Entrepreneurship and Small Business Development : A research program

Mulu Gebreeyesus (Ph.D.)

Research Fellow and Coordinator of the program

E-mail: mulu.yesus@gmail.com

የኢትዮጵያ ልማትምርምርኢንስቲትዩትETHIOPIAN DEVELOPMENT RESEARCH INSTITUTE

Dissemination WorkshopOctober 24, 2017

Hilton Hotel, Addis AbabaEthiopia

Presentation outline

1. Background and rational

2. Program objectives

3. Proposed Activities (2016-19)

4. Progress so far

5. Other planned and ongoing activities

6. Acknowledgments

1. Background and rational

The development of Micro and Small Enterprises (MSEs) has been high on the agenda of the Ethiopian government as a means to generate employment and reduce poverty

A full-fledged MSEs Development strategy was formulated in 1997

This was institutionalized by the establishment of FMSEDA and RMSEDAs

The strategy was revised in 2011 (renewed interest and far more ambitious targets)

The vulnerable segment of the society particularly women and youth have been given priorities in the employment generating schemes

Background cont.The role of MSEs is anticipated beyond generating employment for the urban unemployed. nurturing future industrialists

The manufacturing have been given high emphasis in the MSEs development

The Federal implementing agency (also regional) has been restructured which resulted in the replacement of FeMSEDA with two separate federal agencies:

the Federal small and medium manufacturing industry development agency (FeSMMIDA) under Ministry of Industry (MoI)

the Federal Urban Job creation and Food Security Agency (FUJCFoSA). FeSMMIDA under Ministry of Urban Development and Housing (MUDH)

Background cont.

Despite the unparalleled attention given to the MSEs in the development course of Ethiopia, there is huge knowledge and information gap regarding the sector;

No systematic evidence, except the administrative reports, how many enterprises exist and how much and what type of employment has been generated huge discrepancy and inaccuracy in the enterprises and employment numbers reported No national/regional level representative business directory (database) exist difficult to monitor the sector development

Little is known to what extent do the massive entrepreneurial schemes underway created dynamic entrepreneurs and industrialists

Limited knowledge regarding the circumstances in which the small business entrepreneurs are operating and problems faced

The lack of research is aggravated by the absence of reliable and sector representative dataset (existing data fragmented or limited in scope)

2. Program objectives

In 2016 EDRI initiated a long-term research program namely“Entrepreneurship and Small Business Development” (ESBD) to fill the gap

The ESBDE program has the following two core objectives;

(i) The first is to conduct rigorous research and produce evidence-based knowledge and impact evaluation of programs that can be used to improve the existing policies and practices of the government and all other relevant actors

(ii) The second objective is to build a stronger and more integral knowledge support system and database within the country to underpin future policy analysis in small business development

Creating a research depository that makes the international experience and literature accessible to stakeholders working in the MSEs

Developing comprehensive database systems on MSEs in Ethiopia through compiling existing ones and new survey

3. Proposed Activities (2016-19)

The research program has identified detailed activities and work plan for the first three years (July 2016 – June 2019), which involves;

Preparation (e.g. team formation and resource mobilization)

Stock taking of existing literature and data

A baseline data collection (two types - 8000 MSEs andqualitative/quantitative survey on BDS providers/ beneficiaries)

Analysis (producing 10+ papers) on thematic areas presentedbelow and survey report

Outreach to various stakeholders (including policy makers,program practitioners, the private sector and donorcommunity)

Activities cont.2016 2017 2018 2019

Main Activities and timeline 2nd

half-

year

1st

half-

year

2nd

half-

year

1st

half-

year

2nd

half-

year

1st

half-

year

Phase I

Preparations (program guideline, team formation,

consultations etc.)

Background papers – (3 drafts)

Main Survey – pre-survey preparation, field survey

(8,000 MSEs) and data cleaning

Analysis I (3 papers based on the survey data)

Validation and disseminations workshops

Phase II

Analysis II (3 more papers based on the survey

data)

Consultation and validation workshop

Quantitative/Qualitative survey (BDS providers,

intermediaries, and beneficiaries)

Analysis III based on the both the MSEs survey and

quantitative/qualitative survey (at least 2 papers)

Validation and disseminations workshops

Preparation for 2nd round MSE survey (panel data)

4. Progress so far

Formulation of core research team1. Dr. Mulu Gebreeyesus: Research Fellow and Coordinator of the program (EDRI)

2. Prof. Wim Naude: Dean of the Maastricht School of Management

3. Dr. Girum Abebe Tefera: Research Fellow (EDRI)

4. Dr. Berhiu Assesfa: Research Fellow (EDRI)

5. Dr. Tigabu Getahun: Research Fellow (EDRI)

6. Mr. Abebe Ambachew: Research Associate (EDRI)

• The program also involves other researchers from EDRI and outside

o We are particularly interested to bring onboard researchers from respective economic departments of universities in each towns where survey is conducted

