Rural Entrepreneurship Development in Ethiopia. The case of "Gelgela" Dairy and "Yichalal" Poultry Production Enterprises

in Sodo Zuriya Wereda, Wolaita Zone, SNNPRS


Research Paper (undergraduate), 2022

33 Pages, Grade: A


Excerpt

TABLE OF CONTENTS

ACKNOWLEDGMENT

ABSTRACT

1. INTRODUCTION
1.1. Background of the Study
1.2. Significance of the Study
1.3. Delimitation
1.4. Objectives of the Study

2. METHODOLOGY
2.1. Description of the Study Area
2.1.1. Sodo Zuriya Wereda
2.1.2. Description of Bossa Qacha Kebele
2.2. Map of the Study Area
2.3. Research Design
2.4. Data Sources
2.5. Data and Data Types
2.6. Method of Data Analysis

3. RESULTS AND DISCUSSIONS
3.1. General Overviewon the Performance of all Enterprises in the Wereda
3.2. Types of Rural Enterprises and the Scales of Initial Capitals
3.3. Performance of the ‘Gelgela Dairy Production Enterprise’
3.4. Performance of the ‘Yichalal’ Poultry Enterprise
3.5. Demographic Characteristics of members of Enterprises
3.6. Potential Challenges of all Enterprises in the Wereda
3.7. Challenges of the ‘Gelgela’ Dairy and ‘Yichalal’ Poultry Enterprise
3.8. Opportunities for the ‘Gelgela’ Dairy and ‘Yichalal’ Poultry Enterprises

4. CONCLUSION AND RECOMMENDATIONS

5. REFERENCES

ANNEX

LIST OF TABLES

1. The total number of established enterprises in the Wereda since

2. Types of enterprises established in the Wereda

3. Initial capital/credit scales that are supposed to create profitable enterprises

4. Demographic characteristics of the enterprises

ACKNOWLEDGMENT

It is my pleasure to express gratitude to the members of the enterprises and experts of the Sodo Zuriya Wereda office of enterprise and industry development for their genuineness in providing essential information about their enterprises and patience to give time to discuss all issues related with enterprise development. I would like to express my appreciation to the course instructor Tekle Leza (PhD, Associate Professor) for opening up of the opportunity to conduct the study and to be able to comprehend the course contents from practical perspectives.

I would also like to express my gratitude to Dr. Matusala Mulachew (Delegate for the Academic vice Dean of the Wolaita Sodo ATVET College) for his support in terms of providing transportation facilities to undertake the study.

ABSTRACT

Rural entrepreneurship can be the answer to removal of rural poverty since it ensures employment, decrease rural-urban migration, and ultimately results in balanced regional development. However, all rural and rural entrepreneurship demand an enabling environment in order to flourish. This study entitled as ‘Challenges and Opportunities for Rural Entrepreneurship Development in Ethiopia: the case of ‘Gelgela’ Dairy and ‘Yichalal’ Poultry Production Enterprises in Sodo Zuriya Wereda, Wolaita Zone, SNNPRS’ was conducted to identify the potential challenges of the rural entrepreneurship development, assess opportunities for the development of the rural entrepreneurship, and locate some remedial measures to solve the problems faced by the rural entrepreneurs. To meet the objectives, ‘Gelgela’ dairy and ‘Yichalal’ poultry production enterprises each out of three actively operating enterprises located in Bossa Qacha Kebele were selected. Since 2017, 179 enterprises were established and 143 were ceased working due to various reasons and only 36 enterprises are actively operating in the Wereda. Currently, 49 newly established enterprises on various ventures are waiting for the release of initial capital and 3250 unemployed youth screened to establish an enterprise. The ‘Gelgela’ dairy enterprise started business with only three milking cows and currently owned eight milking cows and six female calves. Though the business is expanding and the working capital is in a position of advancement, the management activities are more of traditional. The main activity of the Yicahalal poultry production enterprise was raising 45 days old chickens to get egg. Even though, the enterprise was performing according to the establishment manuals, due to various challenges especially the inflated input prices, the members agreed to discontinue since they were in a loss status. Therefore, the major problems encountered by the enterprises were lack of capacity building activities, insufficient capital provision, manifestation of poor service delivery by the microfinance institutions, inflated input prices, delay in the supply of feeds, market competition, lack of production area, unknown purity level of dairy cows, disagreement among members, and frequently variable weather. The opportunities for enterprises were attractive market, appointed staff, encouraging enterprise development policy, existence of education institutions in the vicinity (university, TVETS, and Exodus Farm Cooperative), ‘Hamassa’ river flowing all season, and legal acceptance of ownership certificates for the rural land and other household assets are as a collateral. However, the enterprises can be effectiveness and be profitable if linkages with GOs and NGOs made, organization of youth based on their professional background, provision of sufficient capital, conducting awareness creation strategies for youth before they establish an enterprise, all the packages handled by a single appropriate entity or taking corrective measures to improve the quality of services, establish entrepreneurs’ network, implementing modern ways of management activities, controlling input prices, arranging appropriate working area, frequent follow up of the enterprises were a sin qua non.

