Business development services (BDS) in Ethiopia : Status, prospects and challenges in the micro and small enterprise sector

Purpose – With the objective of trying to understand and assess the status of delivering business development services (BDS) and identifying the constraints, the Ethiopian Development Research Institute conducted a survey of randomly selected 974 MSEs (551 micro and 423 small enterprise operators) in 2003. Design/methodology/approach – Random, anonymous survey of MSE operators in BDS in Ethiopia. Findings – The results of the survey indicated that there were very limited BDS providers in the sector, which delivered limited services to few MSE operators (very low outreach). MSE operators had very limited vocational and technical training (before starting business), received few short‐term training, extension and counselling, and marketing services. The most important constraints were mainly related to access to markets and finance. Networks or associations in the MSE sector were not used as useful instruments to promote joint marketing. The results of the survey reveal that there is not significant difference based on size (micro and small) and gender in accessing BDS in the MSE sector. Addressing the constraints of delivering BDS requires clarity regarding the roles of facilitator and providers and the use of subsidies during the transition phase. The interventions should focus on delivering BDS on sustainable basis by responding to the needs in the market and providing incentives to the BDS providers, particularly the private sector. Originality/value – Very few systematic studies of this nature have been carried out in developing countries. The paper offers clear implications for policymakers involved in economic development and poverty reduction.