Creating an Enabling Legal Framework


The overall objective is to enable Micro and Small enterprises to compete and create successful and viable businesses in the market economy environment. The Government is committed to pass a number of enabling proclamations and streamlin
e inappropriate or unduly restrictive legislative and regulatory conditions which are seen as critical constraints to micro and small enterprises to access market and growth.

The Government is committed towards appropriate regulations, which are the results of transparent consultative processes with all interested groups. FeMSEDA in collaboration with the parent Ministry of Trade and Industry and regional bureau
agencies, monitors, coordinates and assists the regulatory reform process through its policy and planning department.

Finance

MSEs identifies the lack of finance as the greatest constraints to their growth and development.
Formal financial institutions are reluctant to avail credit facilities to this sector mainly due to the limitation to the availability of collateral by MSEs as such the access to finance through formal financial institutions is very low. The Government is committed to strengthen the link between financial institutions and Micro and Small Enterprises and to design special instruments and mechanisms to meet the financial requests of MSEs.  FeMSEDA  in collaboration with other MSEs support institutions are committed to   play  a key role in helping MSEs to access Finance. There is also lack of knowledge about the available financing programs or the process of applications by MSEs, the FeMSEDA's Information Department is striving to ensure that such information is made available and disseminated to MSEs, such information is also available at the GTZ/MSEs support web site https://www.bds-ethiopia.net/finance/loans-micro.html. FeMSEDA strives to organize joint forum for action between MSEs, financial institutions, NGOs, local authorities and community groups in order to link MSEs with the financing and other support institutions.

Incentives

The growth of MSEs is also supported by means of incentives devised by the Government to alleviate some of the financial problems. These are aimed at improving the MSEs' competitiveness through the reduction of cost of inputs. Meanwhile, incentives
offered are duty and tax exemption levied on imports and income tax holiday; the FeMSEDA policy and planning department has more details. At regional level additional incentives are availed, details of which may be obtained through contacting the regional agencies: for the Amhara region visit https://www.amhara-development.org/amhara.org/amhara3-2.html

It is through the transparent consultative processes with all interested groups, that the FeMSEDA policy and planning department and in collaboration with the Ministry of Trade and Industry and regional bureaus continue to coordinate and assist the introduction of additional incentives as it is deemed necessary.

Marketing

Various studies have revealed that marketing is another major constraint for the growth of small enterprises as they face the inability to sell their products and services. Whilst the responsibility of marketing MSEs products rests with entrepreneurs themselves it is to the wish of the Government that new-comers are helped hence enabled to access the market. The Government therefore supports MSEs through putting in place legal and regulatory frameworks necessary for inter-linkage mechanisms and training in Business Development and entrepreneurship; and through the support
offered by the FeMSEDA marketing department which facilitates the development of small-enterprise export schemes such as export trading houses, exhibitions, export credits schemes, export market studies, special training in quality development systems, promotion of MSE associations that enables to benefit from bulk purchases of raw materials and establishing market information centers and market channels.

Physical Infrastructure

Developing physical infrastructure is a difficult activity in view of the huge investments it requires. Nevertheless, infrastructure and utility such as business premises, electricity, roads, water, telephone connections and sewage systems are crucial for the growth of businesses. In support of MSEs growth the Governments focus on the establishment of industrial zones, incubators, commercial premises and other common facility centers. These are key and important factors to ease the existing problems mainly through the installation of the costs sharing schemes among beneficiaries and the facilitation of efficient resource utilization. The government is also devising special procedures to acquire land at affordable rates particularly for micro enterprises and small business start-ups. MSE operators are invited to obtain guidelines and more information from the FeMSEDA policy and planning department.

Training in entrepreneurship, skills and management

.

Information and advice

The information system in Ethiopia is not developed to enable proper collection, organization and dissemination. If appropriate information and advice was available to MSEs it would have enabled them to overcome most of their constraints. The FeMSEDA’s Information department in collaboration with the regional agencies strives to overcome the information gap for MSEs.

Access to appropriate technology

The success of MSE is also handicapped by inaccessibility to appropriate technologies. The Technology department at FeMSEDA is responsible for the identification and selection of appropriate technology for MSEs operating in labor intensive and low skill spheres. The activities to facilitate the include technology search, assessment, transfer, absorption, adaptation and replication. The dissemination of the research and development (R&D) outputs to MSEs is done through regional agencies.