secondary as well as
qualitative and quantitative data was used to triangulate and supplement the diverse data
generated from different sources which in return is used to make the data and the result of
the research reliable.

37
 3.2.2 Data sources
In order to gather reliable information, both primary and secondary sources were
employed. The data were collected primarily from first hand sources through interviews,
questionnaires and focus group discussions to achieve the objectives of the study. The
secondary data sources were gathered from official statistical sources (like- MOFED, CSA,
MSEDACA, MSEDOSS, publications and municipal documents), books, journals, internet
sources, research findings of various scholars on the topic under investigation, and other
publications.
3.3. Sampling Procedures
Both probability and non-probability sampling methods were employed in the sampling
and selection process. Simple random sampling was applied as a typical method of
probability sampling technique to select MSEs and other members of the enterprises as
respondents while purposive sampling methods was used as a key non-probability
sampling tools in selecting the sub city , Woredas and Managers/Operators of the selected
MSEs in the study area.
3.3.1 Selection of Sub City
There are ten sub cities in Addis Ababa. Among these, Gulele sub city is selected for the
study purposively. The reasons for selecting Gulele sub city for this study is there are more
MSEs in this sub city6 than the rest nine sub cities, that is why the researcher select this
sub city as a study area purposefully.
3.3.2 Selection of Woredas

There are ten Woredas7 in Gulele sub city, Five Woredas are selected purposely. The
researcher decided to select the five Woredas i.e. Woredas – 01,03, 07, 08, and 108- for the
reason that these Woredas incorporated more than 65% ( 486)9 of the total MSEs of the sub
city, which are 73810. Hence, these Woredas could be a good representative for analyzing
the role of MSEs in alleviating poverty of the participants of MSEs of the sub city.

6
See Annex V
7
See Annex XII
8
See Annex XIII
9
See Annex VI
10
See Annex V for more information.
38
 3.3.3 Selection of MSEs and Respondents

With in each selected Woredas, there are six sectors of MSEs. These are: Food processing;
Textile and Garment; Wood and metal works; Construction; Urban Agriculture and
Municipality Services. With in these six sectors, there are a number of MSEs in each
Woredas. The researcher in this regard tries to take proportional number of MSEs from
each Woredas and sectors. In the same way, the researcher established the sampling frame
for selecting the sample respondents based on the selected MSEs by taking the complete
list of registered MSEs in different sectors from MSEs development office of the sub city.
And finally men and women Managers/Operators as well as other members of the
enterprises who are take part in selected Woredas’ MSEs were taken as respondents.
Accordingly, as shown in table 3.1 below, a total of 48(i.e. 10% of the total 486 MSEs of
the five woredas) MSEs were selected from the five Woredas through simple random
sampling method.

Following the total number of MSEs found in the selected Woredas was known, the total
sample size was determined based on the established sampling frame of the six selected
sectors. In this study, therefore, 15% of total other members of the enterprises (656) of the
selected sample MSEs i.e. 99(57 male and 42 female) other members of the enterprises and
48(26 male and 22 female) Managers/Operators11 were taken as the sample size of the
study by applying purposive and simple random sampling technique respectively.

Consequently, the total sample size was 147 (83 male and 64 female) respondents i.e. 51
from Woreda 01, 32 from Woreda 03, 9 from Woreda 07, 33 from Woreda 08 and 22 from
Woreda 10. As can be seen in the annex VII, the total sample size was again distributed
into the sample MSEs Proportional to the total size of respondents in each sector.

11
As the researcher observe there is one Manager/Operator in each MSEs
39
 Table 3.1: Distribution of Sample MSEs and Respondents by Woredas
Total Numbers of participants of the sample

member

enterpri
Size for
Sample

s of the
Total Numbers of

MSEs13

Other

ses(15
Sample Size for

%)
MSEs(10%)
Manager /Operators Other members of the
Woredas

MSEs12

enterprises

Female

Female

Female
(15%)

(15%)

(15%)
Total

Total

Total
Male

Male

Male
01 139 14 8 6 14 144 102 246 22 15 37
03 121 12 7 5 12 78 54 132 12 8 20
07 44 4 2 2 4 22 15 37 3 2 5
08 102 10 6 4 10 93 58 151 14 9 23
10 80 8 3 5 8 43 47 90 7 7 14
Total 486 48 26 22 48 380 276 656 57 42 99
(Source: Own Survey, 2010)

3.4. Data Collection Methods and Tools

The primary and secondary data comprising quantitative and qualitative data information
were collected through variety of methods and tools. The ways these data were gathered is
described as follows
3.4.1 Primary Data Collection
Primary data are first hand data collected from primary sources. In this study, primary data
were collected from sample households, focus groups and key informants. The primary
data can be either quantitative or qualitative. The researcher has collected the primary data
at the time of field survey. Questionnaires, FGDs and KII were the most important
methods used to collect the primary data.

To collect necessary information from the sample population, sample survey was carried
out using questionnaire. One set of questionnaire containing both open-ended and close-
ended types were designed and administered to a total of 147 (48 managers /operators and
99 other members of the enterprises. Initially the questionnaires prepared in English but it
was translated in to Amharic, the local language to make the questions simple, clear, and

12
See Annex VI
13
See Annex VIII
40
understandable to respondents. The survey was also conducted through face to face
interview between the respondents and interviewer. Of course, the pilot test (pre-test) was
conducted prior to the survey. This has helped the researcher to see whether there were any
difficulties in relation to questionnaire and to modify based on the feed back of the pre-test
or to check the reliability and validity of the data that the researcher collected.

The other data collection method that was used in this research is KII which is used to
collect qualitative data. The information gathered through KII was used to triangulate and
complement the data collected through other methods. Individuals with better knowledge
and experience about the role of MSEs in the study area were selected and contacted to
obtain the relevant data. In this study the Key informants were MSEs officials of the
Woredas‟ and the sub city as well as the agency‟s officials. The researcher was a facilitator
for KII activity. Open-ended discussion was undertaken to gather the required information
from the informants. Checklists were developed and used to guide the interview.
FGD is also one of the methods used to collect qualitative data. In this study, FGD was
under taken from the six sectors. Two FGDs were held in the study area. The criteria to
select these members were their better understanding and experience about the MSEs in the
area. With respect to the size of the group members, six individuals from each sectors were
participated in each group. Check lists were prepared to guide the open ended discussions.

3.4.2 Secondary Data Collection

The secondary sources of data were gathered from official statistical resources (like-
MOFED, CSA, MSEDACA, MSEDOSS publications and municipal documents), books,
journals, project reports, proceedings, internet sources, research findings of various
scholars on the topic under investigation, and other publications.
3.5. Data Analysis
For analysis of the data both quantitative and qualitative methods were employed.
Quantitative data generated from the survey questionnaire were analyzed using Microsoft
Excel programme. Descriptive statistics like frequencies, percentage, and average and cross
tabulation were applied to facilitate meaningful analysis and interpretation of research
findings. The results of processed data were presented in tables. Qualitative data obtained
through FGDs and KII were analyzed through descriptive method of analysis.
41
 CHAPTER FOUR
4. Data Presentation, Interpretation and Analysis
INTRODUCTION

Under this chapter, the data collected through different data collection methods and tools
are discussed and analyzed carefully in order to show and assess the role of MSEs in
alleviating poverty at household level in the study area.

The survey was conducted through face to face interview between the respondents and
interviewer in the sampled five Woredas’ MSEs of Gulele sub city. The questionnaires
consisted of 45 identical questions for Managers/ Operators and other members of the
enterprises together and 4 extra questions also forwarded to Managers/Operators. As the
researcher indicated in the methodology in the preceding chapters, primarily the
questionnaires were prepared for 147 respondents who are take part in 48 MSEs i.e. to 99
other members of the enterprises and 48 Managers/Operators. However, Out of 147
questionnaires, only 105 (71.43%) questionnaires could be filled, i.e. 31(64.58%) of the
Managers/Operators from the 31 MSEs and 74(74.75%) of the other members of the
enterprises.

With regard to the information gathered through FGDs and KII also used to triangulate and
complement the data collected through questionnaires and other methods. In this study the
Key informants were MSEs officials of the agency‟s, the sub city‟s as well as
Woredas’officials. FGDs were under taken from the six sectors. Check lists were prepared
to guide the open ended discussions for both the interviewees and for participants of FGDs
related to the questions that were raised for managers/ operators and other members of the
enterprises. The data presentation is done in such a way that the response questions and
data are grouped according to the respective research questions. In view of that, the
responses are presented as follows.

42
 4.1 General Information about the Respondents
In this section, the study provides details of the age, marital and educational status,
and family size of other members of the enterprises and Managers/Operators and also their
former jobs before getting into MSEs activities and duration of stay in the sector are
discussed and presented which is relevant for the current livelihood of the respondents.

4.1.1 Age of Respondents

Regarding the age structure, 46(44%) of respondents were found in 20-29 age
categories while 33(31) % of the respondents were found in the range of 30-39 years age
group. Age groups 40-49 and 50 and above years constituted 17(16%) and 9(9%) of
respondents, respectively. The majority of the respondents or more than 90% (96) were
found in the age range of 20-49 years and the remaining less than 9 (10%) of respondents
were found in the age range of 50 and above years. This result shows that the active
sections of the societies of both sexes are benefited from the MSEs sector which is the
main objective of the MSEs and urban development strategies (MOTI, 1997, MOFED,
2006 and MWUD, 2006)., in other words, the finding of this research indicate that the
MSEs accommodate the most active and productive age group of poor people as shown in
table 4.1 below.
Table 4.1 Age of respondents and Percentage

Age group Frequency Percent

20-29 46 44
30-39 33 31
40-49 17 16
50and above 9 9
Total 105 100
Source: (Own Survey, 2010)

Moreover, the results of the survey also indicated that 52(49.52%) of the respondents are
women, while 53(50.48%) are males. This indicates that MSEs offers good opportunities to

43
the women, as they are deprived from the other sector employments. But in the sampled
MSEs sector higher percentage of managerial / operators‟ posts are held by the males.

4.1.2 Marital Status of Respondents

Table 4.2 Material Status of Respondents
Material status Frequency Percent
Single 47 44.76
Married 51 48.57
Divorced 2 1.91
Widowed 5 4.76
Total 105 100
(Source: Own Survey, 2010)

With respect to marital status, Table 4.2 shows that out of the 105 respondents in the
selected enterprises, 51(48.57%) of the respondents are married while 47(44.76%) of
respondents are single. The divorced and widowed sample respondents accounted for about
2(1.91%) and 5(4.76%) respectively. Hence, these figure shows that most proportions of
married and single women and men are able to participate in MSEs, and the sector is
capable of absorbing both single and married individuals indiscriminately and is increasing
their income.

