Microenterprises Targeting Youth Group to Socioeconomic Development: The Case of Addis Ababa, Ethiopia

Abstract

Back ground: The sources of unemployment has been identified as one of the major challenges facing young people around the world, with the ranging from 25% to 45 % in most developing countries, “self-employment” and microenterprise as the only way to reach the poorest of the poor”. The unemployment rate of youth group is estimated to 26.1% based on CSA urban employment unemployment survey report 2010. Objective: The main objective of this study was to assess, and analyze microenterprises targeting youth to socioeconomic development in terms of poverty reduction, women empowerment, employment, and entrepreneurship. Method: The study was used a survey method. The survey method involved 120 micro enterprises which operated by youth groups. The sampling method was involved in ten sub-cities of Addis Ababa. The majority micro and small enterprise activity identification was based on the available information from MSE package and selected randomly. Data analysis was made by using descriptive statistics. Results: The results of this survey study, shows that majority of micro enterprises were, in the form of corporation, obtained their sources of initial capital from microfinance institutions, formed between years (2005 to 2008), set their vision to their enterprises during operation, profit earning microenterprises, survival microenterprises have a strategic plan of diversification, and have only permanent employees. Moreover, 1052 number of employees were working in different activities, however, from part time youth employees majority of them were family members. Additionally, majority of microenterprises were demanding growth oriented supports, were provided financial and non-financial supports from Addis Ababa MSE Agency and demanding in the future, were benefited from the different supports of governmental organizations, however, the remaining enterprises were leveled as very important to its essentiality. Furthermore, most of the respondents believed that employment in microenterprises could reduce poverty, and leveled as high in terms of its extent of importance to poverty reduction. From the available psychosocial constraints afraid of failure and criticism, faulty socialization, and low dignity of labor and inadequate motivation are the most serious problems that young entrepreneurs are facing. Conclusion: Institutions have to create favorable environments for youth targeting microenterprises such as fast credit access, systematic and easy collateral, and terms of payment. Additionally, researchers and policy makers have to emphasize for the sector growth and development specifically to youth target microenterprises, which in turn results to provide favorable policy framework.