Challenges of Financing Micro and Small Business Enterprises (MSEs) in Jimma Town

Abstract

The purpose of the study was to determine the challenges of finance for Micro and Small Business Enterprises in Jimma own. The study used descriptive research design. The study included a sample of 378 enterprises from a target population of 7218 MSEs located in Jimma town. Primary data was collected from the study respondents through using self-administer questionnaires. With the quantitative data collected through the questionnaire a descriptive statistical analysis method was used and analyzed descriptively and presented through figures, tables, percentages, bar charts, pie charts and tabulation to show differences in frequencies. Statistical Package for Social Sciences (SPSS) version was used to aid in coding, entry and analysis of quantitative data obtained from the closed ended questions. The study was revealed out the key source of finance for MSEs is personal saving followed by microfinance institutions, which are informal and semiformal source of finance respectively. It was also revealed out the major challenges hindering micro and small enterprises from accessing credit facilities to be stiff collateral requirement, interest rate, and bureaucracy of rules and regulation of credit policy of financial based on the above findings the following recommendations were appropriate it is quite important to seek alternative means of solution to guarantees for collateral requirements such as municipality as a guarantee and resolution of bureaucratic confusion through discussion with concerned bodies and by reduction of interest charge in order to motivate MSEs. the government should incorporating with concerned bodies and give more attention on the issue of human capacity development in order keep and develop efficiency and effectiveness’s of the existing and new comer operators on this field. the government should incorporating with concerned bodies and give more attention on the issue of human capacity development in order keep and develop efficiency and effectiveness’s of the existing and new comer operators on this field, in addition to this government supports in different dimension to smoothening of operation of MSEs were limited like infrastructure development, provision of incentive, facilitating of complex marketing, and others.