4.1.3 Educational Status

Most employment opportunities in the governmental and non governmental offices require
higher educational status and set this criterion on their vacancies as one of the most
important requirements. Hence, the possibilities of finding a job for those who are illiterate
and unable to graduate from high schools, Colleges or Universities are very difficult.
However, as explained earlier in the preceding chapters those problems can be lessened
with the help of MSEs since most of the activities in the sector need not required a special
skill and knowledge. Therefore, those groups of societies are also beneficences from the
sector. This fact is revealed in the following figure.
44
 Fig. 4.1 Educational level of the respondents

27.62%
30 25.71%
25 20%
20 15.24%
15
7.62%
10 3.81%
5
0

(Source: Own Survey, 2010)

As indicated in Figure 4.1, Managers/Operators and other members of the enterprises of the
enterprises are found in different levels of education status. Of the 105 respondents,
27(25.71%) of respondents can only read and write without attending formal education.
These respondents obtained the reading and writing skills through either adult literacy
campaigns and/or from religious institutions. Further more; about 16(15.24%) of sample
respondents were illiterate. As can be seen from the figure, 29(27.62%) and 21(20%) of
sample respondents have completed primary and secondary level of education,
respectively, where as 8(7.62%) of respondents got certificates and 4(3.81%) has diploma
level education. This implies that most of the respondents 72 (68.57%) attended elementary
level education or did not attend any formal education while the remaining 33(31.43%) of
respondents attended secondary level education or above however, none is attending more
than a diploma.

Hence, from the educational levels of other members of the enterprises and managers/
Operators of the enterprises, it is possible to generalize that large proportions of the
participants in MSEs are those who completed their secondary school education but could
not continue their education further in colleges or Universities and those who could not join
in secondary schools. The other benefiting groups are below secondary schools and those
45
who can only read and write. In general, these are also groups of the populations who are
unemployed in governmental and nongovernmental offices. On the other hand, those who
have more than diploma and the literate ones are not found beneficiaries from MSEs. This
may be due to the fact that those who have educational level of diploma or above may not
be interested to participate in such activities, rather, to search for another job on their
professions in governmental and nongovernmental offices, while, the other group who
attended lower than diploma level educations are eager to incorporate in MSEs sector, may
be due to lack of adequate professional skills to involve in formal job market.
4.1.4 Family size sample respondents
A family size seems an important factor in determining poverty along with other
features such as educational status and health situation etc. Accordingly, in the study area,
the data as shown in table 4.3 below the respondents have different household sizes. The
respondents, who have 5-8 family members, accounts for 54(51.43%). About 20(19.05%)
and 6(5.71%) of respondents reported that they have 8-11 and more than 11 family
members, respectively. The proportions of respondents who have five or more family
members were 80(76.19%) and those who have four and below family members were
25(23.81%). This implies that most of the sample respondents have large family size
compared to average family size of the sub city (4.2) which is stipulated in the 2007
Population and Housing Census of Ethiopia(CSA,2007). This might be due to the limited
information that the respondents might have had about family planning services. Large
family size coupled with low-income may expose them for more family burden and
aggravates socio-economic problem such as poverty and unemployment.
Table 4.3 Family Size of the Sample Respondents
Family size interval Frequency Percent
1-4 25 23.81
5-8 54 51.43
8-11 20 19.05
More than 11 6 5.71
Total 105 100.0
(Source: Own Survey, 2010)
46
 4.1.5 Respondents’ Job before Joining MSEs

The main objective of MSEs is to alleviate abject poverty through creating job
opportunities by increasing the income level of the poor. Thus, the role of MSEs should be
seen with respect to employment creation and poverty reduction.

Table 4.4 Job of Respondents before Joining MSEs

Job Types Frequency Percent

Daily laborers 10 9.52
Working unpaid family business 2 1.91
Student 30 28.57
Employed in similar business 15 14.29
Unemployed 48 45.71
Others - -
Total 105 100.0
(Source: Own Survey, 2010)

The survey result shows in table 4.4 that, 48(45.71%) of respondents in the enterprises
were unemployed before joining to their respective enterprises. Similarly, 30(28.57%) and
2(1.91%) of respondents were students and working in unpaid family business respectively.
It was only 15(14.29%) who were other members of the enterprises in a similar business
activities. In general, the figure indicate that MSEs are important instruments to absorb the
unemployed labor force, and for those students who are unable to complete their educations
either in high schools or colleges/Universities. Hence, MSEs can primarily benefit poor
who are unemployed and can bring development through improving their income and then
adjusting income distributions in the economy.

47
 4.1.6 Respondents Duration of Stay in their Respective MSEs
Table 4.5: Duration of stay in MSEs
Duration of stay in Years Frequency Percent
1-2 35 33.33
3-4 44 41.91
5-6 26 24.76
Total 105 100.0
(Source: Own Survey, 2010)
Concerning duration, as table 4.5 indicated , 35(33.33%) of respondents reported
that they have been involved in MSEs for in the range of one to two years and 44(41.91%)
of respondents said that they have been in MSEs activities for about three to four years.
The remaining 26(24.76%) of respondents reported that they have been in MSEs for a bout
five to six years. Respondents, who stayed in MSEs for long period of time, may imply that
they were benefiting from MSEs and hence stayed in this business.
4.2 Capital and Income Conditions of Micro and Small Enterprises and the
Respondents
4.2.1 Initial and Current Employment and Capitals of Micro and Small Enterprises
and year of Establishments
As annexed table X, shows the initial and current employment and capital of the sampled
enterprise with the year of establishments. Accordingly, only 10 of the enterprises showed
increments in their employment numbers while 18 enterprises did not showed any change.
On the other hand, 3 enterprises also showed a decline in its employment number. In
general, the net increase of the employment number is by 4 workers from the 31
enterprises. This increase is not as much significant when compared with the increase in
their income. This is due to the fact that (as different level officials of enterprises indicated
during the interview), in the development of MSEs, those who are organized legally to
work in the enterprises are not encouraged to employ others, rather to run their own
enterprise by themselves in order to earn more income. As the officials further explained,
the reason is just to promote creativity, efficiency and productivity of the participants who

48
set up the enterprises as the efficiency and productivity of workers is better when they
work for themselves.

Regarding to the income, 11 enterprises, indicates that there is no change in their initial and
current capital since they are at infant stage. In contrary to these, 17 enterprises showed an
increase in their income. The rest 3 enterprises shows declined in their income, one from
food processing sector and the remaining two are from the textile. The initial capital of the
31enterprises is 181,458 Birr; while, this figure increased to 695,972 Birr i.e. a net sum
total increase of 51,4514Birr. Similarly, the mean or average increase of income of the
enterprises is changed from 5,854Birr at initial stages to 22,451Birr during the survey time
which shows the MSEs increase the income of the participants to more than threefold.
Therefore, these reveals that the potentials of MSEs to raise the income of the people.

In relation to years of establishments of enterprises, as indicated in the same table, 15

enterprises are established in the year 2003/04 and 2004/05. Similarly, in the years 2005/06
and 2006/07, 6 enterprises are established and 10 enterprises in the years 2007/08 and
2008/09. Hence, it is possible to conclude that although most of the surveyed enterprises
are 2- 5 years of old they are able to change the income of respondents positively which
will discussed further in the next section.

4.2.2 Income of Respondents

4.2.2.1 Respondents Income before Joining MSEs

In order to see the contribution of MSEs in changing the income, it is very essential
to assess income of the respondents before and after their involvement in MSEs. The
following table shows the condition of respondents‟ monthly income before joining MSEs.

49
 Table 4.6: Monthly Income of Respondents before Joining MSEs

Income interval in birr per month Frequency Percent

< 100 9 8.57
101 - 300 12 11.43
301 - 600 4 3.81
> 600 2 1.91
I did not have any 78 74.28
Total 105 100.0

(Source: Own Survey, 2010)

As observed from table 4.6, about 21(20%) of the respondents earn Birr 300 or less before
joining MSEs. Where as 4(3.81%) of respondents reported that their monthly income was
with in the range of birr 301 - 600 and 2(1.91%) of respondent earn above Birr 600. The
remaining 78(74.28%) of respondents had no income at all since they were students and
unemployed. Only 6 (5.72%) of respondents earn more than Birr 300.

4.2.2.2. Respondent's Income after joining MSEs

As indicated in table 4.7, of the total population 15(14.29%) of respondents

reported that their monthly income after joining MSEs has highly increased, and
51(48.57%) of respondents reported that their monthly income after joining MSEs has
increased. On the other hand, 27(25.71%) of respondents reported that their monthly
income still remained the same after joining MSEs as it was before. The remaining
7(6.67%) of respondents reported that their monthly income has decreased and 5(4.76%) of
them said their income is highly deceased. This implies that MSEs are contributing much
in increasing participant‟s income after joining the sector though not for all.

50
 Table 4.7 Respondents Income after joining MSES
Monthly income after joining MSEs Frequency Percent
Highly increased 15 14.29
Increased 51 48.57
No change 27 25.71
Decreased 7 6.67
Highly Decreased 5 4.76
Total 105 100
Reasons for income increment
Expansion of existing enterprise 11 16.67
Purchase of inputs at cheaper price 4 6.06
Because I have my own extra income 5 7.57
Because of MSEs 46 69.7
Total 66 100
Reasons for income decreased
Because of loss 2 16.67
Personal problem 7 58.33
Lack of resources 1 8.33
Because of low income 2 16.67
Total 12 100
(Source: Own Survey, 2010)
As indicated in the table 4.7 another question was designed to gather information as to why
their monthly income had increased for those who said their monthly income has increased
or highly increased. According to the responses, it was found that expanding the previous
income generating activities; buying inputs at cheaper price, starting new income
generating activities in MSEs were the major reasons which play significant roles in
increasing their average monthly income. Out of the total respondents whose income had
increased or highly increased, the majority 46(69.7%) reported that the reason for their
income increment was due to starting of new income generating activities in MSEs and
51
only 5(7.57%) said that they have extra income other than MSEs . The other respondents
which constitute 11(16.67%) and 4(6.06%) of respondent replied that expanding their
existing business and purchases of inputs at cheaper price were reason which brought
increments on their average monthly income after involving in MSEs.

On the other hand the other group found that their average monthly income has
decreased. They mentioned the following reasons, again as shown in the above table, for
the failure in their average income, out of the total respondents, 7(58.33%) replied that this
is happened due to their personal problem, like they did not take the MSEs seriously as the
basic means of their livelihood, was the factor for the deceasing of their income,
2(16.67%) and 1(8.33%) of respondents reported the reason as lose of initial capital and
lack of raw materials were the significant factors affecting their monthly income
respectively, the remaining 2(16.67%) of the respondents explained that lack of resources
brought adverse effect on their monthly income.

The respondents were also asked if their income from the enterprises is sufficient to cover
their family expenses. Accordingly, 34(32.38%) are indicating that it is not sufficient to
cover their costs; while, for 71 (67.62%) of respondents their income is sufficient. In
addition, they were asked whether the job improves their living conditions, 68(64.76%) of
the respondents replied that it has improved due to their employment in the enterprises
while the rest 37(35.24%) responded as there is no such improvements. In general, it was
investigated that most of them were responding that their living conditions has improved
while their income is not sufficient to cover their family expenses or demands. One of the
reasons for this may be due to the inflation that occurred all over the country in the year
2008/09 which was reached 64% on average (CSA, 2009)

52
 4.3Micro and Small Enterprises Role in Improving the Quality Of Life of
Managers/Operators and Other members of the Enterprises

In this section, the contribution of MSEs in changing the economic conditions of

the respondents is discussed, i.e. whether they could fulfill their basic needs and other
demands by comparing their status before and after involving in MSEs sector. Because
improvement in relation to living situation could be used as an indicator of MSEs role in
this study.

