ADDISABABACITYADMINISTRATION

ADDIS
ABABA CITY ADMINISTRATION
MICRO&SMALLENTERPRISES
DEVELOPMENT BUEARU
DEVELOPMENTBUEARU

WOMENINTHEDEVELOPMENTOFMICRO&SMALLENTERPRISESTO
ENSURE SUSTAINABLE DEVELOPMENT & FOOD SECURITY
ENSURESUSTAINABLEDEVELOPMENT&FOODSECURITY

Konjit Debela
ETHIOPIA
ADDISABAABA

Content:
Part One:
PartOne:

Introduction

Part Two:
PartTwo:

Organizational Structure of SMEs Development

OrganizationalStructureofSMEsDevelopment

PartThree:

FundamentalpointsofEthiopianSMEStrategy
p
p
gy

PartFour:

WomenandSMEs

PartFive:

WhoBenefitsfromMSEsdevelopmentprograms

PartSix:

Challengesandwayout

PartSeven:

SupportAreas

MICRO&SMALLENTERPRISESDEVELOPMENT
In Ethiopia (ADDIS ABABA)
InEthiopia(ADDISABABA)

Part One: Introduction

PartOne:Introduction

Micro & Small Enterprise Development Program in Ethiopia meaningfully

has been given due attention by government since 2004/2005.
2004/2005 Of course,
course
in 1996/97 National Micro and Small Enterprise Strategy was developed
by the government. However, the degree of recognition to the sector with
regards to job creation and the alleviation of abject poverty among
impoverished youth & women was not sufficient.

Until 2004/2005, the national strategy was implemented by Federal SMEs

Development Agency organized only at national level. Because of this, it
was very difficult to make the strategy practical specially in delivering
business development service for SME operators.

Thus, by considering the critical role of the sector and the constrained
faced by SME operators since 2004/2005 the government of Ethiopia
decide to establish SMEs coordinating body at regional level.
level

 Accordingly, SMEs development Agencies are set up in all

regions, even sub branch offices at zone/district level. The
system helps to support a lot of SMEs and there by to
create job opportunity for unemployed youth and women.
Currently the government amend SMEs strategy with the
objective of that in addition that the sector play alleviating
poverty & reducing unemployment,
unemployment to help out the sector
to play its pivotal role as a base to medium and large scale
industry.
The strategy is implemented all over the country.
In amending the strategy a lot of experiences had took
from different countries specially from India, Japan and
Malaysia.

PartTwo:OrganizationalStructureof
SMEsDevelopment
B
Bureau
Head
DeputyHead
EnterpriseOrganizing
&Promotion
Department

DeputyHead
EnterpriseSupport
FacilitationDepartment

CaseTeams

MarketLinkage&
Workingpremises
D l
Development
t

Experts
p

CaseTeams

Experts

City
60 Experts
60Experts

SubCity
130 E
130Experts

District
2300Developmentworkers

PartThree:Fundamentalpoints
p
ofEthiopianSMEStrategy

3.1 Definition of Small and Micro Enterprise (SMEs):

According to the new Small & Micro Enterprises Development
Strategy of Ethiopia (published 2011) the working definition of MSEs
is
based
on
capital
and
Labor.
Sr.no

Enterprise level

Sector

Hired labor

Capital

1.

Micro

Industry

<5

$6000.00

or

4500.00

<Birr 100,000.00
00,000 00
Service

<5

$3000.00

or 2200.00 or

<Birr 50,000.00
2.

Small

Industry

6-30

$90,000.00

or

70,000.00

<Birr 1,500,000.00
Service

6 30
6-30

<Birr 500,000.00
500 000 00

3.2 Government Supports and Selected Sectors

3.2GovernmentSupportsandSelectedSectors
Since our country has limited capital government support to SMEs
depending up on the importance of the sector in the economy.
economy
Accordingly growth oriented sectors are selected for Maximum
government support and the rest non selected sectors will get
Minimum support.
support
Some of growth oriented sectors are:
In the manufacturing sector: Metal & engineering, textile and
garment,
t leather
l th products,
d t wood
d workk products,
d t agro processing
i and
d
handicraft products.
In the construction sector: contractor, building material production,
cobble stone production,
production traditional way of mining extraction.
extraction
Urban agriculture: cattle fattening, honey production, forestry, poultry
farm, animal food preparation,
Trade sector: domestic product whole sale and retail trade
Service sector: solid waste collection and recycling, maintenance
service, etc

 Growthorientedsectorsselectioncriteria:

Largemarketsizefortheirproduct,
Employmentabsorptioncapacity,
p
,
Shortperiodofreturnoverinvestment,
Localrawmaterialutilization,
Highroleforpovertyreduction,and

Opportunitytotransformedtomediumandlargescaleindustry
Opportunity to transformed to medium and large scale industry.

