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    EnterMoral-final Assign1

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    Getu Nigussie
    This document summarizes the key problems facing small scale businesses in Ethiopia. It identifies 8 major challenges: lack of finance, poor management skills, marketing challenges, constraints on work and sales spaces, insufficient use of technology, lack of machinery and spare parts, political instability, and shortage of skilled labor. Overcoming these obstacles, such as by improving access to credit and training on management skills, will be important to promote growth of small businesses and help reduce income disparities in Ethiopia.

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    EnterMoral-final Assign1

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    Getu Nigussie
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    This document summarizes the key problems facing small scale businesses in Ethiopia. It identifies 8 major challenges: lack of finance, poor management skills, marketing challenges, constraints on work and sales spaces, insufficient use of technology, lack of machinery and spare parts, political instability, and shortage of skilled labor. Overcoming these obstacles, such as by improving access to credit and training on management skills, will be important to promote growth of small businesses and help reduce income disparities in Ethiopia.

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    This document summarizes the key problems facing small scale businesses in Ethiopia. It identifies 8 major challenges: lack of finance, poor management skills, marketing challenges, constraints on work and sales spaces, insufficient use of technology, lack of machinery and spare parts, political instability, and shortage of skilled labor. Overcoming these obstacles, such as by improving access to credit and training on management skills, will be important to promote growth of small businesses and help reduce income disparities in Ethiopia.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    40 views7 pages

    EnterMoral-final Assign1

    Uploaded by

    Getu Nigussie
    This document summarizes the key problems facing small scale businesses in Ethiopia. It identifies 8 major challenges: lack of finance, poor management skills, marketing challenges, constraints on work and sales spaces, insufficient use of technology, lack of machinery and spare parts, political instability, and shortage of skilled labor. Overcoming these obstacles, such as by improving access to credit and training on management skills, will be important to promote growth of small businesses and help reduce income disparities in Ethiopia.

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    SALALE UNIVERSITY

    COLLEGEOF BUSINESS AND ECONOMICS

    DEPATMENT OF ACCOUNTING AND FINANCE

    Entrepreneurship Assignment

    Title: Problems of Small Scale Business in Ethiopia

    Section: - weekend Program (1st Year)

    Getu Nigussie-------------------------W0447/14-0

    Instructor:

    April, 2023
    Table of Contents

    Problems of Small Scale Business in Ethiopia................................................................1

    1. Introduction...........................................................................................................................1

    1.1. Lack of finance...............................................................................................................1

    1.2. Poor management skill................................................................................................1

    1. 4. Working and sales space constraints..........................................................................2

    1.5. Insufficient use of Technology..........................................................................................2

    1. 6. Lack of machinery and spare parts...............................................................................2

    1.7. Political instability..............................................................................................................3

    1.8. Shortage of skilled manpower.........................................................................................3

    2. General Comment.............................................................................................................3

    Conclusion...................................................................................................................................4

    REFERENCES...............................................................................................................................5
    Problems of Small Scale Business in Ethiopia
    1. Introduction
    Small businesses are types of corporations, partnerships, or sole proprietorships which
    have small number of employees and less annual revenue than a regular-sized business or
    corporation.Small scale business has been played a vital role in country’s economic
    development. They create jobs, contribute to industrialization and boost national economic
    output. They contribute hugely to the national economy by creating employment
    opportunities for many citizens. As a developing country, Ethiopia stands to gain by
    tapping into this sector. However small scale business face problems in Ethiopia. The major
    problems/challenges small scale business faces in Ethiopia are as follows.
     Lack of Finance
     Poor management skill
     Marketing Challenges
     Working and sales space constraints
     Insufficient use of technology
     Lake of machinery and spare parts
     Political instability
     Shortage of skilled manpower
    1.1. Lack of finance
    Non-availability of adequate funds in order to carry out business operations is one
    of the major problems. Due to lack of credit, many of these units fail to raise funds
    from the capital market. Many Banks prefer to allocate their resources to large
    enterprise rather than to small scale businesses.The reason is that large enterprises
    have a lower risk of default and their financial statements are clear.
    1.2. Poor management skill
    The majority of small business in Ethiopia are promoted and operated by a single or
    few numbers of persons and those team members may not possess all the necessary
    skills required to run the business efficiently. Many small business entrepreneurs do
    not have sound technical knowledge about the latest change in technology but they
    may not be successful in applying the trend in their business. They don’t have much
    to take care of all the activities of the business and due to lack of capital, they also
    not able to afford the professional managers that could help them run their business
    effectively and efficiently.
    1.3. Marketing problems
    Due to failures to properly use the market linkage opportunities, small businesses
    have failed to serve their debts timely; their products could not be sold or are sold at
    loss. Rent seeking behaviors observed on both the small business and the bureau
    officials have exacerbated the market linkage problems. Most of the government
    induced linkages which target holidays and festivals create only temporary jobs.
    Furthermore, lack of detailed support packages and their poor implementation
    coupled with poor access to market information are hampering the developments of
    small businesses.