4.3.1 The Role of Micro and Small Enterprises in Improving the Living Condition of
Managers/Operators and Other Members of the Enterprises
This study attempts to explain the role of MSEs on improving the living conditions of the
respondents. In this part, the influences of income from enterprises on the living conditions
of Managers/Operators and other members of the enterprises are assessed based on the
actual data collected from the surveyed enterprises.
It is known that saving is the most important parts of any business activity. It enables the
participants to invest in the future and acquire appropriate return. It also solves the
problems occurred in one‟s business or to avert individual problems. Hence, respondents
were asked whether they are saving or not. As a result, 49(46.67%) of the respondents
found that they are saving their extra income, however, 56(53.33%) are not. This indicates
that most Managers/Operators and other members of the enterprises have been developing
the habit of saving even if their enterprises are too young to be profitable enough for
accumulation of extra capital. On the other hand, more than half of the Managers/Operators
and other members of the enterprises are not saving. This may be due to expenditures on
their enterprises to full fill machineries and other working equipments or infrastructures.

In addition, respondents were asked the sources of their saving. As it indicated in table 4.8,
45(91.84%) out of 49 respondents are saving from the income gained from their respective

53
enterprises, while only 2(4.08%) from their previous incomes. Those who saved from the
income of their relatives and the lenders are only 1(2.04%) each. Hence, this fact also
indicates the potentials of MSEs in increasing the income of individuals working in the
enterprises and their contributions for alleviating poverty in the study areas.

Table 4.8: The Sources of Saving Of the Respondents

Where is the source of saving Frequency Percent
Income from MSEs 45 91.84
Income from previous business 2 4.08
Borrowed from lenders 1 2.04
Income from relatives 1 2.04
Total 49 100
(Source: Own Survey, 2010)

Regarding their saving places, respondents were asked where to save their money.
According to table 4.9, 36 (73.47%) save their money in formal banks like commercial
Banks of Ethiopia, Dashen Bank, Wogagen Bank etc, while only 12 out of 49 in MFIs. One
respondents was found saving at home
.Table 4.9 Saving Places of Respondents
Saving place of respondents Frequency Percent
In MFIs 12 24.49
At home 1 2.04
In formal Banks 36 73.47
Total 49 100
(Source: Own Survey, 2010)

Generally, it is possible to conclude that many of the respondents are saving in formal
Banks which show that they have no either confidence and much trust on MFIs or MFIs
are not working closely with MSEs and most are not saving in the traditional methods like
at homes.

54
According to figure 4.2, an attempt was made to know the reasons why the respondents
were saving. As a result, 15(30.61%) were saving for safety purposes and 9(18.37%) for
the purpose of expanding the existing business.

Similarly, 11(22.45%) of the respondents were saving to buy machineries and other basic
household items and 8(16.33%) for ceremonial purpose. On the other hand, the least
6(12.24%) of respondents was saving for loan repayment. Generally, it is possible to
conclude that the highest proportion of the saving (for safety purpose) indicates that the
respondents are at good positions because they are already thinking for their future safety.
This is, on the other hand, the indication of the improvement of their income and shows the
potentials of MSEs to alleviate their poverty.

Figure 4.2 Respondents purpose of Saving

30.61%

22.45%
18.37%
16.33%
12.24%

For safety To buy To expand the For ceremonial Loan

purpose machinery or existing services repayment
basic business
household
items

(Source: Own Survey, 2010)

Variation in the trend of expenditures in the households of the respondents can be used to
indicate the increase or decrease of the capacity of the households to pay for different
items. Usually, their capacities to spend on different items indicate the increase in income
among the households. Hence, it is attempted to assess the contributions of MSEs, on
improvements on those expenditures on the following table.
55
 Table 4.10 Expenditures of the Respondents on different basic items after involving in
Micro and Small Enterprises

Your capacity for Expending for the following items after

joining MSEs are
Expense items of the household Increased Decreased No change at all
Frequency Percent Frequency Percent Frequency Percent
Food expense 46 69.7 14 21.21 6 9.09
Schooling expense 41 62.12 0 0 25 37.88
Clothing expense 61 92.42 0 0 5 7.58
Health expense 18 27.27 0 0 48 72.73
(Source: Own Survey, 2010)

As it shown in table 4.10, the majority of respondents 46(69.7%) reported that there is an
improvement in relation to food in take and / or expense. Similarly most of respondents
41(62.12%) and 61(92.42%) reported that there is an increase in relation to clothing and
schooling expense respectively. On the other hand, the survey data indicated that even
though there was an increment in their income, with regard to the expense in relation to
health care 48(72.73%) of respondents responded that their access to health facilities has
not been changed. Therefore, the findings revealed that there is an improvement in the
quality of life for the majority of respondents as a result of increment in their income from
their activities in MSEs.
This issue was discussed further in different FGDs with Managers/Operators and
other members of the enterprises in different sectors of MSEs. The majority of the groups
assert that MSEs have different advantages in changing their economic conditions, for
example, the respondents from different sectors explained that there is a drastic change in
their income they earned from MSEs and this in return could spend more on their basic
needs like for health, food, schooling and for other items which was difficult for them to
get the money for spending prior to get involved in the sector. In other words, the sector
has contributed a lot for the development of the income level of the participants. Hence,
the aggregate effect of the MSEs is that it helped to generate income, which they use to buy
56
fixed and consumable items for their family and enables them to adapt a culture of saving

In general, to proof where the real sources of money for all the above expenditures,
respondents were asked if they borrowed from somewhere to satisfy their needs or not and
it was found that 96(91.43%) were indicating that they are not borrowing money in order to
satisfy their needs. Hence, it is possible to say that the majority of the income of the
respondents increased after involving in their respective enterprises. This increase in
income may be affected by the inflation; however, the fact is still strong because even if
there was inflation, their capacity of resisting those inflations is the result of increase in
income of individuals from MSEs, as far as they are not borrowing money to satisfy their
needs from somewhere.

An attempt was made to identify that respondents have faced food shortage before and after
engaging in their respective enterprise, this information is important to know the previous
and current living conditions of the respondents. The result shows that about 67(63.81%)
respondents were experiencing food shortages in their families before joining their
enterprises, while 48(45.71%) of 105 did not. However, after joining the enterprises, only
23(21.90%) of 105 respondents are still experiencing the problem while 82(78.1%) are able
to guarantee their daily food needs both to their families and for themselves.

Generally, it is possible to say that rapid decline in the number of persons who have been
experiencing food shortage before joining the enterprises is the result of increase in their
income due to their being involved in the micro and small enterprises. Here, it is also vivid
that the contributions of MSEs in improving the living conditions of the poor are very
crucial. Those who encounter food shortage before and after joining the enterprises were
also asked about the solutions they took during the shortage. As a result, of the 230
responses given, 68(29.57%), 56 (24.35%) and 51 (22.17%) are forward the solutions like
, cut the down amount of each meals , cut down the number of meals and looking for a
paid work respectively, as shown in table 4.11 below.
57
 Table 4.11 Responses Given By the Respondents as Measures to Food Shortage
Frequency of responses Percentage of
Items
for the items responses
Cut down number of meals 56 24.35
Cut down amount of each meals 68 29.57
Borrowing from relatives or friends 45 19.57
Looking for paid work 51 22.17
Looking food aid 1 0.43
Loan from money lenders 9 3.91
Total 230 100
(Source: Own Survey, 2010)

In the same table, choices like borrowing from relatives or friends ,loan from money
lenders and looking for food aid are responded 45(19.57%),9(3.91%) and 1(0.43%) times
respectively. Generally, the frequencies of the choices indicate that in times of food
shortage the major solutions taken are cutting down number of meals and declining the
amount of food for each meal. The next major solution taken is looking for paid work. This
indicates that it may be because of lack of jobs in other employing sectors (before joining
the enterprises) that most performed either to cut down or decrease the amount of their
meals instead of searching for a paid work.

The housing condition of the respondents is one of the indicators of their living conditions.
Accordingly, table 4.12 shows 67(63.81) are living in Kebeles’ houses which have usually
small rents. On the other hand 20(19.05%) are living by rented houses from private house
owners. The rest 13(12.38%) and 5(4.76%) of respondents have their own house and
inherited from their families respectively.

58
 Table 4.12 Ownership of the Houses of Respondents’
Ownership of the house Frequency Percentage
Private 13 12.38
Rented from kebeles 67 63.81
Rented from private house owners 20 19.05
Inherited house 5 4.76
Temporary shading 0 0
Total 105 100
(Source: Own Survey, 2010)

In general, most of the respondents are living in kebeles’ houses and rented from private
house owners and only few have their own houses. This indicates that MSEs are absorbing
and benefiting low income populations with having no houses. In other words, most
participants of MSEs are poor and they do not have their own houses.

The respondents were also asked about the quality improvements of their houses after
joining the enterprises and it was found that 80(76.19%) of them are indicating the quality
of the house they are living is showing improvements; however, 25(23.81%) have indicated
their houses are not improved. Hence, this development is due to their income from the
enterprises which increases their capacity to pay for the rent and to improve the quality of
their houses. Hence, from this fact it is possible to say that the capacity of increasing in
expenditure for housing may be due to the increase in income of enterprises and this in
return shows MSEs potentials for the increasing of the income of the participant to spend
on their houses.

In addition, data was collected from each respondent about the existence of different
facilities like: kitchen, toilet, bath room and household durables are shown in table 4.12,
out of the 105 respondents, only 36 (34.28%) have their own kitchen while 69(65.72%) use
shared kitchens. Similarly, 58(55.24%) out of 105 respondents are using shared toilets,

59
while the rest 47(44.76%) have their own and only 63 respondents out of 105 have bathing
rooms i.e. 52 have shared while 11 own private. Those who have houses equipped with
basic housing facilities like chair, table, TV, radio, etc. are 67 out of the 105respondents.

