Fortune News | Mar 11,2023
Dec 29 , 2018
By MADEBO GIRMA ( FORTUNE STAFF WRITER )
The City Small & Micro Enterprises Development Bureau is drafting a directive to compel small and micro-enterprises (SMEs) to upgrade themselves to medium level after five years of programme participation. The City Small & Micro Enterprises Development Bureau is drafting a directive to compel small and micro-enterprises (SMEs) to upgrade themselves to medium level after five years of programme participation.
The Bureau has been working on three different directives that focus on three areas - upgrading enterprises, creating market linkages and formation and registration of the enterprises.
The draft directive, in preparation for almost a year, states that enterprises that fail to upgrade themselves in five years will see their licenses revoked. The Bureau will grant a three-month grace period at the expiration of their participation to allow companies to upgrade.
The process of achieving medium-level involves three certification stages.
The directive is the result of observations by the city administration that many of the 30,000 companies spread across different sectors are disinterested in upgrading themselves, preferring to stay in a programme that offers them privileges and assistance as SMEs, according to Awol Mohamed, director of Enterprise Transformation & Support at the Bureau.
"Many enterprises have failed to upgrade themselves, some for over a decade," said Awol.
The new directive defines micro enterprises as those that employ at least five employees with a capitalization of 100,000 Br for industries, and 50,000 Br for service providers. Small enterprises are categorized as those who employ six to 30 workers and are capitalized with up to 1.5 million Br for industries, and 500,000 Br for service providers.
"We are not accepting new applicants as the existing SMEs are not leaving their spots in the programme," said Awol.
Since the launch of the city’s micro, small and medium-enterprise classification system in 2010, over 30,000 enterprises have registered. However, only about 1,500, or four percent of the businesses, have graduated to the medium-enterprise level.
The cause for these low results is attributed to fears that the benefits and incentives the city programme offers businesses will be cut off, according to Awol.
These benefits and incentives include provisions for workplaces, procurement of raw materials, loans and other support.
The assistance the Bureau has been providing was not sufficient, according to Molalegne Baye, communications director at the Bureau.
The enterprises will find markets through outsourcing, outgrowing, franchising and subcontracting.
"The existing supports for the enterprises are not encouraging and making the businesses competitive," said Molalegne.
Creating a market linkage with governmental and non-governmental organisations, individual entrepreneurs and other businesses through telemarketing, e-commerce and bazaar and exhibition showcases are among the plans of the Bureau under the new directive.
"In previous time our mandate was to organise new enterprises rather than creating market linkages," said Nebiyu Wudnehe, director of Job Creation at the Bureau.
For businesses that engage in the construction industry, the Bureau will create market linkages worth 10 million Br, according to the new directive. It is also expected to create market linkages worth 1.2 million Br for those engaged in services and urban agriculture. Small enterprises engaged in manufacturing will get market linkages worth 670,000 Br through the Bureau.
Jemal Abagigissa (PhD), a lecturer at Addis Abeba University for over a quarter of a century and the current head of the Department of Management & Public Administration, cheers the move made by the Bureau.
"Many SMEs get into a comfort zone with the supports they get and don't want to grow," said Jemal. "But the license of the businesses should be revoked if the bureau has given all the necessary support to the businesses."
Jemal also suggests a concerted effort should be taken by the government and the SMEs to make sure that these enterprises achieve their goal in creating an industrialised Ethiopia.
PUBLISHED ON
Dec 29,2018 [ VOL
19 , NO
974]
Featured | Apr 22,2022
Life Matters | Mar 07,2020
Radar | Aug 03,2019
Agenda | May 02,2020
Radar | Jul 03,2021
Dec 24 , 2022
Biniam Mikru heads the department of cabinet affairs under Mayor Adanech Abiebie. But...
Jul 2 , 2022 . By RUTH TAYE
On a rainy afternoon last week, a coffee processing facility in the capital's Akaki-Qality District was abuzz with activ...
Nov 27 , 2021
Against my will, I have witnessed the most terrible defeat of reason and the most sa...
Nov 13 , 2021
Plans and reality do not always gel. They rarely do in a fast-moving world. Every act...
May 27 , 2023
Tauted as a somnolent giant, Ethiopia's financial scene now stirs, roused by favourab...
May 20 , 2023
The pungent irony wafting from Pretoria last week was hard to miss. Cyril Ramaphosa,...
May 13 , 2023
In March this year, Kamala Harris, the United States Vice President, visited Ghana, T...
May 6 , 2023
The history of the Ethiopian labour movement dates back to the 1940s, marked by perio...
Loading your updates...