FACTORS AFFECTING ACCESS TO FINANCE WITH REFERENCE TO MICRO AND SMALL ENTERPRISE IN DILLA TOWN, ETHIOPIA

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1 FACTORS AFFECTING ACCESS TO FINANCE WITH REFERENCE TO MICRO AND SMALL ENTERPRISE IN DILLA TOWN, ETHIOPIA Dr. Brehanu Borji 6 Mesfin Gashu 7 ABSTRACT Micro and Small Scale Enterprises (MSEs) are lifeblood of most economies. These enterprises conduct their business operations successfully only when they have sufficient fund to finance their activities. They need finance to start up, expand and diversify their business operations. Without finance, no business enterprise can achieve its objectives. Even though finance is the backbone of any business enterprise, there are number of determinants affecting access to finance. To this effect, the objective of this study is to assess the factors affecting access to finance with reference to Micro and Small Enterprises in Dilla Town. With this in view, using stratified sampling technique, a sample of 237Micro and Small Enterprises were selected proportionally out of 566 Micro and Small Enterprises currently functioning in Dilla Town. The owners of the selected enterprises were chosen as sample respondents to fill in the questionnaires. In the absence of owners, the managers of the enterprises were taken as respondents. The questionnaires, which had been prepared in English, were translated into Amharic to elicit the desired response and 237questionnaires were administered and distributed to the selected respondents. However, only 219 duly filled in questionnaires were returned back, representing 92.4 percent response rate. The data collected through questionnaire methods were substantiated by the data collected through structured interview. So collected data were analyzed using descriptive statistics such as frequencies, percentages, tables and figures. Accordingly, the study results indicated that there was inadequacy of finance when starting and operating the projects. The formal financial institutions have not been able to meet the credit needs of the MSEs because MSEs are not able to fulfill the requirements such as business plan, governance systems, collateral and other accountability issues which are related to business risk management. However, the supply of credit from the informal institutions is often so limited to meet the credit needs of the SMEs. Therefore, the concerned body should facilitate loan access to Micro and Small Enterprises to start and expand their business operations and bring about the desired growth and development in the study area. KEYWORDS Access to Finance, Formal and Informal Financial Institutions, Loan, Micro & Small Businesses, Sources of Funds etc. INTRODUCTION The small business sector is recognized as an integral component of economic development and a crucial element in the effort to lift countries out of poverty (Wolfenson, 2001). Small-Scale businesses are driving forces for economic growth, job creation, and poverty reduction in developing countries. They are critical means to achieve accelerated economic growth and rapid industrialization. Furthermore, small-scale business has been recognized as a feeder to large- scale industries (Fabayo, 2009). Financing is one of the crucial aspects that assist Small and Medium Enterprises (SME) in the process of their development and expansion. However, there is limited access to institutional finance. Different writers cite various reasons that can affect access to finance. According to Jacob Levitsky and Ranga N. Prasad (1989), they are as follows: (1) Lending to small enterprises is considered risky. The uncertainties facing small enterprises such as high mortality rate of such enterprises and their vulnerability to market and economic changes make banks reluctant to deal with them. (2) Banks and financial institutions are biased in favor of lending to large corporate borrowers. (3) The administrative costs (specifically, transaction costs) of lending to small enterprises are high and cut deep into the profitability of such loans. (4) Small enterprises seeking loans are unable or unwilling to provide accounting records and other documentation required by banks, or they cannot provide securities or collateral for the loans. The focus of this paper is to assess factors affecting micro and small-scale enterprises to access finance from formal sources to properly raise fund and invest it in productive ventures. Investment in any productive sector is very much essential for the growth of industry and obtaining the required finance for investment can enhance the desired growth. Business finance refers to money and credit employed in business. It involves procurement and utilization of funds so that business firms may be able to carry out their operations effectively and efficiently. Business concern needs finance to meet their requirements in the economic world. Any kind of business activity depends on the finance. Hence, it is called as lifeblood of business organization. Whether the business concerns are big or small, they need finance to fulfill their business activities. 6 Associate Professor (Marketing Management), School of Management and Accounting, College of Business and Economics, Hawassa University, Ethiopia, brehanu.borji@yahoo.com 7 MBA-Graduate, Dilla University, Ethio-Telecom Hawassa Branch, Ethiopia P a g e

