The Contribution of Micro and Small Enterprises to Local Economic Development: Evidence from Coffee Houses of Mekelle City

The study was carried on “The contribution of micro and small enterprises to local economic development. Conducting this study was timely since there was no such research focusing on the contribution of coffee house businesses despite the emergence of vibrant coffee businesses in Mekelle. Accordingly, evidences from coffee houses of Mekelle city was collected from August 2013 to June 2014 with the objectives of exploring the contribution of coffee houses in creating employment opportunity, in income generation/capital creation, to tax revenue of the city, and assessing the opportunities and challenges of running a coffee house business using a standardized questionnaire survey administered to a total of 107 respondents of which only 102 respondents were interviewed. Descriptive analysis was employed to analyze the data collected from these 102 respondents. The result indicated that the coffee house business is the domain of female entrepreneurs and majority of these women have managed to generate sizable amount of income and improve their household welfare through coffee sales. In addition, the coffee house businesses have created job opportunities to others while also contributing to local economy and communities through income tax payment and business premises run. However, many of the coffee house business owners or managers have to deal with several challenges such as lack of entrepreneurial and business management knowledge, interpersonal skills, working premises, access to credit, and other support services Hence, pertinent bodies need to intervene in order to address these challenges and ensure sustainability of these businesses as an alternative livelihood and development strategy. Key words: Coffee, Income, Local development, Mekelle, SMEs