Abstract:
Micro finance institutions are basically set up with the goal of Challenges in the Growth of MSEs.
These institutions have a very important and effective role in both developed and in developing countries
because it is considered the backbone of their economies. This indicates that without the establishment
of micro finance institutions, no developing nation can achieve a viable economic
growth/development or the reduction of poverty since they lack enough amount of money. This study
also investigated the role of micro finance institution in growth SMEs of ambo town in Challenges in the
Growth of MSEs in Ambo town. Also the study evaluated how microfinance institutions provide the
services/ products to improve the expansion, endurance, productivity, and performance of MSEs.The role
of micro finance institution in growth SMEs and Challenges 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 the role of micro finance institution in growth SMEs and Challenges was measured
with sale and accessibility of external business environment. The total sample of study 131 the sample
size of study were be 124 respondents sampled was randomly for the study. Questionnaires were
employed to collect data from respondents, which were then analyzed qualitatively and quantitatively
using frequencies and presented in the form of frequency distribution table. IN this study both
quantitative and qualitative approach (mixed approach) was used. As well, primary data was collected to
achieve the Simple random sampling technique was applied to select the sample from selected
inhabitants. Data were analyzed using both descriptive statistics and with the help of Statistical Packages
for Social Science (SPSS version 20). The loan criteria inversely related with growth of MSEs.
Participation of female in enterprise less than male and manufacturing sector was growing faster than
other economic sector. Thus, the needs were finance, available loan criteria and access to market for the
enterprise. Based on findings, recommendations to government bodies, to operators of MSEs growth and
Challenges role of MFIs and suggestions for other researchers are forwarded.They should also ensure
that the lending procedure is clear and precise and timely to encourage SMEs to take up the loans.
Flexible repayment periods should be facilitated by management of lending institutions. The owners and
management of SMEs should always monitor their credit usage to avoid misappropriation. This should
start even before accessing the credit by prior planning for the budget and sticking to that budget. In the
event of misappropriation they should replace the amount used for other purposes on time so as to stick
to purpose of the loan.
