Micro and small enterprise (MSE) sector in Ethiopia plays an important role not only in strengthening economic situation of the country in general; it also creates individual opportunities to reduce poverty and inequalities through the usage of existing human and material resources. There are many successful examples of MSEs as an instrument to bring about economic transition of developing countries by providing reasonably priced goods and services to the residents of rural areas. It is also an important tool that is needed to be promoted within the large number of people that do not require both high-level training and expensive technology.
Although MSE sector activities seem to be the best solution involving a large number of unemployed, there is a wide range of constraints connected to the possibility of effective functioning of market economies. Those constraints include: legal, regulatory, economic, financial, managerial, technological and business difficulties, which could not always guarantee long-term jobs for a large number of unemployed. Ethiopia is not an exception, and the major obstacles occurred in manufacturing industries connected with the erratic supplies of raw materials, which also resulted in a shortage of corresponding working premises.
Despite MSE sector has absorbed a significant number of unemployed for a short-term, there are difficulties to generate those jobs into long-term ones. That means that those small and enterprises within regions shall be supported by networks and creating enabling environment for handloom cluster development in order to jointly address various hindering obstacles and work for building collective efficiency and prospective development.
The promotion of both networks and clusters will provide the ideal environment for the natural home of entrepreneurship with considering personal and professional goals of those involved in the businesses. It will equate income distribution, activate competition and stimulate economic development.