Factor Affecting Micro And Small Enterprises Contribution To Employment Generation: The Case Of Addisababa City

Abstract

Micro and Small Enterprise are driving forces for economic growth, job creation and poverty reduction in developing countries. Cognizant of this fact, Ethiopia is one of the countries which have taken measures to enhance the operation of Micro and Small Enterprises. Unemployment and low income are prevalent issues in Addis Ababa city. To address this problem, the government has implemented a policy aimed at supporting micro and small enterprises. MSEs are widely recognized as the foundation of the economy. The main objective of this study is to identify Factor Affecting Micro and Small Enterprises Contribution to Employment Generation. In the study, both qualitative and quantitative research methods were used. Primary data was obtained using questionnaires. The data that have been gathered through questionnaire were analyzed using both descriptive and inferential statistics with the help of SPSS Version 26 Software for Windows. Stratified sampling was used to select proportional number of samples from the study area. The study further indicate that, there exists linear and positive significant ranging from substantial to strong relationship was found between independent variables and dependent variable. Moreover, the selected in dependent variables may significantly explain the variations in the dependent variable at 5% level of significance. To see the effect of explanatory variables on the explained (dependent) variable, Multiple Regression Model was used. Accordingly, the regression analysis result revealed that the selected independent variables significantly explained the variations in the dependent variable at 95% confidence interval, as shown by adjusted R Squared of 85%. Enterprises that had access to finance, higher education levels, promoters' training, sales and profit growth, physical infrastructure, human capital Age of the firm and Manager Experience experienced positive and significant employment growth. The study recommends promoting inter-firm and buyers/sellers cooperation, increasing share capital contribution, enhancing information dissemination, and providing education and training in business development services (BDS) for Micro and small enterprise in order to enhance employment growth