WOLAITA SODO UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF PUBLIC ADMINISTRATION
FACTORS THAT AFFECTS THE DEVELOPMENT OF MICRO AND SMALL
ENTERPRISES MANUFACTURING (IN CASE BADESA TOWN)

BY: MARTA BALE

ID NO: PDF/WE/107 /12

A PROPOSAL SUBMUTED TO THE DEPARTMENT OF ECONOMICS IN PARTIAL

FULFILMENT OF THE REQUERMENT OF B.A DEGREE IN PUBLIC
ADMINISTRATION

ADVISOR: -TATASHA . (MBA)

MARCH, 2024
WOLAITA SODO, ETHIOPIA
AKNOWLEDGEMENT
First and for most let us praise and honor the almighty God for the opportunity and capacity
given to us to realize my aspiration and helping us in all activities of my life. Secondly, I would
like to express my deepest gratitude to my research advisor for his valuable comments,
encouragement and precious advice, suggestion and strict follow up. My honorable
acknowledgement is also goes to my genuine and lovely families for their effort to build my life
in success. Lastly, I would like to express my deepest acknowledgment to my friends and
respondents who help us by lending their Pc and giving desirable information respectively.

Table of Contents
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AKNOWLEDGEMENT..................................................................................................................i

ACRONYM...................................................................................Error! Bookmark not defined.

CHAPTER ONE..............................................................................................................................1

INTRODUCTION...........................................................................................................................1

1.1 Background of the Study........................................................................................................1

1.2. Statement of problem............................................................................................................2

1.3 Objective of the Study............................................................................................................3

1.3.1 General objective.............................................................................................................3

1.3.2 Specific objective............................................................................................................3

1.4. Research Question.................................................................................................................3

1.5 Significance of the study........................................................................................................4

1.6 Scope /Delimitation of the study............................................................................................4

1.7 Organization of the papers.....................................................................................................4

CHAPTER TWO.............................................................................................................................5

2. LITERATURE REVIEW............................................................................................................5

2.1 Ethiopian Small Enterprises...................................................................................................5

2.2 What is micro and small enterprise........................................................................................6

2.3 Other characteristics of micro enterprise...............................................................................7

2.4. Market constraints on small enterprise.................................................................................7

2.6 Push and pull challenges........................................................................................................8

CHAPTER THREEE.......................................................................................................................9

3. RESEARCH METHODOLOGY................................................................................................9

3.1 Description of the study area.................................................................................................9

3.2 Research Design.....................................................................................................................9

3.3 Data sources...........................................................................................................................9

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 3.4 Target of population...............................................................................................................9

3.5 Sampling size and Sampling technique.................................................................................9

3.5. Method of Data Collection..................................................................................................10

3.7. Method of Analysis.............................................................................................................10

4. WORK PLAN............................................................................................................................12

5. BUDGET BREAK DOWN.......................................................................................................12

REFERANCE................................................................................................................................13

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 CHAPTER ONE
1. INTRODUCTION

1.1 Background of the Study

According to my scholars and policy makers and donors have increasingly recognized the roles
of increasing employment and income generations with the dual objective of enhancing
economic growth and sustainable development (beck and Levine 2003;102-104)
Small enterprise have shown great reliance the time of crisis they have also proved to be
dependable sources of employment by creating opportunities at relatively low capital cost
(kmuyu 2004 ;66-71).
Recently policy shift toward the private sector has occurred in many developing countries and in
this context the role of entrepreneurs in small enterprises as seed beds for large –scale
entrepreneurship is receiving greater recognition [Abdullah and baker 2000;134-136].increasing
concern about the need to achieve high growth that is shares and that encourages human
development ha
We given a new focus to the development of the sector [hailey 1997;201-209]. This because
small enterprises tend to develop in different regions of the country contributing to the reduction
in the concentration of enterprises in urban areas and promoting balances economic growth
[world bank 2004;290-300].moreover sonly mossy and pena [2000;43-48]. Argue that small
enterprises have proves to be efficient and dynamic in countries where they have been given the
opportunity to develop and access appropriate support .for instance in pre world war H Japan the
country is depending on small enterprises for its competitiveness .After the war however it
gradually becomes modernizes raising and establishing complementary linkages to large
enterprises [Gbrehiwot 2006;12-13]. These sectors have also playes dynamic role in the
industrialization efforts of china and Taiwan [GoedlLuys 2002;87-88]. With increasing urban
population dynamics in sub-Saharan Africa. The importance of small enterprises is also growing
[ Barley and West head 1999;10-12].the fact that there are rapid rural-urban migrations and that
urban centers are proving in adequate in absorbing this migrants make the sectors important in
providing employment opportunities [Gbrehiwot and Weldy 2004;117-21].In Ethiopia public
policy concerns for the development of small enterprises extend as far back as the Axumite
empire around the first century A.D Gureemet and rakish(2008;105-108). Argue that the

