DETERMINANTS OF SMALL AND MEDIUM SCALE MANUFACTURING INDUSTRIES PERFORMANCE IN CASE OF SEBETA CITY, ETHIOPIA

Abstract

This research was aimed at identifying determinants of small and medium manufacturing industries in Sebeta city.Small and medium scale manufacturing industries today the face both internal and external determinants that hinder their performance to well accomplish their production capacity in the study area and country level at large. The study used a stratified random sampling method to select 105 small and medium scale manufacturing industries. This study used primarydata using questionnaire through face-to-face interview and personal observation, and analyzed using descriptive and inferential analyses as well as econometric models. According the study problem of working premises, financial constraint and market problem are the three top problems. The next major problems which determine the performance in the study areas were labor skill, technology and infrastructure. The average start-up capital of enterprise engaged in small and medium scale manufacturing is Birr 73,680 with an average of 4.18 employees and at the time of the study, the average current capital was 151,981 and the average current employees was 7.98. From the interview conducted the firm owner agreed with the problem of working premises, financial, market, labor skill, technology, infrastructure and lack of government support. . The correlation result shows positive relationship was found between dependent variables (performance ) and independent variables ( working premises ,financial ,technology ,infrastructure, market, government support and labor skill) ) which are statistically significant at 99% confidence level . The findings of the study verified the importance of SMME in the creations of employment opportunities and generations of income for quite a large proportion of the population and engines for achieving national development goals such as economic growth and poverty alleviation .In general small scale manufacturing industries play a significant roles in the development of large industries and industrialization.The concerned body has to promote the performance and growth of small and medium scale manufacturing industries.