FACTORS AFFECTING THE CAPITAL GROWTH OF MICRO AND SMALL ENTERPRISES: the case of Kirkos Sub-city, Addis Ababa

Abstract

The research study aimed at identifying factors that affect the capital growth of MSEs in kirkos sub city. In the study, a quantitative research method was used. Primary data was obtained using questionnaires and unstructured interviews. Secondary data was also collected from Documents, books, journals, and past research works. The target population of this study included the Micro and Small enterprises in kirkos sub city of Addis Ababa. Stratified proportionate random sampling technique was used to select 74 respondents. Data was collected from among those industries engaged in Construction, Service, Petty Trade, Manufacturing, and Urban Agriculture. Data were analyzed using descriptive and inferential statistics with the aid of Statistical Packages for Social Scientists (SPSS). Also, analysis of variance was carried out to examine the variation in the capital growth of enterprises related to the variation in each of the independent variables of the study. The Analysis of Variance (ANOVA) result indicates there is significance variation on the capital growth of Micro and small enterprises only in relation to the variations to planning practice and record keeping. But the descriptive statistics result shows better capital growth for enterprises owned by individuals with better education level, have prior management and industry experience. In addition it also shows better capital growth for those enterprises that uses planning and record keeping. The study recommended that Enterprise owners should focus on upgrading themselves in education using alternative programs; The stakeholders of the sector should work on preparing training programs on management issues and creating experience sharing opportunities especially to those enter into the sector without any previous business background; enterprises should start using plan to their business activities. On the other hand stakeholders of the sector should work on increasing the capacity of enterprise owners by providing assistances in the area of training which enables them to prepare their own plans; MSEs should enhance their record keeping skill through proper training and experience sharing with other enterprises.