Ethiopian Business Development Services Network (EBDSN)

 Definition of Micro and Small Enterprises

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Definition of Micro and Small Enterprises

The actual by the Ministry of Trade and Industry adopted official definition of Micro and Small enterprises in Ethiopia is as follow:

  • Microenterprises are business enterprises found in all sectors of the Ethiopian economy with a paid-up capital (fixed assets) of not more than Birr 20,000,  but excluding high-tech consultancy firms and other high-tech establishments.

  • Small Enterprises are business enterprises with a paid-up capital of more than Birr 20,000 ($2,500) but not more than Birr 500,000 ($62,500) but excluding high-tech consultancy firms and other high-tech establishments.

(1 US$ equals about 9 Birr, 1 Euro equals about 10 Birr in 10/2003)

 

The Central Statistical Authority (CSA), for the purposes of its survey on "Urban Informal Sector Activity Operators and Small-scale Manufacturing Industries", attached various definitions to enterprises in different sectors, viz: the informal sector, cottage or handicrafts, small-scale manufacturing industries and medium- and large-scale manufacturing industries. The CSA based its definitions on the size of employment and extent of automation for small-, medium- and large-scale enterprises and used a combination of criteria for defining informal sector operators. However, as indicated in the National MSE Strategy, shortcomings in the drafting of these definitions may have meant that some capital-intensive establishments, which should fall solely under medium- or large-scale enterprises, may possibly have come within the scope of the definition for the MSE sector. Therefore in order to exclude those capital-intensive enterprises, which should not be entitled to the support services established for "real" MSEs, it was advised that a new definition be drafted which takes this into account. Hence, a definition that is based on capital, and which takes into consideration the level of technical and technological capacities, was adopted as part of the MSE National Strategy.

 

CSA definition of enterprises:

  • "Large and medium scale manufacturing enterprises have been classified as establishments with more than ten employees using automated machinery.

  • Small and medium enterprises are establishments that engage less than 10 persons using power driven machinery.

  • Cottage/handicrafts are household type enterprises located in households or workshops normally using own or family labour and mostly manual rather than automated/mechanical machinery."

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