Key words: Rural entrepreneurship, enterprise development, Wolaita.

1. INTRODUCTION

1.1. Background of the Study

Rural entrepreneurship is the creation of a new business in a rural location that pioneers new products and services, develops a new market for its offers, or employs modern technology (Business jargons, 2021). Rural entrepreneurship, to put it simply, is entrepreneurship that emerges in non-urban areas. As a result, industrial units are established in rural areas.

Rural entrepreneurs play a significant role in the country's economic development. This will provide employment to the rural population and enhance the incomes of entrepreneurs and their families, which would not only alleviate poverty on a broad scale and raise their standard of living (Grace N., and Stephen M., 2018), but also reduce poor people's migration to metropolitan regions in search of work (Grace N., and Stephen M., 2018). This will help in balanced economic development and remove income disparity.

Entrepreneurs not only make the world a better place to live, but many of them also strive to make it a better place to live (Mulyaningrum, 2016). Those with this entrepreneurial spirit will continue to drive the economic revolution, which has repeatedly demonstrated its ability to increase the standard of living for people all around the world. Rural entrepreneurship has the potential to promote the spread of economic activity in rural areas, resulting in more balanced regional development. Furthermore, it not only safeguards but also promotes art, culture, and creativity, i.e. the region's diverse legacy.

In recent dates, rural entrepreneurship development is seen as a local economic development strategy and conceived similarly as rural industrialization. Frazier et al. (2012) argued strongly as rural entrepreneurship development must be taken as the most crucial component of local economic development strategy. Achievement of rural development could be practical through creating strong links with rural entrepreneurship (Saxena, 2012).

However, the development of entrepreneurship in rural areas is not as easy as in urban and suburban areas. As there are several challenges identified by various scholars in many parts of rural areas in different countries which need to be catered to. Some of the common problems are paucity of funds, lack of technical know-how, lack of training and development, non-availability of skilled labor, risk element, legal formalities, lack of quality control, lack of communication and market insights, lack of storage and transportation facilities, old and obsolete technology, machinery and equipment, lack of promotional strategy, lack of infrastructural facilities, market problems (competition and middlemen) poor quality standards, etc. (Sathya, 2019; UKEssays, 2018; Carmen and Chasovschi, 2019; Komolafe et al., 2017).

Besides, lack of knowledge and awareness in people concerning the significance of enterprise in the rural areas encountered at the time of entrepreneurship development. Moreover, the rural population does not show much interest in choosing to be an entrepreneur, as their career generally goes for employment due to a fixed and regular salary, limited working hours, no investment, and less degree of responsibility. This may be due to the status given to the salaried people by society than to the self-employed ones. In addition to this, rural people also do not have much knowledge and awareness about the entrepreneurial opportunities which is open to them. And they are also not aware of the support organizations, government schemes and programs, and all the necessary information which is needed for its commencement.