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axumite empire cause the fastest growth of ancient house hold enterprise when it start meting its
own gold, silver and bronze coins in the second century, using this to purchase raw material and
professional service from these private organizations.
According to Mulu (2006:66). The first empirical polices giving attention to the small enterprise
of the Ethiopia economy come much later after 1855. Through the ascendancy of the progressive
leader of the period, emperor Theodor II (1855-1867). However Emperor theodors policies faille
to bring his ambitions to fruition. Emperor Minilik comes to the throne (1888/9-1913) following
the death of Emperor Yohannes IV (1870-1887). Who have no clear record of small enterprise
development polices during Emperor Haile Selassie rule (1935-1974). The sector practices
polices marginalization resulting from the drastic shifting the government stone towards socio-
economic modernization. According to CSA (1991:45-56).there are about 400 enterprise during
this period, including both small and medium and large enterprise. After the 1974 revolution and
the introduction of socialism, the government of the degree (1974-1991) issued a proclamation in
1978 establishing the handicraft and small-scale industries development agency (HADIA). Since
1991, the government of the federal democratic republic of Ethiopia has recognized the
promotion and development of small enterprises as important vehicles in addressing the
challenges of unemployment, economic growth and quality. This sector is also accepted as the
bases for medium and large scale enterprise (Gebeyehu and Assefa 2004:28-30). Following the
publication of the micro and small enterprise development strategic document. The federal
government of Ethiopia set up the federal micro and small enterprise development agency
(FEMSEDE). The regional states and administration towns also have their own strategies. These
strategies also apply in BADESA town among the towns in wolaita zones. BADESA is one
which large number of small business enterprise is found. Information taken from BADESA
town trade and industries offices shows that round 694 small businesses are found in the town of
BADESA. The seats of wolaita zone particular BADESA town are suffering from marketing
prices, lack of capital, promotional actives

1.2. Statement of problem

Small business has played a significant role to the advancement of human society. It is largely
through small business this civilization is speeded to all four corners of the known world brought
to the Jewish colander and roman law (sir polis nicholarc-1994).

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Micro and small enterprise is seen as the vital engine for economic development and job creation
in addition this employment opportunity and provide necessary basic good and services to be
available at low cost the majority of low income earners. In Ethiopia small business enterprises
create the best condition for the efficient function of an economy for maximizing national
income and spending economic growth through enhanced capacity of domestics saving (Amman
Dinl 2003) The few available studies that have dealt worth the challenges facing entrepreneurs in
Ethiopia particularly in the study area reported on this research are general and scanty despite
the fact that small enterprises in different sector face challenges of varying magnitude. Hence
this study investigates and would identify the critical challenges and some opportunities that
affect each sectors performance such as the pull factor and the push factors are pull facts are
factors that attract the people to start their own business and push factors that limited to start our
business.
1.3 Objective of the Study
1.3.1 General objective
The main objective of the study will be to assess factor that affect Development of small and
micro enterprises manufacturing in Badesa Town administration.

