The Assessment of TVET College’s Supports and the Performance of Micro Small Medium Enterprises in Addis Ababa

Deksiso L

Published on: 2024-05-31

Abstract

The objectives of the study were to examine the effect of TVET colleges support and their role for the performance of Micro, Small and Medium Enterprises (MSMEs) in Addis Ababa. A total of 376 questionnaires were properly filled and returned and Judgmental sampling were employed. A descriptive and explanatory (mixed) design was employed where both qualitative and quantitative approaches were used in the study. A descriptive statistic (frequency, percentage, mean and standard deviation) and inferential statistical analysis of correlation and relative importance index has been used and SPSS package version 25 was used to process the data analysis. Reliability was assessed using Cronbach’s alpha coefficient of internal consistency. The study findings revealed TVET College’s support has a significant effect on the performance of MSMEs. However, TVETs in Addis Ababa are not contributing for MSMEs performance significantly. The relationship between TVET and MSME were loose, the implementation of policies and strategies by TVETS were poor, and the role of TVETs in providing skilled manpower for MSMEs and in transferring technology and in fostering entrepreneurship was insignificant. TVET and MSMEs is recommended to set a common agenda for decision on common issues to strength their relation, set clear structure that links TVET with MSMEs. TVET institutions should bridge the gap with enterprises with updated technologies. There should have constant interactions and collaborations between MSMEs and TVEs.

Keywords

MSMEs; TVETs; Skilled manpower; Technology transfer; Entrepreneurship

Introduction

TVET is a wide-ranging term denoting to the educational process, which comprises, in addition to general instruction, the education of technologies and related sciences and the achievement of practical skills and knowledge relating to a profession in numerous sectors of pecuniary and social life [1]. TVET is the major link joining the school system and the labor market, this implies that developments in TVET are intimately linked to overall movements in the economy [1]. Micro, Small and Medium Enterprises (MSMESs) are essential in their contribution for socioeconomic development and enhancement of lives of the people. Most of the well- industrialized nations like Japan, China, and Taiwan were put their development industries on MSMESs that made them role model for developing countries on ways of effective utilization of available resources, their unemployed labor and their native technologies [2]. National TVET Strategy Ethiopian is envisage to create a capable, motivated, malleable and innovative labor force in Ethiopia contributing to reduce poverty and social and economic development thereby facilitating demand-driven, best quality technical and vocational education and training, pertinent to all sectors of the economy, at each level and to all section of the society [3] In Ethiopia, Micro, Small and Medium Enterprises (MSMEs) sector have been growing in the last two decades since 1990s?, with the purpose of poverty reduction and transforming the lives of the poor. The MSME sector has enormous potential for entrepreneurs to exercise their talents with optimum capacity and to meet their personal and proficient goals, however, the sector is challenged with many factors that holds back the performance of MSME. Some of the major factors include; financial problems, lack of qualified employees, lack of proper financial records, marketing problems and lack of work premises, absence of proper technical support among others. In addition to this, social, economic, cultural, political, legal and technological factors affected the MSMES environments. Besides to this, personal attitudes or internal factors that hold back the performance of MSMES, these are related to the personal attitude, training and technical skill [2]. In general, there are exterior and interior factors which are still distressing the performance of MSMESs. TVET plays a significant role in enabling individuals with pertinent skills and knowledge for the employment market that nurtures the keenness of the economy and technological modernization processes (Excel in Ed, n.d.). In this regard, improving the capability of TVET system and the quality, usefulness and significance of teaching and learning methodology is crucial [3]. One of the key factors is improving in the quality and capacity of TVET are teachers’ thoughtful understanding of subject matter, practical skills, pedagogical knowledge, and functional action on the base of educational standards and attitudes. These need the strengthening and advancement of technical and vocational education and training by founding and applying high quality education

Program for TVET experts. However, there are a numeral of challenges that holds back the realization of result-based education [3]. The researcher has identified that various literatures has assessed the performance of MSMESs from skill and capacities, access to finance, employment creation and other perspectives. However, there are no studies were undertaken to assess the effect of TVET Colleges support for the performance of MSMEs. Thus, this research contributes to provide recent and reliable data on the issue for more similar studies. The main objective of the study is to examine the effect of TVET colleges support and their role for the performance of Micro, Small and Medium Enterprises (MSMEs) in Addis Ababa. The study intended to address the following specific objectives;

To assess the strategies, implementations and support made by TVET colleges for MSMESs Addis Ababa.

To analyze the effect of TVET colleges support on MSMESs performances

(iii) To scrutinize the effectiveness of support made by TVET Colleges to MSMESs

(iv) Analyze the skilled labor supply of TVET Colleges to MSMESs.