Unlike urban and sub-urban entrepreneurship, rural entrepreneurship has comparative advantages. These can be expressed in terms of opportunities that exist in rural areas. Some of the opportunities which had been agreed by scholars are support and motivation to local people, low establishment cost, availability of ample and cheap labor force, encouraging government policies and subsidies, availability of raw materials, lower cost of production, employment generation for rural youth, absence of promotion cost, availability of potential customer, etc. (UKEssays, 2018).

1.2. Significance of the Study

Identifying the potential challenges and opportunities of rural entrepreneurship development in Sodo Zuriya Wereda were expected to help policymakers, Wereda administrators, and officers who are responsible for organizing and implementing rural enterprise, NGOs, and other concerned stakeholders to pass sound decisions on the real and practical information to provide the assistance needed and to solve curb problems of rural entrepreneurship development. Moreover, enterprise members can make use of the study results to improve their performance through tackling the identified problems and start thinking to use further opportunities as much as they can.

1.3. Delimitation

This study investigated the challenges and opportunities for rural entrepreneurship development in Ethiopia taking the case ‘Gelgela’ Dairy and ‘Yichalal’ Poultry Production Enterprises located in Bosa Qacha Kebele of Sodo Zuriya Wereda of Wolaita Zone in SNNPRS. Regardless of the fact that some of the challenges and opportunities were shared in common with enterprises engaged in similar ventures, it would be difficult to infer the results to the other enterprises within another Weredas of the same Zone since rural locations differ in many aspects. Consequently, findings cannot be generalized to broader rural locations in SNNPRS and the whole country.

1.4. Objectives of the Study

The major objective of the study was to assess challenges and opportunities for rural entrepreneurship development based on empirical evidence from ‘Gelgela’ Dairy and ‘Yichalal’ Poultry Production Enterprises located in Bosa Qacha Kebele of Sodo Zuriya Wereda of Wolaita Zone.

Specific Objectives of the Study

- To identify the potential challenges of the rural entrepreneurship development
- To assess opportunities for the development of the rural entrepreneurship
- To locate some remedial measures to solve the problems faced by the rural entrepreneurs

2. METHODOLOGY

2.1. Description of the Study Area

2.1.1. Sodo Zuriya Wereda

According to the Wolaita Zone Finance and Economic Development Coordination (2019), the total population of the Sodo Zuriya Wereda is 118,341 (58,285 males and 60,056 females), and subsequently, the rural population outweighs as 94,389 (46,483 males and 47,905 females) than the urban ones and accounts about 79.8%. Wolaita Sodo as an administrative town of the Wereda is located at a distance of 330 km from Addis Ababa to the South direction and has a latitude and longitude of 6°54′N 37°45′E. The altitude of the Wereda ranges from 1500 to 3500 masl and the mean annual rainfall is 1200 mm per annum, while the daily temperature varies from 150C to 300C. The major soil types of the Wereda are clay and clay loam.

Having a total area of 168 square km, Wolaita Sodo Zuriya Wereda has 19 rural Kebele administrations and about 87% of the total area is dominated by midland and the rest 13% covers highland agro ecology with rugged mountains and slopes (WFEDC, 2005). Damota Mountain is the highest peak having over 2800 masl in the Wereda and is considered as the main water source to the surrounding communities all the highland Kebeles are located around this Mountain.

Although there is remarkable variation in population density among Weredas, the mean population density of the Wolaita Zone is 504 per square km. The most densely populated Wereda in the Zone is Damot Pulasa (914 persons in a square km) while the least populated one is Abela Abaya (121 persons in a square km). Sodo Zuriya Wereda is in the fourth stage out of 16 Weredas next to Boloso Sore and Damot Gale and having a population density of 705 persons in a square km. However, except for the Abela Abaya Wereda, population densities of all the 15 Weredas of the Wolaita Zone were above the regional average of 181 persons in a square km (World Bank, 2020) indicates how dense the population in the area as compared with Weredas of the Region.

