Business Development Services for cooperatives and individual entrepreneurs: experiences from Addis Ababa

Business development services as one mechanism of enterprises development have been thought of as a wide array of non-financial services designed to help micro, small, and medium enterprises to overcome barriers and increase profitability by improving their productivity. This study analyzed the extent to which BDS promote and improve small enterprises by examining the BDS impact on MSE enterprises in different sectors and under different ownership. Specifically, the study focussed on cooperatives in the food processing, and metal and woodwork sub-sectors; and on individual operators in food processing in the city of Addis Ababa. Regarding the impact of BDS on the targeted enterprises, the study shows that there is a remarkable improvement in terms of income generation, buying more equipment, more product diversification, more sales, and more employment opportunities. But ownership of the enterprises seems to differentiate this picture. The study shows that this is the result of the characteristics of cooperatives i.e. the sharing of decision making and income which makes them less sustainable as a result of collusion among members. Similarly, the impact of BDS had a different impact in different sub-sectors as cooperative food processing enterprises produce more perishable products and fetch a lower profit which makes investment more difficult, while cooperative metal and woodworks operators make a bigger profit and thus have a better potential to reinvest in their own business. Based on the above findings the study concluded that despite the fact that there are differences found across sub-sectors and nature of ownership, BDS on the whole had a positive impact, in particular for unemployed women and many informal operators. Relevance to Development Studies Business Development services (BDS) have been provided to promote and improve small business by addressing the constraints they face. Similarly, many informal operators have organized and licensed as a result of BDS support. Besides this in the case of Ethiopia BDS created job opportunities for many cooperative food processing operators, and legalized many informal operators of cooperative metal and wood work. Considering this the paper has examined the impact of BDS on specific sub-sectors and different ownership enterprises. This could emphasize why and how impacts differed among sub-sectors and between different ownerships.