The Challenges Of Financing On Small And Medium Scale Enterprises (smes)

In Ethiopia, growth and transformation plan through the promotion of small and medium enterprisesrn(SMEs) has strongly underscored in various developments, but both the level of unemployment and a jobrnopportunity is a remaining concern. To make the SMEs sector the engine of economic growth andrnreduce the problem of unemployment, it is important to understand what factors determine growth andrninvestment in improvement in SMEs in the context of Ethiopia and as well as Addis Ababa cityrnadministration. In this paper, we provide data-based evidence on the determinants of SMEs' financialrnaccess in Addis Ababa city administration, with a focus on SMEs' finances accessibility problems. Thernmain objective of this study was to identify the determinants of the challenges of financing SMEs inrnusing a survey of 152 enterprises and financial sector 35 office and management level data from AddisrnAbaba city administration. Mainly different statistical analyses have used to both internal and externalrnfinancial access factors and the relative effects of these factors on the SMEs.rnThe findings of the study reveal that SMEs suffer from a host of internal financial problems (e.g.rnpersonal saving, family, friends, and retain profits fund) and of external factors including lack of accessrnto credit. For small enterprises, a lesser amount of access to credit appears to be the constraint for theirrngrowth of SMEs. Hence, without, especially SMEs through improving access to loans not reducingrncredit constraints of SMEs, when increases the loan access to the SMEs renewed focus on promotingrnfirm growth and improving the SMEs' growth. Since, the government creates an appropriate SMErnfinancial access regulatory environment. It is a potential for SMEs for creating more jobs and theirrngrowth, to accomplish those issues SMEs, the financial sector, and the government will have strictlyrncooperated with each other.rnThe study showed that SMEs’ difficulty in accessing finances was influenced by the characteristics of thernfirm, loan repayment capacity, and financial information and that was within the depended-onrnSMEs' finances access to address these issues. The result revealed that by the statistically figures therncoefficient was statistically significant. In case-independent variable are loan repayment, firmrncharacteristic, and financial information on the dependent variable by the SMEs finances accessibilityrnare statistically significant.rnAs a final point, the study investigated and quantified the effect of these factors on SMEs’ that arernaccessibility problems to finances, from the perspective of both SMEs and the finance sectors. Thisrnthesis employs a sequential explanatory mixed-methods approach to investigate SME financing accessrnchallenges from the SMEs’ perspective and the finance sectors’ perspective in research

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