FACTORS AFFECTING THE PERFORMANCE OF MICRO AND SMALL SCALE ENTERPRISES THE CASE OF KOLFE KERANIO SUB-CITY, ADDIS ABABA

Abstract

This research paper was aimed at investigating factors affecting the performance of MSEs with a special emphasizes on Textile & Garment, Food Processing and Wood & Metal work sectors in Kolfe Keranio Sub-City, Addis Ababa. In order to meet the objectives of the study, data collected through questionnaires were analyzed using statistical analysis such as descriptive and inferential analyses. Mean and Standard deviation explained the descriptive statistics while Pearson Product Moment Correlation Coefficient and Multiple Regression applied. Information was gathered using a five point Likert scale questionnaire from a sample of 197 micro and small scale operators and through an interview conducted with 10 micro and small scale operators. The sample operators were selected using stratified sampling and simple random sampling techniques; Information from an interview was analyzed using descriptive narrations through concurrent triangulation strategy. The empirical study elicit five major independent variables which seem to affect performance of MSEs in Kolfe Keranio sub-city which include: Inadequate finance, Lack of working premises, Marketing problem, inadequate infrastructure and Poor management practices. The findings further indicated that among the independent variables Marketing, Financial and Management factors were the major factors that significantly affected performance. Based on the findings it was recommended that micro finances institutions should improve access to finance through offering a better lending terms and conditions and government to establish a centrally managed marketing sites that will equally give access to market in order to improve performance of MSEs in Addis Ababa.