Analyzing Challenges & Opportunities of Ethiopian SMEs: Micro & Macro Economic Drivers

Abstract

The Ethiopian economy is dominated by the agriculture and services sectors, with each accounting for about 43-44 percent of gross domestic product (GDP), leaving only about 13 percent for industry of which manufacturing accounts for about 6-7 percent. The low industrial contribution is attributed to lower participation of private enterprises; thanks to lack of encouraging policy & conducive environment for entrepreneurs. This research proposal aims at investigating inhibiting factors of growth at micro, macro & meta level. Industrial development and entrepreneurship are two side of a coin. Entrepreneurship encompasses the promoters, government and financial institutes. Entrepreneurship development is essential to solve the problem of economic development through creating local employment, balanced area development, decentralization of economic power and diversion of profits from rich to middle class & poor. Many local innovations go unnoticed because of innovator’s limitations in commercialize the product. An apex institute may be set up to help and promote commercialization of low cost local innovations. If stakeholders of entrepreneurship work in tandem, SMEs can grow fast.

Keywords: Entrepreunership, SMEs, Ethiopia

JEL Classification: I001, Z001