Table 4.13 Housing Facilities of the Respondents

Existence of facilities Responses
Kitchen (private) 36
Kitchen (shared) 69
Toilet (private) 47
Toilet (shared) 58
Bathing room (private) 11
Bathing room (shared) 52
Housing durables live char, TV, Radio etc 67
(Source: Own Survey, 2010)

Hence, it is possible to say (table 4.13) that the majority of the respondents who are
involved in MSEs are low income groups almost with low housing basic facilities. As a
result, the contribution of MSEs to increase the income of the poor is a paramount
importance and can help for alleviating the level of poverty in a population. It was also
attempted to know the improvement of the housing facilities of the respondents, the low
risk of shortage of facilities before, the increase of income of the respondents and if they
have fear of losing their enterprises due to different problems. Accordingly, 82(78.09%)
respondents indicated that their housing facilities have improved after joining the
enterprises, while 23 (21.91%) responded their facilities have not shown any
improvements. In addition, they were asked if they have low risk of shortage of facilities
before joining the enterprises. Hence, 97(92.38.2%) indicated that they have low risk after
they involve in MSEs sector.
Generally, from all the above results, it is possible to say that the contribution of MSEs in
the improvement of the living conditions of either managers/ operators or other members of
the enterprises of the enterprises is significant. This, on the other hand, shows the
60
contribution of the sector for poverty alleviation. In addition, the results of the FGD and
interview also support the role of the enterprise to reduce poverty in the study area.
In the surveyed enterprises it is attempted to investigate the conditions of the participations
of the school age children of the respondents in the formal education. With regard to the
question that inquiring are the number of your school age children attended schools after
involved in MSEs sector increased or not , 72(68.57%) of the respondents respond that the
number of their school age children enrolled is increased while 33(31.43%) of them
replied to the contrary. Similarly, respondents were asked if the quality of the schools that
their children attended and their capacity to pay for those schools increased. Table 4.14
indicates that 57(79.17%) of respondents were replying their capacity to enroll their
children in better schools has been increasing after joining their enterprises while
11(15.28%) responded in contrary the rest 4 (5.55%) indicated the trend is showing no
change.
Table 4.14 Quality of Schooling and the Capacity of managers/ operators and other
members of the enterprises for Paying after Joining in Micro and Small Enterprises
The quality of the schools their children attending Frequency Percent
Improved 57 79.17
Remained as it was 4 5.55
Declined 11 15.28
Total 72 100
Capacity to pay for schooling
Increased 71 73.96
Decreased 6 6.25
Remained the same 19 19.79
Total 96 100
(Source: Own Survey, 2010)
With respect to their capacity to pay for better schooling, 71(73.96%) of the respondents
show that their capacity for paying is increased; however, 19(19.79%) and 6(6.25%) are
indicating their capacity is remained the same and declined respectively. Hence, these are
also other indicators of the contributions of MSEs for improving the living conditions of
the poor and there by to alleviate poverty. Another indicator of increasing income of the
workers is the improved use of medications. As indicated in table 4.15 the source of money
for medical expense was asked and 68 (64.76%) of them are using their business profits,
61
24(22.86%) from house hold saving and 13(12.38%) from both. They are also asked if they
and their family have encountered shortage of money for medication and unable to get
medical treatment before joining the enterprises. Accordingly, 16 (15.24%) of the
respondents were able to cover their costs for their medical requirements, however, the rest
89(84.76%) are unable to pay for their family need of medication and could not visit health
station or hospitals before they engaged in the enterprises. However, the majority of the
respondents 96(91.43%) make clear that they get access to health facility and 9(8.57%) of
them respond as not get an access.
Table 4.15 Sources of Money for Medication and the Capacity of the Respondents to
Get Medical Treatments
Source of money Frequency Percent
Business profit 68 64.76
From household saving 24 22.86
Both 13 12.38
Total 105 100
Capacity of the family to get medical treatment
Increase 76 72.38
Decrease 14 13.33
Remain as it was 15 14.29
Total 105 100.0
If increased why?
Profit increase in the enterprises 81 89.01
Due money from relations and/ or selling of house 9 9.89
hold durables
Due to aids from NGOs 1 1.10
Total 91 100.0
(Source: Own Survey, 2010)
In addition, after joining their enterprises, the capacity of the respondents and their families
to get medical treatment was examined and found that 76(72.38%), 14(13.33%) and
15(14.29%) of them responded increased, decreased, and remained as it was respectively.
In addition, those who responded as their capacity for getting medical treatments has
increased were asked again from where they get the money to pay for medication and
81(89.01%) are due to the income increase in their enterprises while 9(9.89%) and
1(1.10%) of them are because of the money from their relatives or saving of household
durables and aids from NGOs respectively. In general, from all the above results it is
possible to conclude that the contributions of MSEs for increasing income of the
62
respondents to have appropriate medical services shows that their per capital income has
been increasing progressively due to their enterprises. These also are the indication of the
capacity of enterprises to alleviate poverty.

4.4 Constraints and Problems of Micro and Small Enterprises

Designing appropriate MSEs promotion policies and programs require clear understanding
of their start up and operational level problems. In order to reduce poverty of the
participant in MSEs activities , follow up and evaluation should be there either at
inception or in operational stage and then possible solutions should be followed for the
cited problem in each sectors of MSEs.
4.4.1 Major Problems during Start Up and Operation Level of Micro and Small
Enterprises
Under this section, the study attempts to explain the constraints and/or problems of the
surveyed enterprises. For effective functioning of MSEs and for their productivities in
achieving the intended objectives of creation of jobs and alleviating poverty, problems
should be avoided either at the commencement stage or during operational level. Among
others process of entry, shortage of capital, inadequate training, and lack of (production
place, market, experience and raw materials) are problems that the MSEs and their
participants face at the inception period and during their activities, which is raised and
mentioned in previous chapters (Andualem, 1997 and Mannan, 1993). Therefore, if such
problems of enterprises are solved, their ability to absorb labor force will increase radically
and in return they could alleviate poverty.
Accordingly, as Table 4.16 shows questions were forwarded about the existence of the
aforementioned problems both at start up and operational levels. Based on this the
respondents were asked whether they had faced any kind of problems in their engagement
in MSEs as well as during operational level. As a result, out of the total (105) respondents,
76(72.38%) and 61(71.77%) indicated the existence of Shortage of start up capital and high
interest rates for borrowing. Other problems like skilled personnel, lack of production
place, unaffordable tax and /or rent, inadequate support from Government/NGO, lack of
working capital or lack of credit facilities, lack of access for training and lack of market
are the next cited problems which constituted 68(69.39%), 72(68.57%), 59(67.05%),
63
 62(66.67%), 67(63.81%),59 (62.77%) and62 (59.05%) of the responses have been given by
the respondents respectively in the study area.

Both FGD participants and different levels of MSEs officials were also indicating the
existence of the cited problems and believed the solutions to be selected immediately. In
general, the results of this study indicated that there are problems of financial laws,
bureaucratic problems and regulatory requirements which hinder the development and
expansion of MSEs.
Table 4.16 Constraints and Problems of MSEs Faced at Start Up and Operational
Level, Multiple Responses Is Possible
Yes No
Problems Total Frequency Percent Frequency Percent
Shortage of start up capital 105 76 72.38 29 27.62
High interest rates for borrowing 85 61 71.77 24 28.23
Lack of skilled personnel 98 68 69.39 30 30.61
Lack of production place 105 72 68.57 33 31.43
Unaffordable tax and /or rents 88 59 67.05 29 32.95
Inadequate support from Government/ NGO 93 62 66.67 31 33.33
Lack of working capital 105 67 63.81 38 36.19
creditoffacilities
Lack access for training 94 59 62.77 35 37.23
Lack of market 105 62 59.05 43 40.95
Lack of experience 105 51 48.57 54 51.43
Lack of raw material 105 42 40 63 60
Process of entry 95 31 32.63 64 67.37
regulation on
Licensing business start up
bureaucracy 102 23 22.55 79 77.45
Total 1285 733 57.04 552 42.96
(Source: Own Survey, 2010)
On the other hand, among the problems cited in the above table the issues related to
experience, raw materials, process of entry or regulation on business start up and the
licensing bureaucracy considered as the least problem in order of severity i.e. out of the
sampled respondents 54(51.43%), 63(60%), 64(67.37%) and 79(77.45%) of respondents
responded as from all cited problem category respectively. These four problems are not
considered as serious problems for these respondents while others take as severe.

During FGDs, the participants also indicated the existence of such problems and seek the
government to assist them to solve those problems immediately. In addition, during the
interview of officials of enterprises, the problem was raised. Hence, they all agreed the
64
 existence of the problems and explained the measures that the government is undertaking
to lessen them such as building show rooms, arranging markets for products at an
appropriate places by preparing ‘Bazaars’ and through market linkages; however, they all
agrees the measurements taken to alleviate these problems are not sufficient and so that a
lot has to be done in the future.
4.4.2. Major Problems in Different Sectors
The researcher also tries to see the relationships of the problem in different sectors of
MSEs. The sectors are: food processing, wood and metal, textile, municipal service, urban
agriculture and construction sectors. The result of the survey conducted on those six
different sectors is indicated in the following table.
Table 4.17 Problems in Each Sector (Cross Tabulation Result), Multiple Responses is
Possible
Sectors
Food Wood and Municipal Urban
Textile Constructi
Problems Processing Metal Service Agricultur
(N=36) on (N=8)
(N=28) (N=10) (N=15) e N=8
F % F % F % F % F % F %
Shortage of start up capital 13 46.43 9 90 33 91.67 7 46.67 6 75 8 100
High interest rates for 11 39.29 4 40 26 72.22 10 66.67 4 50 6 75
borrowing
Lack of skilled personnel 9 32.14 10 100 27 75 9 60 6 75 7 87.5
Lack of production place 13 46.43 8 80 28 73.68 7 46.67 8 100 8 100
Unaffordable tax and /or 9 32.14 9 90 24 66.67 4 26.67 5 62.5 8 100
rents
Inadequate support from 16 57.14 6 60 24 66.67 8 53.3 3 37.5 5 62.5
Government/ NGO
Lack of working capital or 12 42.86 7 70 28 73.68 7 46.67 6 75 8 100
lack of credit facilities

Lack of access for training 11 39.29 7 70 19 52.78 12 60 4 50 6 87.5

Lack of market 22 78.57 5 50 25 69.44 - - 6 75 4 50
Lack of experience 16 57.14 4 40 26 72.22 - - 3 37.5 6 75
Lack of raw material - - 8 80 23 63.89 - - - - 8 100
Process of entry or regulation 9 32.14 7 70 11 30.56 - - - - 4 50
on business start up
Licensing bureaucracy - - 4 40 9 16.07 4 26.67 - - 6 75
Total 28 100 10 100 36 100 12 100 8 100 8 100
(Source: Own Survey, 2010)
65
As it can be shown in Table 4.17, out of the total (28) respondents on the food processing
sectors 22(78.57%) of them reported that the serious problem in food processing sector
was lack of market which is ranked first. 16(57.14%) of respondents also reported that
problem related to inadequate support from Government ranks second. Furthermore,
14(50%) of respondents lack of experience ranked as the third problem. On the contrary,
lack of raw materials and Complex licensing bureaucracy, were not problems at all in food
processing sectors. Of the difficulties in food processing sectors, lack of working capital/
credit facilities and start up capital were also identified as an impediment by the
respondents for their operations.
They faced a severe lack of money to underway the activities. The participants from food
processing sectors during FGDs also recognized that their enterprises demand up on them
large amount of working capital. To get this capital, they were striving. One on these
attempts had been getting loan from microfinance institutions. But due to their inability to
submit guarantor, they were unable to get credit from microfinance institutions. The other
problem they added was fear of high interest rate on the money that would be obtained
from the credit associations.

According to the survey result (Table 4.17), all respondents 13(100%) in Wood and Metal
works sectors reported that the major problem in this sector was lack of skilled personnel
followed by shortage of start up capital and unaffordable tax and /or rents which
constituted 12 (92.31%) respondents respond for each problem. As indicated in the same
table, the majority of the respondents in textile sectors reported that Shortage of start up
capital 33(91.67%), lack of skilled personnel 27(75%), lack of working capital or lack of
credit facilities 28(73.68%), lack of production place 28(73.68%) and high interest rates for
borrowing 26(72.22%), were the major problems. And (66.67%), (63.89%), (61.11%) ,
(58.33%)and (52.78%) of respondents from the textile sector reported that unaffordable
tax and /or rents ,lack of market, lack of raw material , lack of experience, inadequate
support from Government and lack of access for training was the other major problems.
66
Referring to Table 4.17 above, all 8(100%) of respondents from urban agriculture sector
has reported that lack of production space is a serious problem in the sector. And 6(75%)
of them on each category respond, shortage of start up capital, lack of skilled personnel and
lack of market are their next difficulties on their operation. Lack of raw material, licensing
bureaucracy and process of entry or regulation on business start up were not mentioned as a
problem in this sector.

