Determinants of Growth of Micro and Small Enterprise in Oromia, Ethiopia

This study aimed at investigating determinants factors of MSE’s growth and performance in Oromia. The key determinants of growth and particularly employment expansion among enterprises. The survey covers wide variety of activities trade, service, construction and manufacturing. The data was analysed descriptively and econometrically and presented through figures, tables and percentages. The data used for analysis was collected using structured questionnaires, interviews, and observation.

The descriptive analysis revealed that, the average annual growth rates since start up indicate that overall growth performance is less compared to other developing country experiences on the same growth measures. Most of the enterprises are stagnant. The multiple linear econometric analyses have revealed that firm age, firm size, initial capital, internal experience, high school education, manufacturing sector, working premise and access to infrastructure variables were found to be significant. Enterprise growth potential and performance in most cases is inversely related to initial size, infrastructure facility and availability of own working premises while firm age, internal experience, high school education, manufacturing sector and initial capital of the enterprise are positively related to firm growth and performance.