This paper presents evidence on the state of micro and small enterprises (MSE) finance in Ethiopia from a survey of 1000 MSEs in six major towns conducted by the authors1. The survey generated a rich data set in terms of coverage and detail on MSEs in Ethiopia, allowing in depth analysis of issues. This paper deals with the issue of MSE finance and is the first empirical work on trade credit in Ethiopia. It suggests a new venue to channel funds to MSEs by linking support to MSEs, suppliers credit and bank lending.
It shows that friends/relatives, suppliers credit, and Iqub (rotating saving and credit associations) are the most important sources of finance in that order, with moneylenders used very rarely. Default on informal loans, contrary to the common view, is high. Participation (i.e. receiving and/or extending) in trade credit is wide spread. The amount involved (in both stock and flow terms) is also relatively high. Trade credit appears to be used as a substitute for bank loans. Contrary to the common belief that trade credit occurs between people with strong social ties, most MSEs that granted trade credit and those that received suppliers credit characterised their relation as ‘business only’. More than half of the MSEs that granted trade credit also received suppliers credit whose amount exceeded what they received, suggesting that suppliers credit is being passed on to customers. Suppliers credit thus avails itself as a potential instrument for banks to channel finance to MSEs to improve their access to modern machinery/equipment/tools. This established practice could be extended to equipment-supplier-credit and/or equipment-leasing.
INCOME RISK AND CROP PRODUCTION PATTERNS OF SMALL-SCALE FARMERS IN EASTERN OROMIYA REGION OF ETHIOPIA
Bekabil Fufa and R. M. Hassan
Income risk associated with crop production was analysed using the Quadratic Risk Programming Model for users and non-users of maize production technologies in Dadar district in Ethiopia. The E-V results revealed that both categories of farmers have the same degree of risk aversion as reflected by the degree of risk aversion coefficient ( ). In addition, the optimisation model results showed that improved maize production is associated with higher income risk as no more than the minimum subsistence constraint was chosen under higher degrees of risk aversion. While an increase in fertilizer prices reduced maize area cultivated for package users, the sensitivity analysis results for increases in maize prices showed a substantial rise in the area allocated to improved maize. However, for increased maize prices, area allocated to maize remained at subsistence level for non-users of the package. The development and promotion of new agricultural technologies need to take into account the yield and income risks associated with maize production in the area. In addition, expansion of rural road infrastructure, the promotion of post-harvest crop storage technologies and food processing industries should be given emphasis as strategies to stabilize prices and reduce income variability arising from crop production in the area.
ANALYSIS OF INSTITUTIONAL SOLID WASTE MANAGEMENT IN GWERU, ZIMBABWE
Of all environmental problems that have come into focus in Gweru, institutional solid waste management has been the slowest to develop either direction or regulatory mechanisms. This study examines the characteristics of waste generated, and the effectiveness of the waste management system in the institutions. Measurements were used to determine the quantities of waste generated, and interviews and questionnaires were employed to assess the soundness of the system. The general picture is that significant quantities of waste are generated in the institutional sector, but there are no sound practices for managing the waste. This paper attempts to provide a framework for policy and planning strategies relating to solid waste management in public and private institutions in Gweru. Presently, institutional solid waste management is an area in which our ignorance still exceeds our knowledge.