Finance As A Success And Failure A Factor In Micr And Small Enterprise (In Casuse Finfine Special Zone Of The Burayu Administrative Town.)

Abstract

The role of micro and small enterprises (MSEs) in employment and income generation is increasingly recognized and has become a major playing field for the purpose of enhancing growth and alleviating poverty. This study examines finance as a success or failure factor for micro and small enterprises. The study was conducted based on a survey covering strata method selected MSEs in the Finfine Special Zone, Burayu Administrative Town. Interviews and questionnaires have been used as a tool to gather information. The main objective of this study is to examine whether firms have continued access to finance or not. Moreover, the study emphasized the loan size, interest rate, terms of loans, and timely disbursement of the loans. From the study, the biggest problems identified are a lack of access to finance and the inappropriate delivery of loans. Moreover, MSEs are facing difficulties in bringing collateral, disbursement of loans on time, interest rate, loan size, and other availability of financial instruments. These problems are hampering MSEs in their initial expansion, diversification, promotion, and growth to some exte nt. The success of MSEs is measured in terms of their capital, number of employees, revenue, expansion, and diversification of work. From the analysis and discussions, it was possible to identify that finance was the major problem for MSEs. On top of this, the relationship between lack of access to finance and the success of MSEs was negative. This was consistent with the theories, and it implies that finance is a determinant for MSEs. Most MSEs stated that lack of access to finance constrains their initial, growth, expansion,. Indeed, financial sector policies often work against the ability of financial institutions to serve MSEs, though often unintentionally. Lack of competition in financial institutions limits MSEs' access to finance. High risk and high transaction costs (real or perceived) associated with bank lending to MSEs likewise constrain access to finance.