Researches indicate that the Ethiopian population exceeds 100 million, 70 percent of which comprises youths under 30. Among the latter, many students are graduating from public and private higher educational institutions. However, since job opportunities are limited, they could not be assured of employment in government institutions. Hence, the government has been striving to engage them in micro, small and medium scale business enterprises.
With its many limitations, Micro and Small Enterprises (MSEs) Development Strategy of Ethiopia has been designed to redress unemployment and cut down levels of poverty. Besides, MSEs are thought to be the driving force to maintain the momentum of the rapid economic growth registered in all sectors, to foster entrepreneurship, to alleviate poverty and develop MSEs which could fundamentaly serve springboards for industrialized economy. However, they were not equitable and accessible for all citizens.
The vision, which was set to benefit all Ethiopians, has not been materialized due to many factors. Despite the setbacks, the enterprises have played massive role in reducing poverty and catalyzing development.
According to the Federal Urban Job Creation and Food Security Agency (FUJCFSA), since their proliferation in Ethiopia, MSEs have lifted millions of Ethiopians out of abject poverty through creating job opportunities and employing fresh graduates. Speaking to the Ethiopian Herald, Deputy Director with the Agency Asmelash Bezabh noted the presence of more than 600,000 enterprise engaged in various business activities and 1,625 of them will have been to medium scale level. ‘‘MSEs are becoming the backbone of the rapid economic growth. They have been employing a huge number of population. They also prove highly crucial components in enhancing the manufacturing sector, which will be a major sector of the economy by 2025.
However, it was not equitable and accessible for all. We are tirelessly working to make it accessible for all.’’ Since 1997, MSEs have exhibited tremendous developmental feat to standout as the major driving engines of the economic growth, which has been witnessed over the last two decades. As part of their achievement, recently the government has promoted them through selection in line with the nine criteria being entailed in MSEs, he reaffirmed. The Director added that profitability, market linkage, job opportunity and amount of capital are among the criteria set for selection. Thus, the transformation from small to medium scale level needs enormous effort and commitment.
The Federal Micro and Small Enterprises Agency indicates that the Ethiopian government has created 700,000 jobs through empowering MSEs in the first Growth and Transformation Plan (GTPI). This number will be expected to reach to 2.1 million in GTPII. From this number, women will have the greater number. According to Asmelash, the ente rprises have benefited many youths so far. Moreover, they have been playing a huge role in reducing poverty and industrialization process. ‘‘The government has given due attention for micro and small scale business enterprises. It has realized that these enterprises are the main catalysts in poverty alleviation strategy.
They would be vital for industrial transformation. Thus, among the 1,625 MSEs being promoted to medium enterprise, 1000 were selected as model enterprises,’’ He points out that 20 from Oromia, 17 from Amhara and 15 from Tigray states are among the model enterprises, which have been promoted to medium industry level and they were recognized and rewarded for the success they have portrayed. Consequently, they would be expected to increase their efficiency and labor force. Meanwhile, Tigray state is one of the states which have displayed encouraging development in SMEs. Girmay Gebrekidan, Tigray Small and Small Enterprises Agency, Manufacturing Industry Development, Directorate Director says that 5,022 SMEs have been playing crucial role in poverty reduction, job creation and manufacturing industry development in Tigray state.
‘‘Though there is an impressive economic growth nationwide, states like Tigray have huge number of population still under the poverty line. Having understood this, our Agency has been endeavoring to give support and supervision for small and medium enterprises to be upgraded to large industry level,’’ he says. He added so far, 4,397 small and 625 medium enterprises (5,022 in total) have been contributing for the economic growth of our state.’’
Tigray has 6,965 entrepreneurs, out of this number 1,290 are female and 5,675 are male, the director notes. Thus, still women are not benefiting from the package being allotted by the government compared with their men counterparts. Most of the SMEs in Tigray state have engaged in textile and garment, leather and leather products, agro-processing, mining, construction inputs, chemical products and metal products. The enterprises had created job opportunity for 8,612 people over the last six months and 2,616 of them are women, construction inputs sector takes lion’s share by creating jobs 2,839 people, according to Girmay. ‘’We give priority for youth, women and citizens in the low income bracket. And we are tirelessly working to empower them economically.
To encourage the enterprises, loan, land, machinery provision and market linkage supports have been provided.’’ As far as loan provision is concerned, he states that his Agency has planned to offer 84,000,000 Birr for 960 people and 72,493,170 Birr have been given for beneficiaries which accounts for 86.3 percent performance. Saving and Credit Enterprise such as Dedebit and Adeday have contributed for finance and loan packages for the enterprises. Regarding saving service, Dedebit and Adeday Microfinance Institutions have managed to save 58,734,363.01 Birr and 321 women are among the savers. Besides, the agency has created market for 1,509 enterprises locally worth 164,206,754.2 Birr.
It has also created foreign market linkages through helping enterprise to export manufacturing products. Chief Executive Officer (CEO) of United Textile and Garment, Mesud Abdelqadir resumed his family business with 36,000 Birr starting capital nine years ago in Mekelle, the capital of Tigray state. Currently, the company’s capital has reached 5,000,000 Birr and has created job opportunities for 40 people. He stressed that the support and follow up he gained from the government were invaluable to enhance his business. ‘‘The state government is helping us in creating market linkage.
Almeda Textile Factory is one of our partners in providing inputs, facilitated by Small and Medium Enterprises Agency of the state. We have also been given 2,000 square meter land in lease agreement .We are ready to commence construction soon.’’ According to Mesud, lack of capable skilled human power, electricity shortage and lack of input are among the challenges facing his company. He urges the government to address these problems. Though the development of MEs in Ethiopia had been encouraging over the last couple of decades, there were many bottlenecks. Among the challenges are lack of loan, lack of accessibility, lack of support and supervision. The allocation of budget to the SM scale enterprises was not fair and transparent.
Youths were obliged to be political party members to engage in SMEs and this scenario had deprived them chances to be beneficiaries as citizens. Fasil Abebe, who is a resident of Addis Ababa, had an ambition to involve in producing building materials with his friends. However, they could not get loan from the government since they were not party members. When they asked for loan, they had been told to be members first. As a result, they kick started the business they envisaged borrowing from families and friends. But as it was not enough money, they could not be successful.
‘‘Before Prime Minister Abiy Ahmed came to power, everything had been politicized. Politics had an invisible role in individual’s livelihoods. It was really hard to get loan unless one is a member of a party,’’ he said. Adding ‘‘ Now I hope it will be changed. The availability and accessibility of loan services should be improved and opened for all citizens. Ethiopians should be treated equally from their nation’s resources,’’ He added that trainings, which could enhance the knowledge on business and job creation, should be encouraged and promoted.
‘‘There are many people who do not have a knowhow on creating business. As a result, they get bankrupt and discouraged from keep it going. Thus, aside from launching loan packages for SMEs, the government should also place focus on trainings and workshops, which could develop awareness,’’ he noted. Ethiopia has envisaged to transform its agriculture-based economy into a manufacturing export oriented one in by 2025. To translate this big dream and realize set goals, the support, supervision and mobilization of MSEs should be strengthened because they are foundations for Medium and Large Scale enterprises. Besides, the government should revise its policy of providing loans and mobilizing youths in SMEs. It should work to alleviate the challenges confronting this driving force of the economy
Herald january2019
BY TSEGAY HAGOS
