Policy Brief - Unlocking Potential: Addressing Challenges and Harnessing the Role of Cottage Industries, Insight from Oromia Region of Ethiopia
Executive Summary Cottage industries play an important role in enhancing economic growth and development in developing countries due to their low investment requirement and dependence on indigenous knowledge. They also have considerable role in laying the foundation for future industrial expansi...
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| Main Authors: | , , , , |
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| Format: | Article |
| Language: | English |
| Published: |
Adama Science and Technology University
2025-08-01
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| Series: | Ethiopian Journal of Science and Sustainable Development |
| Online Access: | https://213.55.101.19/index.php/EJSSD/article/view/1088 |
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| Summary: | Executive Summary
Cottage industries play an important role in enhancing economic growth and development in developing countries due to their low investment requirement and dependence on indigenous knowledge. They also have considerable role in laying the foundation for future industrial expansion as they offer excellent opportunities for entrepreneurial and managerial talent to mature. However, the contribution of cottage industries to the overall economic development goals of the country has not received appropriate attention by policy makers and, these industries have not been encompassed in the national and Oromia Regional State strategic development plan. Thus, the aim of this policy brief is to reveal the status of the cottage industry in Oromia Regional State, identify its technology and skill gaps, and formulate intervention strategies for the development of the industry. It attempted to explore spatial distribution of the dominant cottage industries in the region, the gender dimension involved, the contribution to the regional economy, and the level of productivity of cottage industry, and the potential competitiveness of the industry practitioners in Oromia Region. This policy brief document is derived from a policy working document study conducted at Oromia regional state level exhaustively, collecting data from cottage business firms (n=859) and customers of cottage industry products (n=100) from 81 selected districts and 19 urban centers in 16 zones (East Shewa, Arsi, West Arsi, Guji, Bale, East Bale, West Hararge, East Hararge, West Shewa, East Wollega, South West Shewa, Jimma, Buno Bedele, Ilu Aba Bora, North Shewa, and Sheger city) of Oromia Regional State using self-administered questionnaires and interview. The contribution of cottage industries to the regional economy was measured by the income generated from the sector and the number of employment creation. Both descriptive and inferential analyses were conducted to arrive at the results.
The dominant cottage industries practiced in the study area were weaving and knitting, pottery, carpet and basketry, carpentry and wood handcraft, food and beverage processing, metal handcraft, tannery and leather handcrafts, cultural artifacts, and others which include traditional medicine and treatment, hair dressing, local soap production, and gypsum handcrafts. The findings also reveal that there is a gender-based division of labor participation. The average monthly income earned by the owner of the cottage industry is estimated to be 9,071.93 birr, whereas the average wage of a laborer who works in the cottage industry sector was estimated to be 3,477.50 birr per month. This shows that working in the cottage industry sector contributes significantly to household income. With regard to the number of employment creation, a given cottage business creates a job for two people, on average. At last but not least, this study shows that existing cottage industry demands less initial/investment capital, traditional tools and equipment mostly bought from the local market, majority have no formal schooling, their productivity is much less than 50% of their capacity. Overall, the major challenges of cottage industries include lack of finance, access to raw materials, incentives and administrative support, and access to appropriate technology and markets, inconvenient working and selling places, and inflation.
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| ISSN: | 1998-0531 2663-3205 |