Assessing The Challenges And Prospects of MSMEs Development: In The Case Of Ethiopia

Abstract

For a country like Ethiopia, Africa's second most populous nation, the development of MSMEs helps to reduce unemployment and boost the country's overall economy by fostering the growth of industries. For this reason, the overall objective of the study is to assess and analyze major challenges hindering the development of Micro, Small, and Medium Enterprises in Ethiopia. Wood and metalwork, food processing, and textile and garment subsectors located in Nifas Silk Lafto Sub-city/Addis Ababa, were chosen for data collection due to their convenience. Survey data was collected from 291 MSME owners and/or managers, through a questionnaire. Descriptive findings showed that financial, infrastructural, working place, and technological factors, respectively, were found to be the four top most severe problems that challenged the MSMEs development. Inferential analysis output, on the other hand, indicates that technological, marketing, work place, political-legal, and infrastructure factors all have a significant effect on the development of MSMEs, with the exception of infrastructure.