The Role of Microfinance Institutions in the Growth of Micro and Small Enterprises in Jimma Town

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.