Journal of Economics and Business
ISSN 2615-3726 (Online)
ISSN 2621-5667 (Print)
Published: 07 September 2020
The Effect of Government Incentives on the Performance of Micro and Small Enterprises (MSE’s) in Eastern Ethiopia: Evidence from Harar, Dire Dawa city Administration and Haramaya Town
Wondmagegn Biru Mamo
Haramaya University, Ethiopia
Download Full-Text Pdf
Keywords: Capital, Employment, Micro and Small Enterprises (MSE’s), Saving
MSE’s are serving as a vehicle of the economic development for developing countries and the government is trying to incentivize the enterprises through different mechanisms. But, the effect of government incentives on the performance of MSE’s is not yet examined in Eastern part of Ethiopia which is the main aim of this study. In the same vein, there is no study that used both capitals, saving amount and employment together as a proxy measure of performance in the study areas. Based on the findings, enterprises who accessed credit accumulated higher capital, saved higher money, and created higher employment opportunity than enterprises who do not get credit access. MSE’s operating on government provided working-premise have lower capital and lower savings but employed higher number of employees than MSE’s who work on their own or rented working premises. Enterprises who accessed tax incentives saved higher, but less average capital and less employment compared to enterprises who have not accessed tax incentives. Furthermore, MSE’s who accessed training have had higher capital, saving and employment compared to MSE’s who have not accessed trainings provided by the government. Finally, based on the findings, necessary recommendations were forwarded for considerations.
Abdulmelike, A. (2018). Challenges and Opportunities of MSEs in Ethiopia: A Review Paper. Journal of economics and sustainable development, 9, 68-74.
Abera, A. (2012). Factors affecting the performance of micro and small enterprises in Arada and Lideta Sub-Cities, Addis Ababa. MBA Thesis unpublished, School of Graduate Studies, Addis Ababa University, Ethiopia.
Alemayehu, D., & Gecho, Y. (2016). Determinants of Micro and Small Enterprises Growth: The Case of Durame Town, Kembata Tembaro Zone, Southern Nations and Nationalities and Peoples Region, Ethiopia, 2016. International Journal of Business and Economics Research, 5(5), 161.
Belay, K., Asmera, T., & Tekalign, M. (2015). Factors Affecting Developments of Micro and Small Enterprises. International Journal of Scientific and Research Publications, 5(1), 1-10.
Cherkos, T., Zegeye, M., Tilahun, S., & Avvari, M. (2018). Examining significant factors in micro and small enterprises performance: case study in Amhara region, Ethiopia. Journal of Industrial Engineering International, 14(2), 227-239.
Drbie, M., & Kassahun, T. (2013). Deterrents to the success of micro and small enterprises in Akaki-Kality Sub-City. Journal of Business and administrative Studies, 5(2), 1-33.
Firasew, M. Y. (2011). The Livelihoods Reality of Micro and Small Enterprise Operators: Evidences from Woreda One of Lideta Sub-city, Addis Ababa. Unpublished Master’s Thesis.
Fufa, F. G. (2015). Determinants of Micro and Small Enterprises Growth in Ethiopia: The Case of Nekemte Town of Oromia Region, Ethiopia.
Gebrehiwot, A., & Wolday, A. (2006). Micro and small enterprises (MSE) development in Ethiopia: Strategy, regulatory changes and remaining constraints. Ethiopian journal of economics, 10(683-2016-46843), 1-32.
Geleta, D. S. (2013). Socio-economic Contributions of Micro and Small Enterprises: The Case of Jimma City. Science, Technology And Arts Research Journal, 2(2), 123-134.
Habitat, U. N. (2008). Dire Dawa Urban Profile, United Nations Human Settlements Programme (Un-Habitat). ETHIOPIA: Technical Cooperation Division.
Haftu, B., Tseahye, T., Teklu, K., & Tassew, W. H. (2009). Financial needs of micro and small enterprise (MSE) Operators in Ethiopia. Occasional paper, (24).
Harari BoFED, 2006
LDCs, I. N. GROWING MICRO AND SMALL ENTERPRISES. UNCTAD, (no date).
Mengesha, B. T. (2018). Determinants of Micro and Small Business Enterprises Growth: The Case of Three Selected Woreda, Gurage Zone, Ethiopia.
Ministry of Urban Development and Housing (MoUDH) 2016, Micro and Small Enterprise Development Policy & Strategy
Munizu, M. (2016). Study on Determinant Factors of Micro and Small Enterprises Development in South Sulawesi of Indonesia. Mediterranean Journal of Social Sciences, 7(6), 121-121.
Nichter, S., & Goldmark, L. (2005). Understanding micro and small enterprise growth. Micro Report, 36.
Osoro, K., & Areba, A. M. D. N. J. (2013). Constraints Facing Women Entrepreneurs In Kenya: A Case Study OfMicro And Small Enterprisesin Kisii County. Journal of Humanities and Social Science, 16(6), 116-124.
Samuel B. (2019). Determinants of Youth Based Micro and Small Enterprises Growth in Dawro Zone A Case of Mareka Wereda, International Journal of Research in Business Studies and Management, 6(12), 2019, pp.27- 37
Seyoum, A., Aragie, M., & Tadesse, D. (2016). Growth of Micro and Small Enterprises in Addis Ababa City Administration: A Study on Selected Micro and Small Enterprise in Bole Sub City. College of Business and Economics, Jimma University, Jimma Ethiopia, United Nation, Addis Ababa Office, p–581.
Shishaye, H. A., & Nagari, A. (2016). Hydrogeochemical Analysis and Evaluation of the Groundwater in the Haramaya Well Field, Eastern Hararghe Zone, Ethiopia. J Hydrogeol Hydrol Eng 5: 4. of, 10, 2.
Tarfasa, S., Ferede, T., Kebede, S., & Behailu, D. (2016). Determinants of growth of micro and small enterprises (MSEs), Empirical evidence from Ethiopia”. R4D Working Paper 2016/3.
Weldeslassie, H. A., Vermaack, C., Kristos, K., Minwuyelet, L., Tsegay, M., Tekola, N. H., & Gidey, Y. (2019). Contributions of Micro, Small and Medium Enterprises (MSMEs) to Income Generation, Employment and GDP: Case Study Ethiopia. Journal of Sustainable Development, 12(3), p46.
Zemenu, A., & Mohammed, M. (2014). Determinant of Growth of Micro and small enterprises in Ethiopia (A Case of MSEs in Mekelle City, Tigray). International Journal of Advance Research in Computer Science and Management Studies, 2(6), 149-157.