Cecilia Navarra, The Nordic Africa Institute, Uppsala
Sintesi
La disoccupazione urbana in Etiopia rimane a livelli elevati, nonostante la riduzione dell’ultimo decennio. Una delleprincipalipolitiche pubbliche per farvi fronte è la promozione di micro e piccole imprese (MSEs), sostenute da programmi di credito e formazione. L’evidenza empirica sulla piccola impresa, però, produce risultati diversi e in parte contrastanti. Alcuni di questi risultati sono riportati nel presente articolo, attingendo in particolar modo da una ricerca quali-quantitativa condotta da C. Navarra (Nordic Africa Institute) e D. Chinigò (Department of Sociology and Social Anthropology, StellenboschUniversity, South Africa) che confronta settore informale e MSEs sostenute da progetti di promozione pubblica: l’analisi mostra che queste MSEs non producono redditi significativamente maggiori o più stabili rispetto al settore informale, ma inseriscono i beneficiari in circuiti di credito formale. In conclusione, si ipotizza un legame tra difficoltose condizioni di lavoro nel mercato del lavoro salariato e sviluppo della piccola impresa autonoma come alternativa.
Ethiopia, in its unprecedented phase of economic growth, is also experiencing a fall in unemployment rates. Still, these remain quite high, especially in urban contexts: the average urban unemployment rate in 2014 was 16%, with a peak in Addis Ababa (24%). These rates were respectively 22% and 33% in 2003. According to the World Bank 5th Ethiopia Economic Update (WB, 2016), an important characteristic of the Ethiopian urban labour markets in the last decade has been the presence of an increasingly educated work force, but with little change in the structure of employment, both with respect to the ratio between wage employment and self-employment, and with respect to sectorial composition. Moreover, real wages have not reflected the increased level of education of the labour force: although improvements are observed after 2012, these do not compensate for previous decreases.
One of the major policy tools adopted to fight against urban unemployment is a set of programs for the development of Micro and Small Enterprises (MSEs). The national MSE Strategy dates back to 1997 and to the establishment of the Federal MSE Development Agency, but it is more recently that these instruments received much attention. This strategy aims both at fighting unemployment and at formalizing the peri-urban economy. The targets are especially women and youths and the promoted MSEs are in a defined number of prioritized sectors (manufacturing, construction materials, urban agriculture, trade,..). This policy is centred around the idea of work regularization of a fast increasing urban population, of collective participation of citizens organized in groups, and of “saving first”, i.e. a number of actions among which trainings aiming at transformation of individuals’ attitudes towards saving (Chinigò and Navarra, 2017). The public administration provides initial credit, training and working premises for the first 5 years, that is considered to be the “graduation period”, after which the enterprises are supposed to become sustainable. Credit is provided by microfinance institutions through different channels and with different forms of collateral, where the most relevant for unemployed poor people is group collateral, based on joint liability mechanisms. Two main forms of MSEs are promoted: individual MSEs, where people gather for obtaining credit, but actually work as self-employed, and cooperatives, where enterprises join at least 10 members. The 2016 Statistical Bulletin of the MSE Development sector indicates the numbers of MSEs by sector, as presented in Fig. 1.
Fig. 1. Distribution of MSEs by sector. Source: Annual Statistical Bulletin 2010-2014, MSE Development Sector FeMSEDA.
The relevance of MSEs for employment generation seems to be corroborated by the results of a recent experimental study of Christopher Blattman and Stefan Dercon (2017). The experiment randomly assigns jobseekers to industrial jobs, to an entrepreneurship development program (a 300 USD grant plus training), and to a control group. After one year, the income of who entered in the entrepreneurship program had increased by 1/3, while the income increase of wage employees was negligible. Moreover, only 32% of the latter group was employed after one year (compared to 20% of the control group), indicating a high turnover. Finally, employees in industrial firms reported moreover a substantial worsening of their health conditions.