In municipal service sectors, among the problems, the top three are Lack of access for
training 9(75%), inadequate support from Government/ NGO 8(66.67%) and high interest
rates for borrowing7(58.33%). As the municipal service sector mainly provide the services
of solid waste collection from residents, and clearing streets (scavenging service), most of
respondents reported that they are vulnerable to different health problems. The reason
might be due to lack of proper skill and trainings which might have protected them from
hygienic-based transmitted diseases.

Again as indicated in Tale 4.17 above, all the respondents 8(100%) in the construction
sector agreed that the foremost problems in the sector are shortage of start up capital, lack
of production place ,unaffordable tax and /or rents ,lack of working capital or lack of credit
facilities and lack of raw material. However, 6(75%) of the respondents confirmed there is
high interest rate for borrowing, licensing bureaucracy and lack of experience in the sector.
In general, the mentioned multi-faceted problems could hinder the growth and expansion of
MSEs and are creating obstacles on enterprises not to achieve the intended objectives.
Hence, the governmental and non-governmental organizations and the people at large
should work hard for the execution and successful implementation of the policy of MSEs
and thereby to alleviate poverty.

It was also indicated during the interview with the officials offices of MSEs are opened at
Woredas level in order to facilitate the sector and to give good services to reduce the
bureaucracies which was taking months and even years to give license and other
requirements of course the implementing of BPR also may have an impact on the service
delivery. This indicates that the current government is giving due attention for the sector
67
and believed the urban unemployment and poverty is to be solved with the help of MSEs as
they have potentials of increasing the income of individuals. As a result, according to the
result of the interview, MSEs are the best intervention for the fight against poverty in the
study area. Availability of market for the products from MSEs has a paramount importance
for the development and expansion of the sector and to be able to reduce poverty through
MSEs. It is also known that stability of the laws rules and polices make participants of the
enterprises to think for the future about their enterprises without any hesitation and with
full confidences.

To sum up, a lot has been left on the side of the government to create market linkages, sub-
contract agreement to government projects and to stabilize policies not to affect the
existing enterprises in the study area.
.
4.5 Follow-Up and Evaluation

Supervision, follow-up and evaluation of MSEs by the concerned bodies might have a
positive effect on the activity of MSEs. As it can be seen in table 4.18, 79(75.24%) of
respondents reported that they have been provided supervision and follow up services by
the concerned MSEs officials on their working place and general activities. On the other
hand, 26(24.76%) of respondents have not been visited by any concerned government
officials. Therefore, the finding of this research shows that the concerned MSEs officials
have made an attempt to supervise and evaluate the existing MSEs activities which might
help the participants to improve their performance and to simplify their problems.

Table 4.18: Follow-up and Evaluation by Concerned Bodies

Is there supervision or follow-up? Frequency Percent
Yes 79 75.24
No 26 24.76
Total 105 100.0
(Source: Own Survey, 2010)
68
According to the result of the key informant interview, with regard to follow up and
evaluation the sub city‟s officers stated the following points. To follow-up and evaluate
what is done, a person is assigned for each sector permanently. These individuals visit the
entrepreneurs at least four times a week. And they take a form to write the problem the
entrepreneur‟s face, solutions taken if there is any. Beside this, every two weeks there is a
meeting with the managers/Operators as well as other members of the enterprises for
discussing about their operations, problems and solutions. They are encouraged to tell the
problems they face through their representatives. It is in this way that we try to solve their
problems. For example, there was problem mentioned by participants related with road on
the construction sector. Taking the information obtained from these sectors the observed
problem was solved through discussion.

This indicates that some of the concerned MSEs officials tried to take measures for he
problems of enterprises through supervision, follow-up and evaluation. On the other hand,
during FGDs, some of the participant said that the Woredas representatives come and focus
only on the participants‟ negative side. Besides, some of the participants asserted that they
did not get any evaluation or consultation from the concerned officials. This may indicates
that there is no strict supervision, follow up and evaluation in some Woredas.

4.6 Possible Solutions For The Problems

Respondents were asked to suggest possible solutions to cope up with the cited
problems in MSEs. Accordingly, they provided the solutions that the government should
arrange easy access for capital with appropriate interest rates. There should also have
provision of enough production spaces for the growing enterprises. The problem of market
should be solved not only by the participants in the enterprises but also primarily by the
government through market linkages with governmental organizations and NGOs.
Provision of assistances in market research and should have support in relation to
promotion of MSEs from the government and other stakeholders; also mentioned by the
respondents as a solution for achieving the intended goal, i.e. alleviating poverty.
.69
They also strictly suggested in the FGDs that the government, although there is some effort
regarding this issues, is also responsible to facilitate adequate market for their products
through provision of show rooms, arranging training programs, importing modern
equipments for production by the government which should be tax free and payable in the
long run etc in order to promote and expand MSEs.

70
 CHAPTER FIVE
5. Summary, Conclusion and Recommendations
5.1 Summary and Conclusions

The role of micro and small enterprises for income generating and employment creation
was recognized by many individuals few decades earlier. In both developed and developing
countries, MSEs account for significant proportion of employment opportunity. They are
also serving as important source of income for the majority of less educated and less skilled
segments of the population. In Ethiopia, recently the government have given due attention
for the development of MSEs in different sectors. It is considered as the most effective
mechanism to alleviate poverty and unemployment in the urban area.

Creating conducive environment for the poor, who are engage in MSEs activities, is
essential either for the socio-economic development of the country or for benefiting the
participants in multiple aspects. Institutionalizing the MSEs is one of the ways to facilitate
this condition. MSEs can play a role in improving the socio-economic condition of the
participants since they create employment opportunity that enable them to generate their
income which in turn leads to access to socio-economic merits such as education, better
health condition, good housing and nutrition.

Though significant measures are being taken by the government and various stake holders
to improve the efficiency of MSEs, their performance are not compatible with the existing
high demand. This is mainly because of the activities of those sectors of the economy is
constrained by a number of start up and operational problems.
According to the findings of the research, a substantial number of MSEs involved in the
study areas are indeed useful in meeting the over all objective of the study, i.e., assessing
the role of MSEs in alleviating of poverty of MSEs‟ participants in Gulele sub city. With
regard to the role of MSEs in bringing economic growth and social change on the
participants, the study revealed that MSEs have been playing undeniable roles in changing
the life standard of the participants in different status, such as married, divorced, widowed,
71
single, educated, and uneducated participants of all age joined in different sectors of MSEs.
The main reason is to improve their livelihood and to find alternative income due to urban
poverty and unemployment in Addis Ababa. Therefore, this study tried to investigate the
roles played by MSEs in improving for those who were mainly in need of job and poor
with low level of income.

Those who were searching for a job in governmental and non governmental offices could
not find it simply because of low level of education but they can easily be employed in
MSEs. As a result, the income of individuals can grow progressively and there by their
living condition can be improved. Similarly, increase in income of individuals working in
the enterprises can cause for better income distributions and increase their capacity to
expend on food, clothing, housing facilities, medication, schooling and ceremony.
Women14 in this regard also expedient as men, who are almost, absent in governmental
and nongovernmental offices and restricted in indoor activities, are beneficiaries from the
employment created by MSEs and as a result their income has been increasing through
time. In general, MSEs are contributing a lot in poverty reduction by increasing the income
of individuals.

Although MSEs are contributing a lot for poverty alleviation, they are facing multi-
dimensional problems both at start up and operational levels. Considering the main
problems of the enterprises in different sectors this research reveals that, start up capital,
high interest rates, skilled personnel, production place, unaffordable tax and /or rent,
inadequate support from Government/NGO, working capital or lack of credit facilities, lack
of access for training were among the major impediments for participants‟ at the grass root
level of MSEs activities. Of course, as mentioned in the preceding chapters the findings to
the research also revealed that the severity of MSEs problem vary depending on the type of
sector. Problems in one sector are different from the other.

In general, the findings of this research show that the MSEs have great roles in improving
the participants‟ economic condition though there are different constraints which hinder the
performance of MSEs in the study area. Therefore, it is important to draw some

14
See for more information in annex X
72
recommendations that can help to reduce the problems on MSEs and to encourage the
development and expansion of the sectors.

5.2 Recommendations

On the basis of the major findings of the study, the following policy recommendations have
been drawn with the view to improve the contributions of MSEs for poverty reduction in
Addis Ababa in general and in the study area in particular.

 In the study area, enabling environments like facilitating cooperation between

enterprises with different development organizations and NGOs, promoting
entrepreneurial development programs, expanding training institutions, preparing
‘bazaars’, providing information concerning business analysis and promoting
market association building should be developed in order to increases the
contributions of MSEs for poverty alleviation. In general, developing market
research is important to predict about the future market trends of enterprises and to
take the necessary solutions for the problems before hand.

 Availability of credits for MSEs both at the start up levels and during operations is
very important for achieving the objectives of enterprises in poverty alleviations.
Hence, the government and nongovernmental bodies should support MSEs both at
the start up levels and during their operations for easy accessing of credit facilities.

 The sub city should put in place the necessary mechanism to inspire the participants
through sharing the experience of others successful MSEs‟ participants. This will
help enterprises to solve problems, share skills each other in providing services and
consequently they could join and promote to medium and large enterprises.

73
  In order to solve the problem that the participants face during their operation, the
sub city should assign professionals for supervision and follow- up. Because the
participant themselves responded as there is no as such enough visiting by
concerned bodies.

 Finally, the researcher believes that the over all development cannot be achieved in
study area only by MSEs. Hence, integrated development programs have to be
developed and further research should be conducted on different areas which
directly or indirectly have influences on poverty alleviation.

In general as the development of MSEs is the key way out of poverty as observed in the
study area, greater consideration should be given to the over all strategies and activities to
improve the lives of the poor of Addis Ababa in general , Gulele sub city in particular.

74
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ANNEX I

Addis Ababa University

Faculty of Business and Economics
Department of Public Administration and Development Management
Research Questionnaire for Other Members of the Enterprises
Dear respondent,
The purpose of this questionnaire is to gather pertinent data that will be used as an input for
doing my research thesis on the role of MSEs in poverty alleviation in Gulelle Sub city.
This questionnaire is designed to obtain information about your perceptions, opinions,
experiences & particular knowledge about the types, contributions, economic significance
and constraints of MSEs. The information you are going to provide will be kept secret and
used purely for academic purpose. Therefore, you are kindly requested to give genuine
responses.
PART-ONE-General information of the respondents
1. Sex 1. Male 2. Female
2. Ages of respondents 1. 20-29 2. 30-39 3. 40-49 4. 50 & above
3. Marital status 1. Single 2. Married 3. Divorced 4. Widowed
4. Educational levels
1. Illiterate 2. Read and write 3. Elementary
4. Secondary 5. Certificate 6. Diploma or TVET.

