CONSTRAINTS FACING SMALL AND MEDIUM

Abstract

Small and medium-sized enterprises (SMEs) are considered to be one of the principal driving force in economic growth in both developing and developed countries. They contribute a lot in creating employment; they also have significant contribution to GDP and export. Particularly, SMEs manufacturing sectors are considered important because they represent an entrance point for most African small business operators. Therefore, as an alternative approach to development, the necessity to promote SMEs makes it more evident. 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 current constraints 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 decades of war. Moreover, it has also been engaged in recent border war with its neighbor and business partner Ethiopia. This being the case, the constraints for economic development in general and constraints for SMEs growth and development in particular are enormous. Therefore, to ensure a sustainable contribution towards the economic growth of a country we need to identify the constraints SMEs face on continuous bases, so that they can be tackled through coordinated policies and other means. On the basis of these facts, this research identifies the current constraints hindering the development and growth of SMEs in Asmara, Eritrea. Moreover, this study investigates the role of the government in promoting SMEs and alleviating their constraints.