22 April 2018

Ethiopia: SMEs - Driving Force for Realizing Renaissance

Micro and Small Enterprises (MSEs) Development Strategy of Ethiopia has been designed to maintain the momentum of the rapid economic growth being registered in all sectors, foster entrepreneurship, alleviate poverty and develop MSEs, which lay fundamental foundation for industrialized economy.

What are the achievements the sector displayed and set backs it experienced in the eyes' of pertinent bodies?

According to the Federal Urban Job Creation and Food Security Agency (FUJCFSA), since their thriving in Ethiopia, MSEs have lifted millions of Ethiopians out of abject poverty.

Speaking to The Ethiopian Herald, Deputy Director with the Agency Asmelash Bezabh said that more than 600,000 enterprises are engaged in various business activities and 1,625 of them will be promoted to Medium Scale level at the end of this fiscal year.

"MSEs are becoming the backbone of the rapid economic growth. They are also highly crucial components in enhancing manufacturing sector which will be the major sector of the economy by 2025."

Since, 1997 MSEs have shown tremendous development to be noted as the major driving engines of the incredible economic growth, which have been registered over the last two decades now.

As part of their achievement, the government has decided to promote them conducting selection in accordance with the nine criteria being included in MSEs, he reaffirms.

The Director adds that profitability, market linkage, job opportunity and amount of capital are among the top most criteria set up for selection.

The Federal MSEs indicates that the Ethiopian government has created 700,000 jobs through empowering MSEs in the first Growth and Transformation Plan (GTPI) and this number will be expected to reach to 2.1 million in GTPII.

Asmelash indicates that the enterprises have been huge contributors for poverty reduction and industrialization process.

"The government has given due attention for micro and small scale business enterprises. It ensured that these enterprises are the main catalysts in poverty alleviation strategy. They would be vital for industrial transformation. Thus, among the 1,625 SMES being promoted to medium enterprise, 1000 were selected as model enterprises,"

He points out that 20 from Oromia, 17 from Amhara and 15 from Tigray states are among the model enterprises to be promoted to medium industry level and they would be recognized and rewarded in the coming May 2018.

For his part, Girmay Gebrekidan, Tigray Small and Medium Enterprises Agency, Manufacturing Industry Development Directorate Director tells Herald that 5,022 small and medium enterprises have been playing pivotal role in poverty reduction, job creation and manufacturing industry development in Tigray state.

"Though there is an impressive economic growth nationwide, states like Tigray have huge number of population still below the poverty line. Having understood this, our Agency has been endeavoring to give support and supervision for small and medium enterprises to be upgraded to large industry level," he says and adds "so far, 4,397 small and 625 medium enterprises (5,022 in total) have been contributing for the economic growth of the state."

Tigray has 6,965 entrepreneurs, out of which 1,290 are female, the Director notes.

Most of the SMEs in Tigray State have been engaged in textile and garment, leather and leather products, agro-processing, mining, construction inputs, chemical products and metal products.

The Enterprises has created job opportunities for 8,612 people over the last six months and 2,616 of them are women, construction inputs sector takes lion's share by creating job for 2,839 people, according to Girmay.

"We give priority for youth, women and low income societies. And we are tirelessly working to empower them economically. To encourage the enterprises, loan, land, machinery provision and market linkage supports have been provided."

As far as loan provision is concerned, he states that his Agency has planned to offer 84,000,000 Birr for 960 people. And 72,493,170 Birr, which accounts for 86.3 percent performance, have been given for beneficiaries.

Saving and Credit Enterprise such as Dedebit and Adeday have made financial contribution useful for loan packages of the enterprises.

Regarding saving service, Dedebit and Adeday Microfinance Institutions have managed to save 58,734,363.01 Birr and 321 women are among the savers.

Besides, the Agency has created market for 1,509 enterprises locally worth 164,206,754.2 Birr. It has also created foreign market linkages through helping enterprise to export manufacturing products.

Chief Executive Officer (CEO) of United Textile and Garment, Mesud Abdelqadir resumed his family business with 36,000 Birr starting capital nine years ago in Mekelle, the capital of Tigray state. Currently, the company's capital has reached 5,000,000 Birr and has created job opportunities for 40 people.

He stresses that the support and follow up he gained from the government was very important to enhance his business.

"The state government is helping us in creating market linkages. Almeda Textile Factory is one of our partners in providing inputs facilitated by Small and Medium Enterprises Agency of the state. Also we have been given 2,000 square meter land in lease agreement and we are ready to commence construction soon."

According to Mesud, lack of capable skilled human power, electricity shortage and lack of input are among the challenges facing his company and urges the government to address these problems.

Ethiopia has envisaged to transform its agriculture-based economy into manufacturing export-oriented yields by 2025.

According to pertinent bodies in the sector, to realize this goal, the support, supervision and mobilization of Micro and Small Enterprises should be strengthened because such enterprises are foundations for Medium and Large Scale ones.

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