1.3.2 Specific objective

 To assess factors that affect small business enterprises
 To assess the role of government affects small business enterprises growth and
development.
 To identify how factors affect the performance of small scale business enterprises in
Badesa Town administration.
 To identify the technical skill that affect small business enterprises.

1.4. Research Question

A. What are factors that affect small business enterprises?
B. What is the role of government affects small business enterprises growth and
development?
C. How does a factor affect the performance of small scale business enterprises in Badesa
Town?
D. What are the technical skills that affect small business enterprises?

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1.5 Significance of the study
The study the following important points
This study provides new information about factors that affecting the performance of small scale
enterprises for administration of BADESA town to take corrective action.
The study also gives promoting supportive organization and encouraging the entrepreneurs and
investors. It helps the researcher to improve the experience in conducting research. Furthermore
it use has for other researchers as a guide line.

1.6 Scope /Delimitation of the study

Even through, there are different issues that can be researchable in relation to small enterprises
this study will be focus on the assessment of factors affecting the performance of small scale
business enterprises in BADESA town such the marketing factors and technological factors.

1.7 Organization of the papers

The study will be organized in to five chapters. The first chapter deals with the introduction parts
about the background the study statement of the study of the problem basic research question
objective of the study significance and scope of the study and limitation of the study the second
chapter will be discussed about the related literature review of study. In the third chapter research
methodology such as description of the study research design target population sample size
sampling technique sources of data collation tools and methods of data analyzation and
interpretation will be illustrate . The fourth chapter contains the section where data will be
analyzed and interpretation or presented. And the major finding conclusion and recommendation
will be discussed in the fifth or last chapter.

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 CHAPTER TWO
2. LITERATURE REVIEW

2.1 Ethiopian Small Enterprises

Small scale enterprises as well as industries in Ethiopia have not been a lot of contribute
substantially as needed to the economic development participation because of technical
knowledge financial .population and marketing problems and these problems are major hand
caps to their development lack of finance and credit has always major problem of Ethiopian
small scull unit do not have easy access capital market because they mostly organized property
basis and very small size. They don’t have access to industrial sources of finances party. Because
of their size and fact that their surpluses which utilize to repay loner are negligible (Haile
G1Tinsa”e 2003).
Small enterprise finds it difficult to get way of materials of good quality at cheap price they don’t
get raw material in time. As result there enterprise very often fails to produce goods in requisites.
Farther more, the technique of productions which enterprise adopted usually out data. Because of
their poor financial position ,they are not able to buy new equipment as a result their productivity
surfers ,prides many small business enterprises are suffering with the problem of marketing their
product ( paulporn and Jim dew Hurt,1996).
Ethiopian small business which is referred to as having problem s of technical knowledge fiancé
and marketing as suggested by (Haile G/silase2003).
Numerous source of finance diversity which may arise as a consequence of differently
managerial abilities. For example the extent of external quality with business varies widely
according to the process of accumulation. They age of firm and its profitability. External equity
make equally significance for some small firms the firm, its size the nature of the customer based
varies by sectors and market variation in factors, stretch factors, and stretch as trade credit
payments items, decide payments market power and many of their factors affect the revenue
following into the business (jillhussay and roger hussay 197).
Government set a number of individuals and business operatory in our economics. For instance
the government chance property taxes and income taxes poor the property owners and the
income generated for running a business. This are more sensitivity price than others a price (Paul
born Iam dew hurt 19998). Business seldom have unrestricted frees of action in the market place

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for example at customers and cannot buy some holic average without certificate that provides
that right to do the activities (mark thin small colmme Donald 1995).