5. Size of house hold ______

6. Woreda and the sector you employed ________________________________
7. When were you employed in this enterprise? ____________
8. What was your earlier occupation before you employed in this enterprise?
1. Unemployed 2. Daily wage laborer 5. Student
6. Employed in similar business 7. Working unpaid family business
8. (Other specify) ___________________
9.How much was your monthly income before you were employed in MSEs?
1. < 100 birr 2. 101-300birr 3. 301-600birr
4.>600birr 5.Idid not have income
10. After you become involved in MSEs, what happened to your household‟s overall
average income?
1. Highly increased 2. Increased 3. No change
4. Decreased 5. Highly decreased.
11. If your response to question no10 is „increased‟, or highly increased‟, why?
1. Because of expanding existing enterprises 2.Becouse I have extra Income
3. Buy input at cheaper price 4. Because of MSEs
12. If you response to question no 10 is “decreased‟ or „highly decreased‟, why?
1. Because of loss 2. Because of personal problem
3. Lack of resource 4.Because of low income
PART-TWO-The Role of Micro and Small Enterprises on alleviating

the Poverty of the Employees

13. Is your monthly income sufficient to support your living condition?
1. Yes 2. No.
14. Do you believe that the job improves your living condition?
1. Yes 2. No.
15. Do you save?
1. Yes 2. No
16. What is the source of money for saving? (Multiple answers possible)
1. Income from MSEs 2. Borrowing from Lenders
3. Income from relatives, 4. Income from previous Income
5. Others, (specify)
17. Where do you save?
1. In MFIs 2. At home (e.g. in safe box)
3. Lending to others with higher interest rate 4. Informal Banks
5. With friends/ relatives 6. In the form of durable materials
7. Others (specify)
18. For what purpose you have been saving? (Multiple answers possible)
1. for safety purpose 2. To earn interest
3. for ceremonial services 4. To buy basic household items
5. Others (specify)

Your capacity for Expending for the

following items after joining MSEs are
Expense items of the
No
household Increased Decreased No change at all

19. Food expense

20. Schooling expense

21. Health expense

22. Clothing expense

23. For purchase of durable

household

24. In general, were /are you borrowing money to fulfill the above (Q19-23) expenses
before or after joining this enterprise?
1. Yes 2. No.
25. Did your household experience food shortage before joining this enterprise?
1. Yes 2. No.
26. Do you encounter food shortages in the household after joining this enterprise?
1. Yes 2. No.
27. If your answer for question numbers either in Q25 or Q26 is „Yes‟, how did you and
your family adopt to minimize the impact of that food shortage? (Multiple answers
possible)
1. Cut down number of meals 2. Cut down amount of food for each meal.
3. Borrowing from relatives/friends 4. Looked for paid work
5. Looked for food aid 6. Loan from moneylenders
7. Others (specify)
28. Types of ownership of the house you and your family living;
1. Private 2. Rented from kebele
3. Rented from private house owners 4. Inherited house
5. Others (specify)
29. If your response for question number 28 is „Rented from private house owners‟, is your
capacity for paying the rent, after you involved in MSEs activities, improved?
1. Improved 2. Remanded as it was 3. Declined
30. Is the quality of the house you owned/ rented show quality improvements after
joining this enterprise?
1. Yes 2. No.
31. Does your house have the following facilitities? 1. =Yes 2.= No.
>Kitchen (private) _________ >kitchen (shared) _________
>Toilet (private) _________ > Toilet (shared) _______
> Bathroom (private) _______ .> Bath room (shared) ______
>Housing durables like tables, chairs, TV, Radio etc________________
32. Did those facilities, mentioned above, show improvements after joining this enterprise?
1. Yes 2. No.
33. Do you feel that in your household there is or will be less risk of shortage of facilities
today than there was before joining this enterprise?
1. Yes 2.No
34. What do you say about the number of school age children (6-18) after you involved in
MSEs ?
1. Increased 2. Decreased 3.No change
35. Did the quality of the School your children attending, improved after joining the
enterprise? (Compare the quality of schools, number of children attending schools before
and after joining this enterprise)
1. Improved 2. Remanded as it was 3. Declined
36. Your capacity, for paying for better quality of schooling, after joining this enterprise;
1. Increased 2. Decreased 3. Remain the same.
37. Your capacity for paying for better medical services after you involved in MSEs?
1. Increased 2. Decreased 3. Remain the same.
38. Where did you get the money to pay for medical costs?
1. Business profit 2. From household saving
3. Business profit and house hold saving
4. Borrowing from friends 5. Loan
6. Others (specify) ___________________
39. Before you joining this enterprise, was there a moment when you and your family
seeking medical treatment but could not get due to shortage of money?
1. Yes 2. No.
40. After joining this enterprise, did you and your family seeking medical treatment but
could not find services due to shortage of money?
1. Yes 2. No.
41. How do you compare the capacity of you and your family in getting medical treatment
before and after joining this enterprise?
1. Increased after joining this enterprise
2. Decreased after joining this enterprise
3. Remain the same
42. If your answer for question number 37 is „increased‟, why?
1. Due to the increase income from the enterprise
2. Due to other source of money like; relatives and selling of house hold durables
3. Due to aid from NGOs.
 PART-THREE- Problem areas
43. Are the following constraints and problems has been existed both at start up and
operational level of your enterprises? (Multiple answers possible). (Make a tick mark
parallel to the question )

Problems Yes No
Process of entry
Shortage of start up capital
Lack of production place
Lack of market
Lack of experience
Lack of raw material
Lack of working capital or lack of credit facilities
Lack of machineries /equipments
Lack of skilled personnel
Lack of access for training
Inadequate support from Government/ NGO
Unaffordable tax and rents
Complex licensing bureaucracy

44. In your opinion, how can the above-cited problems of your sector be resolved?

________________________________

45. Are there supervision or follow-up and evaluation done by the responsible body?

1. Yes 2. No.
ANNEX II

Addis Ababa University

Faculty of Business and Economics
Department of Public Administration and Development Management
Research Questionnaire for Managers/ Operators
Dear respondent,
The purpose of this questionnaire is to gather pertinent data that will be used as an input for
doing my research thesis on the role of MSEs in poverty alleviation in Gulelle Sub city.
This questionnaire is designed to obtain information about your perceptions, opinions,
experiences and particular knowledge about the types, contributions, economic significance
and constraints of MSEs. The information you are going to provide will be kept secret and
used purely for academic purpose. Therefore, you are kindly requested to give genuine
responses.
PART-ONE- General information of the Respondents
1. Sex 1. Male 2. Female
2. Ages of respondents 1. 20-29 2. 30-39 3. 40-49 4. 50 and above
3. Marital status 1. Single 2. Married 3. Divorced 4. Widowed
4. Educational levels
1. Illiterate 2. Read and write 3. Elementary
4. Secondary 5. Certificate 6. Diploma or TVET.
5. Size of house hold ______
6. Enterprise type or sector and Woreda ________________________________
7. When was the enterprise established? ______
8. How much was your initial capital? ___________ Br.
9. How much is your current capital? _____________ Br.
10. How many were your enterprises employees when you started the business?
.
11. What is the current number of employees of the enterprise?
.
12. What was your earlier occupation before your become you Manager/Operator of this
enterprise?
 1. Unemployed 2. Daily laborer 3. Student
4. Employed in similar business 5. Working unpaid family business
6. (Other specify) ___________________
13. How much was your monthly income before you were involved in MSEs?
2. < 100 birr 2. 101-300birr 3. 301-600birr
4.>600birr 5.Idid not have income
14. After you become involved in MSEs, what happened to your household‟s overall
average income?
1. Highly increased 2. Increased 3. No change
4. Decreased 5. Highly decreased.
15. If your response to question no 14 is „increased‟, or highly increased‟, why?
1. Because of expanding existing enterprises 2. Becouse I have extra income
3. Buy input at cheaper price 4. Because of MSEs

16. If you response to question no 14 is “decreased‟ or „highly decreased‟, why?

1. Because of loss 2. Because of personal problem
3. Lack of resource 4.Because of low income
PART-TWO -The Role of Micro and Small Enterprises on alleviating the

Poverty of the Managers/Operators

17. Is your monthly income sufficient to support your living condition?
1. Yes 2. No.
18. Do you believe that the job improves your living condition?
1. Yes 2. No.
19. Do you save?
1. Yes 2. No
20. What is the source of money for saving? (Multiple answers possible)
1. Income from MSEs 3. Income from relatives
2. Borrowing from, Lenders 4. Income from previous business
5. Others, (specify) _______________
21. Where do you save?
1. In MFIs 2. At home (e.g. in safe box)
3. Lending to others with higher interest rate 4. Informal Banks
5. with friends/ relative 6. In the form of durable materials
 7. Others (specify) ______________________

22. For what purpose you have been saving? (Multiple answers possible)
1. Loan repayment
2. To undertake my own business or to expand the existing business
3. For safety purpose 4. To earn interest 5. For ceremonial services
6. To buy machinery or basic household items
7. Othes (specify) ______________

Your capacity for Expending Your capacity for Expending

Expense items of the household for the following items before for the following items after
No joining MSEs are joining MSEs are
Increased Decreased Increased Decreased
23. Food expense
24. Schooling expense
25. Health expense
26. Clothing expense
27. For purchase of durable household

28. In general, were /are you borrowing money to fulfill the above (Q21-25) expenses
before or after owning this enterprise?
1. Yes 2. No.
29. Did your household experience food shortage before you involved this enterprise? ;
1. Yes 2. No.
30. Do you encounter food shortages in the household after you involved this enterprise?
1. Yes 2. No.
31. If your answer is „yes‟ either in Q29 or Q30, how did you and your family adopt to
minimize the impact of that food shortage? (Multiple answers possible)
1. Cut down number of meals 2. Cut down amount of food for each meal.
3. Borrowing from relatives/friends 4. Looked for paid work
5. Looked for food aid 6. Loan from moneylenders
7. Others (specify)
32. Types of ownership of the house you and your family living;
1. Private 2. Rented from kebele
3. Rented from private house owners 4. Inherited house
5. Others (specify)
____________________________
33. If your response for question number 32 is „Rented from private house owners‟, is your
capacity for paying the rent, after you involved in MSEs activities, improved?
1. Improved 2. Remanded as it was 3. Declined
34. Is the quality of the house you owned/ rented show quality improvements after
Managing/Operating this enterprise?
1. Yes 2. No.
35. Does your house have the following facilitities?
1= Yes 2= No.
>Kitchen (private) _________ >kitchen (shared) _________
>Toilet (private) _________> Toilet (shared) _______
> Bathroom (private) _______.> Bath room (shared) ______
>Housing durables like tables, chairs, TV, Radio etc________________
36. Did those facilities, mentioned above, show improvements after you
Managing/Operating this enterprise?
1. Yes 2. No.
37. Do you feel that in your household there is or will be less risk of shortage of facilities
that are mentioned in Q number “35”today than there was before you
Managing/Operating this enterprise?
1. Yes 2.No
43. What do you say about the number of school age children (6-18) after you involved in
MSEs?
1. Increased 2. Decreased 3.No change
39. Did the quality of the School, your children attending, improve after you
Managing/Operating this enterprise? (Compare the quality of schools, number of
children attending schools before and after you Managing/Operating this enterprise)
1. Improved 2. Remanded as it was 3. Declined
40. Your capacity for paying for better quality of schooling after you Managing/Operating
this enterprise.
1. Increased 2. Decreased 3. Remain the same.
41. Your capacity for paying for better medical services?
1. Increased 2. Decreased 3. Remain the same.
42. Where did you get the money to pay for medical costs?
1. Business profit 2. From household saving
3. Business profit and house hold saving
4. Borrowing from friends 5. Loan
6. Others (specify)_______________________

43. Before you Managing/Operating this enterprise, was there a moment when you and
your family seeking medical treatment but couldn‟t get due to shortage of money?
1. Yes 2. No.
44. After you Managing/Operating this enterprise, did you and your family seeking medical
treatment but could not find services due to shortage of money?
1. Yes 2. No.
45. How do you compare the capacity of you and your family in getting medical treatment
before and after you Managing/Operating this enterprise?
1. Increased after joining this enterprise
2. Decreased after joining this enterprise
3. Remain the same
46. If your answer for question number 41 is „increased‟, why?
1. Due to the increase income/profit from the enterprise
2. Due to other source of money, like relatives and selling of house hold durables
3. Due to aid from NGOs.
 PART-THREE- Problem areas

47. Are the following constraints and problems has been existed both at start up and
operational level of your enterprises? (Multiple answers possible). (Make a tick mark
parallel to the problem )
Problems Yes No
Process of entry
Shortage of start up capital
Lack of production place
Lack of market
Lack of experience
Lack of raw material
Lack of working capital or lack of credit facilities
Lack of machineries /equipments
Lack of skilled personnel
Lack of access for training
Inadequate support from Government/ NGO
Unaffordable tax and rents
Complex licensing bureaucracy

48. . In your opinion, how can the above-cited problems of your sector be resolved?

