Abstract:
This research aims to examine Determinants of loan repayment of micro and small enterprises in
Alge sachi Woreda. The study examined the institutional management related factors (training,
follow-up and supervision, repayment period), borrowers related factors (Age of leader, leader
experience, keeping book of record and member size) and external related factors (market
availability and infrastructures) that determine the loan repayment of small and micro enterprises.
This study employed descriptive and explanatory research design. The Primary data was collected
through self-administrated questionnaires from random samples of 179 Micro and Small
Enterprises by stratifying into five groups. The collected data was analyzed through descriptive and
inferential statistical techniques using the Statistical Package for Social Science of version 23.
The descriptive statistics and binary logistic regression were employed to present the results and
findings of the research. The result of binary logistic regression model indicated that Experience of
respondents, Age of respondents, Training, infrastructures, follow up and supervision and loan
repayment period were positively and significantly affect loan repayment. The enterprises member
size, lack of keeping book of record and lack of accessible market was negatively and significantly
affected loan repayment of small and micro enterprises in the study area.
This study recommends that the participation of females in management of MSE’s should be
improved, enterprises and industry development office should provide Capacity building trainings
and should make continuous supervisions and follow-up to prepare enterprises to perform in the
business they involved, an assessment of the borrowers business related experience should be
conducted before loan disbursements and they should include experience in their loan criteria,
Experience sharing activities on Marketing Skills should be set by office of MSEs with supporting
institutions to obtain better knowledge and experiences from each other and MSE should work hard
to get market access and linkages for their products and services, the MSEs should register their
daily activities to control all their activities and loan,The woreda MSEs 0ffices should be setting
suitable repayment periods by communicating with the federal government and other concerned
body
