Essay

Introduction

Small businesses are very important to all economies. They play a vital role in the economy and contribute not only to economic growth, but also create numerous jobs. The report is about the small business environment in Ethiopia. Ethiopia is second most overpopulated country in the sub-Saharan Africa. It is one of the most poverty-stricken economies in the world (World Bank 2010). Ethiopia depends largely on agriculture and its main crop is coffee. There are also other crops such as pulses, oil seeds and cereals. This agriculture-based economy is often affected by severe droughts and these crops do rely heavily on rainfall. The country faces several problems such as poverty, overpopulation, malnutrition, poor sanitation, and also HIV infections. This often explains why small businesses fail to grow. The SME (Small medium enterprises) together with CBE (Commercial Bank of Ethiopia) assist small firms by providing loan schemes. The Federal government institution micro and small business development agency (FEMSEDA) provide assistance to small businesses in terms of funds and training services (telecom 2001). There were numerous issues which were found after studying the small business environment in Ethiopia. The following issues will be included in the first part of report and recommendations to solve these problems would be pointed out in the second part of the report.