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3.3. Access to credit (working capital)
The majority of the sample retailers (94 percent) had not borrowed money from formal banks
in the preceding 12 months. Informal sources are the only means to finance retail activities
(Table 3.13). On average, the retailers had borrowed birr 4,403 during the preceding 12
months. About 35 percent are members of iqub, and each deposits birr 145 per week on
average. The average total value of deposits is birr 9,354, compared with birr 28,342.90 in the
case of brokers (Annex Table 3.8).
Table 3.13: Credit facilities for retailing activities
Formal sources Informal sources
Response Number % Number %
Yes 6 5.6 35 32.7
No 101 94.4 72 67.3
Total 107 100.00 107 100.00
Source: Survey, 2002.
3.4. Regulatory framework and policy
About 68 percent of the sampled retailers have a license from the Trade and Industry Bureau
of Addis Ababa (Annex Table 3.9). The average cost of obtaining and renewing a license was
birr 182 and birr 119, respectively. On the other hand, 32 percent of retailers do not have a
license because they do not have premises and adequate capital. Obtaining a license requires,
among other things, having a stall and initial capital (usually more than birr 5,000). Because
of the weak regulatory and legal environment, retailers have no strong pressure to get a
license. Licensed retailers complain that they incur the additional cost of taxes and other
government charges while their competitors operate freely.
Licenses are expected to provide the licensee access to government services and protection
from unfair trading practices. Almost all of the sample retailers reported, however, that public
services in terms of transport facilities, access to parking, security services, and support of the
traders’ association are weak and not improved over time (Table 3.14). They felt that the
government ought to ensure a level playing field and improve public services.