THE ROLE OF MICRO AND SMALL ENTERPRISES IN EMPLOYMENT CREATION AND INCOME GENERATION (A CASE STUDY OF ADI TOWN IN TIGRAY, ETHIOPIA)

Abstract

The general objective of the study was to examine the Role of Micro and Small Enterprises in Employment Creation and Income Generation taking the town of Abiy-Adi as a case study for this study were collected from 327 respondent individuals who where employees and operators of Micro and Small Enterprises. In addition, secondary data were collected from Tigray regional state bureau of Trade, Industry and Transport .primary data was collected using questionnaire and interviews as data collection instruments. Moreover qualitative data was collected using focus group discussion for data analysis; descriptive statistical tools such as tables, frequency distribution, and percentage were used to describe the responses on the role of Micro and Small Enterprises. The study revealed that MSEs significantly contribute to local economic growth, providing approximately 5-23 jobs per enterprise annually and generating average incomes of enterprise between 30, 000-200, 000 Birr. Micro and Small enterprise also empower Women and Youth, addressing poverty and enhancing livelihoods. However, challenges such as limited access to finance and infrastructure hinder their growth. Most of the Micro and Small Enterprises also face constraints during operation and start up time and the major constraints are found to be lack of finance and unavailability of affordable rented houses. Therefore, Micro and Small Enterprises appear to have great contribution in reducing unemployment and in providing income both for firm owners and employees alike. This study implies that expanding access to finance through credit and improving supply of working place need to be implemented in earnest maintain and boost further the employment and income generation potential of micro and small enterprises.