The Role of Micro and Small Enterprises in Reducing Unemployment and Poverty in Ethiopia

Despite the country’s success in economic growth and poverty reduction over the past decade, income inequality and unemployment remain formidable challenges in Ethiopia. According to the 2014 Central Statistics Authority report, average urban unemployment was as high as 16.5%. Tackling issues of unemployment and poverty through the support and promotion of large-scale manufacturing industries has repeatedly failed to achieve the required results. Some argue that focusing on small businesses, which require relatively less financial and human capital and are able to absorb a significant portion of the labor force, will provide the solution. The study looks particularly at the role of MSEs in reducing unemployment and poverty both generally and specifically among vulnerable groups, such as women. The researchers also consider alternative strategies that could be more effective than current policies as part of the country’s plan to develop the MSE sector.