Micro & Small scale Enterprises Development (MSE)
Ministry of Urban Development Housing and Construction

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
Before the MSE strategy developed i.e 2003 E.C there was no clear strategy and implementation manuals for micro and small enterprises in the country to deal with multifaced problems of the sector such as ; high unemployment for Youth & women, Weak work culture and problem of attitude to do jobs of any kind available , skill gap to plan and use of technology identification of skill gaps and, limited Coverage of loan provision for micro finance institutions , unbalanced provision of production & sales premise and other problems emanated from lack good governance . In addition the country had a limited absorption capacity in public service sector to employ all graduates and other job seekers on the other hand MSE was not considered as part of business making idea creation method to solve the socio economic problems. Even though MSE enterprises were functioning in different trades most of them were not successful and there was a problem of high expectation of support every things from government. Graduates from different institutions were also busy in seeking employment opportunities in the public service sectors than creating their own jobs. Besides these idea was also shared by the family of the youth.

B. Strategic Approach

 2. What was the solution?
To militigate the above mentioned problems in the sector the government set a strategy and implementation manuals are prepared for micro and small enterprises in 2003 E.C . A continuously and an extensive awareness creation , workshops and panel discussions were made with micro and small enterprise actors and implementing bodies about the strategy and the implementation manuals. We believe that the attitude of the society towards the benefit is changing through time and the initiative of the youth to create their own job is developing. Thus the government gives strong emphasize to micro & small enterprises development in widely establishing small micro finance institution to fill the financial gap of enterprises and training facility to fulfill the skill gaps in and other expertise supports in one stop service delivery .

 3. How did the initiative solve the problem and improve people’s lives?
TheFederalMicro and Small Enterprise Development Agency has given special emphasis to the development ofMicro and Small Enterprise sector country wide by coordinating and building capacity of the Regional Micro and Small Enterprise Development Agencies and continuously assessing the sectors limitationand addressing those. The Agency accomplishes its task in co-operation with concerned stakeholders and integrating best practices from foreign countries. In order to facilitate/ provide all the required services to the MSEs under one umbrella, one stop servicecenters are established at grass root level. The Centers provide the services mainly for MSEs and job seekers. They are established depending on the size ofpopulation of the respective sub-city or Kebele. The service providers in the centers are constituted from MSE Development office, Trade and Industry office ,TVET, Revenue, and Micro Finance Institutions of the given city. In one stop service centers diverse servicesare given for the job seekers as well as for enterprises. The services include; - Legalization of enterprises, - Provision of technical support for micro and small enterprise at their working place - Identification of the skill gaps to conduct skill gap training, - Preparation of Exhibitions and bazaar to share and exchange best practices, promote their products and services and facilitate market linkages. In addition, in collaboration with executing bodies like MFI & TVET and other governmentbodies, the Federal Agencyis facilitating market linkages in government Mega projects for the youth. This is intended to enable the youthcreate seed money and in the long run to transform to other activities and starttheir own businesses, whereby they can contribute to thereduction of unemployment.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
Since the establishment of the MSE strategy there were further implementation mechanisms such as by encouraging and supporting the TVET and University graduates to join the MSE sector creates job opportunities as per their academic/technical backgrounds.The implementation of the strategy was further extended/strengthened ,by building the capacity of Micro and Small Enterprises’ promoters and other implementer/ actors, facilitating access to financial resource, providing working and selling premises, facilitating adaptation, development and transfer of technology among themselves and from others in collaboration with TVET, facilitating market linkage locally and abroad. Currently implementation of kaizen philosophy is being pursued in the promotion of the MSE sector. It is supposed to help them to increase their product quality and productivity, which shall ultimately bring about transformation of enterprises from Micro to Small and from Small to Medium size enterprises.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
The stakeholders of the sectors are:- • Micro Finance Institutions • National Bank of Ethiopia • Technical and Vocational Educational Training Institutions(TVETs) • Ministry of Trade • Ministry Industry • Ethiopian Revenue and Custom Authority • Ministry of Science and Technology • Ethiopian Entrepreneurship Development Center • Ministry of Women, Childe and Youth Affairs • Metal and Engineering Technology Corporation (METEC) • NGO’s and private sectors such as investors, suppliers, and other concerned bodies
 6. How was the strategy implemented and what resources were mobilized?
As Micro and Small Enterprises are business creation entities, there are resources needed like a Land, finance, human resource, machineries and other materials. The mobilization mechanism is coordinated at federal levelin the Federal Micro and Small Enterprises Development Agency and supplemented by other institutions working together that allocategovernmentbudget to the success of Micro and Small Enterprises.In regard to this,provision of finance for MSEs is facilitated by the Micro Finance Institutions,production and selling premises for micro and small enterprise are provided by the city administrations of the respective regions, technical and managerial trainings and supply of machinery for MSEsis provided by the regions/citiesTechnical and Vocational Educational Training Bureaus/centers.