(v) To assess communication, mutual understanding and trust between TVET College and MSMEs.

The above listed specific objectives are followed by the following research questions;

(i) What are the strategies, implementations and support made by TVET colleges for MSMESs Addis Ababa?

(ii)To what extent do TVETs Support contribute on the performance of MSMESs in Addis Ababa?

(iii)Does TVET Colleges supplying adequately skilled labor to MSMESs?

(iv) What is the communication, awareness, mutual understanding and trust between TVET Colleges and MSMESs?

Review of Related Literature

Theoretical Literature Review

Economic Theory of Entrepreneurship

According to J.R. Harris and G. F. Papanek, “The inner drive of a man is associated with economic gains, which drive him into economic activities. Therefore, they regard economic gains as a pre- condition for the supply of entrepreneurs.” According to this theory, an entrepreneur executes all activities due to economic incentives. The supporters of this theory, profit motive is the prime driving force that change an individual into an entrepreneur. As such an entrepreneur emerges due to incentives and economic profit. Thus, the desire of increasing actual income and economic gains exist in any type of society. This tendency creates the spirit of economic development. They believe that the economic incentive is the basic condition of entrepreneurship.

Theory of Human Capital

Human Capital Theory (e.g., Schultz, 1961; Becker, 1993; Mincer, 1974) presents HE as both a ublic and private investment decision for governments and its people. As a public investment, the fundamental argument is that investing in education leads to economic growth through increased productivity, social stability, and healthier lifestyles. On the other hand, as a private investment choice, investing in education leads to increased lifetime earnings for those with more years of schooling; access to better paying jobs; reduced time spent in the unemployment market; and speedier transitions to enhanced career prospects [4].

According to Becker [5], human capital can be accumulated in different forms of education, training, migration, and health. Through such forms, employees gain knowledge, skills and abilities in different ways. Firms invest in human capital because these firm view humans as an asset and expect that what the firm has invested will be returned and provide a positive value in the future. In other words, an individual investment in their schooling or training and anticipate that the knowledge, skill earned will be enhanced to their career advancement.

Empirical Evidences

Technical and Vocational Education and Training

Ethiopia's Education and Training Policy has placed a strong emphasis on TVET as a means of integrating employment creation and entrepreneurship. The Ethiopian government has devised an MSMES development strategy in order to produce long-term jobs and promote growth and equity. The relevance of TVET and MSMES development for economic growth is emphasized in this plan. The interdependence and oneness aspect of the integration of TVET and MSMES, which are the backbone of any developing country's ability to achieve sustainable economic development, is emphasized here. The organizations collaborate to enhance their missions and achieve the Millennium Development Goals [5].

Micro and Small Enterprises Development in Ethiopia

In 2011, Ethiopia established a new micro and small business development strategy with the following primary goals. The primary goals are to increase work opportunities and reduce poverty. The second goal is to make the sector capable of industry development that promotes economic growth. The third goal is to expand the sector's development in metropolitan areas by attracting developmental investors. The short-term goal of Ethiopia's MSMES development strategy is to ensure rapid development by conserving capital and thereby benefiting society, and the medium- and long-term goals are to serve as a source of investors. Ethiopia's government believes that TVET systems should foster integration between education, training, and development. It is the only TVET system that provides critical assistance for MSMES growth. The finest instrument for encouraging urban development is the TVET system [6]. TVET institutions are intended to overhaul and supply services to the market for the transmission the newly designated technologies. Additional task of the TVET institutions is to appropriately utilize their own resources and to provide services that meets the payment offered for the services. The revenue generated from such interventions enables to create further capacity to increase the potential of the institutions. Moreover, the institutions are expected to pertinently transmission the technologies to micro and small enterprise (MSMES) sector in order to improve their productivity, enhance the quality of products and services and facilitate creation of new business. Delivery of TVET programs and the transfer technology services are the means to reinforce MSMES in urban and semi-urban areas. [3].

The Role of TVET to Strengthening Msmess

In developing nations like Ethiopia, MSMESs play a critical role in poverty alleviation. MSMESs often account for more than 90% of non-agricultural employment, create large domestic earnings, and are a key source of employment. MSMESs, on the other hand, are limited in their ability to operate and grow their businesses due to their size. A crosscutting approach on human development elements is required to remove the constraint and increase the efficiency and productive ability of MSMES development. The sector's crosscutting strategy is determined by governments' ability to implement solid macroeconomic policies by reducing labor force assistance through training. Ethiopian TVET and MSMES sectors have recently collaborated to attain the above goal. They are working to meet as a source of person supply and a hand of skilled improving area for the MSMES, as stated explicitly in the TVET strategy. [7] Attaining the aims of Ethiopia's national TVET policy would strengthen the culture of self- employment and help the economy create jobs. Furthermore, the TVET program provides relevant and demand-driven training that meets the economic and social sector's requirement for self- employment. This alternative was evidently attained through micro and small businesses, which are regarded as the foundation for economic development and the improvement of individuals' living conditions [8].