The population category under the age of 15 accounts for about 38% and the elderly (64+) account for only 2.7% in the Sodo Zuriya Wereda. Therefore, a total of 40.7% of the population are grouped under economically non-productive category/dependent and, on the contrary, the remaining 59.3% belongs to the active working-age group (aged 15-64) of the total population. This shows that the population pyramid of the Wereda has a broad base implies that a very large proportion belongs to the younger age group. Moreover, the Zonal population is characterized by a 2.8% rate of fertility in rural areas and 4.8% in urban areas (WZFEDC, 2020).

In 2020, out of the 21566, 3006, 3243, and 4241 hectares of land covered by major cereals like maize, sorghum, teff, and wheat in the Zone, the Weredas share was 1075, 147, 1055, and 192 hectares covered by the aforementioned crops respectively using high yielding new varieties of different crops and inorganic fertilizers (NPS and Urea). According to the Zonal report (2019), only 83.16 hectares were cultivated through five small-scale irrigation schemes within five Kebeles (Shela Borkoshe, Bosa Kacha, Shola Kodo, Zala Shasha, and Busha).

Consequently, the productivity level for maize, sorghum, teff, and wheat in the Wereda were 60, 29, 19, and 56 2Qts per hectares respectively and all shows spare of the Zonal averages. Haricot bean, root crops, enset (false banana), fruits, barley, vegetables, soybean, horse bean, field pea, chickpeas, spices, coffee, and other crops are also being cultivated in the Area. Root crops play an important role in filling the gap in household food requirements particularly during the lean season and the single and largest cash crop produced in the Wereda is coffee and the Wereda is one of the higher producers of the crop in the Zone.

Even though agriculture and allied activities are the main sources of livelihoods of the people, the agricultural system is still traditional and is often characterized by low productivity. There are two agricultural production seasons; ‘meher’ (long rainy season: start in June and extend up to mid-September) and belg (short rainy season: starts in March and ends in May). The ‘belg’ season contributes the highest share to the annual crop production, and about 87% of the farmers operate in this season.

Besides crop production, WZFEDC (2019) reports show that the total livestock population of the Wereda is estimated to be 302,182. The major livestock reared include cattle, sheep and goats, poultry, donkey, mule, and horse. Almost all farming households rear livestock to obtain multiple utilities like draught power, manure, egg, milk, and meat. Lack of productive and pure breed supply, adequate pasture, and lack of a sufficient number of animal clinics are the most important constraints in the Wereda.

In addition to agriculture and livestock production, non-farm activities are also supplementing and complementing households’ income. Some Kebeles in the study area are nearer to most small towns where farmers are engaging in some sort of income-generating activities such as petty trading and daily labor.

There are about 24,781 farmers attended the modern technical training on multiple agricultural specializations in 27 FTCs since 2008 and 191 DAs are providing agricultural extension support in all rural Kebeles. The ratio of DAs to the farming households being served is 1:123 and this is smaller next to Kindo Koysha’s 1:114 which is below the Zonal ratio of 1:183. The number of DAs to the farming households can be used as an opportunity to boost productivity since the actual number of DAs is more than the 3standard threshold (67 DAs).

Omo microfinance is the only institution through which enterprises and rural communities getting finance to start a business, buy agricultural inputs, and use to solve their various social as well as economic problems in the Wereda.

Land shortage (mean landholding size of about 60% of Zonal farming community is less than a 0.25 hectare), environmental degradation due to natural and man-made factors, loss of land fertility due to prolonged cultivation are major problems among others. The unemployed youth and those who are deprived of cultivation land frequently migrate to the nearby Wolaita Sodo town in search of good job opportunities, better wages, better health, and educational services and creates a burden on the services and life of the town dwellers (Mefekir, 2017). Consequently, migrants face the worse socio-economic complex problems in the town.