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
The most successful output in the development of MSEs isCreation of job opportunity for theyouth and women, creating developmental investors, entrepreneursand wealthy people that results in increment of household income. In other dimensionsWomen empowerment and saving culture of the people increased. Since many manufacturing based enterprises are developing the industrialization process is enhanced to some extent

 8. What were the most successful outputs and why was the initiative effective?
The monitoring and evaluation mechanism of the sector includes monthly &quarterly, semi-annual and annual reporting system,quarterly & special field supervision programs and constant downward feedbackfollowing the field visit and periodicreview meeting with the head of Regional Micro and Small Enterprises Development Agencies and other executing bodies.

 9. What were the main obstacles encountered and how were they overcome?
The main obstacles challenging the development of the sector were mainly the attitudinal problems (which is this time mitigated noticeably)of the society towards the sector. The other constraining problems include;unbalanced electric power demand & supply for the MSE clusters, poor ICT infrastructure for exchanging up-to-date data, dependency syndrome (Expecting everything from the government) prevailing in the sectors’ elements, lack of co-ordination and capacity to solve problems at all levels,the teaching capacity of the TVET trainers.FeMSEDA and regional Micro & Small Enterprises Development Agencies are taking measures to overcome these obstacles using constant awareness creation over the strategies for the MSEs and for target groups,expanding best practice of model Micro and Small Enterprises for youth & women by using different medias at each stages, through provision of refreshment trainings for the sectors executive bodies about implementation of manuals at the same time share experiences from each other.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
The key benefits in the development of micro & small enterprises are • Reduction of unemployment rate and with that poverty reduction, • A good beginning of equitable distribution of wealth, • Improvement of the working culture • Improvement of the saving culture , • Laid foundation for the countries’ future industrial transformation and other social and political stabilization in the country.

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
While the government of Ethiopia is highly committed to development the MSE sector, believing that it is the engine of growth in the context of the Ethiopian economy, the sustainability of the development of the sector is not doubtful. The support of Nongovernmental Organizations and development partners also contributes to the sustainability of the sectors’development. Different programs and projectsare designed to incorporate the development of the sector with the whole economic development of the country. Since there are sufficient Micro Finance Institutions in the financial demands of the MSEs is addressed successfully at this stage.The beginning of the Entrepreneurship Development Program (EDP) with the support of UNDP(under the auspices of FeMSEDA) is also an asset in expanding the entrepreneurship culture in the country thereby ensuring the sustainability of the MSE sector. and with that strengthening the On the other hand introduction and promotion MSE products nationally and internationally byFeMSEDAthrough organizing Exhibitions and bazaars and using different medias such as radio,televisions,websites and other information communications systems has been running constantly by the federal micro and small enterprise Agency and by the regional MSE development agencies.These are impactful factors ensuring the sustainability of the sector.

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
The developments observed in the sector have shown the beginning, growth and transformation of enterprises from lower to higher levels. This has sensitized the entrepreneurial culture of a broader segment of the society, especially the youth and women. Due to this, by now in the country entrepreneurship practice has developed dramatically that individuals mentality&working culture towards starting from small business to medium and large companies becoming a reality . It is also observed that political stability is confirmed because of individuals’ per capita income increased due to the expansion of Micro and Small Enterprise in the country’s overall economic development.Since in the countries growth and transformation plan the key component is job creation and for that the expansion of Micro and small Enterprise is irreplaceable.Thus we recommend that the Micro and Small Enterprises strategy will be supported to continue its progress in the future.

Contact Information

Institution Name:   Ministry of Urban Development Housing and Construction
Institution Type:   Government Agency  
Contact Person:   Selamawit Alem
Title:   Capacity Building and reform Bureau Head  
Telephone/ Fax:   +251911688791
Institution's / Project's Website:  
E-mail:   selamawitalem@yahoo.com  
Address:   Bole Sub City
Postal Code:  
City:   Addis Ababa

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