Determinants of Micro and Small Enterprises Growth in Selected Districts: In Case of West Shoa Zone

Abstract

MSEs have an important contribution to economic growth and employment creation in Ethiopia. However, due to different bottlenecks that hinder the growth, MSEs found in these three Woreda were not grown as it was expected. Therefore, this study aimed at identifying the major determinants of MSEs growth in West Shoa Zone, Oromia region, Ethiopia. In the study, both qualitative and quantitative research methods were used. Primary data was obtained using questionnaires. Stratified sampling was used to select proportional number of samples from the study area. The study used Chi-square and logistic regression to measure the association and determine growth probability of MSEs, respectively. The result of the study revealed, Financial accessibility, Skill and capacity, Financial management practice, Environmental factors, Government Support, Technological factor sector variables were identified as a major determinant of growth of the MSEs in the study area. .From the total population of 1135 MSEs the total sample size 296 was taken. In this study both quantitative and qualitative approach was used. As well as primary data was collected by structured questionnaires and interview methods to achieve the purpose. Stratified sampling technique was applied to select the sample from a selected inhabitants. Data were analyzed using both descriptive statistics and Binary logistic regression Model with the help of stata and Statistical Packages for Social Science (SPSS). Based on the computed growth rate, the MSEs are divided into two major groups: growing if the growth rate is greater than zero and non-growing or survival if the growth rate is less than or equal to zero. These groups are represented in the model by the numbers 1 for growing and 0 for survival or non-growing by following Cheng (2006). 208 (70.27%) of the sample's MSEs are determined to be non-growing, and 88 (29.73%) of them are growing.