Progress: Resource mobilization

We have so far mobilized USD 809,360 from 3 different sources

Source USD (%) Duration

IDRC 237,186 29.3 2016-2017

ECRC/EDRI 182,213 22.5

EU 389,961 48.2 2017-2019

Total 809,360 100 2016-2019

The IDRC/ECRC fund was able to finance the collection of the baseline data on 8000, MSEs and produce survey report and about 4-5 thematic papers

The EU finance which started this year is being used to produce more papers and additional survey related to BDS actors

I would like to thank IDRC, ECRC and the EU!

Survey Questionnaire: Contents

1) General Information 8) Investment and Finance

2) Characteristics and history of the enterprise

9) Business Development Services

3) Characteristics of the owner (entrepreneur) 10) Business Practices

4) Growth Orientation 11) Greening MSEs

5) Employment and earnings 12) Occupational Safety and health of workers

6) Marketing and Supply Linkages 13) Production, Sales and Costs

7) Competition, Technology and Innovation 14) Cognition, time and risk preferences

Progress: Baseline data collection

One of the major initial activities was to collect baseline data taking a sample of 8,000 manufacturing MSEs in 10 major cities

The survey was conducted b/n (Oct. 2016 - May 2017) providing us with

8174 MSEs

Geographical and size distribution of the MSEs survey

City

1-5 workers

(Micro)

6-30 workers

(Small)

More than 30

workers Total (%)

Addis Ababa 1,195 3,035 263 4,493 55.0

Outside Addis (9

towns) 2115 1518 48 3681 45.0

Total 3,310 4,553 311 8,174 100

(%) 40.5 55.7 3.8 100

Progress: Baseline data collection

The 9 towns are; ---Adama, Bahir Dar, Dessie, Dire Dawa, Gondar, Hawassa, Jigjiga, Jimma and Mekelle

Progress: Research outputs produced

Research topics First draft

1. Literature Review: Ethiopia’s MSEs Development policy,

practices and performance

Completed

2. The role of small business and sector on creating

productive employment for the youth and women

Completed

3. Who are growth-oriented entrepreneurs? Evidence from a large scale survey of micro and small enterprises

Completed

4. Innovation practices, productivity and growth performance

in the MSEs

Completed

5. Confused about Entrepreneurship and Development? Perspectives for Perplexed Policymakers

Completed

6. Baseline survey report Completed

Objective of this workshop

The aim of today’s workshop is to present and discuss the research outputs so far

Topics Presenter

The Assessment of existing MSEs data set and the ESBDE

Survey Methodology

Dr. Girum Abebe

Baseline survey report: Mani features of MSEs Abebe Ambachew/ Dr.

Mulu G.

Who are growth-oriented entrepreneurs? Dr. Girum A.

Innovation, Productivity and Growth Performance of

MSEs

Dr. Tigabu Getahun

The Role of the Small Business Sector on Creating

Productive Employment

Dr. Berihu Assefa

Determinants of MSEs use of

energy efficient technologies in Ethiopia

Dr. Seid Hassen

5. Other planned and ongoing activities

Planned and undergoing thematic areas of research

(1) Understanding the pattern of structural transformation in Ethiopian through the lens of MSEs growth performance

(2) The determinant factors of enterprises energy efficiency and conservation activities

(3) Promoting MSEs through State support: Does it work? (the story of selection into cooperatives and intensity of state support)

(4) What determines business practices in micro and small enterprises?

(5) How does the business environment affect MSE firms entry and performance (with special focus on financing, regulatory and infrastructure)?

(6) The impact of power outage on enterprises productivity/production

(7) Size class dynamics of MSEs: Which firms managed to upgrade/grow?

Other planned cont.

(1) Dissemination and stakeholders engagement

Organizing dissemination workshop (24th Oct. 2017)

Extra engagements (distribution of research outputs, policy briefs, and other workshops)

(2) Conducting survey on BDS service providers and beneficiaries (from Jan 2018)

(3) Mobilizing further resources for the 2nd round survey to be held in 2 years time preparation undergoing

Future major activities

AcknowledgementsAllow me to thank several institutions and individuals that made to happen this progress

- EDRI and the management for overall support

- IDRC for their critical and catalytic role in initial financing

- ECRC/EDRI for coming forward to raise matching fund

- The EU delegation here in Addis for ensuring the sustainability of this project in the next two years

- Different government agencies at Federal, regional and town level for their generous cooperation

- Research team members for their determination and team sprit

- Finally, supervisors, enumerators and data managers for their painstaking work and delivery

THANK YOU FOR YOUR ATTENTION!