Academic journal article Journal of International Women's Studies

Women Entrepreneurship in Micro, Small and Medium Enterprises: The Case of Ethiopia

Academic journal article Journal of International Women's Studies

Women Entrepreneurship in Micro, Small and Medium Enterprises: The Case of Ethiopia

Article excerpt

Abstract

This research article examines factors that influence the long-term survival and viability of a random sample of 500 micro small and medium enterprises (MSMEs) located in five geographical regions of Ethiopia based on a 6-year long follow-up study. The objective of the study is to identify key predictors of long term survival and viability in small businesses and enterprises in Ethiopia, and to find out if small businesses and enterprises operated by male entrepreneurs perform better than those operated by female entrepreneurs in Ethiopia. Data was gathered on key determinants of survival such as access to finance, managerial skills, level of education, level of technical skills, ability to convert profit back into investment, etc between 1996 and 2001. Econometric methods such as Kaplan-Meier survival probability curves and the Cox proportional hazards model were used for data analysis. 221 of the 500 businesses in the study (44%) were operated or owned by women. 110 of the 500 businesses in the study (22%) had failed at the end of the study period. The majority of businesses that failed were operated by women (78%). Female-headed firms that ceased operation had an average lifetime of 3.2 years, while male-headed firms that ceased operation had an average lifetime of 3.9 years. Businesses that failed were characterized by inability in obtaining loans from formal money lending institutions such as commercial banks (61%), inability to convert part of profit back into investment (46%), poor managerial skills (54%), shortage of technical skills (49%), and low level of education (55%). Based on hazard ratios estimated from Cox regression, businesses operated by women were 2.52 times more likely to fail in comparison with businesses operated by men.

Keywords: MSME, survival, gender in Ethiopia

Introduction

In spite of the enormous importance of the micro, small and medium enterprises (MSME) sector to the national economy with regards to job creation and the alleviation of abject poverty among impoverished women in Ethiopia, the degree of recognition and strategic support provided to the sector is grossly inadequate. Three successive governments that were in power since 1960 have failed to improve the plight of women entrepreneurs in Ethiopia (Ethiopian Welfare Monitoring Unit, 2002). Although several economists have argued that the promotion of women entrepreneurs is a prerequisite for overall economic growth and the alleviation of poverty, women entrepreneurs in Ethiopia have not been provided with meaningful assistance from the national government of Ethiopia in terms of recognition, access to finance and skills required for operating small businesses and enterprises profitably and efficiently. Intervention strategies that are meant to address inefficiency in the sector are often irrelevant, half-hearted and grossly inadequate in terms of resources that are essential for optimal performance and utilization of resources. Although the MSME sector in Ethiopia provides livelihood to 49% of all employed women in Ethiopia, the strategic support it receives from the national government has been minimal (Abegaz, 2004; Abera, Hailu & Solomon, 2002; Admassie & Amha, 2004; Ageba & Amha, 2006; BESO, 2004). The plight of destitute women has been significantly improved due to MSMEs in countries such as Bangladesh, Singapore, Japan, China, South Korea, Taiwan and Malaysia. In Sub-Saharan Africa, some measure of success has been achieved in South Africa, Botswana and Mauritius. The success achieved in each of the above countries is mostly attributed to support to MSMEs in terms of policy, respect for the basic rights and needs of women, the availability of resources such as finance, good infrastructure, skills and appropriate technology and an enabling macro-economic environment for attracting international investors. According to Rahel (2004) and Rahmato (2004), small businesses and enterprises constitute the only livelihood available to the majority of impoverished women in Ethiopia. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.