The survey conducted by the Central Statistics Authority (CSA) in 1996 indicates that there were about 175,933 informal sector operators in urban areas of the region, absorbing 217,737 labor forces which are 30% of the total labor force engaged in the informal sector in the country. Women constitute 69% of the total labor force engaged in the sector. However, most of the MSE's are concentrated in limited areas; manufacturing alone taking the largest share of 52%, followed by trade, hotel, and restaurants assuming another 38.9% and the remaining being taken by, 4.5% community services and 4.6% were engaged in agriculture, forestry, mining and quarrying transport and construction. According to the survey, the total gross value of income generated by the informal sector in the region was about Birr 467,459,395 with the total value added amounting to birr 211,147,180 signifying the importance of the sector in the economy of the region in terms of production and services and employment generation. As it is clear from the above data micro and small scale enterprises play a vital role in the economy of the region in terms creating wide job opportunity as well as contributing to the economy in the form of tax revenue. They also have a key role to play in creating large market for the agricultural sector thus supporting its development. Moreover, in a region where labour is abundant and abject poverty prevails, the contribution of this sector is immense if conducive environment is created to promote the development of the sector. Therefore, the following measures need to be taken to accelerate the development of the sector. First, to maximize the benefit that could be drawn from this sector, it is essential to build their entrepreneurial capabilities, create better access to working and business premises, credit services and to market facilities. Second, special incentive and support mechanism should be put in place to encourage the development of export oriented businesses. Third, it is crucial to organize small scale enterprises into cooperatives to pool together their resources to enhance their competitiveness and take advantage of economy of scale.