    1. 4. Working and sales space constraints


    Access to working and sales premises are also the other challenges to small business
    operating in the country. A national strategy was designed to construct appropriate
    working shades in different parts of the country. As a result, considerable number of
    manufacturing service rendering premises have been built and offered to both small
    businesses that are working in the manufacturing and service sectors.
    Even though the government pays due attention on the construction and expansion
    of working shades, the implementation has its own drawback.

    1.5. Insufficient use of Technology


    ICT is evolving rapidly. People are interested in buying mobile phones, tablets,
    computers and other electronic devices. The demand for electronic devices has
    increased rapidly in recent years. As a result, many consumers prefer to order
    online, and the e-commerce market continues to grow in our daily life. However,
    small scale businesses have not been able to take full advantage of these
    opportunities in Ethiopia. Because poorly developed telecommunication
    infrastructure and also most small businesses don’t have their own websites even if
    they haven’t company social media pages.
    1. 6. Lack of machinery and spare parts
    Small businesses face a financial and knowledge gap to install modern machines and
    equipment in the production process to compete with large industries. Majority of
    small businesses use outdated and traditional technology and equipment. The lack
    of proper technology and equipment poses a major obstacle to the development of
    small scale industries. In addition, small businesses that use better technology do
    not have access to skilled technicians and spare parts at affordable prices when
    their machines break down. This has made the growth of small businesses very low.

    1.7. Political instability


    Political instability inevitably disrupts the smooth running of the business and the
    free flow of goods and services. Even in countries perceived as politically stable,
    political change can have significant impact on business. This may simply be
    because the government changes the legal framework, which as we have seen in the
    previous section is wide-ranging, but it could also be that a change of government
    changes the political attitudes towards business. This may result in less business-
    friendly policies, changes in business taxation and regulations

    1.8. Shortage of skilled manpower


    Labor shortages can have many negative effects on small businesses. Lack of skilled
    labor can slow a company’s growth. Small businesses are owned and operated by
    one person or a small group of owners who do all the administration often with a
    little help from others.
    2. General Comment
    To overcome the financial problem of small business enterprise, the government
    should ensure access for credit service from banks and other financial
    institutions.throogh using the monetary policy that governs banks, the government
    can enforce public and private banks to extend loan quotas to small business
    enterprise which is under a so called mandatory credit extension system
    To encourage innovation and new product development in small businesses, the
    government and support agencies should focus on providing appropriate training to
    improve technical and managerial skill of enterprise owners. Moreover, to
    accelerate innovation and entrepreneurial activities of small business enterprise the
    government should support and facilitate the acquisition of new technology and
    skill required to operate machinery.

    Conclusion
    Ethiopia has immense potential for expanding Small businesses and promoting

    innovations. Raising per capita income is necessary for economic growth. Small-scale

    industries will bridge the gaps in per capital income and reduce the urban and rural

    disparities. Achieving economic resurgence through small scale businesses is the most

    recommendable solution for developing countries like Ethiopia. However, small scale

    businesses face challenges from lack of finance, poor management skill, political instability,

    insufficient use of technology, lack of machinery and spare parts and shortage of skilled

    manpower, which are some the reasons of behind the slow growth of small business in

    Ethiopia.
    REFERENCES

    Small and medium enterprise in Ethiopia-https://archives.kdischool.ac.kr

    Problem of small business in Ethiopia-https://www.scribd.com/document

    Micro and small enterprise in Ethiopia: success to credit:https://www.gbnews.ch

    Challenges facing small and medium-sized enterprise in Ethiopoia:https://addisinsight.net

    Challenges and prospects of small scale enterprise in Ethiopia: https://www.academia.edu

    Small business:https://en.m.wikipedia.org

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