Challenges and Opportunities of MSEs in Ethiopia: A Review Paper

Abdulnasir Abdulmelike


The micro and small business sector is recognized as an essential component of economic development and a crucial element in the effort to lift countries out of poverty (Wolfenson, 2007). External and internal factors are known to affect the growth of MSEs. Thus, this review provides overview of challenges, prospects and factors affecting growth of Micro and Small Scale Enterprises (MSEs). “Google Scholar” and “Science direct” search engines/databases were used to conduct the review using search keywords ‘’the challenges of MSEs’’, ‘’the achievements of MSEs’’ and, “factors affecting MSEs growth’’. The 16 articles collected show that The prominent challenges listed in various studies in Ethiopia are access to finance, selling at less price compared with other similar enterprises, shortage of raw material, lack of experience in own business, limited access to markets, to premise, lack of training, cultural oppressions, high competition as a result of open entry to the business, development strategy and policy focusses on agriculture which in turn discourage MSEs operating in other sectors, unattractive market, lack of advertisement, training. shortage of electricity and unscheduled power cuts, bureaucratic working procedure, high tax, high collateral requirement, high interest rate, lack of technology, weak performance leading to absence of growth thinking challenges, starting business without conducting survey, inappropriate tenure, uncollectible receivables, lack of financial management skill and Youth’s adverse attitude towards working under umbrella of MSEs agency. On the opportunity side, studies revealed few of them including business consultation services, training for the beginners, loan facilities, moral or encouragement, peace and security, area specific features, support and reward like training, fund, and certificate play a role for expansion and growth of women entrepreneurs in particular and MSE owners in general.

Keywords: Challenges, Growth, MSEs, Opportunities

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