Nowadays, both in the local and international arena, the discourse of micro and small enterprises (MSEs) serving as a gateway or vehicle to industrialization and sustainable development for developing countries has already taken center stage. Micro and small enterprises are receiving close attention at present, especially in the developing world, seeing the German MSE sector – the Mittelstand – as a role model, and taking lesson from the country’s success story.
Ethiopia, for long now, has recognized the role micro and small enterprises can play in its socioeconomic development, sculpting an MSE policy and strategy more than a decade ago. The sector is prioritized by the government as an indispensable means for job creation, economic diversification and alleviating poverty. Further, the MSEs development was integrated in the GTP as one of the pillars of the industrial development plan, and taken as one of the best tools to implement the country’s industrial development strategy. Even though there have been a lot of achievements made through the MSE sector, there is still a long way to go in terms of the sector serving as a propellant to industrialization and being a base for medium and large industries.
Micro and small enterprises (MSEs) has left a “missing gap” in Ethiopia, and in the whole developing countries for that matter, in terms of being major driver of industrialization, of course, and also as carriers of indigenous knowledge and social capital. Dr. Wondaferahu Mulugeta, Economics Associate Professor at Federal Meles Zenawi Leadership Academy, says that as a country, Ethiopia should look into expanding its medium and small enterprises, as they represent indigenous knowledge, and should capitalize on them.
As to him, there is a missing gap when it comes to the country capitalizing on the indigenous knowledge through its micro and small enterprises, seeing as how they can serve as carriers of indigenous knowledge and social capital. “The missing gap didn’t come now; it has been with us for the past 40 to 50 years. For instance, we as a people have a long history of smelting iron, but we have already missed the chance to build upon it [and be in a great place of advantage].”
He said that countries like Korea have hugely benefited from capitalizing on their indigenous knowledge. “We can also look at countries like Brazil and India as well.” Of course, one of the major and main challenges that have been identified by the relevant stakeholders is the fact that there is lack of entrepreneurial capability within MSEs operators, which can be solved by exploiting the indigenous knowledge and encouraging social capital formation.
After all, there is a link between social capital and knowledge exchange, and promoting MSEs’ innovation and entrepreneurship capability. According to various studies, MSEs in developing countries are based on indigenous knowledge that thrives largely on the basis of implicit knowledge and in knowledge exchange with other firms and organizations in the knowledge sphere. And where there is such transaction, the knowledge base of indigenous firms would grow, increasing the scope for firms to be creative, innovative and entrepreneurial.
While Dr. Wondeaferahu highlights how, if properly nurtured, indigenous knowledge would be capable of generating innovation and growth, he also acknowledges the importance that resides in knowledge transfer too. Knowledge transfer is very crucial for developing country like Ethiopia as it allows adopting, modifying knowledge from prosperous countries, and then reverse use them, he remarked. “However, , indigenous knowledge means that we have already created it; and encouraging the utilization of it means that is the same as holding on to those knowledge.
It means bolstering local innovation and entrepreneurial capacity, and developing the country’s national [indigenous] technological capability,” he added. To this end, Dr. Wondaferahu believes that huge attention must be given to setting up an institution that is committed to overseeing the knowledge’s management, and start working on ways to exploit it.
He indicated that there have been now some works done to better manage indigenous knowledge so that it becomes an important input in the country’s endeavor of securing sustainable development. “As a country we should not forget about the missing gap as I believe they will be the basis for our industrial transformation,” he concluded.
The Ethiopian Herald, February 13/2019
BY ROBEL YOHANNES
