MSEs: Potential to alleviate poverty, generate employment opportunities

  • PDF

By A.A

Unemployment has been one of the major problems and cause of poverty in many urban areas of Ethiopia during the past regimes. Several people who are capable of working and also eager to do have stayed without job for a long period of time.

However, the incumbent government attached due attention to avoid and reliably solve such problems. To this end, it started identifying programs that can bring about rapid job opportunities along with providing the unemployed youth with access to finance, production and market places.

Micro and small enterprises (MSEs) were among the programs the government of Ethiopia has recognized and paid due attention to address the challenges of unemployment and expedite economic growth across the country.

Globally, this sector has been accepted as the foundation of economic growth. The major advantage of the sector is its employment potential at low capital cost. Moreover, it is also credited with creating highest rates of employment growth.

In Ethiopia too, MSEs have been making a significant contribution in the overall development and in the efforts geared towards reducing unemployment rate. In recent years, it is common to see the sector flourishing in every corner of the country.

To encourage, coordinate and assist institutions which provide support to the development and expansion of MSEs, an agency dubbed the Federal Micro and Small Enterprises Development Agency (FeMSEDA) was established.

Today millions of unemployed youth in various towns and cities of Ethiopia have become beneficiaries of MSEs sector. As per available statistics from the Agency, this sector employed more than one million people in the just concluded budget year alone.

“Micro and small enterprises (MSEs) have been playing a key role in addressing unemployment in urban areas of Ethiopia,” says Gebere Meskel Challa, Director General of the Agency. “There is also a plan to engage over 1.7 million unemployed citizens in this budget year,” he added.

The Agency has carried out encouraging activities in enhancing MSEs’ competitiveness, providing manufacturing plots, organizing new enterprises and creating market access. The sector has now created millionaire entrepreneurs in Ethiopia.

“My life is improving,” says Mendefre Wagshum, who has been in MSEs business for the last eight years along with his 9 friends. Mendefre and his friends joined this sector following the promotional works, encouragement and incentives given by the government. Initially, they had only 2,000 birr but the government provided them with 30,000 birr and production place. Their capital has now reached to 12 million birr.

As the demand for MSEs products is high, Mendefre and his nine friends began working day and night to meet the demand by employing other jobless youth. They hired 5 people on permanent and 55 on causal basis as well as bought an Isuzu commercial vehicle to transport their products to the nearby markets.

Demelash Adamu, one of Mendefre’s friends, extends his gratitude for the government for designing the program and giving various supports. “Had it not been for government’s support, we couldn’t have been here,” he said.


There are several enterprises that have been transformed into medium industry level following the various supports of the government of Ethiopia. They are now millionaire entrepreneurs.


What we understand from Mendefre and his friend is that MSEs have the potential to alleviate poverty and generate employment opportunities for unemployed compatriots. Moreover, the sector has been contributing for the national economy and will have a major role to play in the future.


Those who remained unemployed after graduating from education need to stay focused on job creation. As long as we give respect for all jobs, with the right programs in place, unemployment will no longer be a problem for Ethiopians.