TypesofGovernmentSupportforSMEs:
Maximumsupport(forgrowthorientedsector)
1.Workingpremiseswithleastleasingprice,
gp
gp
2.Productdisplaycenterwithleastleasingprice,
3.Technicalandbusinessmanagementtraining,
4.Counselingservice
5.Loanprovision,
6.Marketlinkageparticularlywithgovernmentdevelopmentprograms(eg.
Housingdevelopment,)
7 E hibiti
7.Exhibition,tradefairorganization
t d f i
i ti
8.Accesstotechnology

Minimumsupport
i i
1. Loanprovision,
2. Exhibition,tradefairorganization
3 Technicalandbusinessmanagement
3.
Technical and business management
training,and
4 Counseling service
4.Counselingservice

3.3Typesofenterprisesgrowthstage
yp
p
g
g
Microenterprises

3.Maturity

Smallenterprises
4.Emergingmedium
3.Maturity

2.Growth
2.Growth

1 Start up
1.Startup

1.Startup

GovernmentSupportandGrowthstageofEnterprises
Government support either for growth oriented or non
growth oriented sectors base the growth stage/cycle of
the enterprises.
Based on the new strategy enterprises that wants to
get support from government are obliged to know the
stage of their enterprise.
enterprise
The size of support to SMEs (either maximum or
minimum) depends up on the growth stage of the
enterprises. That is, enterprises in the higher stage
wants large support to be successful in their business
activity.

PartFour:WomenandSMEs:
4.1WomenintheConstitution:
The
ThebasicpointofEthiopiaconstitutionpertainingto
basic point of Ethiopia constitution pertaining to
Womenempowermentisequalpower&rightinthesocial,
economicandpoliticalparticipation.
Tocomeuptothebacklogasregardsgenderdiscrimination
someaffirmativeactionsareapplied.
WomenhavegotownershiptitleonresourceslikeLand.
Women have got ownership title on resources like Land
Atnationallevelwomenaffairpolicyispublishedin1992.
AndministerofficeandregionallevelWomenaffairBureau
And minister office and regional level Women affair Bureau
aresetuptomaketheconstitutionrealistic.Themajorduty
andresponsibilityofthesegovernmentinstitutionsareto
empowerwomen,awarenesscreationongender
inequalities,etc

4.2Women&SMEs
Womenareverymuchencouragedtoparticipatein
growthorientedsectors.
Insomesectorslikecarparkingservices,solidwaste
collection,etcarepredeterminedforwomen.Members
of the enterprise should include 50% of women This is
oftheenterpriseshouldinclude50%ofwomen.Thisis
becausetheactivitiesarefullyoutsourcedby
government.
Toraisetheconsciousnessandtherebyincreasethe
participationofwomenintheeconomicactivitiesto
ensure sustainable development & food security the
ensuresustainabledevelopment&foodsecurity,the
followingsystemsareapplied:
1 Initiatingandsupportingwomennetworkgroups:
1.
I iti ti
d
ti
t
k
i.
ii.
iii.

Womenexportersassociation,
Womenentrepreneursassociation,
p
,
Insomesectorswomenformunions

2.Selectionofbestperformingwomenownedenterprises
toteachotherwomen:

Model
M
d l women enterprises
t
i
t i other
train
th
women (both
(b th
unemployed & unsuccessful women in SMEs) about how to
create job, challenges they faced, how to overcome the
challenges in the business world, etc

3. W
3
Womenjobcreationteams(WJCT):
j b
i
(WJCT) groupofunemployed
WJCTsareorganizedinallprovinceswiththeaimof
raising economic benefit of women
raisingeconomicbenefitofwomen.

More than 50,000

50 000 unemployed selected and registered to
create job opportunity in SMEs sector

unemployed

unemployed

unemployed

779WJCTcreatedineach
779
WJCT
t di
h
ketena

 Ineachprovincedependinguponthetotalno ofpopulation
andthesizeofboundarythereare510womenjobcreation
teams (WJCT)
teams(WJCT).
ketena

One
District

ketena

 The members of each team are 15 unemployed.

They are nominated democratically by the society,
believed that they are powerful to convince and change
the attitude of other unemployed women regarding job
creation And they can act as a vanguard to involved in
creation.
any SMEs sector.
The team is also responsible to assess the business need
of the unemployed, to advice how, with whom to form
business organization.
For the first time the selected 11,000 unemployed women
are organized in to 779 women job creation team. The
members are trained on detail government development
policy in general and specific training on SMEs strategy.
The training was given in the form of TOT,
TOT to help them to
convince others.

