The main objective of this study is to investigate the Contribution of Group-BasedrnMicro and Small Enterprisers (specifically metal and wood work enterprises) tornthe local economy and social development in the Arada Sub city. Both primaryrnand secondary data were employed. Questionnaire, key informant interview andrnobservation were the main data collection instruments. Among the 10 woredas inrnthe sub city, 4 of them (woreda 2, 3, 6 & 9) were purposely selected due to theirrnrelative performance. Among the 4 woredas, 16 group-based enterprises and arnsample size of 97 respondents were covered. The quantitative data wasrnanalyzed using simple statistical techniques like tables, charts and graphs.rnNarration method was employed to analyze the qualitative data. The findings ofrnthe study indicated that MSEs have great influential nature in the locality inrnterms of economic (be good source of income for local individuals) as well as nonrneconomicrn(forrntherndevelopmentrnsocialrncapital/resource)rncontributions.rnFurthermore, the research finding showed that lack of capital, limited workingrnspace, lack of market, lack of raw material inputs,rnunfair treatment amongrnenterprises by the government, absence of display centers, difficult collateral tornget loan from financial institutions are some of the constraints that hinderrnoperation of MSEs. All in all, there is a need for strengthening the growth ofrnMSEs and thereby enhancing theirrnsocio-economic contributions by wideningrnaccess to loans, providing working premises in the appropriate place, andrnstrengthening both financial and non-financial (Business Development Services)rnsupports