FACTORS AFFECTING THE GROWTH OF MICRO AND SMALL

ENTERPRISES IN HAWASSA TOWN,ETHIOPIA

A Thesis Proposal Submitted to the school of Graduate Studies of

GRAND COLLEGE in Partial fulfillment of the Requirements for the
Award of the Degree of Master of Business Administration (MBA)

By LEMMA KIFILE
ID NO:- 108/2011
ADVISOR : DR GEBRE SORSA

GRAND COLLEGE HAWASSA

MBA PROGRAM

APRIL,2020 HAWASSA ,ETHIOPIA

FACTORS AFFECTING THE GROWTH OF MICRO AND SMALL ENTERPRISES IN

HAWASSA TOWN, ETHIOPIA

Proposal Page 1
 By LEMMA KIFILE
ID NO:- 108/2011

ADVISOR: GEBRE SORSA

A Thesis Proposal Submitted to the school of Graduate Studies of GRAND COLLEGE in Partial
fulfillment of the Requirements for the Award of the Degree of Master of Business Administration
(MBA)

GRAND COLLEGE HAWASSA

MBA PROGRAM

APRIL,2020 HAWASSA ,ETHIOPIA

GRAND COLLEGE HAWASSA

MBAPROGRAM

Proposal Page 2
 Board of Examination Thesis Approval Sheet

Members of the Board of Examination

External Examiner------------------------------------------- Signature------------------------- Date

Internal Examiner----------------------------------------- Signature ---------------------------Date

Advisor---------------------------------------------------- Signature------------------------- Date

Chairperson -----------------------------------------------Signature ---------------------------Date

APRIL,2020 HAWASSA ,ETHIOPIA

Abstract

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The purpose of this research proposal was to factors affecting the growth of Micro and small
enterprises have key roles to ensure economic growth and reduce poverty in developing countries.
This study was conducted on Hawassa Town to investigate factor affecting the growth of Micro and
Small Enterprise on metal and wood , blocket production sector and urban agriculture enterprise.
Primary data is collected from 109 respondents using well-organized self-administered questionnaire
The study has used both descriptive and explanatory research designed. Data for the analyses
collected through questionnaire and focus group discussions.

The study has used stratified random sampling technique to select 109 MSEs from 1511 fond in
Hawassa town. The study has used correlation and regressions to establish the relationship between
variables. Correlation coefficients revealed a significant relationship between the factors and
growths of MSEs (current capital).Variables such as initial capital, access of infrastructure,
technology use, habit of receiving feedbacks from customer, profitability of business and
government motivation are positively influence to growth of MSEs (profit). Hence improving those
variables increase growth of MSEs (current capital). Multiple regression analysis has also revealed
the variation in response variable (current capital) is explained by predictor variables and improving
those variables increase growth of MSEs (capital). The study recommends that MSEs Office could
be transparent at the time of allocating the working place to the MSEs, better to design close
supervisor of MSEs and linking the MSEs with other private contractors working around Hawassa
town, support the establishment and strength of business development services. Moreover, in order
to reduce the influence of factors on growth of MSEs, policy makers and the service provider
institutions need to consider and revise the extent, intensity, and quality of support and their
linkages.