2 In Ethiopia, MSEs Sector is the second largest employment-generating sector following agriculture (CSA, 2005). A national survey conducted by Ethiopian Central Statistical Authority (CSA) in 2005 in 48 major towns indicated that nearly 585,000 and 3,000 operators engaged in micro and small scale manufacturing industries respectively, and they can absorb about 740,000 labor forces. However, access to finance is difficult, like in many developing countries, for the reasons mentioned here above. Because of such problems, micro and small enterprises, in most cases, as indicated by Haftu et.al., (2009) explained that MSEs attempt to start their businesses obtaining financial assistance from informal sector, but find it extremely difficult to survive and expand their businesses without further financial assistance from the institutional lenders. REVIEW OF LITERATURE Now-a-days, in almost all economies of the world especially in developing countries of Africa like Ethiopia, micro and small enterprises are key factors for sustained growth and development. Okpara and Wynn (2007) elaborated that MSEs are generally regarded as the driving force for economic growth, job creation and poverty reduction. They have been the means through which accelerated economic growth and rapid industrialization to be realized. A healthy MSE sector contributes prominently to the economy through creating more employment opportunities, generating higher production volumes, increasing exports and introducing innovation and entrepreneurship skills. The MSE sector, everywhere, is characterized by highly diversified activities, which can create employment opportunities for a substantial segment of the population. This implies that the sector is a quick remedy for unemployment and poverty problem. The realization of a modest standard of living through curbing unemployment and facilitating the environment for new job seekers and self-employment requires a direct intervention and support of the government and other concerned stakeholders (Mulugeta, 2011). According to the definition given by MoTI (1997), micro enterprises are business enterprises found in all sectors of Ethiopian economy with a paid up capital of not more than Birr 20,000, but excluding high technology consultancy firms and other high technology establishments. However, small enterprises are business enterprises with a paid up capital of more than Birr 20,000 but not exceeding Birr 50,000 and excluding high technology consultancy firms and other high technology establishments. If so, do they have adequate access to finance? Many theories have raised the issues regarding the financing problems of micro and small enterprises (MSEs). When they are given a chance of access to credit, they can use the fund obtained through credit to start up and expand their businesses. Finance is the oil for growth. It is indeed the life-blood of the economic system. The financial system is the vessel that carries this life-blood through the economic system. Faulty vessels prevent the life-blood from reaching essential parts of the economic system (Sowah N.K., 2003). Microfinance is defined as a development tool that grants or provides financial services and products such as very small loans, savings, micro leasing, micro-insurance and money transfer to assist the very or exceptionally poor in expanding or establishing their businesses. It is mostly used in developing economies where MSEs do not have access to other sources of financial assistance (Robinson, 1998). Most of the time, if not always, micro and small business enterprises are getting access to finance through informal system because such a system is not demanding them any collateral. They cannot obtain credit from the formal financial systems like bank, micro finance and other financial institutions because of the inability of the MSEs to meet the stringent requirement of these financial institutions (A.N, Berger & G.F Udell, 2004). Paul Derreumaux, Chairman and CEO of Bank of Africa, highlighted three main issues blocking the flow of credit from formal financial institution to MSEs. These are lack of equity in MSEs, lack of organization in terms of human resources, accounting, and administrative management among others and finally the firm s lack of forward-looking vision. For him, most firms were born on the impulse on the part of the entrepreneur, without any in-depthanalysis of the market or competition, which often leads to disillusion in terms of turnover and, consequently, in repayment capacity for financial institution loan. The empirical studies of Gebrehiwot and Wolday (2006) pointed out that inadequate loan size, loan durations that do not match with the gestation periods and cash flow patterns of borrowers activities financed by the loan, failure to disburse loans timely, and the tendency of group collateral requirements