This paper analyzes the achievemellts of Micro ami small Enterprises ill improvillg the illcomernof urban poor alld identifies the clllIlIellges they are encountering. The study is cOllducted inrnAsella town- Oromia regional state, ill two sub cities ami 011 44 ellterprises. The subjects of thernstudy are operators of MSEs in the particular enterprises. Representative samples were selectedrnusillg both random afl(l 1101l-rllfulom sampling methods from which data were gathered, usillgrnquestiollllaires alld focus group discussiolls ami thell descriptive statistics afl(1 before alld afterrnapproach (paired sample T- test) of data analysis are employed. As a result, it is found that: thernprogram has created employmellt opportunity particularly to those jobless dwellers, there arernsignificant differences in operators' illcome, expansioll and growth is exhibited itl growthrnoriellted enterprises, improvements are realized in; households' fIXed assets, access to educationrnami medical services after establishment of the business ventures. The findings of the studyrnrevealed that Micro and small enterprises in the study area are playing a vital role ill illcreasingrnincome, creating employment opportunities ami generally improving the livillg cOllditions ofrntheir operators. However, they are facing with various challenges afl(l threats that could lifJectrntheir sustainable contributions to the proliferation of their overall benefits. These includes:rnfinancial constraints, inadequate technical ami mallagerial trainings, inadequate markets alldrnmarket linkages, high level of depelldellce 011 government projects, disagreement amongrnmembers al/ll the like. Finally, for a better achievement of objectives of the program in the studyrnarea, illterventiolls such as: access to finance, appropriate supports to improve outputs (supply)rnand market demand, and promoting a culture Ihal sllppol'ls and rewards entrepreneurship, needrn10 be undertaken.