Determinants of Growth and Diversification of Micro and Small Enterprises: The Case of Dire Dawa, Ethiopia

This research was aimed at identifying factors affecting growth and diversification of micro and small enterprises with a special emphasis on construction, manufacturing, and service sectors in Dire Dawa Administration. The study used a stratified random sampling method to select 190 micro and small enterprises. To achieve the objectives of this study, data were collected using questionnaire through face-to-face interview and observation, and analyzed using descriptive and inferential analyses as well as econometric models. The descriptive result showed that the source of finance at the start-up were mainly personal saving and the major constraints of the enterprise engaged in construction, manufacturing, and service at this time were lack of sufficient capital, marketing and working place. The next major problems which affected the growth and diversifications of the three sectors in the study areas were right advices, opportunities, technology, and legalization. Majority of the respondents of construction and manufacturing agree with opportunities and technological problems. But, respondents of the three sectors agreed with the right advice and legalization problems. The average start-up capital of enterprise engaged in construction, manufacturing, and service was Birr 6909.47 with an average of 6.48 employees and at the time of the study, the average employment was 7.23 employees. About 85.8% of survey respondents sold their products/services in the local market and 14.2% of them sold their products/services external market inside the country. However, no firms were participating in export markets. The econometrics result indicated that age of owners/managers and enterprises engaged in construction were negatively related to growth of enterprises. Previous work experience, enterprise engaged in manufacturing, access to market, access to working and selling premises, amount of initial capital, access to finance, social networks, and vertical linkage were important factors which affected the growth of MSEs positively. Similarly, diversification of MSEs was positively influenced by opportunities, information and communication technology, strengthening the household asset basis, and availability of key assets. Genders and age of owners/managers were also found to be significant factor which affect diversification of MSEs negatively. The findings of the study verified the importance of micro and small enterprises in employment creation. The Dire Dawa Administrative city has to promote the growth and diversification of micro and small enterprises by facilitating necessary credit services, working premises, market, and experience sharing to update their knowledge. In this regard, creation of awareness of the owners/managers to follow a related diversification strategy through using opportunities, ICT and key assets that are underutilized within the enterprises. And also it is advisable to give special attention and support for enterprises that are owned/managed by female. Key words: Micro and small enterprises, Employment growth, Related diversificatio

Economic valuation of improved management of Dechatu drainage basin in Dire Dawa Administration, Ethiopia

This paper assesses households’ awareness of the causes of drainage basin degradation and measures their willingness to pay for improved drainage basin management. Cross-sectional data were collected from 398 randomly-selected households. The spike and bivariate probit models were applied to determine the mean willingness to pay and factors affecting households’ willingness to pay, respectively. Agricultural expansion, population pressure, changes in weather conditions and climate change were identified as the main causes of degradation of the Dechatu drainage basin in Dire Dawa Administration, Ethiopia. The study also identified appropriate mechanisms and bases of charging a drainage basin management fee from the sampled respondents. The mean willingness to pay from the spike model was computed to be ETB 111 per annum for five years whereas the mean willingness to pay from the open-ended elicitation method was computed to be ETB 78 per year. The higher mean willingness to pay from the spike model might be due to anchoring effect from the dichotomous choice format. The result suggests that any drainage basin management system needs to consider the monthly income, location, sex, initial bids, occupation, marital status and educational level of the affected households

CHOICE OF CLIMATE CHANGE ADAPTATION STRATEGIES AND ASSOCIATED FACTORS: EVIDENCE FROM SOUTHEAST ETHIOPIAN SMALLHOLDER FARMERS

The aim of this study is focusing on identification of the determinants of smallholder farmers’ choice of adaptation strategies to climate change and their associated factor in southeast Ethiopia. To get the data both qualitative and quantitative data were collected from primary and secondary sources. To get carry out the study 155 household heads were employed. Interview schedule, survey questionnaires, FGDs, key informant interview and field observation were also employed to collect the data. To analyze the data both descriptive statistics and econometric model were employed. Multivariate probit model was employed to identify the determinants of smallholder farmers’ choice of adaptation strategies to climate change and the result showed that the likelihood of households to adopt planting tree, terracing practice, improved varieties of crops, adjust planting date, and use crop diversification were 76.5%, 74%, 51%, 46.7%, and 40.4%, respectively. Therefore, future policy should focus on awareness creation on climate change and its adaptation strategies