Keywords: Micro and Small Enterprises, Growth of Current Capital, Hawassa Town

CHAPTER ONE

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 INTRODUCTION

1.1. Background of the Study

Micro and Small Enterprises (MSEs) have become engines of poverty reduction, employment
creation and business development among others in various countries worldwide. In the current
global economy, micro and small enterprises progressively being regarded as powerful engines for
economic performance and development of most economies. Industrial development policy
authorities in most developing countries globally have realized the substantial contribution made by
MSEs towards attainment of sustainable local economic development and poverty reduction through
creation of job opportunities. Growth of MSEs sector is closely associated with the performance of
the nation and their contribution in each nation economy. The importance and emphasis of MSEs has
been draw attention to the mind of policy maker, planer and industry because of a society is not
through the large scale but through individual and small initiatives by visionary from MSEs, and
they are base for shift form agrarian to industrial knowledge base. In Africa the MSE sector provides
certain benefits to the economy, key among them is the recognized potential of the MSE sector to
generate incomes and provide jobs to a large number of peoples. Similarly, in Ethiopia Micro and
small enterprises (MSEs) play crucial role for socio-economic development and serves as vehicles
for employment opportunities and ways of enhancing wealth creation by support the economic
growth. They have become significant employment contributors and can function successfully in
many areas of Ethiopia. However, their effectiveness depends on the nature, performance, and
productivity level of employment and available resource. Limited access to financial services, lack
of partnership and networking, absence of technical and business skills among other are major
obstacles in the sector. In line with the country strategy government of South Nation Nationality
people regional state promotes the development of Micro and small enterprises in order to generate
income and provide job opportunity for unemployment. According to Hawassa town Enterprise and
industry Development office 2019 annual report, Micro and small scale enterprises created
employment opportunities for 3497 peoples in sectors such as Manufacturing, construction, trade,
urban agriculture and service. In Hawassa town Enterprise and industry Development office
(HTEIDO) established in 2018, with responsibility to promote and facilitate the growth of MSEs in
order to enable them to play their role in the economy. Micro and small enterprises in Hawassa town
plays essential function in solving unemployment and provide job opportunities to those graduated

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from university and TVET. However, the growth of micro and small enterprises in Hawassa town
was not significant as expected.

1.2. Statement of the Problem

Micro and small enterprise account for the vast majority of enterprise and contributed major share to
employment and economy growth in the European countries, Japan and US. Similarly, many of the
countries in Sub-Saharan Africa reported to have high number of MSEs in the economy. In Ethiopia,
Micro small and enterprises (MSEs) have a tremendous potential to generate employment for the
majority of the urban labor force. The government revised strategy strives to create an enabling
environment for MSEs through putting in place a national strategy framework and coordinated
programmers at Federal, Regional, and Local levels. Several studies have been identifying factors
affecting the growth of Micro and small enterprises in other region of Ethiopia such as Addis Ababa,
DebreBerhan, Mekele and Bahirdar. For instance, study conducted by, utilized multiple regression
analysis and the finding indicated, external factors and internal factors affect the growth of micro
and small enterprises (MSEs). He mentioned external factor includes government motivation,
infrastructure factors and technological access and internal factors such as initial capital, skills and
managing. His study only focused on manufacturing sectors particularly in textile and garment, food
processing and wood and metal work and recommended for further study factors affecting the
growth of micro and small enterprises including other sectors such as construction, urban agriculture
and trade sectors. So far, significant number of micro and small enterprises in Hawassa town does
not show necessary growth level and some of the enterprises ceased from market in their infant age.
According to the data from Hawassa town enterprise and industry office 2019, from total
1591MSEs, 80 MSEs are failed to continue their operations at the end of the year. This motivated the
researcher to undertake the study. Study conducted by in Hawassa town on Challenges and
opportunities of micro and small scale enterprises using descriptive analysis, result showed that,
factors such as environmental, financial, human resource and managerial as well as market related
factors constraining the growth of MSEs. His research question focused on internal and external
factors hindering the growth of MSEs; however, the study does not clearly indicate those of factors.
In addition, his study has not indicated clearly measurement of growth of MSEs. Therefore, the
major focus of this research was factors affecting the growth of Micro and small enterprises of all
sectors such as construction, manufacturing, urban agriculture, trade and service. Consequently, the
following basic questions are expected to be addressed.

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 1.3. Research Questions

a. What are the major factors that micro and small enterprise face in their growth?

b. What are the possible solutions that can be applied to solve the problems?

c. Is the growth of the micro and small enterprises satisfactory or not?

1.4. Objective of the Study

1.4.1. General Objective

The main objective of the study was to examine factors those affecting growth of micro and small
enterprise in Hawassa town.

1.4.2. Specific Objectives

In order to attain the- general objective the research put out to accomplish the following specific
objective.

i. To identify major factors that micro and small enterprises face to growth in Hawassa town.

ii. To analyze whether there is relationship between the growth of micro and small enterprise and the
major factors faced by MSEs, in Hawassa town.

iii. To provide predictive models for the future growth of micro and small enterprises,

iv. To investigate whether the growth of the MSEs is satisfactory or not in Hawassa town

1.5. Significance of the Study

Findings from this study may help academicians for further study in the area by providing a deeper
understanding of the critical factors that affect the growth of MSEs. In addition, the regional
government uses the findings of this study to overcome critical factors that affect the growth of
MSEs. Moreover, the findings of this study may help the policy makers and financial institutions in
consideration to areas where the strategies should be focused so as effectively promote MSEs
growth.