 Accordingly
Accordingly, with in six months more than 60% of
WJCT organized and started to operate in different
SMEs sectors . Most of them operate in cobble
stone production
d
sector.
Around 12,000 women business need have been
identified form business organization,
identified,
organization trained in
different fields and started operation.
Although this type of women structure has great
benefit to move up the economic involvement of
women sustainability of the WJCT
women,
has face
challenges like:
Un equal
q commitment of members,,
Loose participation of members,
In some WJCTs, members after involving in SMEs
sector, totally
ll not participate in the
h WJCT,
Lack of fixed place to gettogether, etc

4.3SMEsdevelopmentplanandwomen
participation:PlanandAchievements:
ti i ti
Pl
d A hi
t

a.Plan
Plan
Becausemorethanhalfofthepopulationofthecityare
women(51%),eachyearitisplanedthat50%ofthejob
(
),
y
p
j
opportunitywillbecreatedforwomen.
A
Accordinglydifferentmeasureshavebeentaken.
di l diff
t
h
b
t k
ViaWomencivicassociations:continuousawareness
creationprogramconductedinalllevels,
p g
GenderUnit:throughthisunitmonthlygenderreview/
checkhavebeenconducted.
ThusfromyeartoyearwomeninvolvementinSMEs
Th f
t
i l
t i SME
sectorincreasesatincreasingrate.In2010ofthetotal
jobcreation37%arewomen.

b. MajorAchievementsofthecityto
the development of the sector:
thedevelopmentofthesector:
1. Policy Guidance and Regulation:
1.PolicyGuidanceandRegulation:
Anorganresponsibletothedevelopmentofthesector
isestablished.Thatis,MicroandSmallEnterprise
,
p
DevelopmentBureau,
Differentsupportpackagestogrowthorientedsectors
havebeendeveloped,
Procedureandstrategyontransformationofsmall
enterprisestomediumscale,
Manualisdevelopedtoselectmodelenterprises,

 Different regulations and procedures have been

developed to make conducive environment to the
sector. Some of them include:
Regulation on accessing market (getting priority) on
governmentt development
d l
t works
k
Regulation
g
on MSEs workingg p
premises & sales display
p y
centers administration,
Different Procedures depending on support given to
MSEs,
MSEs

 Taxpolicyandwomen:
MSE
MSEshavetheprivilegeoftaxexemptionforthe
h
h
i il
f
i f h
first3years.
However each SMEs have to get tax identification
number (TIN) during licensing. This is just to
control & make SMEs learn the habit to pay tax
after 3 years.
This policy basically benefited to women because
most women take p
part in SMEs rather than
medium & large scale industry.

2.Marketlinkage&marketfacilitation:
2
Market linkage & market facilitation:
Directmarketlinkagewithgovernment
development program like housing
developmentprogram,likehousing
development
Housingdevelopmentprogram:since2003
Housing development program: since 2003
80,245housesareconstructed.
More than 12,000 SMEs are participated.
Morethan12,000SMEsareparticipated.

Organizingwomenentrepreneurstradefair
& exhibition (at city sub city & district level)
&exhibition(atcity,subcity&districtlevel)
Localmarketassessment Marketlinkage
between & among SMEs medium & large
between&amongSMEs,medium&large
scaleindustries.
Mostwomeninfoodprocessingsectorare
Most women in food processing sector are
linkedwithsupermarkets.

3 Li
3.LicensingService&Creationofenterprises:
i S i & C ti
f t
i
onestopshopisorganizedtomakesuitablebusiness
environmentforwomenandyouth.
y
Accordinglyfrom2003 2010morethan22,000new
enterpriseshavegotbusinesslicenseandnowtheyare
underfunction.Ofthis37%arewomen.

4.Technicaltrainingsupport:
from2003 2010around295,084operatorshavegot
businessandtechnicalskilltrainingsupportfrom
government.Ofthis32%arewomen.

5.Loanprovision/disbursement:
Since2003to2010foratotalnumberof200,289
i
f
l
b
f
businessoperatorshavegotbirr
1,335,092,912($111,257,742).Ofthismorethan
,
,
,
(
,
,
)
40%oftheloanhavebeengiventowomen.

