GROWTH DETERMINANTS OF SMALL SCALE HANDICRAFT MANUFACTURING ENTERPRISE’S: THE CASE OF ADDIS ABABA, ETHIOPIA

Abstract

The important role of small handicraft manufacturing enterprises as a source of income and employment to poor households is a widely acknowledged fact in many developing countries. The objective of this study is to identify factors that contribute to the growth of handicraft Production enterprises in Gulele Sub city of the Addis Ababa city administration. The study used survey methods on 101 handicraft production enterprises formally registered enterprises of the mentioned sub city. The Data analysis was done using multiple linear regression methods and the results show that handicraft production started with an average paid capital of Br 4,292 and 2 employees. The sources of finance for the startup of the business are personal saving and family assistance. Lack of finance was the most constraining factor. The econometric results show that age and start up size of enterprises are negatively related with growth of enterprises at 1% significance level. The extent of diversification of products and availability of infrastructural facilities were found to influence employment growth at 1% and 5 % significance level respectively. The availability of own premise and the availability of workers with a vocational formal training are positively related with growth of enterprises at 10% significance level. The findings of the study have important implications to the employment creation of handicraft enterprises. As a way out of financial constraints, group lending approaches, small and increasing credit, link of credit savings or micro financing institutions should be undertaken. The city government has to facilitate the growth of handicraft productions by accessing necessary infrastructural facilities and working premises.