________________________________
49. Are there any supervision or follow-up and evaluation done by the responsible body?

1. Yes 2. No.
ANNEX III
Questions for key informant interview and /or Interview for MSEs
Officials

1. How do you compare the income levels of both the Managers/Operators and employees
and the trends for number of employees in MSEs with year of their set up before and
after you get involved in MSEs?
2. Is there any supervision, follow up, and monitoring services by concerned MSEs
officials about your working place, market place generally your business activities?
3. Is there any responsible body that is in charge of contacting the Kebele officials for any
administrative issues you face?
4. What are the major constraints that impede MSEs to operate to their full capacity?
5. How do you explain the contribution of MSEs to increase the per capita income of
individuals?
6. From which government bodies do MSEs get support principally? And do you think
MSEs get the support they are in need of?
7.What efforts have been made by the government to search for market linkages for MSEs?
What problems have occurred in doing so?

ANNEX IV

Check list for Focus Group Discussions Guide questions

1.Are there any challenges you faced in doing MSEs? What are these challenges? And how
do you think these challenges are solved?
2.In your view, what are the contributions of MSEs to eradicate poverty? Or could you
discuss the situation of your income, employment and living standards before and after
joining or owning this enterprise?
3.What do you expect from MSEs offices to do in expanding your business getting access
to MFIs., legality of your business, marketing issues, in laws, rules and regulation areas
?
4. Would you suggest some possible solutions to cope up with the challenges in MSEs?
 ANNEX V
ADDIS ABABA CITY ADMINISTRATION
MICRO AND SMALL ENTERPRISE DEVELOPMENT AGENCY
LIST OF MICRO AND SMALL ENTERPRISES OF THE TEN SUB CITIES IN THE SIX SECTORS UPTO MARCH 9, 2010
MSEs SECTORS
TEXTILE FOOD CONSTRUCTION WOOD AND METAL MUNICIPAL URBAN TOTAL
NO. SUBCITIES PROCESSING WORKS SERVICES AGRICULTURE
1 LIDETA 11 82 119 47 91 10 360
2 AKAKI 35 92 236 48 30 101
KALITI 542
3 GULELE 215 105 240 69 70 39 738
4 BOLE 34 132 310 62 89 107 734
5 NIFAS SILK 19 70 146 234 33 44
LAFTO 546
6 KOLFE 105 90 117 56 47 35
KERANIO 450
7 YEKA 20 70 254 77 38 52 511
8 ARADA 33 56 132 112 27 32 392
9 ADDIS 100 77 51 57 40 21
KETEMA 346
10 KIRKOS 24 62 175 32 38 23 354
TOTAL 596 836 1780 794 503 464 4973
(SOURCE: MSEDACA, 2010)
 ANNEX VI TABLE SHOWING TOTAL NUMBER OF MSEs IN EACH WOREDAS AND SECTORS
MSEs SECTORS
WOREDAS TEXTILE FOOD CONSTRUCTION WOOD AND MUNICIPAL URBAN TOTAL
PROCESSING METAL WORKS SERVICES AGRICULTURE
01 61 12 37 22 7 0 139
02 0 7 29 12 10 0 58
03 49 29 29 5 4 5 121
04 10 5 11 3 5 7 41
05 15 5 16 3 12 3 54
06 32 6 6 0 4 9 57
07 11 9 17 0 1 6 44
08 19 19 20 17 18 9 102
09 7 6 20 4 5 0 42
10 11 7 54 3 5 0 80
TOTAL 215 105 240 69 70 39 738
(Source: Own Survey, 2010)
ANNEX VII
TABLE SHOWING SAMPLE RESPONDENTS (MANAGERS/ OPERATORS AND OTHER MEMBERS OF THE ENTERPRISES
) IN EACH SECTOR IN THE SAMPLED WOREDAS‟
SECTORS NAME FREQUENCY PERCENT CUMULATIVE PERCENT
Textile 45 30.61 30.61
Urban Agriculture 8 5.44 36.05
Construction 14 9.52 45.57
Wood And Metal Works 21 14.30 59.87
Municipal Services 25 17.00 76.87
Food Processing 34 23.13 100.0
Total 147 100.0
(Source: Own Survey, 2010)
 ANNEX VIII
LIST OF SELECTED MSEs AND TOTAL NUMBERS OF PARTICIPANTS OF THE SAMPLE MSEs

Total Questionnaires distributed

Total other members of
Total Respondents Asked and

Total Managers
the enterprises
Returned the Questionnaires

/Operators
Enterprises Name

Grand Total
Woredas

Sectors

No

/Operator
members

enterpris

Manager
es asked

s asked
Total

Grand Total
of the
Total
other
Female

Female

Female

Female
Total

Total

Total

Total
Male

Male

Male

Male
1. MIRAF CONSTRUCTION 10 1 11 1 - 1 12 3 1 1 2 1 - 1 3
2. EL ROE CONSTRUCTION 8 4 12 1 - 1 13 3 1 1 2 1 - 1 3
3. BIRHAN LE CONSTRUCTION 8 6 14 1 - 1 15 3 1 1 2 1 - 1 3
WETATOCH
4. AMBAGER WOOD AND METAL 6 5 11 1 - 1 12 2 - 1 1 1 - 1 2
WORKS
5. WUB WOOD AND METAL 4 0 4 1 - 1 5 2 1 - 1 1 - 1 2
WORKS
6. FIKRE SELAM MUNICIPAL SERVICE 0 9 9 - 1 1 10 3 - 2 2 - 1 1 3
7. 01 ADDIS HIWOT MUNICIPAL SERVICE 0 9 9 - 1 1 10 3 - 2 2 - 1 1 3
8. BIRUH RAEY MUNICIPAL SERVICE 5 9 14 - 1 1 15 2 1 - 1 - 1 1 2
9. MASTER TEXTILE 26 6 32 1 - 1 33 6 3 2 5 1 - 1 6
10. HIBRET BE TEXTILE 42 8 50 1 - 1 51 6 2 3 5 1 - 1 6
ANDINET
11. TIRET TEXTILE 19 1 20 1 - 1 21 6 4 1 5 1 - 1 6
12. ART FOOD PROCESSING 15 7 22 - 1 1 23 4 2 1 3 - 1 1 4
13. SETOCH ENA FOOD PROCESSING 0 24 24 - 1 1 25 4 - 3 3 - 1 1 4
TARIK
14. NEBIR FOOD PROCESSING 1 13 14 - 1 1 15 4 1 2 3 - 1 1 4
Sub -Total 144 102 246 8 6 14 260 51 17 20 37 8 6 14 51
15. ANDINET LE CONSTRUCTION 8 1 9 1 - 1 10 3 1 1 2 1 - 1 3
EDIGET
16. RAL KON CONSTRUCTION 8 1 9 1 - 1 10 2 - 1 1 1 - 1 2
17. SETOCH LE WOOD AND METAL 10 0 10 1 - 1 11 2 1 - 1 1 - 1 2
EDIGET WORKS
18. BEZA YE BET WOOD AND METAL 9 1 10 1 - 1 11 3 1 1 2 1 - 1 3
EKAWOCH WORKS
19. MESRAT BE FOOD PROCESSING 0 9 9 - 1 1 10 3 - 2 2 - 1 1 3
GARA
20. 03 EDIGET BE FOOD PROCESSING 0 9 9 - 1 1 10 2 - 1 1 - 1 1 2
HIBRET
21. FIKRE SELAM URBAN AGRICULTURE 10 - 10 1 - 1 11 2 1 - 1 1 - 1 2
22. TIRET KEBIT URBAN AGRICULTURE 10 - 10 1 - 1 11 3 2 - 2 1 - 1 3
ERBATA
23. HULU BERSU MUNICIPAL SERVICE 4 7 11 - 1 1 12 3 1 1 2 - 1 1 3
HONEıı ı ı
24. KIDISTE MUNICIPAL SERVICE 9 1 10 1 - 1 11 2 - 1 1 1 - 1 2
MARIAM YE
TSIDAT
AGELGELOT
25. BERTA LIBS SIFET TEXTILE 9 13 22 - 1 1 23 4 1 2 3 - 1 1 4
26. LEWT TEXTILE 1 12 13 - 1 1 14 3 1 1 2 - 1 1 3
 Sub -Total 78 54 132 7 5 12 144 32 9 11 20 7 5 12 32
27. ADDIS KIDANE WOOD AND METAL 6 3 9 1 - 1 10 2 1 - 1 1 - 1 2
WORKS
28. 07 BEST FOOD FOOD PROCESSING 8 1 9 - 1 1 10 2 - 1 1 - 1 1 2
29. HANA TEXTILE 8 2 10 1 - 1 11 3 1 1 2 1 - 1 3
30. EDIGET BE TIRET MUNICIPAL SERVICE - 9 9 - 1 1 10 2 - 1 1 - 1 1 2
Sub -Total 22 15 37 2 2 4 41 9 2 3 5 2 2 4 9
31. KECHENE TEXTILE 39 - 39 1 - 1 40 7 6 - 6 1 - 1 7
ALBASH ENA
LEBASH
32. TEBABEREN TEXTILE 19 - 19 1 - 1 20 4 3 - 3 1 - 1 4
ENESERA
33. DIL BER URBAN AGRICULTURE 13 - 13 1 - 1 14 3 2 - 2 1 - 1 3
08 AZAWENTOCH
CHIGIGN MAFIYA
34. FILAGOT WOOD AND METAL 11 2 13 1 - 1 14 3 1 1 2 1 - 1 3
WORKS
35. HIDASSE TESFA WOOD AND METAL 9 - 9 1 - 1 10 2 1 - 1 1 - 1 2
WORKS
36. HIBIRET FANA FOOD PROCESSING - 9 9 - 1 1 10 2 - 1 1 - 1 1 2
INJERA GAGARI
37. UTOPIA YE FOOD PROCESSING - 9 9 - 1 1 10 2 - 1 1 - 1 1 2
MIGIB
MAMERECHA
38. TERAMED KOLO FOOD PROCESSING - 22 22 - 1 1 23 5 - 4 4 - 1 1 5
39. EDIGET BE MUNICIPAL SERVICE 1 8 9 1 - 1 10 3 1 1 2 1 - 1 3
HIBRET DEREQE
QOSHASHA
AWEGAGDE
40. ADEY ABEBA MUNICIPAL SERVICE 1 8 9 - 1 1 10 2 - 1 1 - 1 1 2
Sub -Total 93 58 151 6 4 10 161 33 14 9 23 6 4 10 33
41. 10 ADDIS HIWOT WOOD AND METAL 9 1 10 1 - 1 11 3 1 1 2 1 - 1 3
WORKS
42. AHADU WOOD AND METAL 10 - 10 1 - 1 11 2 - 1 1 1 - 1 2
WORKS
43. WUBET DEREQ MUNICIPAL SERVICE - 9 9 - 1 1 10 2 - 1 1 - 1 1 2
QOSHASHA
44. TSEDAT BE MUNICIPAL SERVICE - 10 10 - 1 1 11 3 - 2 2 - 1 1 3
GULELE DEREQ
QOSHASHA
45. BETESEB TILF TEXTILE 1 4 5 - 1 1 6 3 - 2 2 - 1 1 3
ENA LIBSE SIFET
46. TIGIL FIRE LIBS TEXTILE 18 - 18 1 - 1 19 3 2 - 2 1 - 1 3
SIFET
47. NIGAT FOOD PROCESSING 5 9 14 - 1 1 15 3 1 1 2 - 1 1 3
48. ADDIS BIRHAN FOOD PROCESSING - 14 14 - 1 1 15 3 - 2 2 - 1 1 3
DEREQ MIGIB
Sub -Total 43 47 90 3 5 8 98 22 4 10 14 3 5 8 22
Total 380 276 656 26 22 48 704 147 46 53 99 26 22 48 147
(Source: Own Survey, 2010)
 ANNEX IX
Total Respondents Asked and Returned the Questionnaires

