Challenges of Economic Integration of Small and Medium Enterprises in Manufacturing Sector Tigray Regional State Mekelle City

Abstract

The purpose of this study is to assess the economic integration of small and medium enterprises in Ethiopia, in the case of Tigray Regional State Mekelle. The development of Small and Medium Enterprises (SMEs) in the manufacturing sector has been highly agenda on the Tigray Regional State to generate employment and reduce poverty. The goal of the economic integration of SMEs is have free movement of capital, labor finance, and service between SMEs in the region and outside the country and becomes a more efficient in the allocation of resources. This study was employed a qualitative research method conducted in Mekelle city, focusing on the challenges of SMEs. Collected data by interview 15 (10 SMEDA leaders and stakeholders) and eight focus group discussions with the SMEs council, including non-participatory observation of the researcher. The result also revealed that small and medium enterprises are operated in a problematic situation suffering from financial constraints and work premises are found out as a general challenge to all SMEs. Also, the commitment, capacity, and attitude of leaders at a different level to support and coordination for SMEs is weak. The critical problem of peace and security among the Ethiopian Regional Governments and neighboring countries hinders the market linkage among them. On the other hand, the dependency and rent seeking mentality of the SMEs to prepare a business plan and promote their products. The commitment, attitude, and capacity of the leaders at a different level to support and coordinate SMEs' activities is feeble. The researcher recommends that the regional government should establish specialized financial institutions and market supporting unit to help SMEs. Alongside the asset of the operators should be considered as collateral to solve the liquidity problem of the enterprises. Capacity building to operators and SMESDA leaders are very critical to internalize the experience gain from others to support SMEs efficiently. Work premises should be ready before the SMEs are established.

Keywords: Small and Medium Enterprise, Economic Integration of Small Enterprises, work premises

DOI: 10.7176/JESD/11-4-14

Publication date: February 29^th 2020