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1.6 Scope of the Study

1.6.1 Geographical scope

This study will be carried out in Hawassa Town, the capital of Sidama zone and the Southern
Nations, Nationalities and Peoples Regional State in Ethiopia. Hawassa Town Admistration is
selected because it has many small enterprises and financial institutions. It is also easier to access
these small scale enterprises by the researcher because most of them are situated in the center of the
city. Hawassa Town 8 sub towns namely (meneharia sub town, bahil aderash sub town, Addis
Ketema sub town, tabor sub town, haik dar sub town, misrak sub town, tula sub town and mehal sub
city).

1.7 Organization of the Study

The research has been arranged into five chapters. Chapter one presents the introduction part which
consists of background, problem statement, objectives of the research, significance, and scope of the
study. Chapter two presents the review of related literature. Both theoretical as well as empirical
literatures relevant to the study have been sufficiently reviewed. Chapter three, on the other hand,
states the research design and methodology aspect of the study. While chapter four presents the
analysis and discussion part, the last chapter presents summary of findings, conclusion and
recommendations sections of the study.
1.9. Limitation of the Study
It is clear that preparing research Paper will not be free from some limitation. The following are the
major limitation of this research paper.

 Shortage of time;
 Luck of adequate and consistent data;
 Financial problems ( e.g. money );
 Unwillingness of officials to give sufficient information;
 Respondents carelessness to give quality information as requested;
 Shortage of internet facility;
 Lack of recent publication in relation to the research title; and

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  Lack of past studies relevant to the research paper Similar to other
research, this study had limitations.
 The sources of difficulties encountered in this study were described as
follows: most of the documents and reports that are concerned with
micro and small enterprises are written in Amharic. To translate in to the
required instruction language (English) takes longer time and lacks
compatibility.
 Another problem encountered in the study has to do with the owners or
representative’s of the enterprises unwillingness to cooperate due to
suspicion that disclosing information may lead to negative effect on their
business, example, fear of high taxation and providing exaggerated
information on anticipating incentive from government. It is very
important to note that these limitations did not have any significant
interference with the outcome of the study because of triangulation
method of verifying the information.

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 CHAPTER TWO

LITERATURE REVIEW

2.1. Chapter Introduction

This chapter reviews related literature under different sub topics relevant to the study objectives.
This includes definition of Micro and small enterprises (MSEs), measurement of performance of
MSEs, contribution of micro and small enterprises to the economic development ,Growth Definition
and Its Measurements. It also discusses the theoretical background and empirical study on micro and
small enterprises (MSEs) included the factors that affecting growth of MSEs such as Finance,
marketing work premises, technology, infrastructure, and personal entrepreneurial characteristics on
MSEs performance. Finally presents the conceptual framework, which gives a grasp picture of the
study.

2.1 The Definition of Micro and Small Enterprises (MSEs)

The definition of micro and small enterprises around the globe vary from country to country and
depend on the phase of economic development as well as their prevailing social conditions. The
definition uses number of full time employee, total asset, net asset and paid capital, and annual
turnover as criteria independently or in combination. According to European Commission’s the
recommended official definition of micro and small enterprises base on criteria of the number of
employees and one of the two financial criteria, such as either the total turnover or total balance
sheet. Based on this definition small enterprises has number of employees less than 50 and micro
enterprise has less than 10 employees. Similarly, in Africa the definition of Micro and small scale
enterprise is differing from countries to countries. For instance, Kenya’s definition of micro and
small enterprises used two criteria such as number of employees and the company’s annual turnover.
For enterprises in the manufacturing sector, the definition takes into account the investment in plant
and machinery as well as the registered capital. Accordingly, for micro enterprise number of
employees less than 10 and annual turnover is not exceeding ksh 500,000. According to Ethiopian’s
Federal Micro and Small Enterprises Agency the improved definition of micro enterprises is an
enterprise operates with 5 people including the owner and/or their total asset is not exceeding Birr
100,000 under industry and the values of total asset is not exceeding Birr 50,000 for service sector.
Hence, the definition of micro and small enterprise given by Ethiopia revised MSE strategy, 2011
used for this study. Accordingly, micro enterprise defined as an enterprise operates with 5 people
including the owner and/or their total asset not exceeding Birr 100,000 (one hundred thousand)
under industry sector such as manufacturing, construction and mining and the values asset not
exceeding Birr 50,000 (fifty thousand) under service sector such as: retailer, transport, hotel and
Tourism, ICT and maintenance service. In similarly way the definition of small enterprises is as an
enterprise operates with 6-30 persons and/or with a paid up capital of total asset Birr 100,000 (one

