THE IMPACT OF ACCESS TO FINANCE ON THE GROWTH AND PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES: EVIDENCE FROM ADDIS ABABA, ETHIOPIA

Abstract

This study investigates the impact of climate change on agricultural production in Ethiopia, focusing on key climatic variables such as temperature rise, rainfall variability, extreme weather events, and soil degradation, as well as the role of adaptation strategies. Ethiopia’s agricultural sector, predominantly rain-fed and dominated by smallholder farmers, is highly vulnerable to climatic fluctuations. Using a combination of descriptive statistics and regression analysis, the research assesses historical climate trends and their effects on crop yields and livestock productivity, while also projecting future scenarios based on observed data patterns. Findings indicate that over the past decades, average temperatures in Ethiopia have steadily increased, while rainfall has become more erratic and generally declined during key growing seasons. These changes have significantly reduced agricultural productivity, with sharp declines in both crop yields and livestock output. Regression analysis confirms that temperature and rainfall are negatively correlated with agricultural output, with extreme weather events exerting the strongest negative effect. Soil degradation further exacerbates these impacts, whereas adaptation measures such as the use of climate-resilient crop varieties, improved irrigation, and conservation agriculture show a positive influence on mitigating productivity losses. The study concludes that climate change poses a substantial threat to Ethiopia’s food security and rural livelihoods. It highlights the urgent need for policy action that mainstreams climate adaptation into agricultural development. Recommended interventions include promoting climate-smart agricultural practices, improving water management systems, strengthening early warning mechanisms, and enhancing farmers' access to extension services, finance, and resilient technologies. The research contributes to a growing body of knowledge emphasizing the importance of integrated and inclusive adaptation strategies tailored to Ethiopia’s socio-ecological context. It also calls for further longitudinal studies and spatially diverse research to support evidence-based policy planning for climate-resilient agriculture