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Abstract

According to the Ethiopian Growth and Transformation Plan (GTP), development of micro and small scale enterprises in general and the manufacturing sector in particular, is one of the major strategies of urban poverty reduction. The main objective of the study was to examine the cha...

Abstract

According to the Ethiopian Growth and Transformation Plan (GTP), development of micro and small scale enterprises in general and the manufacturing sector in particular, is one of the major strategies of urban poverty reduction. The main objective of the study was to examine the challenges and prospects of micro and small scale manufacturing enterprises in urban poverty reduction. The study investigated challenges, livelihood changes, employment, role of the government and prospects in relation urban poverty reduction.
The study employed both quantitative and qualitative methods of research. A total of 150 micro and small scale construction enterprise were selected by probability proportionate to size and systematic random sampling technique from the ten sub cities of Addis Ababa. Data were also collected by using secondary sources, FGD and key informant interview. Purposive sampling technique was employed to select participants of FGD and key informant interview. The study also employed both quantitative and qualitative procedures of data analysis and interpretations.
It is found out that MSSMEs are creating enormous employment opportunities, significantly improving their members and others livelihood, and thereby reducing urban poverty. Very low amount of saving, inconsistency in the provision of infrastructure and inefficiency in credit services are identified as the main challenges of the enterprises. These challenges are impending the scaling up efforts of the enterprises. The provision of working place is found as the most successful support of the government. The result also revealed that higher amount of profit, higher level of scaling up, improved government supports and market linkage are the main prospects of the enterprises.

Based on the findings, it is recommended that provision of need-based capacity building trainings; develop enabling incentive mechanisms to increase saving and investment; formation of MSSMEs’ association; improvement in the provision of infrastructure; and reorganization the procedures of credit services can mitigate the challenges and enhance enterprises’ contribution in urban poverty.


Key Words: Employment, Manufacturing, Micro and Small scale enterprises, Poverty Reduction