Factors Influencing Performance of Micro and Small Scale Industries in Addis Ababa: A case of Nifas Silk Lafto Sub-city, Addis Ababa

Abstract

The fundamental objective of this study was to determine the factors influencing the performance of micro and small scale industries in Addis Ababa (Nifas Silk Lafto Sub-city) and to determine the relationship between factors and performance of MSSIs. The study was based on Textile and garment, wood and metal work business category. Employing stratified random sampling, 126 respondents were selected. Data were analyzed using measures of central tendency, tests of correlation and regression processed via SPSS version 20. The empirical study elicit eight major independent variables which seem to influence performance of micro and small scale industries in Nifas Silk Lafto sub-city which include: political-legal, Inadequate finance, lack of working place, inadequate infrastructure, marketing problem, poor management practices, technological and entrepreneurial factors. Results show that there is significant relationship between political-legal, financial, working place, infrastructural, technological, marketing, management and entrepreneurial factors and micro and small scale industries business performance. Furthermore, the research finding showed that among such factors working place, marketing, technological and financial factors are the major factors that influence the performance of MSSIs in Nifas Silk Lafto sub-city. According to the above problems the study recommended that different founding institutes in cooperation with other government bodies have to develop comfortable source of finance for MSSIs, government to create policies in order to reduce delays in processing legal requirements and the government through various relevant departments should revise laws regards of micro and small scale industries to minimize legal related problems, micro and small scale industries operators are better to enhance their marketing skills through proper training and experience sharing with other successful medium and large scale industries, government bodies, non-governmental institutions such as training centers and business operators are better to work on preparing training programs for MSSIs operators to enhance better management and entrepreneurship skills. And also government and other concerned bodies to advance technologies and infrastructures such as constant supply of electric city, sufficient water supply, transportation systems and providing working space.