are the problems of MSEs in expanding and diversifying their enterprise. Studies conducted so far concluded that the problem of MSEs are access to working capital, inadequate infrastructure, high transactional cost, limited managerial and technical experts and marketing problems (World Bank, 2008), (Hailay, 2003), and (Gebrehiwot and Wolday, 2006). The main obstacle to access external finance of MSEs is due to lack of collateral. This implied that many MSE owners have been out of access to finance due to lack of sufficient collateral. Large banks and other financial institutions are not willing to lend money for MSEs because these banks and most financial institutions do not have confidence on MSEs in repaying the loan on the specified period. In order to minimize this risk, they mostly ask collateral as pledge. Some of respondents elaborated that bureaucracy of financial institutions has been found to be their main financial problem. MSE owners have asked to complete many bureaucratic activities and should force to wait long time to get the money. On the other hand, few respondents stated that fear of risk by MSE owners have been found as the main financial problem. This means that some MSE owners did not take loan from credit providers due to fear of risk on their business (Tadesse, 2014) P a g e

3 STATEMENT OF PROBLEM Micro and small enterprises are believed to be the bridge to achieve the goals of the government (MoFED, 2011). Okpara and Wynn (2007) elaborated that MSEs are generally regarded as the driving forces of economic growth, job creation and poverty reduction in developing countries. Despite these contributions, they face the major problems such as lack of access to equity and debt financing (lack of access to capital), lack of viable education which may be used to prepare their business plan, lack of security or collateral, high risk, high competition, high taxation rate, delay in loan repayment and default in effecting loan repayment. OBJECTIVES OF STUDY General Objectives The general objective of this study is to assess factors affecting access to finance with reference to micro and small business enterprises in Dilla town. Specific Objectives To examine factors that can affect access of MSEs to finance. To assess the possible sources of finance to start-up ones business. To evaluate the role of the government as a facilitator to alleviate the problem of access to finance. To recommend actions to be taken by the concerned body. METHODOLOGY OF RESEARCH The researcher used the descriptive research to describe and critically assess the factors affecting the MSEs access to finance in Dilla town. The study made use of both primary and secondary data. The primary data were collected from target respondents (owners or managers) by distributing questionnaires. To substantiate the data collected through questionnaire method, structured interview has been used to gather the data from the micro and small enterprise officers and key informants in the study area. The secondary data, on the other hand, were collected from files, pamphlets, office manuals, circulars and policy papers. Moreover, variety of books, published and/or unpublished, government documents, websites, reports and newsletters were reviewed to make the study a success. The target population of the study constitutes all micro and small business enterprises in the study area. There are three sub-cities in Dilla town administration. Each of the sub-cities has its own Micro and Small Business Development Agencies with a registration list of MSEs operating within them. According to the survey report conducted by Dilla town trade and industry bureau (July 2013), there were 566 micro and small business enterprises in five different sectors, namely, manufacture 102, construction 217, service 91, merchandise 127 and 29 urban agriculture. For the purpose of this study, from the 566 MSEs currently registered and working in the town, 237 sample enterprises were selected using stratified random sampling technique and questionnaires translated into Amharic language were distributed to the owners of these enterprises. In the absence of owners, managers were made to fill in the questionnaires, representing the owners. However, out of 237 questionnaires distributed to sample respond ents, only 219 duly filled in questionnaires were returned representing 92.3 percent response rate. DATA ANALYSIS AND INTERPRETATION Figure-1: Types of Micro and Small Enterprises in Dilla Town Construction Merchandise Manufacture Service Urban Agriculture Sources: Survey of Dilla Town Trade and Industry Bureau, July P a g e

