Factors that Influencing Access to Finance of Micro and Small Scale Enterprises in the Case of Gindeberat District, Oromia Regional State, Ethiopia.

Abstract

Micro and Small Scale Enterprises are major contributors to the gross domestic product and employment in economies around the world; their financial needs are underserved, which holds back their growth. The aim of this study will be examine factors that influence access to finance in Micro and Small Scale enterprises in the case of Gindeberat District, West Shoa Zone, Oromia Regional State, Ethiopia. In this study, description and explanatory of the research design used, as well as mixed types research approach and multistage sample method was employed. The researcher has used both primary and secondary data sources. Concerning the number of 140 questionnaire responses from members of the Micro and Small Scale Enterprise in the study area. Instrument data collection semi-structure questionnaire, face-to-face interview respondents, key informant interviews, and focus group discussions. The data has been analyzed through, descriptive statistics, and inferential statistics such as linear regression and correlation have been used to draw important information. Descriptive statistics such as frequency, mean, standard deviation, percentage and also, inferential statistics such as t-test and chi-square were used for analyzing the data. The finding of the problem research indicated that micro and small-scale enterprises are access to finance in providing fairness measure profitability for their members. Besides, managerial skill, collateral, information, training, market problem, infrastructure, source initial capital, business plan, land, credit, and perception of financial institutions by creditors and weak linkage among and other enterprises are majority problems that influence access to finance for micro and small scale enterprises. The multiple regression analysis showed that the institutional factor was significant (at 5% level of significance). While socio financial and challenge-faced by factors were significant(at 1% level of significance).. Recommended that government support, willingness of members to join members’ enterprises and dissatisfaction with members’ participation were taken as an opportunity for those. In addition, formal and informal institutions together are more encouraged and staff is given regular training on enterprise trends and innovations of the enterprise establishments had been both highly recommended in Gindeberat district.