Micro and Small Enterprise in Ethiopia
Definition and Concept of Micro and Small Scale Enterprises
The significance of Micro and Small Scale Enterprises to the socioeconomic development necessitates the provision of well-structured support frameworks that would facilitate their growth and development. In order to provide effective support services it would be important to define what is meant by MSEs. However the definition of MSEs considerably varies from country to country even within the same nations across different institutions, and sectors, etc. To mention a few, these include small business, the informal sector, small firms, small scale industries, micro enterprises, cottage and hand craft, etc. usually some of these terms are used interchangeably to describe and refer more or less to the same activity.
Lack of universally accepted single definition as well as the use of diverse type of terminologies has created a great confusion among policy makers and different institutions which makes the process of target groups’ selection identification of primary area more complex and difficult.
In Ethiopia, different institutions have been using different criteria and approaches for defining the concepts of MSEs. For instance, according to CSA(2003), informal sector is defined as household type establishments or activities: which are mainly engaged in market production; not registered companies or cooperatives; have no written books of account; have a less than 10 persons engaged in the activity; and have no license. On the other hand, the federal government of Ethiopia, in its policy document of national MSEs Development strategy adopted different criteria for defining MSEs. Accordingly:
“Micro enterprises: are those business enterprises with a paid- up capital of not exceeding Birr 20,000 and excluding high technology establishment. Those business activities are indecently owned and operated, have a small share of the market, are managed by the owner, and...