4 As it can be seen from Figure-1, currently there are five micro and small enterprises, namely, Construction (38%), Merchandise (21.9%), Manufacturing (17.8%), Service (16.4) and Urban-agriculture (5.5). According to the information from CSA, the population size of Dilla town is 78,365 (41,469 male and 37,205 female). Consequently, like any other towns of developing countries, there is acute problem of unemployment in the town. To do away with such persisting problems of unemployment, as it can be seen from figure-1, unemployed job seekers formed different micro and small enterprises to create job and employment for themselves and their families particularly and for the society in general. Wolfenson (2001) also pointed out that the small business sector is an integral component of economic development and a crucial element in the effort to lift countries out of poverty. Fabayo (2009) also underlined the contribution of micro and small businesses to job creation, poverty reduction and economic growth stating, Small-scale businesses are driving forces for economic growth, job creation, and poverty reduction in developing countries. According to a national survey conducted in 48 major towns by Ethiopian Central Statistical Authority (2005), near ly 585,000 and 3,000 operators engaged in micro and small scale manufacturing industries respectively, and created the opportunity of employment for about 740,000 unemployed job seekers. From this, it can be implied that MSEs established in Dilla Town can serve as a stepping-stone to job creation and poverty reduction. These MSEs need fund to finance their projects. Without fund, it may be very difficult to start and expand any business in the competitive marketing environment. In business, money may be required for various operations as well as to buy different plants and machineries. Table-1: Amount of Startup Capital Item Amount of Capital Frequency Percent How much was the amount of startup capital when you start your business Less than Birr 10, B/n Birr 10,000 50, B/n Birr 50, , Above Birr 100, Total % According to Table-1 here above, 110 (50%) of the respondents answered that they started their businesses with the amount of capital not exceeding Birr 10, (24.7%) of the respondents replied that they started their business with the capital ranging between Birr 10,000-50, (14%) of respondents replied that they started their business with the seed capital of Birr 50, ,000 whereas 25 (11.4%) of MSEs developers replied that they had started their business with the capital more than Birr 100,000. From this, it can be implied that MSEs can be established with small amount of startup capital at the beginning even though more capital is required to expand business operation, later on. Table-2: Current Status of Capital Item Amount of Capital Frequency Percent What is the current status of your Less than Birr 10, business in terms of capital growth? B/n Birr 10,000 50, B/n Birr 50, , Above Birr 100, Total % To assess the current status of MSEs in Dilla Town, it is necessary to compare the initial capital of MSEs in Table-1 with the current capital of the same in Table-2. When Table-1 is compared against Table-2, the number of MSEs with startup capital between Birr 10,000 and Birr 50,000 were declining whereas the number of MSEs having capital more than Birr 50,000 is increasing. According to Table-1, 50 percent of MSEs started their business with startup capital not exceeding Birr 10,000. However, during its operation, the number of MSEs using the capital less than Birr 10,000 declined to 22 (10%) in Table-2 from 110 (50%) in Table-1. In the same fashion, the number of MSEs using capital more than Birr 50,000 was 56 (25.4%), according to Table-1. However, in Table-2, the number of MSEs employing capital more than Birr 50,000 increased to 165 (75.4%). This shows that the amount of capital used by MSEs is increasing. Table-3: Educational status of Owners Education Level of MSE Owners Frequency Percent High school certificate TVET graduate First degree Total P a g e

5 To assess the impact of the owners education on the performance of their businesses, the owners are grouped into three categories such as high school certificate holders, TVET graduates and first-degree graduates. As it can be seen from Table-3, 48 (21.9%) of MSEs owners replied that they completed only high school studies. 144 (65.7%) of owners replied that they are TVET graduates. 27 (12.4%) of respondents replied that they are first-degree graduates. In association with their studies, the first degree graduates highly expressed the contribution of their education to their business thereby enabling them to record business transactions, prepare different financial statements for internal and external financial information users and that this in turn increased their skills to manage and efficiently utilize financial resource of the business venture. Table-4: Adoption of Business Plan for Their Business Item Responses Frequency Percent Have you adopted a business Yes plan for your business? No Total % According to Table-4, 129 (59%) of owners of micro and small enterprises responded that they adopted proper business plan which could assist the operation of their businesses. They also added that they are deriving various benefits such as accessing loan from formal sources of finance even though it failed because of not fulfilling collateral requirement. On the other hand, 90 (41%) of the owners of the enterprises answered that they do not possess any business plan for their business and described that they faced number of problems one of which being