Abstract:
This study investigates the role of microfinance institution (MFI) in the growth of micro and
small enterprises (MSEs) in Jimma town. Also the study evaluated how microfinance institutions
provide the services/ products to improve the expansion, endurance, productivity, and
performance of MSE. Micro and small enterprises are best known as the structure block of both
developed and emerging economy. Recognizing the expansion behaviors of MSEs is quite
heterogeneous. The basic aspire to comprise this research is to recognize and examine factors
that affect the growth of MSE. In this survey growth of MSEs was measured with sale and
accessibility of external business environment. And major issues were recognized that control
growth of MSE. Firm specific issue control variables and external business environment source
as: size, age, education level, credit of microfinance and business environment factor which
include provision to finance, provision to training, advisory to services and infrastructure are
realized as major factors for MSEs working in Jimma. In this study both quantitative and
qualitative approach (mixed approach) was used. As well, primary data was collected to achieve
the purpose and Stratified sampling technique was applied to select the sample from some
selected inhabitants. Data were analyzed using both descriptive and explanatory research
designed would be applied to explain the overall primary and secondary data. The loan criteria
inversely related with growth of MSE. The descriptive analyses approach and explanatory
research designed would be applied to explain the overall primary and secondary data. In the
final analysis, the research clearly reveals that MFI have a positive role in the growth MSE. In
other to enhance a sustained and accelerated growth in the operations of MSE credits should be
client-oriented and not product-oriented. Participation of female in enterprise less than male
and trade sector was growing faster than other economic sector. Thus, the needs were finance,
provision to finance and provision to training for the enterprise. Proper and extensive
monitoring activities should be provided for clients who are granted loans.