Role of Msmess in the National Economy

The catalytic roles of micro and cottage businesses have been displayed in many countries of the world such as Malaysia, Japan, South Korea, Zambia, and India among other countries. They contribute substantially to the Gross Domestic production (GDP), export earnings and employment opportunities of these countries. Micro and small-scale enterprises (MSMESs) have been widely acknowledged as the springboard for sustainable economic development. Apart from the fact that it contributes to the increase in per capital income and output, it also creates employment opportunities, encourage the development of indigenous entrepreneurship, enhance regional economic balance through industrial dispersal and generally promote effective resource utilization that are considered to be critical in the area of engineering economic development [6]. Nuwagaba and Nzewi [7] used a descriptive research approach based on a sample of 60 MSMESs to investigate the factors affecting MSMES performance in Uganda and Nigeria. Environmental restrictions such as high taxes, limited market access, costly and inconsistent electrical supply, and a lack of qualified and competent human resources, according to the report, impede MSMES performance. Access to the market is another significant criterion for MSMESs to improve their performance. In order to access differentiated market niches, MSMES managers may need to position their companies by generating reasonably high-quality items and implementing cooperative marketing tactics.

In Kenya, for instance, Kombo, Justus, Murumba and Makworo (2011), submitted that “micro and small-scale entrepreneurs who include agriculture and rural businesses have contributed greatly to the growth of Kenyan economy”. The sector contributes to the national objective of creating employment opportunities, training entrepreneurs, generating income and providing a source of livelihoods for the majority of low-income households in the country accounting for 12-14% of GDP [10-12] It has been recognized over the world that one of the mechanisms to reduce poverty is a focus on the development of MSMESs, which generate income and employment opportunities (MUDC, 2013). It is well known fact that microenterprises generally account for bulk of the total enterprise population, irrespective of the level of development of a country. In many countries of the world, particularly those in Africa and Asia, the micro enterprise sector constitutes the majority of the working population. Micro and small enterprises play various roles in economic development of a nation that include building up local production structure, creating employment opportunity and achieving a fairer distribution of national resource, income, knowledge and power, help to promote rural industrialization, and promote export market [8].

Conceptual Framework

Figure 1: Conceptual Framework.

Source: Compiled by the Author (2022)

 

Methodology Of The Study

Research Design and Approach

The purpose of academic research can be exploratory, descriptive, or explanatory. Exploratory studies aim for basic knowledge within the problem area. Exploratory studies are a valuable means of understanding what is happening; to seek new insights; to ask questions and to assess phenomenon in a new light (Yin, 1994). Literature research, survey, focus group and case studies are usually used to carry out exploratory research. Explanatory research is more interested in understanding, explaining, predicting and controlling relationships between variables than detecting causes. Descriptive research is appropriate when a problem is clearly structured but the intention is not to conduct research about connections between causes and symptoms. The study uses mixed approach of both quantitative and qualitative study. The quantitative research being applying mathematical models is measurement that provides fundamental connection between empirical observation and mathematical expression of quantitative relationships between the dependent and independent variables. Qualitative research is a “subjective” assessment of a problem and takes the form of an opinion, view, perception or attitude towards objects. Hence, in this study the research was employed both approaches.

Data Types, Sources and Methods of Collection

This research used both primary and secondary data and the primary data was collected directly from the respondents and the secondary data was collected by reviewing the existing data that enable to capture information relevant to the study objectives. Primary data was obtained using questionnaire and Key Informant Interview (KII). Secondary source on the other hand, was collected from printed materials, reports, journals and books.

Sampling Design

Target Population and Sampling Technique

In Addis Ababa, there are 6 Poly Technique Colleges and 8 Industrial/Manufacturing Colleges, and 12,000 MSMESs. There are 4500 Professional staffs in all TVET Colleges (Instructors, deans), 11,000 students in all TVET Colleges. Thus, the questionnaires will be distributed for representative samples of professional staffs of TVET, students and due to unmanageability number of MSMESs, the study was including only the managers on behalf of MSMESs, as target population. Out of the total target population of 12,000, the researcher uses the formula developed by Yamane (1967) and the sample size become 387.

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