GROWTH CONSTRAINTS OF MICRO AND SMALL ENTRPRISES IN ADDIS ABABA: A STUDY IN WEREDA 3 OF GULLELE SUB CITY

Abstract

In developing countries like Ethiopia, micro and small enterprises comprise the largest part of the industrial sector. They are among the most important economic development agents through creating employee opportunities and contributing a significant share in gross domestic product of a country. The benefits of micro and small enterprises to a country will be maximized if they perform well and grow into medium enterprises leaving their place to the rise of new micro and small enterprises. Growth of micro and small enterprises requires identification and minimization of constraints that hinder their performance through a holistic and effective micro and small enterprises support service. This research tried to identify the main constraints that limit the growth of micro and small enterprises in wereda 3 of Gullele sub city. Eight constraints that limit the growth of micro and small enterprises were selected for the study, quantitative data was collected and analyzed from micro and small enterprises. The results showed financial factors as having the highest influence on growth of micro and small enterprises. High collateral requirement and interest rate from lending institutions, complicated loan application procedures of lending institutions and inadequacy of credit institutions are the major challenges for micro and small Enterprises in wereda 3 of Gullele sub city. The results indicate the demand for improved support service from micro and small enterprises across wereda 3 of Gullele sub city.