The Roles of Micro and Small Enterprises in Urban Household Livelihoods: The Case of Ambo Town, Ethiopia

Abstract

This study intended to explore the role of Micro and Small Enterprises (MSEs) in urban household livelihood, taking MSEs in Ambo town, Ethiopia. As such, the study employed qualitative research approach based on intensive fieldwork. Sample MSEs were purposively selected from the available lists of Ambo town MSEs Development office. And primary data were collected from the owners, employees and managers of these selected MSEs by using in-depth interviews, focus group discussion, and key informant interview. The collected data were then duly transcribed, edited, coded, and categorized into different themes based on the study's interest and sustainable livelihood framework, and hence analyzed thematically. The result of the study revealed that MSEs have played great role in livelihood improvement of the owners and employees. These outcomes include, among others, increased income and household asset ownership; better employment opportunities; better access to nutrition, education and health services; increased level of technical and social skills; and women economic empowerment. However, despite considerable efforts made by the government to provide various supportive services through credit and training provision and better policy environment, the MSEs are suffering from many challenges. These challenges affecting performance of MSEs include inadequate finance, poor infrastructures, poor management practices, institutional bureaucracy, high tax and global competition, among others. As a result, the study recommend that it is important to improve business management and entrepreneurial skills, identify business areas where MSEs can further participate, enhance linkage among MSEs, strengthen provision of credit as well as formalization processes, provide adequate working and marketing premise, and improve administrative efficiency and basic infrastructures.