The Impact of Micro and Small Enterprises in the Socio-Economic Development and the Challenges Encountering the Sector in Ethiopia: A Systematic Review

Abstract

Micro and Small Enterprises (MSEs) are one of the means of poverty alleviation strategies particularly in developing countries like Ethiopia. They are the backbone for advancement and also lay bases for the economic transformation. Being cognizant of their role as essential vehicles in accelerating socio-economic development, the current government of Ethiopia issued National MSEs Strategy in 1997 and established MSEs Development Agency in 1998. As a result, abundant numbers of MSEs and employment opportunities are created in Ethiopia, which have shown increasing trend overtime. The intention of this review was to examine the status and the main challenges impeding the performances of the MSEs in Ethiopia. To do so, an appropriate methodology employed was descriptive research design. The type of methodological approach was best evidence review. The source of data used is secondary from the literature review and articles of different materials. The instruments used for data collection is review of compiled documents. The study shows that in spite of their growing contributions, MSEs in Ethiopia are encountered with various challenges among which, financial, managerial, technological and technical skills, business development services, infrastructure, policy related and institutional linkage are the most important identified challenges hindering the progresses of the sector. Thus, to enable the MSEs fully contribute the rationale of their establishment, collective efforts are required from all the stakeholders including the entrepreneurs themselves to confront the specified obstacles.

Keywords: Micro and Small Enterprises; Employment Creation; Capital Formation; Livelihood Improvement; Socio-Economic Development; Challenges; Interventions

DOI: 10.7176/EJBM/11-25-05

Publication date:September 30^th 2019