1

Factors Affecting the Capital Growth of Micro and Small Enterprises: The Case of

Burayu Sub-City, Sheger

Student's Name - EduWriter.ai

Institutional Affiliation

Course Details

Instructor's Name

Date of Submission
 2

Factors Affecting the Capital Growth of Micro and Small Enterprises: The Case of

Burayu Sub-City, Sheger

The success and growth of micro and small enterprises (MSEs) are crucial for

economic development, particularly in developing countries like Ethiopia (Gebreeyesus,

2007). However, the capital growth of these enterprises is often hindered by various factors.

This study aims to investigate the factors affecting the capital growth of MSEs in Burayu

Sub-City, Sheger.

One of the primary challenges facing MSEs in the study area is access to finance

(Abera, 2012). Lack of collateral and credit history, as well as the perceived high risk

associated with these enterprises, often make it difficult for them to secure loans from

financial institutions (Kefale & Chinnan, 2012). Additionally, the high interest rates and short

repayment periods of available loans can further hinder the capital growth of MSEs

(Gebrehiwot & Wolday, 2006).

Another factor that may impact the capital growth of MSEs is the level of managerial

and entrepreneurial skills among the owners and managers (Aregash, 2005). Inadequate

training and limited access to business development services can hamper the ability of MSE

owners to effectively manage their enterprises and make informed decisions regarding

growth and expansion (Abera, 2012).

Furthermore, the regulatory and policy environment can also play a significant role in

the capital growth of MSEs. Inefficient bureaucratic procedures, lack of supportive policies,

and inadequate infrastructure can create barriers to the growth and development of these

enterprises (Gebrehiwot & Wolday, 2006).

In conclusion, the capital growth of MSEs in Burayu Sub-City, Sheger is influenced

by a combination of factors, including access to finance, managerial and entrepreneurial

 3

skills, and the regulatory and policy environment. Understanding these factors is crucial for

policymakers and support organizations to develop targeted interventions that can foster the

growth and success of MSEs in the region.

 4

References

Abera, A. (2012). Factors affecting the performance of micro and small enterprises in Arada

and Lideta sub-cities, Addis Ababa. Unpublished master's thesis, Addis Ababa

University, Addis Ababa, Ethiopia.

Aregash, A. (2005). Public-private partnership projects in Ethiopia: Practices and challenges.

Addis Ababa, Ethiopia: Ethiopian Development Research Institute.

Gebrehiwot, A., & Wolday, A. (2006). Micro and small enterprises (MSE) development in

Ethiopia: Strategy, regulatory changes, and remaining constraints. Ethiopian Journal

of Economics, 15(2), 1-35.

Gebreeyesus, M. (2007). Growth of micro-enterprises: Empirical evidence from Ethiopia.

Ethiopian Journal of Economics, 16(2), 67-86.

Kefale, M., & Chinnan, V. P. (2012). Financial sustainability of micro and small enterprises

(MSEs) in Ethiopia: A case study in Amhara region. International Journal of Research

in Commerce, IT and Management, 2(5), 34-38.