Proposal Page 10
hundred thousand) and not exceeding Birr 1.5 million under industry sector and total asset, or a paid
up capital is with Birr 50,000 and not exceeding Birr 500,000 under service sector. As already
mentioned, micro and small enterprise contribute to the economic growth of a country by providing
new jobs, introduction of innovation, simulate competition, aid big business and produce goods and
service efficiently. In many countries, there is now a wide recognition of the contribution of micro-
and small enterprises (MSEs) to economic growth. In a cross-section of both developed and
emerging economies, the contribution of the MSEs sector to total employment, entrepreneurship and
innovation cannot be underestimated. The potential advantages of a dynamic MSEs sector have
generated high expectations in many developing countries about the contributions of this sector to
job creation and poverty reduction. Add to this the optimism that the full development of the MSEs
sector can foster competitiveness in the economy and achieve a more equitable distribution of the
benefits of economic growth in both developed and developing economies. Such considerations have
motivated many governments to put in place national policies to stimulate the growth of this sector
in service, distribution and manufacturing-related economic activities. According, micro and small
enterprises in Sub-Saharan sub African countries play a pivotal role in industrial development and
restructuring, satisfying rising local demand for services, allowing for increased specialization and
supporting larger firms with inputs and services. Even though most of the firms in developing
countries are micro and small enterprises (MSEs) and despite the substantial amount written about
the significance of MSEs to developing economy there is limited literature evidence on the
contribution of MSEs to economic growth.

According to Ethiopian Development Research Institute studies conducted on micro and small
enterprises, MSEs sector growth in terms of its contribution to growth domestic product,
employment and export and total manufacturing output is mostly unknown. Based on the review of
the literature on the study area indicated that there is information gap on the contribution of MSEs
Sector all over the economy of the country.

2.3. MSE’S Policy and Strategy in Ethiopia

Economic policies, strategies and legal and regulatory frame work are prerequisite in order to create
a conductive environment to promote MSE’S. has argued that in Ethiopia deliberate effort to
promote MSE’S in relatively a recent phenomenon. During the Derg regime due to its ideology,
policies and regulations the environment was not conductive for the private sector. In general, during
the Derg regime the legal requirements to obtain license were bureaucratic, and in affect discouraged
the participation of MSE’S operators. The tight foreign exchange control and heavy import and rent
seeking business community. The 2002 National MSE’S strategy figure out the various policies,
structural and institution related problems that constrained the role of the MSE sector in and
contribution to national economy. It thus primarily aims at creation enabling legal, institutional and
other supportive environments for the development of MSE’S. the specific objectives of the strategy
include Facilitating economic growth and bring about equitable development, Creating long term
(sustainable) jobs, Strengthening cooperation between MSE’S, Providing the basis for medium and

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large scale enterprises, Promoting exports and Balancing preferential treatment between MSE’S and
bigger enterprises.

2.4. Empirical Study on Factors Affecting Growth of MSEs

Based on the reviewed of past studies conducted on micro and small enterprise in developing
countries there are several factors affect the growth of MSEs. Accordingly, some of empirical
studies discussed as follows;

analyzed the factors affecting the growth of MSEs in Uganda and, Nigeria using descriptive
research design based on a sample of 60 MSEs. The study concluded that environmental constraints
such as high taxes, limited access to market, costly and erratic electricity supply and lack of skilled
and competent human resources hinder growth of MSE’s. Analyzed the factors affecting the
performance of MSEs in in the Jua Kali sector in Nakuru town of Kenya using descriptive and
explanatory research design based on a sample of 262 MSEs. The study concluded that factors such
as access of finance, marketing, entrepreneurial skills, corruption and infrastructure affect the growth
of MSEs sectors.

