Determinants of the Growth of MSEs in Ethiopia: The Case Study of Bahir Dar City Administration

Abstract

This paper aimed to examine the determinant factors that affect growth of MSEs in Bahir Dar city administration, Ethiopia. Since those firms play significant role on one's country economy. However, MSEs currently facing various challenges which hinder their growth. Some researchers conducted on this issue; however, they focused on trade and services by using some other determinants. This study therefore, tried to find out the determinants of growth of MSEs, specifically; manufacturing, construction and urban agriculture in the Bahir Dar city administration for the year 2005E.c. The study incorporated seven determinants and found that five of them (access to credit, firm size, firm age, educational level and initial investment) positively and significantly affected growth of MSEs of Bahir Dar city administration. However, the rest two variables (access to land and gender of the owner) have no significant effect on firm growth. Generally, firms are highly challenged by the above significant variables both the government and owner of the business should work hand in hand to improve financial position and educational level of both owner and employees of MSEs in the city.