6.Workingpremisessupport:from2003
gp
pp
2010

Built&distributedworkingshed:
996metal&woodworkshed
612foodprocessing(97%)
p
g(
)
639construction
127 b
127urbanagriculture
i l
71G+4buildingsfortextile,garment&
leatherproducts

7 Job Opportunity: from 2003

7.JobOpportunity:from
2003 2010

686,083 unemployed people have got job

opportunity from SMEs development.
development Of this 36%
are women.
Accordingly the unemployment rate of the city
will decline from 37% to 25.8%

8.EnterpriseTransformationfromSmallto
p
Mediumscaleindustry:Accordingly250small
Enterprises(having1,685businessmembers)are
transformed to Medium Industry (2010)
transformedtoMediumIndustry(2010),
Ofthetotalbusinessmembers24%arewomen.

9.Modelenterprisesandbestpracticeexpansion
program

182ModelEnterprises(enterpriseswithbestpractice)areselectedwiththe
objectiveofExpandingtheirtopperformancetoothers.

PartFive:WhoBenefitsfromMSEs
development programs
developmentprograms
Theprogrammorefocusesonpropoorpeople:
Unemployedyouth&women
U
l d
th &
TVETschoolgraduates
Schooldropouts
ExistingSMEssuchasweavers,streetvendors,
Existing SMEs such as weavers street vendors
traditionalhandicraftoperators,
PeoplewholiveontheStreet
P
l h li
h S
Etc

PartSix:Challengesandwayout
1.Challenges:
EnterprisesAttitude:
Rentseekingattitude
Enterpriseformationjusttogetandsell/leaselimitedgovernment
supports(e.g.Workingpremises)
Usinginappropriateconstructionmaterialforhousing
development
Violationofcontracts

Missutilizationofgovernmentsupport
Liketransferringpremisestothirdparty
Reluctanttorepayloanontime
Reluctant to repay loan on time

Dependency
Alwayshangaroundgovernmentmarket
Unwillingtosave,someofthemarenotvisionary(anintentto
(
snatchgovernmentsupport)

Enterprisesfacelackofmarket,finance,skill,etc
p
,
,
,

2.WayOut:Systemsetupforcoordination
amongsupportingorganization
Rule issetuptoindicatehowtoplan,howtoimplementand
worktogether,whenandhowtoevaluatetheworketc
Basedontherulethereisaformofsteeringcommitteewhich
includethethreeorganizationsandotherstakeholders.This
steeringcommitteewiththesameformofmembershipis
organizedatsubcity&wereda
i d t b it &
d (district)level.
(di t i t) l l
Themajortaskofthesteeringcommitteeistopromote&solve
problemsfacedbySMEsoperators.
Inadditiontoformingstakeholderscommitteetomakesuitable
businessenvironmenttoSMEs,thethreemajorstakeholders
(SMEsDevt Bureau,MFIs&TVETs)atdistrictlevelsetuptheir
officeintheformofonestopshop.
ff
f
f
Thethreeorganizationshavetimetomonitorandevaluatethe
serviceprovidedtoSMEs(monthly,quarterly,yearly).

Taskforceisorganizedamongtough
SMEssupportingorganizations
TheMajorSMEssupportingorganizationare:

SMEs
Development
Bureau

Micro
i
Finance
Institutions

TVET

Formation of MSEs council or steering committee

FormationofMSEscouncilorsteeringcommittee
SMEsDevelopmentBureau
MicroFinanceInstitution

Premisessupport,marketlinkage,counselingservice,
businessplandevelopment
Loanprovision,savingservice,awarenesscreationonsaving,
consultation

TVETCenters

Provisionoftechnicalandbusinessmanagementtraining,
Technologydevelopment

AddisAbabaCommunicationBureau

communicate
communicatethecommunityonthedevelopmentofSMEs,
the community on the development of SMEs
bestpracticeexpansion,promotion

AddisAbabaTrade&Industry
B
Bureau

TradeLicensing,investmentlicensing,supporttransformed
enterprises from SMEs to medium & large scale industry
enterprisesfromSMEstomedium&largescaleindustry

AddisAbabaDesign&Construction Designing&followtheconstructionofSMEsworkingsheds
andbuildings,marketlinkagetoSMEsengagedinconstruction
Bureau
sectors
sectors.

AddisAbabaHousingProjectOffice marketlinkagetoSMEsengagedinconstruction
sectors.
AddisAbabaWomenandYouth
AffairBureau

Attitudechangeworkinghabit,awarenesscreationon
SMEsbenefit&role,financesupporttowomen,

Part Seven: Support Areas

PartSeven:SupportAreas
Toaccomplishsuccessfulandsustainable
p
p g
SMEsdevelopmentprogramweneed
financial,technicalsupport:
Forthedevelopmentofworkingpremises,
For the development of working premises
Fortheprovisionofloan(intheformofrevolving
f d)
fund)
Skilltrainingontechnologicaldevelopment,
productdevelopmentand
Sharingexperienceonchangingtheattitudeof
womenandyouthtowardsbusiness.