Adaptation to Climate Change and Variability in eastern Ethiopia

Agricultural production in Ethiopia is vulnerable to climate change. Adaptation is one of the options to abate the negative impact of climate changes. This study has analyzed factors influencing different climate change adaptation choices by farm households in eastern Ethiopia. The study were analyzed by using the data obtained from 330 household heads randomly and proportionately sampled from two agroecologies in Eastern Hararghe zone of Oromiya Region and Dire Dawa Administration, Ethiopia. The study used a multinomial logistic regression model to identify factors affecting the choice of adaptation strategies to climate change where changing planting date, irrigation water use, soil and water conservation, and crop variety selection. The result indicated that factors determining choice of climate adaptation options were sex of household head, family size, education status of household head, agroecology, distance to market, cultivated land, credit access, decreasing precipitation and change of temperature. Policy thrust should focus on linking farmers to fertilizer usage, credit access and social participation as well as creates awareness to climate change. Keywords: climate change, adaptation strategies, multinomial logit mode

ECONOMIC EFFICIENCY OF SMALLHOLDER FARMERS IN WHEAT PRODUCTION: THE CASE OF ABUNA GINDEBERET DISTRICT, WESTERN ETHIOPIA

Yield enhancement through increasing efficiency in cereal production in general and in wheat production in particular could be an important way towards achieving food security. This study was aimed at estimating the levels of technical, allocative and economic efficiencies of smallholder wheat producers; and to identify factors affecting efficiency of smallholder farmers in wheat production. A two stages sampling technique was used to select 152 sample farmers to collect primary data pertaining of 2016/17 production year. Both primary and secondary data sources were used for this study. Stochastic production frontier approach and two limit Tobit model was employed. The stochastic production frontier model indicated that input variables such as mineral fertilizers, land and seed were the significant inputs to increase the quantity of wheat output. The estimated mean values of technical, allocative and economic efficiency were 78, 80 and 63% respectively, which indicate the presence of inefficiency in wheat production in the study area. A two-limit Tobit model result indicated that technical efficiency positively and significantly affected by sex of the household head, education, extension contact, off/non-farm activity and soil fertility but negatively affected by land fragmentation. Similarly, age, education, extension contacts and off/non-farm activity positively and significantly affected allocative efficiency. In addition, economic efficiency positively and significantly affected by sex, age, education, extension contact, off/non-farm activity and soil fertility. The policy measures derived from the results include: expansion of education, strengthening the existing extension services, establish and/or strengthening the existing off/non-farm activities and strengthening soil conservation practices in the study area

Reversing degradation of arable lands in Southern Ethiopia

Degraded soils are a major constraint to agricultural production and food security in the southern Ethiopian Highlands. As their yields and incomes decline, poor farmers have fewer resources to invest in fertilizers or soil conservation measures, while pressure from the growing population forces them to cultivate marginal lands, and discontinue fallow and the use of crop residues to maintain soil fertility. Soil fertility is declining most rapidly in the outer fields, as crop residues from these areas are used on the homestead gardens where enset and coffee crops are grown, which also receive the most manure and organic waste. Farmers need to adapt their soil fertility management strategies to the considerable spatial and temporal variations in soil degradation, focusing on restoring and maintaining the fertility of outfields and degraded land on steep slopes. The African Highlands Initiative (AHI) and Ethiopian Agricultural Research Organization responded to this situation by setting up a participatory research programme on natural resource management. The overall objective of the programme was to increase the capacity for independent innovation within farming communities, while working with farmers to develop appropriate technologies to combat soil degradation. Farmers spent three years testing various methods of restoring soil fertility, introducing legume cover crops into rotation systems, installing measures to control soil erosion, and practicing minimum tillage and more efficient ways of managing crop residues. The results of the research showed that adoption of these technologies depended on factors such as farm size, the availability of labor and soil condition. Research conducted during the programme identified five socioeconomic strata within local communities, each with clearly different pportunities and needs. Any attempt to address agricultural problems should take account of this diversity, as blanket recommendations or technology packages are unlikely to provide effective solutions to the range of problems faced by farmers. Their interests will best be served by using a participatory approach to develop technologies that address the needs and specificities of each group, and by ensuring that farmers are fully involved in all stages of the process, from research and implementation to monitoring and evaluation. The AHI team found the participatory approach to research a very positive experience, which helped them identify problems and develop technologies that were specifically tailored to local conditions. The main achievements of the programme were to increase the capacity of farmers to solve their problems through experimentation and encourage various organisations to work together and learn from each other. The next step is to move from discipline-based research towards research and development in integrated natural resource management at watershed level