lack of access to formal financial institutions for loan because business plan is a proposal that describes a business opportunity to financing agencies or investors. In addition, it spells out the goals and objectives of a business and clearly outlines how and when they will be achieved. Table-5: Grant of Loan from Formal Sources of Finance Item Responses Frequency Percent Have you ever been granted any Yes loan from formal financial institutions? No Total % According to Table-5, 180 (82%) of the respondents replied that their request for loan was rejected by formal financial institutions whereas 39 (18%) of the respondents reported that they were granted a loan. The reason for rejection was attributed to many factors such as lack of collateral, which may be provided as a security, the perceived high-risk nature of these MSEs, small portfolios of these businesses, and high transaction cost that financial institutions incur in granting credit to SMEs. Table-6: Grant of Loan from Formal Sources of Finance Item Responses Frequency Percent Why was your request for loan rejected by the Default on previous loan formal financial institutions? Lack of security or collateral Too small equity base Lack of experienced management According to Table-6, the loan request of majority of the MSEs owners 179 (81.7%) was rejected because of inability to provide the required security or collateral to loan. 35 (16%) of the loan request was declined because of small portfolios of these businesses. 7 (3.2%) of request for loan was rejected because of lack of experienced management in the organization to properly manage the operation of the business organization. Finally, 4 (2%) of request was put down because of default on the previous loan. Table-7: Major Constraints for Growth of SMEs Item Responses Frequency Percent What are major constraints for Taxes 13 6 the growth of MSEs? High utility expenses 0 0 Competition 13 6 Lack of access to finance Lack of infrastructure P a g e

6 According to Table-7, 173 (79%) of the respondents replied lack of access to finance as the major constraint to the growth of their business and 20 (9%) of the respondents complained infrastructure as one of the constraints affecting the growth of their business. 13 (6%) of the respondents complained competition and taxes as the constraints for their growth, respectively. Some of the respondents are heard complaining taxes as a constraint that is highly affecting the growth and expansion of their business. However, none of them did give answer to it by circling the multiple choices in the questionnaire. This implies that even though lack of access to finance is ranked as the major constraint to the growth and expansion of MSEs, all others also can significantly affect the growth and expansion of MSEs. This finding is in line with the findings of Cuevas et al (1993), Aryeetey et al. (1993) and Schiffer and Weder (1991). In their study, they also agreed that these constraints, specifically lack of access to credit could seriously affect the growth and expansion of MSEs. Table-8: Major Sources of financing to get loan for Start-Up Capital Source of Fund Frequency Percentage Cumulative percentage Bank Loan Personal Savings Trade Credit Family / Friends Microfinance Institution Ikub Hisrich and Peters (1995) classified sources of funds into two: internal and external funds. MSEs, therefore, can use internal or external sources of funds to finance their operations and investments based on the accessibility and/or availability of the alternative sources of capital. Internally generated funds come from a number of sources within a company and are more frequently employed. They include operational and investment profits, sales of assets, extended payment terms, reduction in working capital and accounts receivable. In this study, the researcher questioned the MSEs owners about the sources of their finance when they started their business. According to Table-8, 74 (40%) of respondents agreed that the source of their seed capital was personal savings. 60 (27.3%) of respondents answered that they financed their business by the fund earned from micro finance institutions. 35 (16.1%) of MSEs owners replied that they financed their business by fund from family / friends. 25 (11.3%) of MSEs replied that the source of their finance is trade credit whereas 22 (10%) of owners responded that the source of finance for their business is Ikub (traditional source of micro finance). From this, it can be implied that bank loan, personal savings, trade credit, family, friends, micro financial institutions and ikub are some of sources of finance that can be used by micro and small firms to finance their business especially when they start their business at the beginning. This finding is in line with the findings presented by Gebrehiwot and Wolday (2006). According to them, family, friends and close business associates are sources of finance when a new business is commenced. Study made by Kuriloff (1993) and Longenecker (1994) also supported the findings of this study stating Loans and contributions from friends and relatives