Growth Determinants, Challenges, and the Role of Micro and Small Enterprises in Debre Birhan City, Ethiopia

Abstract

Micro and small enterprises (MSEs) are vital components of the economic landscape in Debre Birhan City, Ethiopia. This study examines the factors influencing the growth, challenges, and the role of MSEs in the city. Through primary data collection from MSE owners/operators, key determinants such as the gender, level of education, and family business background of MSEs owners/operators, ownership structure of MSEs, start-up size, market opportunities, and competition from the informal sector were identified as crucial drivers of MSEs growth in the city. However, challenges such as insufficient working capital, limited market linkage, inadequate working premises, lack of technical skills, and inadequate infrastructure and services were found to impede the expansion of MSEs in the city. Despite these challenges, MSEs in Debre Birhan City play a significant role in generating employment, creating wealth, reducing poverty, satisfying customers, and promoting local entrepreneurship. To capitalize on these opportunities and address the challenges faced by MSEs, local authorities and relevant stakeholders must collaborate to create an enabling environment that fosters entrepreneurship, provides access to finance, provides working premises, and improves infrastructure. By addressing these factors, MSEs in Debre Birhan City can realize their full potential as engines of economic growth and job creation. This study provides valuable insights for policymakers, stakeholders, and supporting organizations looking to support the sustainable development of MSEs in Debre Birhan city.