Total Questionnaires distributed

Total other members of
Total Respondents Asked and

Total Managers
the enterprises
Returned the Questionnaires

/Operators
Enterprises Name

Grand Total
Woredas

Sectors

No

members

/Operator
enterpris

Manager
es asked

s asked

Grand Total
of the
Total
other

Total
Female

Female

Female

Female
Total

Total

Total

Total
Male

Male

Male

Male
1. MIRAF CONSTRUCTION 10 1 11 1 - 1 12 3 1 1 2 1 - 1 3
2. EL ROE CONSTRUCTION 8 4 12 1 - 1 13 3 1 1 2 1 - 1 3
3. WUB WOOD AND METAL 4 0 4 1 - 1 5 2 1 - 1 1 - 1 2
WORKS
4. BIRUH RAEY MUNICIPAL SERVICE 0 9 9 - 1 1 10 3 - 2 2 - 1 1 3
5. ADDIS HIWOT MUNICIPAL SERVICE 0 9 9 - 1 1 10 3 - 2 2 - 1 1 3
6. MASTER TEXTILE 26 6 32 1 - 1 33 6 3 2 5 1 - 1 6
7. HIBRET BE TEXTILE 42 8 50 1 - 1 51 6 2 3 5 1 - 1 6
01 ANDINET
8. ART FOOD PROCESSING 15 7 22 - 1 1 23 4 2 1 3 - 1 1 4
9. SETOCH ENA FOOD PROCESSING 0 24 24 - 1 1 25 4 - 3 3 - 1 1 4
TARIK
10. NEBIR FOOD PROCESSING 1 13 14 - 1 1 15 4 1 2 3 - 1 1 4
Sub -Total 144 102 246 8 6 14 260 38 11 17 28 5 5 10 38
11. RAL KON CONSTRUCTION 8 1 9 1 - 1 10 2 - 1 1 1 - 1 2
12. LEWT WOOD AND METAL 10 0 10 1 - 1 11 2 1 - 1 1 - 1 2
WORKS
13. MESRAT BE FOOD PROCESSING 0 9 9 - 1 1 10 3 - 2 2 - 1 1 3
GARA
14. FIKRE SELAM URBAN AGRICULTURE 10 - 10 1 - 1 11 2 1 - 1 1 - 1 2
03
15. TIRET KEBIT URBAN AGRICULTURE 10 - 10 1 - 1 11 3 2 - 2 1 - 1 3
ERBATA
16. HULU BERSU MUNICIPAL SERVICE 4 7 11 - 1 1 12 3 1 1 2 - 1 1 3
HONEıı ı ı
17. BERTA LIBS SIFET TEXTILE 9 13 22 - 1 1 23 4 1 2 3 - 1 1 4
18. SETOCH LE TEXTILE 1 12 13 - 1 1 14 3 1 1 2 - 1 1 3
EDIGET
Sub -Total 78 54 132 7 5 12 144 22 7 7 14 4 4 8 22
19. BEST FOOD FOOD PROCESSING 8 1 9 - 1 1 10 2 - 1 1 - 1 1 2
20. HANA TEXTILE 8 2 10 1 - 1 11 3 1 1 2 1 - 1 3
07
Sub -Total 22 15 37 2 2 4 41 5 1 2 3 1 1 2 5
21. KECHENE TEXTILE 39 - 39 1 - 1 40 7 6 - 6 1 - 1 7
ALBASH ENA
LEBASH
22. TEBABEREN TEXTILE 19 - 19 1 - 1 20 4 3 - 3 1 - 1 4
ENESERA
23. DIL BER URBAN AGRICULTURE 13 - 13 1 - 1 14 3 2 - 2 1 - 1 3
08 AZAWENTOCH
CHIGIGN MAFIYA
24. FILAGOT WOOD AND METAL 11 2 13 1 - 1 14 3 1 1 2 1 - 1 3
WORKS
25. TERAMED KOLO FOOD PROCESSING - 22 22 - 1 1 23 5 - 4 4 - 1 1 5
26. EDIGET BE MUNICIPAL SERVICE 1 8 9 1 - 1 10 3 1 1 2 1 - 1 3
HIBRET DEREQE
QOSHASHA
AWEGAGDE
Sub -Total 93 58 151 6 4 10 161 25 13 6 19 5 1 6 25
27. 10 ADDIS HIWOT WOOD AND METAL 9 1 10 1 - 1 11 3 1 1 2 1 - 1 3
WORKS
28. TSEDAT BE MUNICIPAL SERVICE - 10 10 - 1 1 11 3 - 2 2 - 1 1 3
GULELE DEREQ
QOSHASHA
29. TIGIL FIRE LIBS TEXTILE 18 - 18 1 - 1 19 3 2 - 2 1 - 1 3
SIFET
30. NIGAT FOOD PROCESSING 5 9 14 - 1 1 15 3 1 1 2 - 1 1 3
31. ADDIS BIRHAN FOOD PROCESSING - 14 14 - 1 1 15 3 - 2 2 - 1 1 3
DEREQ MIGIB
Sub -Total 43 47 90 3 5 8 98 15 4 6 10 2 3 5 15
Total 380 276 656 26 22 48 704 105 36 38 74 17 14 31 105

(Source: Own Survey, 2010)

 ANNEX X
Initial and Current Employment and Capitals of Enterprises

Current capital

establishments
Initial capital
Sex

Year of
employment

employment
Enterprises Name
No.

Difference

Difference
Sectors
Woredas

Current
Initial
Male Female
1 01 MIRAF Construction 2 1 10 12 2 11000 75000 64000 2004/05
2 01 EL ROE Construction 2 1 10 13 3 3000 5000 2000 2004/05
3 03 RAL KON Construction 1 1 5 10 5 3300 157427 154127 2003/04
4 01 WUB Wood And Metal 2 - 5 5 0 2000 2000 2008/09
Works 0
5 03 LEWT Wood And Metal 2 - 10 11 1 2200 6241 2004/05
Works 4041
6 08 FILAGOT Wood And Metal 2 1 14 14 0 7000 8200 2007/08
Works 1200
7 10 ADDIS HIWOT Wood And Metal 2 1 11 11 0 11050 11050 2008/09
Works 0
8 01 BIRUH RAEY Municipal Service - 3 10 10 0 1500 1500 0 2008/09
9 01 ADDIS HIWOT Municipal Service - 3 10 10 0 500 500 0 2008/09
10 03 HULU BERSU HONEıı ı ı Municipal Service 1 2 12 12 0 1200 1200 0 2008/09
11 08 EDIGET BE HIBRET DEREQE Municipal Service 2 1 8 10 2 550 5000 2004/05
QOSHASHA AWEGAGDE 4450
12 10 TSEDAT BE GULELE DEREQ Municipal Service - 3 11 11 0 1100 1100 2008/09
QOSHASHA 0
13 01 MASTER Textile 4 2 28 33 -5 1800 7000 5200 2003/04
14 01 HIBRET BE ANDINET Textile 3 3 50 51 1 5000 1500 -3500 2003/04
15 03 SETOCH LE EDIGET Textile 1 3 14 14 0 1200 50000 48800 2005/06
16 03 BERTA LIBS SIFET Textile 1 2 23 23 0 3750 60000 56250 2004/05
17 07 HANA Textile 2 1 11 11 0 1400 200 -1200 2003/04
18 08 KECHENE ALBASH ENA LEBASH Textile 7 - 58 40 -18 8318 8605 287 2003/04
19 08 TEBABEREN ENESERA Textile 4 - 28 20 -8 800 40000 39200 2003/04
20 10 TIGIL FIRE LIBS SIFET Textile 3 - 19 19 0 4750 4750 0 2008/09
21 01 ART Food Processing 2 2 23 23 0 46000 48000 2000 2005/06
22 01 SETOCH ENA TARIK Food Processing - 4 25 25 0 3750 3000 -750 2004/05
23 01 NEBIR Food Processing 1 3 15 15 0 1300 2000 700 2004/05
24 03 MESRAT BE GARA Food Processing - 3 10 10 0 1000 1000 0 2001/02
25 07 BEST FOOD Food Processing - 2 5 10 5 1000 1500 500 2004/05
26 08 TERAMED KOLO Food Processing - 5 20 23 3 1440 2536 1096 2005/06
27 10 NIGAT Food Processing 1 2 15 15 0 11500 11500 0 2008/09
28 10 ADDIS BIRHAN DEREQ MIGIB Food Processing - 3 15 15 0 11050 11050 0 2008/09
29 03 FIKRE SELAM Urban Agriculture 2 - 10 11 1 10000 65242 55242 2005/06
30 03 TIRET KEBIT ERBATA Urban Agriculture 3 9 11 2 9000 89871 80871 2004/05
31 08 DIL BER AZAWENTOCH CHIGIGN Urban Agriculture 3 - 14 14 0 14000 14000 2007/08
MAFIYA 0
Total 53 52 508 512 4 181458 695972 514514
Average 5854 22451
(Source: Own Survey, 2010)
ANNEX- XII: Map of Gulele Sub City
ANNEX- XIII: Sampled Woredas of Gulele Sub
City