At the same time, other works point at some limitations of MSEs or attempt to put MSEs into perspective. According to Söderbom (2012), indeed new firms are entering every year the Ethiopian market, but they are mostly quite small. These display higher death rates than bigger firms: after 8 years from their birth, 2/3 of small firms are not operating anymore, meaning that the employment generated has disappeared. In a recent study I carried on with my co-author DavideChinigò (2017) we compare and analyse three groups of small enterprises: informal self-employed, government-sponsored individual MSEs and government-sponsored cooperatives, in three Ethiopian peri-urban settings (Addis Ababa, Jimma and Hawassa). We use a mixed method approach, thus analysing a small survey database (300 observations), stratified by type of firm, and a number of semi-structured interviews with women who are entrepreneurs in the three categories. We find out that sponsored MSEs do not seem to produce higher earnings than informal businesses and follow more or less the same patterns (e.g. low risk, low value added activities). Individual formal MSEs, moreover, do not display higher income stability nor higher access to credit, if we consider both formal and informal channels. Cooperatives represent a partial exception, since they display higher income stability than both informal and formal individual businesses, and a positive correlation with access to credit. On the contrary, it appears that participation into a sponsored MSE is significantly correlated with the use of formal credit channels. These services, managed by Microfinance Institutions, are in fact more accessible to women involved in sponsored projects, including the individual businesses. In our analysis, it emerges that these credits are not correlated with business profitability, while they are more often used for extra lump-sum expenses in times of hardships or to support individual home-based small scale businesses. This is of course not without exceptions, as the mentioned cases of cooperatives, but other cases can be found also among individual businesses, especially where the observed business is not the only income source of the household. Still, in most observed cases, MSEs enter into poorer households’ strategies driven by the need to seek additional incomes to sustain a minimum level of consumption (or seeking to diversify), thus being used as a sort of substitutes for safety nets.
Interestingly, both papers (Blattman and Dercon, 2017, Chinigò and Navarra, 2017) point out the need for income stabilizers, that may explain, in the first case, people queuing for wage employment despite the poor working conditions, and, in the second case, people enrolling in MSE programs, despite the lack of substantial difference in income generated with respect to informal works. Although the different studies cannot be strictly speaking compared with each other, we may wonder how to reconcile the contrasting evidence on entrepreneurship development. An interesting way forward would thus be to analyse the relationship between industrial wage employment and self-employment. Since there is evidence of people moving between self-employment and wage employment and between formal and informal works (WB, 2016, Chinigò and Navarra, 2017), it is reasonable to think that the conditions available on the formal waged-labour market affect the flow of people towards self-employment and the comparative attractiveness of the latter. There is indeed evidence of stagnation of real wages (WB, 2016. See Fig.2), with signs of increase since 2012 that are unable to catch up the decline in previous years.
Fig. 2. Monthly real urban wage. Source WB (2016) calculations on Urban Employment Unemployment Survey 2003-2014.
Inequalities among wage earners are also substantial. Women have wages 28% lower than men, accounting both for lower hourly wages and fewer hours worked. Real wages of categories with some education suffered the biggest decrease comparing 2006 and 2014. At the same time, it is low skilled wages that are clustered around very low levels: the real wage of the 25th percentile of people with no education is below the nominal national poverty line (WB, 2016). Moreover, Blattman and Dercon (2017) highlight the worsening effect of industry employment on workers’ health. Although this would require greater empirical explorations, we can argue that poor working conditions in the formal labour market play a role in the attractiveness of entrepreneurial alternatives.
References
Blattman, C. and Dercon, S., (2017). The impacts of industrial and entrepreneurial work on income and health: Experimental evidence from Ethiopia. American Economic Journal: Applied Economics, forthcoming.
Chinigò D., Navarra C., (2017). Small enterprises in urban areas between formalization policies and social protection needs. A discussion on the Ethiopian case, paper presented at the EADI Nordic Conference, Bergen, Norway, August 2017.
Söderbom, M. (2012). Firm size and structural change: A case study of Ethiopia. Journal of African Economies, 21(suppl_2), ii126-ii151.
The World Bank, (2016). 5th Ethiopia Economic Update. Why so idle? Wages and Employment in a Crowded Labour Market, December. This report uses the Urban Employment Unemployment Survey of the Ethiopian Central Statistical Agency.
