Business constraints and growth potential of micro and small manufacturing enterprises in Uganda

Ugandan micro and small enterprises (MSEs) still perform poorly. Studies associating poor performance of manufacturers with lack of finance and low investment ignore micro enterprises. Those focusing on MSEs are either exploratory in nature or employ a descriptive analysis, which cannot show the extent to which business constraints explain the performance of MSEs. Thus, this paper tries to examine the extent to which the growth of MSEs is associated with business constraints while controlling for owners’ attributes and firms’ characteristics. The results reveal that MSEs’ growth potential is negatively associated with limited access to productive resources (finance and business development services), high taxes and lack of market access

Firm Size and Structural Change: A Case Study of Ethiopia-super- †

I use firm-level census data to study changes in the structure of Ethiopia's manufacturing sector between 1998 and 2008. Over this period, aggregate manufacturing value-added grew at the same rate as GDP, the number of manufacturing firms more than doubled, and average firm size fell by more than 40%. I highlight substantial heterogeneity in economic performance across firms, and emphasise a strong association between firm size and value-added per worker. I find that 29% of the value-added size gap can be attributed to differences in product selection across small and large firms. I find no systematic difference in the output price charged by small and large firms for a given product. I therefore attribute the remaining value-added size gap to a higher level of physical labour productivity in large than in small firms. I conclude that small and large firms in Ethiopia use quite different technologies to produce similar products, and that an increase in the number of large firms would raise value-added per worker and ultimately GDP per capita in the country. Copyright 2012 , Oxford University Press.