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Micro-businesses contribute to economic development by improving individual welfare. Women are the primary drivers and owners of such businesses in urban Ethiopia. The purpose of this study is to investigate the poverty status and determinants among women-owned micro-businesses.

The basic study units were women who owned micro-businesses. A sample of 384 women-owned micro-business was chosen using a stratified and systematic random sampling technique. Thirty-six participants were purposely chosen for in-depth interviews and focus group discussions. Questionnaires, in-depth interviews and focus group discussions were used to collect data. The poverty head count, poverty gap and poverty severity indices were computed to estimate poverty status. The major determinants of women’s poverty were investigated using a logistic regression model.

The overall poverty incidence, gap and severity were estimated to be 24.27%, 3.85%, and 1.11% respectively, among the women who owned micro-businesses. Eight of the 14 poverty determinants, including age, dependents, savings, remittance and the number of days and hours women work in their businesses, were found to have a significant effect on women’s poverty. The results suggest that local governments, technical and vocational training institutions should work together to reduce the impact of poverty-aggravating factors on women and increase the contribution of women-owned micro-businesses to poverty reduction.

This study addressed the poverty status of women who run micro-businesses, which is a crucial issue in Ethiopia’s urban context. It adds new knowledge to the issue of gendered economic participation, poverty reduction and poverty determinants in the Ethiopian context.

Microbusinesses are better able to assist many disadvantaged groups in finding employment and breaking the cycle of poverty because they require less initial capital and employ a large number of poor people in developing economies. Women run and own the majority of micro-businesses in urban Ethiopia. This study aims to investigate women’s microbusiness participation decisions and the effect on poverty in the Wolaita zone southern Ethiopia.

A cross-sectional study was carried out using a mixed-methods research approach. A total of 384 women who owned micro-businesses were chosen using a systematic random sampling technique, while 36 women were purposefully chosen for qualitative data analysis. Data were gathered through survey questionnaires, in-depth interviews and focus group discussions. The collected data were analyzed by using a propensity score matching technique as well as contextual analysis.

The study discovered that women’s participation in registered micro-businesses had a higher and more beneficial impact on their food, non-food and overall consumer spending than women’s participation in unregistered microbusinesses, which helped to reduce poverty. Besides, overall women’s participation in micro-business increased their decision-making power and enabled them to provide resources for their families food and non-food consumption, with registered micro-business participants reaping the greatest benefits.

This research focused on the effects of women’s micro-entrepreneurship on poverty in low-income communities. Rather than providing food, clothing and/or other aid to women in disadvantaged communities, the authors asserted that assisting women and their micro-businesses allows them to be self-sufficient in terms of food and clothing as a long-term solution to poverty reduction. As a result, policymakers can use our findings to gain a better understanding of how women’s micro-entrepreneurship affects poverty reduction, allowing them to develop more effective anti-poverty initiatives. This study’s findings are novel and add to the body of knowledge in Ethiopia and the sub-Saharan African region.