are common sources of funds to finance especially a new business since the financial institutions are reluctant to grant loans to start-up business because of the risks involved. As stated by Kuriloff et al., (1993), it can be clearly understood that formal financial institutions like banks are reluctant to provide loans to MSEs simply because they do not possess fixed assets that can be presented as security or collateral to mitigate or minimize the associated risks. Table-9: Reasons for Defaults of Repayment Question Responses Frequency Percent High interest rate Why MSEs default to repay their Short duration for repayment loans as per scheduled agreement? Low turnover High monthly repayment 11 5 Total As it can be seen from Table-9, 99 (45%) of the respondents mentioned high interest rate as a cause for their default of repayment to lending institutions. 85 (39%) of the respondents replied that the time duration scheduled for repayment is very short to earn enough money for repayment. 25 (11%) complained that sales of their products is low not enabling them to generate sufficient profit that can contribute to repayment of their loans. Moreover, 11 (5%) of respondents complained that monthly repayment is high and they cannot generate such high amount from their sales in a month P a g e

7 SUMMARY OF FINDINGS Micro and small-scale businesses are driving forces for economic growth, job creation, and poverty reduction in developing countries. Being organized makes, them loudly heard and get assistances from different agencies involved in development issues. As it can be seen from table-1, MSEs can be established with small amount of startup capital at the beginning even though more capital is required to expand business operation, later on. According to table-3, the participants of MSEs, especially the graduates of first degree, highly expressed the contribution of their education to their business thereby enabling them to record business transactions, prepare different financial statements for internal and external financial information users and that this in turn increased their skills to manage and efficiently utilize financial resource of the business venture. From this, it can be implied that education is very important to commence micro and small business enterprises. The concerned development agents have to give training to MSEs on how to prepare a sound business plan. According to Table-4, the adoption of business plan benefited MSEs in creating a fertile ground to access formal financial institutions for loan if MSEs are in position to meet requirement of security in terms of collateral to minimize the associated risks. According to Table-5, the request of majority of MSEs to formal financial institutions for loan was rejected. The reason for rejection was attributed to many factors such as lack of collateral, which may be provided as a security, the perceived high-risk nature of these MSEs, small portfolios of these businesses, and high transaction cost that financial institutions incur in granting credit to SMEs, default on previous loan and lack of experienced management. According to Table-7, MSEs identified taxes, high utility expenses, competition, lack of access to finance, lack of infrastructure as challenges affecting their growth and development. According to Table-8, the respondents identified bank loan, personal savings, trade credit, family, friends, micro financial institutions and Ikub as some sources of financing that can grant loan to MSEs to start up their businesses. However, the loan obtained from such sources is limited and could not support the business to expand and diversify its operations. According to Table-9, MSEs mentioned the major causes that are affecting their repayment to the lending institutions. They are high interest rate, Short duration for repayment, low turnover, high monthly repayment short duration for repayment of principal and interest. The realization of a modest standard of living through curbing unemployment and facilitating the environment for new job seekers and self-employment requires a direct intervention and support of the government and other concerned stakeholders. This finding is in line with that of Mulugeta (2011). Formal Financial Institutions have to provide loan to MSEs without too much insisting on collateral and thereby simply considering feasibility of their business plan. The government has also to set up packages that could provide large amount of loan to MSEs without collateral when their financial plan is approved by Trade and Industry Bureau of the Region where MSEs are operating in. CONCLUSION It is well known reality that small business sectors do have high relevance to developing countries like Ethiopia because they are driving forces for economic growth, job creation, and poverty reduction. MSEs are highly believed to have crucial role in an economy and are a key source of economic growth, dynamism and flexibility; and can adapt quickly to changing market demand and supply situations. To start such indispensable businesses, startup or seed capital is necessary. Why because