Economic valuation of improved management of Dechatu drainage basin in Dire Dawa Administration, Ethiopia

This paper assesses households’ awareness of the causes of drainage basin degradation and measures their willingness to pay for improved drainage basin management. Cross-sectional data were collected from 398 randomly-selected households. The spike and bivariate probit models were applied to determine the mean willingness to pay and factors affecting households’ willingness to pay, respectively. Agricultural expansion, population pressure, changes in weather conditions and climate change were identified as the main causes of degradation of the Dechatu drainage basin in Dire Dawa Administration, Ethiopia. The study also identifi ed appropriate mechanisms and bases of charging a drainage basin management fee from the sampled respondents. The mean willingness to pay from the spike model was computed to be ETB 111 per annum for five years whereas the mean willingness to pay from the open-ended elicitation method was computed to be ETB 78 per year. The higher mean willingness to pay from the spike model might be due to anchoring effect from the dichotomous choice format. The result suggests that any drainage basin management system needs to consider the monthly income, location, sex, initial bids, occupation, marital status and educational level of the affected households

Adoption and intensity of use of improved sweet potato varieties in Boloso Sore Woreda, Southern Ethiopia

No Abstract. Ethiopian Journal of Development of Research Vol. 27(1) 2005: 25-5

URBAN FRESHWATER USERS WILLINGNESS TO PAY FOR UPLAND DEGRADED WATERSHED MANAGEMENT: THE CASE OF DECHATU IN DIRE DAWA ADMINISTRATION, ETHIOPIA

The study assesses urban freshwater users’ perception of watershed degradation and users' willingness to pay for upland degraded watershed management. Cross sectional data was collected from 282 urban freshwater users. A number of causes and effects of watershed degradation and water supply problems are identified. Economic instruments and mechanisms are also identified as the basis of charging and collecting the fee for watershed management, respectively. Besides, contingent valuation result shows that about 82 percent of the respondents were willing to pay for upland degraded watershed management. The mean willingness to pay from the spike model was computed to be 97 Ethiopian birr (ETB) per annum for five years whereas the mean willingness to pay from the open-ended elicitation method was computed 70 ETB per year. Urban freshwater user willingness to pay is affected by total income, initial bids, marital status, ownership of house and educational levels. The study recommends that any watershed management activities need to consider the socio-economic variables of the affected respondents. Besides, it is worthy to consider the demand of the urban dweller (downstream users) for any upland degraded watershed management

ECONOMIC EFFICIENCY OF SMALLHOLDER FARMERS IN WHEAT PRODUCTION: THE CASE OF ABUNA GINDEBERET DISTRICT, WESTERN ETHIOPIA

Yield enhancement through increasing efficiency in cereal production in general and in wheat production in particular could be an important way towards achieving food security. This study was aimed at estimating the levels of technical, allocative and economic efficiencies of smallholder wheat producers; and to identify factors affecting efficiency of smallholder farmers in wheat production. A two stages sampling technique was used to select 152 sample farmers to collect primary data pertaining of 2016/17 production year. Both primary and secondary data sources were used for this study. Stochastic production frontier approach and two limit Tobit model was employed. The stochastic production frontier model indicated that input variables such as mineral fertilizers, land and seed were the significant inputs to increase the quantity of wheat output. The estimated mean values of technical, allocative and economic efficiency were 78, 80 and 63% respectively, which indicate the presence of inefficiency in wheat production in the study area. A two-limit Tobit model result indicated that technical efficiency positively and significantly affected by sex of the household head, education, extension contact, off/non-farm activity and soil fertility but negatively affected by land fragmentation. Similarly, age, education, extension contacts and off/non-farm activity positively and significantly affected allocative efficiency. In addition, economic efficiency positively and significantly affected by sex, age, education, extension contact, off/non-farm activity and soil fertility. The policy measures derived from the results include: expansion of education, strengthening the existing extension services, establish and/or strengthening the existing off/non-farm activities and strengthening soil conservation practices in the study area