ROLE OF MICRO AND SMALL ENTERPRISES (MSES) FOR RURAL LIVELIHOOD DEVELOPMENT IN ARBA MINCH ZURIA WOREDA, GAAMO ZONE, SOUTHERN ETHIOPIA

Abstract

Maximizing the Small and Medium Enterprise activities is an important poverty reduction strategy for vulnerable communities, and SME are important providers of jobs and incomes for jobless youths and householders. In spite of the presence of large and diverse number of job seekers, the role (i.e., creation of jobs and income) of SME remains low due to various reasons such as low consideration of the government to this sector, low and poor awareness of jobless youths for the activity, lack of good selling places, lack of enough working capitals, high cost of raw materials, lack of assets for collaterals to credit institutions, and lack of financial capacity to participate in more and expected amount. The aim of this study was addressing the pillar contributions of SMEs to rural livelihood development in the study area. Multi stage sampling procedure was followed to select rural kebeles and entrepreneurs for the study. Because of my adequate work experience at this Woreda and its proximity to my living area , this Woreda was selected purposively and three rural kebeles were selected randomly. Two hundred thirty four entrepreneurs were selected randomly using probability proportional to size sampling. Structured interview schedule and key informant interview were used to collect primary data and secondary data were collected from relevant offices. Result of this study indicated that age of respondents, education level, livestock holding, the organizing agent contact and training were important variables which had positively and significantly influenced use of small and micro scale enterprises. Distance from kebele administration and market had shown negative relationship with use of small and micro scale enterprises. The good opportunities to extend SME use in the study area include management training, access to financing, financial assistance, due diligence and compliance, institutional support, availability of different types of SME activities and others. And the main challenges that hinder implementation of small and micro scale enterprises are related to lack of appropriate policy, development strategy,