It is crystal clear that Ethiopia does have a range of approaches and opportunists to back its journey towards economic sovereignty and lasting development. Of the myriads of means towards this end, the expansion of micro, small and medium enterprises can be prettily cited as a very good example.
Taking this solid fact into account, The Ethiopian Herald had a stay with Lemma Birru, an economist graduated from Dilla University, to have professional opinion regarding the role micro, small and medium enterprises have been playing in promoting national economy and job creation scheme at national level.
He said, “Micro, Small, and Medium Enterprises are instrumental in shaping the economic landscape of emerging markets like what is happening in developing nations like ours. These enterprises ability to innovate, generate employment, and contribute to national economic development makes them quite indispensable. The growth potential of these enterprises is undeniable in spite of a range of challenges.”
In the dynamic landscape of national, regional, continental and even global economics, emerging markets have really played pivotal role in shaping the future of the business world. These enterprises play a crucial role in fostering innovation, generating employment opportunities and driving economic development, Lemma added.
According to him, Micro, Small and Medium Enterprises are businesses that operate on a relatively smaller scale compared to large corporations. These enterprises encompass a wide array of sectors, from manufacturing and agriculture to technology and services. Their distinguishing features include limited manpower, lower capital investment, and localized operations. They often function as the catalysts for economic inclusive nature, as they provide jobs to a significant portion of the population.
These enterprises are of significantly useful in boosting innovation, employment generation, market diversification, inclusive growth via providing citizens with opportunities for economic participation and entrepreneurship.
However, he said these sectors are not devoid of challenges. To mention but a few, they have faced with several obstacles hindering their progress like lack of access to finance, infrastructural constraints, regulatory burdens, limited technical expertise and knowledge as well as market challenges.
As to Lemma, understanding the nuances of private sector development in emerging economies in Ethiopia is pivotal for sustainable growth. Governments, international organizations, and the private sector itself need to collaborate to create an enabling environment for the enterprises to thrive.
As far as the viable means employed to help the sectors address the challenges are concerned, the Ethiopian government needs to create wider access to finance, expand capacity building which means providing training and technical support to entrepreneurs to enable them to enhance their skills and capabilities, enabling them to compete effectively, he added. Besides, policy reforms need to be injected towards simplifying regulations and reducing bureaucratic red tape thereby creating a friendlier business environment for the enterprises would be easy.
As to him, the two other most important ways need to be well embarked on, too. These are infrastructure investment and market access since facilitating enterprises access to domestic and international markets can expand their reach and potential.
Given the importance of private sector development in Ethiopia to achieve sustainable and inclusive economic growth, Lemma stated that the country has to well invest in these developing partners.
Having better understanding of how the private sector in the country can be developed, the government has been attaching due emphasis to them and widely open local avenues for them like adjusting micro-finance access, expand investments and business development services, he added.
Undoubtedly, said Lemma, the aforesaid enterprises are significantly useful in fueling sustainable development goals of Ethiopia through creating employment, alleviating poverty, and improving citizens’ living standards if the well identified challenges such as lack access to finance, problems in relation to access to electricity, and tumultuous trade regulation are the major constraints for the development of the sector.
Expanding enterprises and entrepreneurship can be a cure for Ethiopia’s problems such as unemployment, inequality, low productivity, disconnect from global value chains, etc., he said.
Adding he said, “Hence, investment in entrepreneurial ventures can contribute immensely to economic growth and job creation and jobs in turn provide income, which improves living standards and consumption possibilities. Micro, small and medium-sized enterprises are a major source of growth, innovation and jobs and their potential impact on achieving many of the sustainable development goals is much greater than their size. Therefore, there is a great interest of young people to start a business and many of them are willing to undertake risks and challenges of entrepreneurship.”
According to Lemma, these enterprises provide a substantial collective contribution to the national economy, contribute a lot to employment, employ the vast majority of any local labor force and have an integral role in any sustainable growth trajectory and it is ‘the missing link’ for inclusive growth.
No doubt, said Lemma, financial stability in Ethiopia enhances entrepreneurial development which improves economic growth.
In sum, the existence of favorable working environment would play a key role in the growth and development of enterprises. As their access to sufficient premises in proper location increases enterprises’ financial performance, poor infrastructure and power outages which have affected productivity should be addressed. In addition, strong intervention to infrastructure development, particularly electricity supply, working premise that increase ease of doing business and sustainable development of the country have to be seriously capitalized.
He said, “The presence of market linkage enables enterprises to supply their produce and acquire inputs in the commercial value chain, which create jobs and improve their efficiency. These enterprises have been a key area of intervention to sustainable development specifically in growing youth population of the country.”
He further stated that, employment in enterprises leveled as high in terms of its extent of importance to poverty reduction, empowered women socially, economically, and contributing to local economy and communities through income tax payment in Ethiopia.
The agility and responsiveness of micro and small-enterprises lets them play a key role when it comes to innovation economic growth and national income generation.
These companies produce a smaller environmental footprint in comparison to large corporations, making them the key players for promoting responsible business practices and reducing their negative impact, he opined.
In due course of promoting enterprises and helping they get grown well, the role of the government, line ministries, states business companies and even international cooperators have to move in unison to help all the enterprises make a difference.
Besides, financial institutions, the government, and corporations, be they are micro, small, medium or large ones would be of meaningful partners and they would play invaluable role in getting the business grow and in supporting these businesses, through the creation of funding and training programs.
The very point that needs to be understood in this regard is collaboration between/among large and small companies can also be mutually beneficial, since micro-enterprises and other business operators can usually bring agility and a breath of fresh air that larger companies can use for their own transformation and innovation.
It is quite important that the government, companies, enterprises themselves and even the general public have to recognize the important role these companies play, both in the economy, in terms of creating job opportunities and even protecting the environment from pollution if the companies are working carefully and well valuing the significance of having neat and appealing ecology. Truly, all sorts of enterprises are driving forces behind the economy, prime movers of innovation, and key players in building a sustainable future by backing the economy and curbing unemployment.
BY MENGESHA AMARE
THE ETHIOPIAN HERALD TUESDAY 20 FEBRUARY 2024
