THE ROLE OF MICRO AND SMALL ENTERPRISES IN EMPLOYMENT CREATION AND INCOME GENERATION IN GEDEB WOREDA OF GEDEO ZONE, SOUTHERN ETHIOPIA

ABSTRACT Micro and Small enterprises are increasingly recognized as major engines of growth. The purpose of the study was to assess the role of micro and small enterprises in employment creation and income generation in Gedeb Woreda of Gedeo zone in SNNPRS. The research was a mixed type, i.e., qualitative and quantitative, using cross-sectional series, in which key informant interview, focus group discussion, and survey questionnaires were used to capture data from 220 respondents were selected from 64 MSEs out of the total population of 77 MSEs having 489 members. The collected data were displayed using tables, graphs, pie chart, and bar chart; descriptive statistical tools were used to analyze data by SPSS version 20. The sector of engagement include: construction, manufacturing, services, retail trade, and urban agriculture. Source of start-up capital were personal saving, family assistance, loan from micro finance institution, and NGO assistances; and amount of start-up capital ranges from Birr 5,000.00 up to Birr 50,000.00; which increased much at the end the period under the study. Operators joined MSEs so as to create employment, generate income and earn better income. The total number of MSEs in the Woreda showed increasing trend from time to time due to the attention given by the government for the development of MSEs, the awareness created on the part of society, the attractiveness of some sectors like construction and manufacturing sectors, the changes shown on the living standards of operators, and the level of poverty in the society and the struggle made by them to escape from it. MSEs in the study area played crucial role in employment creation for both jobless society and for those who resigned from their jobs sustainably for both family employees and employees from external labor market who were paid monthly salary ranging from Birr 275.00 up to Birr 1,600.00. Similarly, MSEs played significant role in income generation and livelihood improvement as monthly income earned before and after joining MSE increased. Shortage of start-up capital, market problem, government rules and regulation, lack of business skill, lack of adequate supply of input, lack working and marketing place, lack production technical skill, lack of qualified staff, high material cost, lack of finance/credit facility, lack of up to date business information, high taxes, lack of managerial skill, lack of access business training, and lack of accounting system as major challenges faced in operating MSEs. The paper recommended that awareness creation works to the needy people should be undertaken; the woreda administration should strive to increase the level of Gedeb town to 3rdlevel so that independent Town Administration is structured and undertake urban projects of the TIO should speed up the construction BDS, and should provide adequate up-to-date business information and intensive entrepreneurship trainings; and Omo Microfinance Institution Gedeb branch office and Trade and Industry Office should avail loan able funds.