This study assessed the business environment in which the knitwear and handloomrnweaving micro and small(MSE) were operating in and evaluated their growthrnpotentials. The study employed descriptive cross sectional survey consisting of arnstructured questionnaire triangulated using focused group discussion and personalrnobservation. A sample of J II clothing enterprises, 64 knitwear and 47 handloom weavingrnji-om selected areas of the KoifeKeranyo and the Gullele sub cities were selected usingrnsimple random sampling techniques. Descriptive statistical tools like frequency tables,rncross tabulations, averages, and percentages were employed. A chi -square test was alsornused to test statistical significances between the different variables under the study.rnA number of variables related to the operational constraints such as internal factors, rulernand regulations, market related problems and support services were reviewed.rnOpportunities for growth were also assessed.rnThe study utilized univariate and bivariate analysis techniques. Chi-square test was usedrnto test the correlation between some variables.rnThe findings of the study revealed that the knitwear and handloom weaving clothingrnMSEs were constrained by internal and external factors. Internally, they werernconstrained by poor workmanship and poor production process and organization whichrnwere combined to reduce their productivity. These in turn were exacerbated by externalrnfactors. These were low demand, poor provision of raw materials, absence of fabricrndesign patent policies, competition of the local markets through new and secondhandrnimported cloths. These factors combined to affect the business environment in which theyrnwere operating. On the other hand, the existing spatial pattern of these entelprisesrnpointed a tendency for horizontal cooperation among the enterprises. This mightrnstrengthen their capacity. Besides there were yet unexploited internal and externalrnmarket potentials.rnExploiting these potentials requires clearing their business environment first. This againrncalls for policy tailoring. Appropriate policies should be devised to address theirrnproblems. The study, therefore, underscores the need for appropriately targeted market,rnregulatOlY and support interventions which would help those enterprises breaks thernviciously chained impediments they were encircled in.