2.2 What is micro and small enterprise

In our country Ethiopia the central static authority define small trade organization those
employees less than 10 people and whose capital is not exceeding from br. 20000 excluding
higher constancies services organization other higher technology.
Size of criteria: - even the criteria use to measure the business very some criteria are applicable
to all industrial areas while other relevant only to certain types or business.
Some of their measure includes
-number of employer
- Sales volume
- Assets size
Value of deposit
An example the European commission has coin the terms small and medium enterprise and in
1996 defines it as an organization employing fewer than 250 people.
Being a small business is not just about size depend in simple statically terms small enterprise
also have important defying characteristics (paul burns, 2007).
3. Economic and control criteria
A. Marketing influences:- as the micro and small enterprise involved in producing and saving
goods and services in its country, its production and sales capacities shall not have the power to
influences the pries in the country level. Unfortunately, two fundamental problems arises with
their firstly with the definition of market and secondly with the ability of the small firm to
influences price and the quality sold in the market.
B. Independent:- the other criteria that micro and small business shall fulfilled is that the owner
is supported to be super power holder in the business and be able to make all major decision in
dependable. The small enterprise is independent in the since that it does not form port of large
enterprise and only owner manager rare consider small enterprise (pall burns, 2007).
C. Person influence:- micro and small enterprise are managers in personalize way and not
through the medium of a formalizes management structural. This person is involves in all aspects
of the management of the business and is involving in all manager decision making.

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Frequently there is little devotion or delegation of authority, small and micro business strat to
bake managerial when they have some 10-20 employees and at this point then strate to take on
the appearances of more formal structure (Atkison and meager, 1994).
Never the tests, this third point is the to a definition of the real small business the one with
potential the one that economist cannot understand, the one that is so deferent from the large
firms.

2.3 Other characteristics of micro enterprise

The first is that they one typically short of cash, they contraries capital in the same way a large
company can their has major strategy implication.
- Firstly it consternates the strategy that there can adopt for example they cannot afforded
to adopt.
- Expensive advertising and promotion campaign so entity managers develop class
relationship with customers and prosifective customers investing their time rather than
money
- Secondly it indicates that business decision must have a quick pay off and there is short
term.
- For a growing business it a means that rising finance becomes major issues and
relationship with fencing institution such as banks and other capitals can become major
resources issues (paul, burn 2007).
- The small scale of their operations means that small ventures have little impact on their
surrender and have limited pore to modify environment force to their advantage in micro
and small enterprise there fundamental change in social value consumer targets
techniques, financial market and soon offer smaller flexible responsible organization an
advantages with the concentration of decisive making power in the hands of the owner.
Allow growth oriented small ventures to capitalize on the opportunities which emerge
from environmental change (David carron, Stanly cormier, Jimmy Hill,1995).

2.4. Market constraints on small enterprise

Looking at the characteristics of small enter prices from marketing perspective, there brood type
of constraints on marketing may be identified (David Carron, sanely comity pauric, Mc, aowin
and Jimmie Hill.1995.

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 1. Limits resources: limitation an finance ,marketing knowledge and time may all contribute
to limited marketing activity.
2. Specialist expertise: may be constraints because managers and entrepreneurs in small
business tend to be generalist rather than specialist.
3. Limits impact in the market place: it may also be a constraint because small business or
enterprises have lower customer and employees than large companies.
2.5 technology related challenges
According to back and Levine (2003:167-171), technology designates combination of
machinery, labor, skills and techniques. This technology need to be consistent with local
resources and conditions in order to make effective use of the relatively abundant
resources. However, the issue of adopting appropriate technology and the limits access to
this type of technology has presents serious problems and obstacles for operators of small
scale enterprises (Leidholm 1992:39-44;Yu 2002: 33-39;Will beton and EVERET
1999:20-28).
Among the entrepreneurs studied by the CSA in Ethiopia,29% reported machinery failure
as the major reason for their inability to be operational (CSA2003:2-13).Assefa (1997:43-
48) also notes that small enterprises have difficulties in accessing appropriate
technologies and information.

2.6 Push and pull challenges

Pull factors is the factors that attract the people to start their own business this factors are;
Desire for independence.
Desire for exploit opportunity
Financial incentives
Push factors is a factor that limited to start our business, such as
Redundancy
Unemployment
Disagreement with previous employers

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 CHAPTER THREEE
3. RESEARCH METHODOLOGY

3.1 Description of the study area

Badesa is the town of the Wolaita zone in Ethiopia. The majority of the inhabitants practiced
Ethiopia orthodox Christianity with of the population report that beliefs are protestant and
Muslims.