starting any business requires finance. If one s own finance is not sufficient to start the business, which is believed to bring about the growth and development, the required fund can be obtained either from internal or external financing sources. The amounts that may be obtained from internal financing agents are limited and cannot enable the firm to expand further. To this effect, when MSEs are in need of expanding their ventures, they have to turn their face to external formal financing agents to get the desired loan. However, they could not obtain the loan from the formal financial institutions because of not being able to fulfill the requirement of provision of collateral as security to minimize the associated risks. As far as micro and small enterprises (MSEs) are concerned, as they are the part of business enterprises, they need finance to start up, expand, diversify and for working capital of the business firms. Without finance, no business enterprise can achieve its objectives. If they are not supported to expand their businesses, they could not accommodate more number of employees thereby reducing unemployment and contributing towards generating personal income and improving standards of living. DIRECTION FOR FUTURE RESEARCH This study is conducted to assess the factors affecting access to finance in Dilla Town. It would be far better if it were conducted nationwide in all towns and cities to get results that are more reliable. The future study should be conducted with the objective to see whether the loan obtained from Micro Financial Institutions has brought about the desired growth and development to micro and small businesses P a g e

8 The future study has to be undertaken by concerned researchers to find out means and ways that enable micro and small enterprises to access finance from formal financial sources without provision of collateral in order to expand their business operations. The impact of Government intervention on enabling MSEs to access formal financial institutions to get loan with minimum requirement of security / collateral. Here the government prepares the body that looks-over the operation of MSEs and gives them guarantee certificate that serves like collateral to take loan from the formal financial institutions. The body gives a certificate to them only thoroughly assessing their business plan and financial performance during their previous business operations. REFERENCES 1. (2005). National Survey. Central Statistical Authority (CSA). Ethiopia: Addis Ababa. 2. Eshetu, B., & Mammo, M. (2009). Promoting micro, small and medium Enterprises (MSMEs) for sustainable rural Livelihood Development, Innovation and International Political Economy Research (Working Paper No. 11). Denmark: Aalborg University. 3. Haftu, Berihun, Tseahye, Tsegaye, Teklu, Kidane, & Tassew, W/Hanna. (2009). Financial Needs of Micro and Small Enterprise (MSE) Operators in Ethiopia (Occasional Paper No. 24). Ethiopia: Addis Ababa. 4. Hisrich, R. D. (2005). Entrepreneurship: New Venture creation (5 th Edition). New Delhi: Tata McGraw Hill. 5. Hisrich, R. D., & Michael P. P. (1995). Entrepreneurship: Starting, Developing and Managing a New Enterprise (3 rd Edition). Chicago: Irwin. 6. Gebrehiwot, A., & Wolday, A. (2006, January). Eastern Africa Social Science Research Review, 22(1), Kuriloff, Arthur H., John, M. Hemphill, Jr & Douglas, Cloud. (1993). Starting and Managing the Small Business (3 rd Edition). New York: McGraw-Hill, Inc. 8. Levitsky, Jacob, & Ranga. (1989). Credit Guarantee Schemes for Small and Medium Enterprises (World Bank technical paper No. 58). Washington DC: World Bank. 9. Longenecker, Justin G., Carlos W. Moore, & J., William Petty. (1994). Small Business Management: An Entrepreneurial Emphasis (9 th Edition). Cincinnati Publishing Company. 10. Malhotra, M. (2006). Expanding Access to Finance, Good Practice and Polices for SMEs. USA. Washington DC: World Bank. 11. Mckernan, S. M., & Chen, H. (2005). Small Business and Micro Enterprise as an Opportunity and Asset Building Strategy. USA. Washington DC. : The Urban Institute. 12. (1997). MSE development strategy. Ministry of Trade and Industry. Ethiopia: Addis Ababa. 13. Okpara, J., & Wynn, P. (2007). Determinants of micro and Small Business Growth. Constraints in a Sub- Saharan African Economy. South Africa: Sam Publication. 14. MoFED. (2011). Growth and Transformation Plan. Addis Ababa: Ethiopia. 15. Robinson, M. S. (1998). The Paradigm Shift From credit Delivery to Sustainable Financial Intermediation, In Mwangi S Kimenyi, Robert C Wieland and J D Von Pischke (eds), 1998, Strategic Issues in Microfinance. 16. Schiffer, M. (2001). Firm Size and the Business Environment: Worldwide Survey Results. The World Bank and International Finance Corporation (IFC), USA: Washington DC. 17. Sowah, N. K. (2003). Comments on the Golden Age of Business: The Role of the Banking Sector. CEPA Research Working Paper. 18. Wolfenson, J. D. (2001) Comparing the Performance of Male and Female-controlled businesses: Relating Output to Inputs. Entrepreneurship Theory and Practice, 26(3), ***** 1687 P a g e