2.1.2. Description of Bossa Qacha Kebele

Bosa Quacha Kebele is one of the 19 rural Kebeles administrations in Sodo Zuriya Wereda and is located around 5kms away from the Sodo town to the South-East direction. The Kebele has access to the all-weather road that connects it with Sodo town and other four adjacent Kebeles next to it. The Kebele has a 24 hours access to electricity and potable water service from Sodo town.

Since the start of the enterprise development activities in the Wereda, eight enterprises were established in the Kebele and started businesses in 2018 and 2020. Among them three were in beef fattening, two were in sheep fattening, one was in dairy production, and two were in poultry production. However, currently, the only two enterprises operating in the Kebele were ‘Gelgela’ Dairy and ‘Yichalal’ Poultry Production Enterprises and, on the contrary, others ceased their businesses.

There are about 130 (80 males and 50 females) unemployed youth screened this year as and submitted to the Wereda office for further process. Moreover, currently, about eight enterprises having 40 members (21 males and 19 females) newly established in trade and livestock production especially in poultry and dairy production, and waiting for the release of initial capital according to their respective business plan following the organizational criteria.

2.2. Map of the Study Area

Abbildung in dieser Leseprobe nicht enthalten

Source: Own design (2021).

2.3. Research Design

Through cross-sectional research design, data collected on relevant variables one time only from an office of rural job opportunity creation sector, the Kebele level employee who provides service in terms of youth screening, organizing them in enterprises, and serving as a liaison with Wereda level officers, and conducting a follow up of enterprises, and ‘Gelgela’ dairy and ‘Yichalal’ poultry production enterprises located in Sodo Zuriya Wereda.

2.4. Data Sources

Primary and secondary data sources were used. As a primary data source, two officers who are responsible for organizing, supporting, and monitoring the progress of enterprises in the Wereda and members of the ‘Gelgela’ dairy and ‘Yichalal’ observation poultry production enterprises were interviewed using a semi-structured interview schedule. Besides, on-site observation of physical evidence, enterprises’ products, and overall progress on how activities are being performed was conducted. On the other hand, secondary data used were documents that exist in the Wereda office including the ones submitted by the enterprises to the office. Moreover, guidelines, procedures, rules and regulations, organizational guidelines and criteria, agreements and support letters from Kebele, enterprises’ business plan, and annual reports of the office were used as a secondary data sources.

2.5. Data and Data Types

The data collected were quantitative and qualitative. The quantitative data collected for this study were background knowledge, age, sex, work experience, etc. of members, and amount of working capital, average monthly and annual incomes obtained for their products, number of milking cows, amounts of milk obtained, number of chicken and egg products, and associated expenses. Motivation level, attitude towards change, understanding level of members regarding their enterprise’s future development, etc. were taken as qualitative data.

2.6. Method of Data Analysis

The collected data were analyzed using descriptive analytical tools like minimum daily products of milk and eggs and income and maximum products and incomes after selling, average daily and monthly products, incomes and expensed incurred. On the other hand, data were tabulated to clearly depict the patterns of enterprise development in the Sodo Zuriya Wereda to understand how the development of enterprise is going on. The results obtained were described and concluded based on the discussions held with entrepreneurs and experts at office and Kebele.

[...]

Excerpt out of 33 pages

Details

Title
Rural Entrepreneurship Development in Ethiopia. The case of "Gelgela" Dairy and "Yichalal" Poultry Production Enterprises
Subtitle
in Sodo Zuriya Wereda, Wolaita Zone, SNNPRS
Grade
A
Author
Year
2022
Pages
33
Catalog Number
V1183776
ISBN (Book)
9783346617668
Language
English
Keywords
rural, entrepreneurship, development, ethiopia, gelgela, dairy, yichalal, poultry, production, enterprises, sodo, zuriya, wereda, wolaita, zone, snnprs
Quote paper
Meseret Guja (Author), 2022, Rural Entrepreneurship Development in Ethiopia. The case of "Gelgela" Dairy and "Yichalal" Poultry Production Enterprises, Munich, GRIN Verlag, https://www.grin.com/document/1183776

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