In Ethiopia, analyzed the factors that affect the growth of MSEs in Addis Ababa using sample
household survey data collected in 2011. He used both descriptive data analysis and multiple
regression model to identify the factors affecting MSEs. His finding indicated that finance factors,
marketing factors, infrastructure factors, technological factors, work premise factors, management
factors and entrepreneurial factors hindered the growth of MSEs.

2.5. Conceptual Framework

The conceptual framework shows relationships between independent and dependent variables. Since
business growth is influenced by some factors, operators need to understand what influences
businesses to reach expected growth. The factors can be include government motivation, habit of
receiving feedback from customers, profitability, initial capital (access of credit), technology,
infrastructure and soon. In line with the study objectives, growth of MSEs, which measured interms
current capital, were dependent variable where as the factors affecting MSEs growth, were used as
independent variables measured interms (initial capital, government motivation, habit of receiving
feedback from customers, profitability of business, technology use, access of infrastructure)

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 dependent Independent
variables
variables

Access to finances; profitability,

factors afecting amount of loans size, technology
growth of micro and initial capital (access of
small enterpraise credit), • Interest rate
increase,,loan criteria access of infrastructure and
current capital. habit of receiving feedback
from customers
.
Government age at manager,
Policies
marital stutus

2.6 Growth Definition and Its Measurements

A current study investigated by Gupta et aI, (2013) cooperatively revised aspects of growth definition.
Growth can be defined in provisions of income generation, value addition, and expansion in terms of
volume of the business. As well this, it can also be evaluated with qualitative features like market share,
product quality, and customer satisfaction.

Gupta et al.'(2013), on his academic study of rising firms, he has done that business move through five
distinguishable stages of growth. All stage contains a comparatively quiet period of expansion that ends
with a management crisis (Masurel and Montfort 2006). These five phases and crises of expansion are
creativity, direction, delegation, coordination, and collaboration (Figure 2.1).

Creativity direction Delegation Coordination Collaboration

Figure 2. 1: Phase and Crises of growth adopted from (Gupta et al. 2013) Churchill and Lewis (1983) have
developed five stage of an enterprise growth. There are existence, survival, success, take-off and resource
maturity as depicted below (Figure 2).

Existence Survival Success Take-off Resource

Maturity
Figure 2.2: Stages of an enterprise growth adopted from (Gupta et al. 2013)

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 CHAPTER THREE
RESEARCH METHODOLOGY

3.1 Introduction

This chapter will discus to express the procedural structure used in attaining the declared purpose of
the survey and also it clarifies the study hypotheses assumed. The main points discussed in this
section were study plan, type and basis of information, population explanation, sample size, nature
of sampling, sampling methods and explanation of the alternative information gathering tools, and
technique of facts evaluate.

3.2 Description of Study Area

Hawassa is an active city in Sidama Administration and south Ethiopia at the heart of the rift valley
and is located at the eastern shore of Lake Hawassa & 275 km south of Addis Ababa.

It is the head quarter of the Sidama Administration as well as the capital of the Southern Nations,
Nationalities and Peoples Region.

The town has been named after the lake that stands next to it. Hawassa city is attaining a continuous
growth; and daily attracting tourists and has opened its doors wide to investors. It is an attractive
town that you can come in any of your interest and do what you wish. Hawassa city administration
As per the information gathered from , there has 8 sub cities and 32 urban kebeles and its population
is estimated to be 1,427,200 where women constitute 52 percent of the population. Town covered at
Unemployment, low family income, poor housing conditions, poor access to basic facilities,
disempowerment, etc., are some the major challenges of the residents.

