CONSTRAINTS FACING SMALL AND MEDIUM

Small and medium-sized enterprises (SMEs) are considered to be one of the principaldriving force in economic growth in both developing and developed countries. Theycontribute a lot in creating employment; they also have significant contribution to GDPand export. Particularly, SMEs manufacturing sectors are considered important becausethey represent an entrance point for most African small business operators. Therefore, asan alternative approach to development, the necessity to promote SMEs makes it moreevident. However, small and medium-sized enterprises often face different obstacles,such as access to finance, legal and regulatory restrictions, inadequate infrastructure,limited managerial and technical expertise, and difficulty access modern technologies etc.In this regard, Eritrea may not be regarded as an exception.This study made use of primary and secondary data in order to identify the currentconstraints SMEs manufacturing sector face for their development and growth in Asmara,the capital city of Eritrea. The rationale for this is that Eritrea has emerged after decadesof war. Moreover, it has also been engaged in recent border war with its neighbor andbusiness partner Ethiopia. This being the case, the constraints for economic developmentin general and constraints for SMEs growth and development in particular are enormous.Therefore, to ensure a sustainable contribution towards the economic growth of a countrywe need to identify the constraints SMEs face on continuous bases, so that they can betackled through coordinated policies and other means. On the basis of these facts, thisresearch identifies the current constraints hindering the development and growth of SMEsin Asmara, Eritrea. Moreover, this study investigates the role of the government inpromoting SMEs and alleviating their constraints.