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Addis Ababa University School of Graduate Studies ADDIS ABABA UNIVERSITY SCHOOL OF GRADUATE STUDIES THE CONTRIBUTION OF GROUP- BASED MICRO AND SMALL ENTERPRISES IN EMPLOYMENT CREATION AND INCOME GENERATION: EVIDENCES FROM WOREDA FOURTEEN OF KOLFE KERANIO SUB-CITY, ADDIS ABABA, ETHIOPIA [ BY: TOLASA TAFA FEBRUARY, 2016 ADDIS ABABA SCHOOL OF GRADUATE STUDIES COLLEGE OF BUSINESS AND ECONOMICS DEPARTMENT OF PUBLIC ADMINISTRATION AND DEVELOPMENT MANAGEMENT THE CONTRIBUTION OF GROUP- BASED MICRO AND SMALL ENTERPRISES IN EMPLOYMENT CREATION AND INCOME GENERATION: EVIDENCES FROM WOREDA FOURTEEN OF KOLFE KERANIO SUB-CITY, ADDIS ABABA, ETHIOPIA [ ATHESIS SUBMITTED TO THE SCHOOL OF GRADUATE STUDIES OF ADDIS ABABA UNIVERSITY IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF MASTER OF ARTS IN PUBLIC MANAGEMENT AND POLICY SPECIALIZED IN DEVELOPMENT MANAGEMENT BY: TOLASA TAFA ADVISOR: ABEBE YITAYEW PHD) FEBURARY, 2016 ADDIS ABABA ETHIOPIA ADDIS ABABA UNIVERSITY SCHOOL OF GRADUATE STUDIES COLLEGE OF BUSINESS AND ECONOMICS DEPARTMENT OF PUBLIC ADMINISTRATION AND DEVELOPMENT MANAGEMENT THE CONTRIBUTION OF GROUP- BASED MICRO AND SMALL ENTERPRISES IN EMPLOYMENT CREATION AND INCOME GENERATION: EVIDENCES FROM WOREDA FOURTEEN OF KOLFE KERANIO SUB-CITY, ADDIS ABABA, ETHIOPIA [ By: Tolasa Tafa APPROVED BY BOARD OF EXAMINERS Abebe Yitayew (Ph.D.) _________ ___________ Advisor signature Date Nega Wubei( Ato ) _________ ___________ Internal Examiner signature Date Filemon Hadaro (PhD) _________ ___________ External Examiner signature Date Acknowledgements Above all, I would like to thank God for his invaluable helps in my entire life span. My especial gratitude and appreciation goes to my advisor, Abebe Yitayew (PhD) for his consistent support. I am very much grateful for all his constructive comments and suggestions from the beginning to the end. My deepest gratitude goes to my beloved mother Siwaye Feyisa and sister Alemi Tafa who were passed in 2007, my father Tafa Wami, my sister Mulu Tafa and all my brother and sister for their continuous support from the very beginning of my academic journey to this point of success. I would like to also thank the Woreda 14 of Kolfe keranio sub-city Micro and Small Enterprises team leaders, especially Ato Teklewegn for giving me useful material and information. My especial thank also goes to Ato Desalegn Eba Kolfe Keranio Woreda 11 Trade and Industry office trade registration officer, W/ro Abarash Biru and W/ro Beletu Selemon under Addis Ababa Women and children Affairs Bureau Kolfe site Former women wood carriers project member and accountant respectively for giving me moral support during my study. Further, I would like to thank micro and small enterprises operators and heads of enterprises for their valuable information and efforts during data collection with great commitments and Deacon Haile Girma at Burayu Town Evangelical Mekane Yesus Church for his great support on spiritually, morally and materially specially providing me computer for my thesis. Last but not the least, my warmest gratitude goes to Defferew Kebede (MA) at Addis Ababa University for his general comment on methodology and for giving me some relevant ideas on the research paper. i Table of Contents Contents Page Acknowledgements ........................................................................................................................ i List of Tables................................................................................................................................ vi List of Graphs ............................................................................................................................ viii Acronyms ..................................................................................................................................... ix Abstract ............................................................................................................................................ CHAPTER ONE ........................................................................................................................... 1 1. INTRODUCTION .................................................................................................................... 1 1.1 Background of the Study ........................................................................................................... 1 1.2 Statement of the Problem .......................................................................................................... 3 1.3 Objective of the Study ............................................................................................................. 5 1.3.1 General Objective ---------------------------------------------------------------------------5 1.3.2 Specific Objective--------------------------------------------------------------------------5 1.4 Research Question .................................................................................................................... 5 1.5 Significance of the Study .......................................................................................................... 6 1.6 Scope of the Study ..................................................................................................................... 6 1.7 Limitation of the Study .............................................................................................................. 6 1.8 Organization of the Paper .......................................................................................................... 6 CHAPTER TWO .......................................................................................................................... 8 2.REVIEW OF THE RELATED LITERATUR ......................................................................... 8 2.1. Theoretical Literature ............................................................................................................... 8 2.1.1. Definition of Micro and Small Enterprise ............................................................................ 8 2.1.2 .Common Characteristics of MSE ....................................................................................... 11 2.1.3 .Contribution of MSE ........................................................................................................... 14 2.1.3.1 Employment Generation ................................................................................................ 14 2.1.3.2 The Economic Contribution of MSEs ........................................................................... 14 ii 2.1.4 MSEs and Economic Growth ......................................................................................... 15 2.1.5 The Role of Micro and Small Enterprises in Poverty Reduction ...................................... 18 2.2. Empirical Literatures .............................................................................................................. 20 2.2.1 Regional Examples of MSE Impacts ................................................................................... 20 2.2.2 Contribution of MSEs to the Ethiopian Economy .............................................................. 22 2.2.3 Constraints faced by MSEs in Ethiopia ............................................................................... 23 CHAPTER THREE ............................................................................................................................ 25 3. RESEARCH METHODOLOGY AND THE STUDY AREA .................................................... 25 3.1 Research Methodology ............................................................................................................ 25 3.1.1 Types and Methods of Data Collection ............................................................................... 25 3.1.1.1 Methods of Collecting Primary Data ............................................................................ 26 3.1.1.2 Methods of Collecting Secondary Data ........................................................................ 27 3.1.2 Sampling Design ................................................................................................................... 27 3.1.3 Sample Size Determination .................................................................................................. 28 3.1.4 Sampling Techniques/Procedures ........................................................................................ 29 3.1.5 Processing of Data ............................................................................................................... 31 3.1.6 Method of Data Analysis...................................................................................................... 31 3.1.7 Sampling Strategy ................................................................................................................. 31 3.1.8 Quality of Research Design ................................................................................................. 32 3.1.8.1 Validity............................................................................................................................ 32 3.1.8.1.1 Internal Validity .......................................................................................................... 33 3.1.8.1.2 External Validity ......................................................................................................... 33 3.1.8.2 Reliability ........................................................................................................................ 33 3.2 The Study Area
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