Micro and Small Enterprises in Ethiopia; Linkages and Implications: Evidence from Kombolcha Town

Abstract

This paper examines the status of formal institutional linkages and its implications on MSEs performance in Ethiopia, particularly in Kombolcha town. The study was carried out in Kombolcha town. This paper has employed mixed (quantitative and qualitative) research design and explanatory sequential analytic approach. Using primary and secondary data, this study examines formal institutional linkages in terms of access to the market, financial support, infrastructures and educational institutions against MSEs performance. Thus, findings of the study show that locally produced raw materials are in a dearth of quality and affordability in the area. Despite having a favorable institutional linkage with TVET institutions in access to training and business improvement tools; technology transfer, credit access and market link for their produces is currently encountered with challenges from administrative sides and lack of appropriate policy concerns. Credit accesses as a backbone of MSEs has been highly affected by collateralize issues and entrepreneurs failures to organize under micro-enterprise as a mandatory procedure. Unlike formal linkages, the informal linkages have a significant role to play in access to the market. Thus, it is important to make revisions to the administrative procedures and traditional work practices at governmental and private institutions, and policy rigidity together to strengthen MSEs linkages with formal institutions.