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Hawassa City Administration Map

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3.3. Target Populations
The study has conducted in five Micro and Small enterprises centre owners /operators of Hawassa
Town. The target population for this study is such as wood and metal, blocket production sector and
urban agriculture, garment and other enterprise

3.3. Source of Data

The main sources of data for this study is Primary data which is first hand data and is directly
collected from the respondents sampled from the target population by using stratified random
sampling techniques and through the well organized and administered questionnaires to gather
necessary information Some secondary sources of data were used for this study.

3.4. Sampling Design and Techniques

The sampling technique is simple random sampling (SRS) to select the representatives from target
population (frame). In this case the units in the populations are numbered from 1 to N. A series of a
random number between 1 to N is then drawn by means of lottery method. At any draw, the process
used must give an equal chance of selection at any number in the population but not already drawn.

3.5. Method of Data Collection

The method of data collection would be determined by the following factors. Objective of the study,
nature information and operational possibility cost. There are different methods of data collection.
Among them administrated and direct investigations are the appropriate for this study. Based on the
origin of data, statistical data can be classified as primary and secondary data. Among them, this
research project would be conducted by using primary source of data; this would be collected
information from respondents through some specific questionnaires.

3.6. Sample Size Determination

Determining the sample size is very important issue for the precision of the survey. For this study
would use stratified sampling is used with proportion allocation to determine the population size of
the enterprises. Determining the sample size is the key step on the overall statistical processes. An
appropriate sample size means of gaining high precision, accuracy and confidence with minimum
cost. There is a sample determination formula, with much better margin error, i.e.0.05. (Godden
(2004); (Aczel, Amir, Sounderpandin and Jayavel 2006)) Accordingly:
¿
no=(Za /2 ¿ 2 d 2 pq

Where

(Z=0.5, p=0.5, q=0.5, d=9%)=118. If no<5%, no=n

Proposal Page 16
But, )

118
❑no
N= =0.078>5 % (0.005)
1511

so use

no 118 118
n= n= =109.4 ≈109
1+ no 1+ 118 1.078
N 1511

3.7. Variables Included in the Study

The response variable in this study is Current capital, which the capital the MSEs has in the current
time and the explanatory variables included in this study are, infrastructure access, initial capital,
technology use, profitability of business, habit of receiving feedback from customer, and
government motivation.

3.8. Method of Statistical Data Analysis

3.8.1. Descriptive Statistics

Descriptive statistics consist of the collection, organization, summarization and presentation of data
in some meaning full, from such charts, graphs or table. Since variable under study is qualitative
variable, the bar graph is appropriate for the study.

3.8.2. Inferential Statistics

In this way a set of methods will use to generalize from sample to population by performing
hypothesis testing, determining the relationship among estimate variables and making prediction by
data inferential methods such as chi-square, multiple linear regression and hypothesis testing.
Multiple Linear Regression Analysis Multiple linear regressions are a direct extension of simple
linear regression. It is Statistical technique that uses several explanatory variables to predict the
outcome of a response variable (Current capital). The goal of multiple linear regressions (MLR) is to
model the relationship between the explanatory and response variables. Regression Models a
mathematical equation provides prediction of values of dependent variable based on the known
values of two or more independent variables. A particular form of regression model depends up on
the nature of the problem under study and the type of data variables. Consider the problem of
regression when study variable depends on more than one explanatory or independent variables,

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called as multiple linear regression models. This model generalizes the simple linear regression in
two ways.

It allows the mean function E (y) to depend on more than one explanatory variable and to have
shapes other than straight lines, although it does not allow for arbitrary shapes. The linear model: Let
y denotes the dependent (or study) variable that is linearly related to k independent (or explanatory)
variables

X1, X2, …, Xk through the parameters β1, β2, …, βk and

We write

Y = β0 + β1X1 + β2X2 +... + βkXk + ε

This is called as the multiple linear regression models. The parameters β1, β2, …, βk are the
regression coefficients associated with X1, X2, …, Xk respectively and ε is the random error
component reflecting the difference between the observed and fitted linear relationship. There can be
various reasons for such difference, e.g., joint effect of those variables not included in the model,
random factors which cannot be accounted in the model etc. Note that the jth regression coefficient
βj represents the expected change in y per unit change in jth independent variable X j.

Assuming (ε) =0.

