Page 45 - Azerbaijan State University of Economics

A.M.Gebreselassie: The Impact of Economic Integration on SME

Competitiveness in Ethiopia, Tigray

Leadership needed to fill the gaps in coordinating the stakeholder’s involvement in
this issue. In countries like Ethiopia, available cheap and skilled labor for SMEs is
obvious. SMEs cannot absorb the available workforces in the sector and pay less cost
for human labor, in turn, increasing productivity, On the other hand, SMEs were not
produced quality materials to compete in the international market due to a lack of
competitive strategies, quality and quantity inputs and government motivation at large.
SMEs were always dependent on the government to arrange markets and promote
their product and prepare business cards and promote themselves and create a link
with local and international markets. They are limited in the local market due to a lack
of market assessment based on studies knowing demanded products by the local and
international markets. Moreover, the gap in technology transfer, capital, market
linkage exposure to foreign markets, and management system since they used family
employees. Further, unwillingness to take risk of producing quality products and fear
of increasing cost of production, and lack of internationalization outlook.

Respondents agreed that adequate support service to provide a workplace, access to
facilitate credit /finance, established one-stop service center, technology transfer, the
commitment of leaders to support SMEs, procurement of capital goods, easy access
to information about market and acquisition of land /rent are the main challenge of
economic integration for all SMEs. To that extent, the training given to SME
operators was not demand-based and adequate to fill their gap. Thus, SMEs are
working in difficult situations due to a lack of commitment and weak support of the
leaders and experts to mobilize and coordinate different stakeholders to engage
directly or indirectly in SMEs activities. The provision of land is problematic, the
lease price of the land increases from 0.7 to 300-birr k/meters which is not
affordable by SMEs and not considered the situation of the enterprises. Moreover,
delays in the process and rent-seeking behavior due to a lack of coordination and
collaboration between SMEDA and the Mekelle Municipality office. Further, lack of
responsible and accountable officials in the public service. The other critical
challenge for SMEs is the financial regulation of the country which is not accessible
to SMEs. SMEs are missed in the strategies. Regarding market linkage, SMEs were,
limited in the local market due to a lack of quality and quantity input in the market
that emanates from poor linkage with suppliers and a lack of foreign currency for
buying quality input products to compete in the market. As a result, the product they
are producing lacks demand in the international market. Only 43(5041,700) birrs by
small and 18(438067,313 birrs) export in 2018/19.

6. RECOMMENDATIONS
The result of findings and knowledge acquired from the literature, recommendations
are proposed to be carried out to resolve the challenges which are identified.

45