Factors that Hinder Rural Youth Participation in Micro and Small Enterprises: A Case Study of Eastern Oromia National Regional State, Ethiopia

It has been more than two decades that MSE gaining recognition for their contribution mainly in economic development and employment creation and has been occupied most of the discussions among government, policy makers, academicians, researchers, scholars etc worldwide. However, the sector’s contribution was mainly studied and widely searched respect to urban economic development and employment creation. This research thus tried to indicate the contribution of the sector in some selected rural and semirural areas. Moreover, it tried to identify the factors affecting the rural youth participation at the main target for the sector. To meet these objectives, both secondary and primary data were collected. Primary data were the main sources for this study. To this end, a sample of 117 youth both from MSE and unemployed youth were addressed using well structured questionnaire, 4 different officials and 3 MSE extension workers interviewed and 5 people focus group discussions were contacted. To analyze the data, both quantitative and qualitative research methods as well as descriptive and inferential techniques were applied. SPSS 20.0 versions were used to analyze the data. The unemployed youth in rural village who tried to engage in MSE indicated that unfavorable conditions (treatment) from MSE facilitators and lack of money or material resources were found as the major factors contributed for their lack of participation. On the other hand, those who did not  tried to engage in MSE indicated that lack of awareness when and where to start; and lack of experience to operate own business were the major reasons for which youth did not participate. On contrary, those unemployed youth from the semirural areas revealed that watching the failure of other MSEs and lack of confidence due to its risk thereby the attitude towards wage employment were the reasons for which they did not participate in MSEs. Furthermore, the study revealed that lack of access to feasible market, lack of access to credit and lack of support (training and motivation) were the major reasons for which some MSEs were shut down. The study also showed that majority of the youth participants were more engaged in an ‘easy-to-entry’ business such as trade or sales and service and less engaged to start businesses with higher entry barriers, such as manufacturing and professional services. Finally the study indicated that MSEs have contributed to employment creation, owned individually and cooperatively, though there is difference among sectors in terms of number of employees per MSE and types of employment. Moreover, those who have been engaged in MSE are able to earn income for which their livelihood depends, though there is variation among the types of MSEs. Based on the major findings, the study recommends that by improving educational system, broadening access to credit, provide work place, marketing assistance, capacity building for and continuous follow up and evaluation of MSE facilitators and improving the general business environment are vital for youth participants with entrepreneurial ability to respond to lucrative opportunities.