DETERMINANTS OF MICRO AND SMALL ENTERPRISES’ PARTICIPATION IN BUSINESS DEVELOPMENT SERVICES: THE CASE OF JIGJIGA CITY COUNCIL, SOMALI REGIONAL STATE, ETHIOPIA

Abstract

In developing countries, micro and small enterprises are recognized as important vehicles of economic growth, employment creation, income generation and poverty reduction. This study aimed at identifying the determinants of micro and small enterprises participation in business development services in Jigjiga city of Somali region. Random selection of 127 micro and small enterprises from the city was chosen to collect primary data, although only 123 Enterprises responded. Data were analyzed using descriptive statistics and binary logit model. Descriptive statistics results showed that out of the total sampled MSEs respondents, only 41 (33.33%) were participants of business development services (BDSs) while the remaining 82 (66.67%) were non-participants. Descriptive statistics results also showed that there are significant differences between participants and non-participants. On the other hand, results of the econometric model indicated that out of a total of eleven explanatory variables included in the model, eight variables were significant in determining MSEs’ participation in business development service programs in the study area. Accordingly, sex and educational status of MSEs manager, firm age, access to market, access to finance, amount of start-up capital, MSE business organization and access to vertical linkages were found to have positive and significant influence on MSEs participation in business development service. In addition, the challenges and opportunities of the MSE sector in study area were explored. Finally, based on the findings of the study, important recommendations were made to MSE sector leaders and policy makers of the study area, in order to increase MSEs’ participation in BDSs and solve constraints faced by MSEs in the study area