Despile Ihe presence of plenty of business opportunities that can be promoted by micro financerninslitutions (MFls) and despite the presence of large unemployed and economically activernpopllialion in Alar, the development of MFIs has long been conceived as costly and laborious atrnhest and impractical at worst. Although some small credit schemes around Awash (zone three)rnhv CARE Awash, Gewane (zone three) by Farm Africa and Afdera and Teru (zone two) byrnUNICEF - WIBS (United Nations International Children's Emergency Fund - WoredarnIlIIegrated Basic Service) program have been undertaken, fitll time fimctioning commercialrnmicro/in(lnce institlltions have not been introduced to the regioll yet. This has hampered therndevelopment olmicroellterprises. Economically active people ill the region are kept idle andrnspend th eir life fin ancially insecure.rnThe primUlJ! ohjective of the study is to show the extent of potential demand for microcredil inrnGewane woreda, to indicate the most important household characteristics which dictate thernhOllsehold's decision for a given amount of loan, alld to show the presence of plenty of businessrnopportllnities that can be a potential base for the development of sustainable fillancialrninstitutialls.rnPrilllmy rial({ were collected through cross-sectional survey. Both purposive and systematicrn/'{fndolll sampling techniques were employed to select woreda, farmers associations (FAs) andrnhOllseholds. Slmctllred questionnaires and focused group discussions were used to collectrnprilllaty data. Quantitative and qualitative techniques were used to analyze the data.rnMajor [tnc/iugs of the study shows that in Gewane woreda the livelihood of households is mainlyrndependent on livestock production. About 70 percent of the sample households are engaged inrnlivestock production. On the average, there are about 6.1 dependents and 3.4 economicallyrn({Clive people ill a household. About 314'" of the households earnl1lonthly income which is belowrnIhe woreda average (547.61 Bin). Livestock and crop production and urban and rural pettyrnlrades including Gulit, small shopping center, selling of food, local drinks, and chat and thern!,rodllclioll ol halldicrafts such as Sifet, Selen, and Gadeta are the major business opportunitiesrnin GelÂ·val/e woreda. Shortage of capital and marketing are the major problems faced byrnlIIicroenlreprenellrs. Cattle disease, marketing and instability (because of the conjlict with Issa)rnlire also the main causes to household food insecurity problem. These causes offood deficit mayrnalso be potential weakllesses ofGewane woreda to the development of micro finance institution.rnMore thelll 90 percent of GelÂ·vane woreda households need credit to operate gainfulrnlIIicrobllsilless ({ctivities. Out of these 68.3 percent require a loan amount of 2,000 Birr or less.rnThe stlldy revealed that rural households demand higher amount of loan than urban households.rnFrolll Ihe lotal salllple survey population, more than 95 percent are willing to pay for therniil/ancial service they would receive. Out of these, 61.8 percent are willing to pay 12.5 percent orrnlIIore interest for the loan delivered to them. About 314'" of rural and hall of urban householdsrn{Ire willillg 10 P({Y the indicated amount of lending interest rate. The analysis using logisticrnregressioll lIIodel illdicated that age, ethnic group, level of educatioll, /lumber of dependents andrnnllll/her ol econol/Jical~)I active age people in the household and monthly income of the householdrnhead ({re Ihe 1II0st important household characteristics which injluence the decision of thernhOllsehold/or a given amount of loan.