This research aims to scrutinize the challenges and opportunities of graduates of MSEs with arnspecial emphasis on construction, manufacturing and service sector in Addis Ababa. For the sakernof achieving the objectives of this study, information was gleaned through questionnaire from arnsample of 50 operators and focus group discussion was conducted with 6 representativernenterprises of the graduated enterprise of 2011GC. Moreover an interview was conducted withrnthe head of the investment bureau of Addis Ababa. The respondent operators were selected usingrnsimple random sampling (lottery) technique. Questionnaires were analyzed using descriptivernstatistics besides; the focus group discussion and the interview were analyzed using descriptivernnarrations through concurrent triangulation strategy. The empirical study elicited that thernenterprises contracted back in terms of temporary and permanent employment creation comparedrnto while they were MSEs. Their working capital slightly increase while the fixed capital almostrnremain the same, this is because of the different challenges the enterprises are facing. The majorrnchallenges faced by the graduated enterprises are the delayed provision of land for the industrialrnzone, problems related to access to finance, upgrading technology and access to market. Thesernproblems obstruct them from competing with the existing local industries, foreign investors andrnimported goods. The major opportunities the enterprises acquired after graduation are; even if it 'srnlate, getting the land to build the industry zone, kaizen training, change of the enterprise name tornmedium level itself changes the perception of customers towards the quality of product thernenterprise produce and for some enterprises engaged in manufacturing sector, market linkage withrnFDRE Metal and Engineering Corporation. Based on findings, the thesis recommends a serious ofrnmeasures which should be performed by the government. These include: establishment of thernneeded infrastructure for the industrial zone and provision of affordable alternative source ofrnfinance for the graduated enterprises.rnKey words: Graduates, Micro and Small Enterprise, Finance, Employment, Capital