The Micro And Small Enterprise Sector In Ethiopia
The five-year Growth and Transformation Plan (GTP) has given particular attention to the expansion and strengthening of micro and small-scale enterprises The sector is believed to be the major source of employment and income generation for a wider group of the society. The major objective of this program, which is creating and promoting MSEs in urban areas, envisages reducing urban unemployment rate. A total of 176,543 MSEs were established in 2009/10 employing 666,192 people. The number of established and total employment created went up 141.6 and 25.6 percent, respectively, compared to a year ago. The total amount of loan received from micro finance institutions was Birr 814.1 million under the review period, 22.8 % higher than last fiscal year.
Development strategy
The Ethiopian government released the country’s first MSEs development strategy in November 1997 E.C. The primary objective of the national strategy framework is to create an enabling environment for MSEs. In addition to this basic objective of the national MSE strategy framework, the MoTI has developed a specific objective which includes, facilitating economic growth and bring about equitable development, creating long-term jobs, strengthening cooperation between MSEs, providing the basis for medium and large scale enterprises, promoting export, and balancing preferential treatment between MSEs and bigger enterprises. The strategy outlines the policy framework and the institutional environment for promoting and fostering the development of MSEs and stimulating the entrepreneurial drive in the country.
The federal development agency
To further ensure the proper institutional coordination for MSE support functions, the government created the new Federal Micro and Small Enterprises Development Agency (FeMSEDA) in 1998. In addressing above objectives, FeMSEDA is expected to provide support to the Regional Micro and Small Enterprises Development Agencies (ReMSEDA).
The FeMSEDA (2006) provide leadership by delivering ‘training the trainers’ programs to equip regional agencies, business associations, and other professionals to deliver entrepreneurship training and facilitation services and BDS to MSEs; studying the problem of identifying viable markets for MSEs and addressing product quality issues; disseminating information to MSEs; and advising government on MSE policies and strategies. FeMSEDA also operates skills and technology training facilities, much like incubators, where training is offered in woodworking, metalworking, garments making and handicrafts. It also provides a marketing outlet for MSE products in its sales and display center and organizes MSE product exhibitions at national and local trade fairs.
The FeMSEDA has been established as an autonomous government institution having its own legal identity and run by a board of management which includes representatives of the private sector. Private sector participation in the management of enterprise promotion agency is a new approach in Ethiopia. The FeMSEDA is directly accountable to the MoTI. In 2000, the regional governments also provided for the establishment of ReMSEDAs to provide extension services to MSEs at the regional, zonal and wereda level. The MoTI through FeMSEDA, provides institutional support.
