The informal features of micro and small enterprises and its incompatibility with the partnership law in Ethiopia

Abstract

This paper aims to analyze unfitness of micro and small enterprises with the existing trade law particularly partnership rules in Ethiopia. Qualitative research methodology is utilized in order to capture and analyze accurate and in-depth insight of the fact that micro and small enterprises in Ethiopia are not compatible with the existing partnership law though partnership form of firms are suitable for small business. The available literatures related to the issue were professionally scrutinized and analyzed for the purpose of the research. The results of this research shows that micro and small enterprises in Ethiopia are formed as simply business organization which does not specify the kind of firm structure. Formation, management, liability and dissolution of micro and small enterprises deviate from the partnership requirements stipulated under the Ethiopian commercial code. Furthermore, micro and small enterprises are operating as informal sector business though the sectors‘ development strategy clearly states that they should be organized under trade law. Therefore, micro and small enterprises system should be reformed in order to make them to be compatible with the existing commercial law.