Role Of Mme In Ethiopia

In post 1991, unlike the predecessors‟ regimes of Hailesellasie and the Derg, Ethiopia exercised decentralization policy and entered into the market economy. In addition, the country developed different policies towards poverty reduction. The Agriculture Development Led Industrialization (ADLI) was developed to increase the productivity of the agricultural sector and thereby forming both backward and forward linkages to the industrial sector. It was intended to achieve rapid growth in the agricultural sector and finally to promote and develop the manufacturing sector. After ADLI, a Five-Year Development Strategy 2005/06 - 2009/10 named PASDEP developed, which was focusing mainly on poverty reduction both in rural and urban Ethiopia was developed. In this strategy, reducing the unemployment level and increasing the income of individual were the focus areas (Philipos, 2006).

Hence, as an instrument, MSEs were given great attention to achieve those objectives in urban Ethiopia (MOFED, 2006). As a result, different strategies were developed towards the promotion of MSEs. The 1997 Development strategy document and the report of industrial development strategy of Ethiopia were some of the outcomes of policies towards MSEs. In the document, great emphasis

MSEs have a number of potential advantages to the economies of least developed countries (LDCs). They are suitable to the factor endowments of LDCs as they utilize domestic resources and use labor intensive technology. MSEs are favorable to the vast majority of the population whose income is very low. Given this low income level and the associated effective demand, MSEs, become ideal to satisfy the demands of narrow domestic markets. Furthermore, lesser capital and skill requirements of MSEs, implies that they can be easily established and operated by the nations of least developed countries (Simeon and Lara,