3.2 Research Design

A descriptive research design will be employed in the study to assess the main factors that
affecting the existence for the performance of small business enterprise in Badesa town. The
reason for using this designed will be that it enables to describe the different factor that affects
the performance of small enterprises and opportunities that pave the way for success of small
business enterprises.

3.3 Data sources

 Primary data sources
Primary data sources are the most valuable to address this particularly research which is
collect directly from employee s of the organization.
 Secondary data sources
Secondary data is also has greatest contribution for the definition of research problem
there for the most common sources of secondary data are books, research, finding records
document and annual report of the organization.

3.4 Target of population

The people who are considered in the study are managers and owners of the small enterprises to
collect the data.

3.5 Sample size and Sampling technique

The research select proportionate stratified sampling technique because these techniques divided
the population in to homogenous sub groups. The total population of small enterprises is 694
from this the researcher is took 146 has a sample size which represented almost 21% of the

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population due to the cost constraints by using confidence level of 95% from each strata based
on the following Yamane(1967)formula.
n= N/1+N(e)2 (Yamane, 1967)
where n= sample size
E= error
N= total population
N= 694/1+694(0.05)2=254
In order to minimize the sample size use correction factor formula.
N=n/1+n/N n= 254/1+254/N694= 186 n=186/1+186/694=146
Therefore n=116
S.N Strata Population Sample from %
each state
1 Manufacturing 177 37 20
2 Construction 168 35 20
3 Services 221 47 21
4 Urban and 39 8 19
agriculture
5 trade 89 19 20
694 146 100

3.5. Method of Data Collection

For this study, the researcher will be using both primary and secondary data. The primary data
will be gathering through questionnaire and unstructured interview. The questionnaire consists of
important open ended and closed ended questions concerning accounting treatment for fixed
assets. The respondents will be employees working at management and employees in the
hierarchy of the company.

3.7. Method of Analysis

The collect data through using the above tools analyzed using tables, and diagrams that are
appropriate to explain the facts. The researcher use only use qualitative data analysis method in

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the research paper. As a result, conclusions will be drawn with regard to how the company
manages the risk, what are the effects of the risk towards the corporation’s effort.

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4. WORK PLAN
No Activity Months
Dec Jan Feb Mar April May Jun
1 Proposal √ √
development
2 Proposal √
submission
3 Questioner √
development
4 Data collection √
5 Data analysis and √
interpretation
6 Data organization √
7 Report writing √
8 Submission √

5. BUDGET BREAK DOWN

No Item Unit Amount Unit price Total remark
1 Paper Desta 1 170 170
2 Data collection Number 3 100 300
Interview Number 3 70 210
transportation
3 Computer service Number 1 100 100
4 Printing Number of 56 2 112
sheet
5 Total - - - 892

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REFERANCE
Abdullah,M.A and Baker,M.2000 Small and medium enterprises in Asian pacific countries.
Amman Dinal 2003.economic role small and medium enterprises.
Assefa, A.1997.Comparative analysis of the development of small industry in region 14 with
other regions.
Atkinson and Meager 1999 entrepreneurship is successfully launching new ventures bank for
reconstruction and development.
Beck,T.and Levine,R.2003.smalland medium enterprises,growth;cross country and evidence new
york.
Birly ,S and West head ,P 1999.growth and performance contrast between types of small firms.
CSA 2003 urban informal sector sample survey Addis Ababa, CSA Ethiopia.
CSA 2007.Report on population and housing census. Addis Ababa Ethiopia.
David Carron Stanlycrone,jimma haile 1995. Marketing and entrepreneurship in small and micro
enterprises an innovative approach.
Gebeyehu,W.and assefa .D.2004 role of micro small enterprises in the economics development
of Ethiopia. Addis Ababa, Federal micro and small enterprises Agency.

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