Micro and Small scale Enterprises (MSEs), being essential springboards for economic growth and job creation, have been given due emphasis in many successful developing countries.
Since the Ethiopian government tailored the MSEs development strategy in 1997, this informal sector has helped many citizens in Ethiopia escape the vicious circle of poverty by creating opportunities to generate income with limited start up capital and skill. However, the youth both in urban and rural areas of the country have been heard complaining to their respective administrative bodies about obstacles they face in their effort to begin and expand their enterprises.
Irregular and erratic supply of raw materials, shortage of suitable working places, insufficient initial working capital and lack of effective marketing practices are the few among the many challenges frequently raised by those engaged in the sector. Moreover, the chance to engage in the sector is yet to be evenly and equally distributed to all people in rural and urban areas of the country. Those working in Micro and Small scale Enterprises also have limited opportunity to improve their capacity and skills and expand their enterprises. As the second major employment generating sector next to agriculture, according to the latest Central Statistical Agency data, there should be measures to curb these and other hurdles that the sector is facing.
Allocating adequate working capital to the sector could in turn contribute for more equitable income distribution. It could also be a breeding ground for new entrepreneurs. As the labour absorptive capacity of MSEs is very high, it should be taken as a major tool of minimizing unemployment in the country. The sector could also helps provide goods and services, that are of adequate quality and are reasonably priced. In a nutshell, the government should curb the multiple hurdles that the sector is facing if it has to benefit from the sector's propellant effect for rapid economic growth.