Assumptions

i. For any specific value of the independent variable, the values of the Y variable are
normally distributed. (This is called the normality assumption)
ii. There is a linear relationship between the dependent variable and the independent
variables. (This is called the linearity assumption.)
iii. The independent variables are not correlated. (This is called the non muliti co linearity.)
iv. The values for the Y variables are independent. (This is called the independence
assumption.)
3.9. Parameter Estimation of the Model

The model parameter is estimated by using least square estimation method. This is given as
β =(xx)-1xy. The model of least square estimation is used to estimate regression coefficient in
multiple linear regression model. There is a response variable and more than one explanatory
variables. Variables of (xi) assume the model has E (ε) =0, var (ε) =σ and ∑(ε) are uncorrelated
random variables.

Where, Y= nx1 vector of observation

X= nxp invertible matrix

Β= px1 vector of regression coefficients that was estimated from the data.

The model

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Y = β0 + β1X1 + β2X2 +... + βkXk + ε

Where: The model also can be expressed as in matrix form Y= X+ε

Least square estimator (LSE) of β for the multiple linear regression model Yi= X+β =(xx)-1x’y
assuming(x’x)-1x’ is invertible or non singular matrix β =minimize SSE or sum square of error.

4. Results and Discussion

The main objective of this study is assisting to identify factor that determines the Growth of micro
and small enterprises in Hawassa Town, The data were collected on the respondents of the factor and
their activities. The sample size determined for this study was 109, the analysis was based on the
information, and the data obtained from 109 respondents

4.1. Descriptive Analysis About Study Variables

This technique is mostly employed for describing the characteristics of the sample and the major
study variables are displayed in the form of frequency description, percentage, cross tabulation and
diagrammatic representation such as bar chart.

4.2. Inferential Analyses

Inferential statistics is statistical method that deals with inferring or drawing conclusions about
population based on data obtained from limited number of observations that came from the
population. Inferential statistics consist of estimation and hypothesis testing.

4.3. Model Adequacy Checking

This model is used to check whether the major or standard assumptions of multiple linear regression
analysis are meeting. This is made through the following. Residual Analysis: - Analysis of residual
is an effective way to discover several type of model adequacy. It is a measure of variability that was
left unexplained by the regression model. Thus any departures from the assumptions on the errors
should show up in the residuals. Its analysis is effective through plotting. Histogram, Normal
probability plot and Scatter plot.

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 CHAPTER FOUR

TIME SCHEDULEANDBUDGET
BREAKDOWN

4.1 Time Schedule

 
S.N
Activities
o
 

Month  
July August Septembe
April May June r
1 Proposal defense            
2 Literature review            
3 Data collection            
4 Data clearing & entering            
5 Data analysis            
6 Interpretation            
Writing &Printing the    
7 thesis        
8 Final submission          

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4.2 Budget Break Dawn

No. Item Measuremen Quantit Unit cost Total cost

t y
1 Flash disc Pcs 1 400 400.00
2 Toner cartridge Pcs 1 1,900 1,900.00
3 Duplicating paper Pkt 3 115 345.00
4 Clipboard Pcs 5 30 210.00
5 Square paper Pcs 1 40 40.00
6 Note book Pcs 5 15 75.00
7 Pen(ball point) Pcs 15 3 45.00
8 Pencil Pcs 10 1 10.00
9 Staples Pkt 1 8 8.00
10 Erasers Pcs 5 10 50.00
11 Internet cost Hr 500
12 Data collectors days 5 200*5 5,000.00
13 Focus Group discussion days 2 2500 5,000.00
Total 13,583.00

References
1. Admasu A (2012) Factors affecting the performance of micro and small enterprises in Arada
and Lideta Sub Cities; Addis Ababa, Master thesis.

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 2. Anne, N. K. (2014) Factors Affecting the Performance of Small and Medium Enterprises in
the Jua Kali Sector In Nakuru Town, Kenya. IOSR Journal of Business and Management, 16,
80-93. https://doi.org/10.9790/487X16148093.
3. Berihu Assefa, Abebaw Zerfu, and Biruk Tekle. Identifying Key Success Factors and
Constraints of Ethiopia’s MSE Development: An Exploratory Research. 2014. EDRI
Research Report 18. Addis Ababa: Ethiopian Development Research Institute.
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