Investment Problems Facing by Small Businesses: The Case of Construction Material Producing Enterprises in Addis Ababa, Ethiopia

Abstract

Micro and small enterprises operate within the environment of varies constraints but their contribution to economic development is highly considerable. They are the basis for entrepreneurship and large businesses. This study has attempted to show the problems encountered by small businesses in the construction sector. It particularly looked into investment problems faced by small enterprise engaged in the production of cement materials in selected sub cities in Addis Ababa. The roles of government in the development of investment and the major factors that affect the flourishing of investment are briefly outlined. Some potential problems of investment in business such as access to credit, problems that come from the activities of regulatory bodies, problems in connection with securing land and infrastructure are highlighted. Both primary and secondary data sources were used for this study. For the latter, different sources books and research articles are reviewed through the descriptive type of study. To obtain the necessary information from the primary sources survey method was used. To analyze the data both qualitative and quantitative methods were used. Respondents were asked to give information on the types of ownership of their business and 48(64.86 %) are owned by partnership while 26(35.14 %) by single individuals. In the case of enterprises owned by partnership there are 534 members of which 408(76.46 %) are males and 126(23.60 %) are females. From the whole enterprise only 10 (20.83 %) are without female members and the majority 38(79.17 %) comprise both male and female owners. Of which, 40.54 % of them have secondary education and 10.81% none educated. The findings of the research reveal that high cost of raw materials in the most severe problem cited by the enterprises. The highest percentage of the enterprise indicates that the rising price of raw materials especially cement has put a negative impact on their business. Next to this lack of permanent premise for their operation is brought out as main problem. Many of the enterprise are operating in a premise which is temporary, and a good number of them operate in a rented land and payment for the rent is gone up. Shortage of capital is raised as a third problem of the enterprises. Many of them have expressed that they want to expand their business as market for their products is not a serious problem, but lack of capital has become an obstacle.

Keywords: Micro, Small enterprises, Construction material, economy

DOI: 10.7176/RJFA/12-9-01

Publication date:May 31^st 2021