External Factors Affecting the Growth of Micro and Small Enterprises (MSEs) in Ethiopia: A Case Study in Shire Indasselassie Town, Tigray

Abstract

The role of MSEs are not only income and employment generating but also breeding ground for entrepreneurs, has higher employment capacity and not capital intensive, and highly competitive, flexible and innovative. However, MSE growth is affected by a number of factors. Therefore, the main objective of this study was to investigate external factors affecting the growth of MSEs by using semi-structured questionnaire covering 160 randomly selected MSEs from five Kebeles of Shire Indasselassie Town. Binary logistic regression model was employed to test the hypotheses and to analyze the factors affecting the growth of MSEs. The result of the study revealed that access to credit from formal financial sources, access to infrastructure and access to working premise are significant factors for MSEs growth. MSEs having access to sufficient infrastructure and access to own working premise are growing rapidly than of those MSEs that are operating with limited access to infrastructure and operating at rented and family working premise. In addition, MSEs that have no access to credit are rapidly growing than those of MSEs having access to credit. Considering the well recognized importance of MSEs in job creation, income generation and poverty alleviation, all stakeholders (government and non governmental institutions) have the responsibilities to make intensive effort to remove the factors that stand on the growth of the MSE.

Keywords: Employment, External, Factor, Growth, Survival.