Constraints and Growth Potentials of Micro and Small Enterprises: Case from Mekelle City

Abstract

This study examines the constraints and growth potentials of micro and small enterprises. To undertake this study primary data were collected through well-structured and self-administered questionnaire to a sample of 85 micro and small-scale enterprises operated in Mekelle City. In order to explore the relationship between the explanatory variables with the dependent variable different econometric models like multiple regression to examine the growth of MSEs is associated with diffrent constraints and logit model to analyzes how and to what extent the operators’ socio-economics characterstics affect the income growth potential of enterprises were applied. The study result indicated that micro and small enterprises employment growth was significantly affected by constraints like crrent capital, current employment level, start up employment level, access to business services, and by motivation of the enterprises. Moreover, age,sex, experience access to finance and motivation of the enterprises affect growth potential of enterprises income. Therefore, these results highlight that the growth of MSEs in the study area are highly influenced by the specified business constraints.

Keywords: Growth Potential, MSEs, and Constraints