Abstract:
In developing countries, despite the efforts by various stakeholders, lack of access to credit is
almost universally indicated as a key problem facing MSE’s. The main objective of the study
was to evaluate factors affecting access to Micro Finance by Micro Enterprises. The researcher
also set out to establish the influence of collateral requirements on accessibility of credit
facilities by MSEs, determine the influence of cost of credit on accessibility of credit facilities by
MSEs, The study used quantitative and comparative research design. This study used firstly
purposive sampling in selecting enterprises market, and then cluster sampling to determine
enterprises in each zone, and finally used systematic sample for determining the study
respondents. This study collected quantitative data on the challenges affecting factors affecting
access to micro finance by micro enterprises and financial institutions using a questionnaire. In
addition, the study found out that the collateral requirement is very high, while accessing to
credits. This is because of the banks are willing to reduce the risk of losing their loan and as well
as the study found out that the cost of credit is one of the major factors, which are constraint to
access to microfinance by enterprises in Garowe, Puntland. However, the study recommends
that Microfinance institutions should simplify the collateral requirements in order to increase the
accessibility to microfinance by micro enterprises. The study recommends that Micro finance
institutions and banks should reduce their bank’s profit charge of which they charge to micro
enterprises. The study also recommends strengthening the other processing system and
