WOLLO UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE

THE ROLE OF MICRO FINANCE INSTITUTIONS IN

STRENGTHING MICRO AND SMALL BUSINESS
ENTREPRISES (IN CASE OF DESSIE TOWN)

A SENIOR RESEARCH PROJECT SUBMITTED FOR THE PARTIAL

FULFILLMENT OF THE REQUIREMENT OF BA. DEGREE IN ACCOUNTING
AND FINANCE

BY: HABTAMU KEBEBE

ADVISOR: SOLOMON MOLLA (MSc.)

JUNE, 2015
DESSIE, ETHIOPIA
Abstract

The main task of this study was to assess the role of micro finance in strengthening small micro
enterprises in Dessie Administrative town. Due to various limitations particularly time, and lack of
sufficient literature review, the sample of the study consists of 2 micro finance Institutions and 40 small
micro enterprises in DESSIE Administration Town. Judgmental sampling and covenantal sampling was
used to select both small micro enterprises and MFI heads. In case of gathering information both
primary data and secondary source of data was used and open and close ended questionnaire were the
main instruments employed. The data obtained were tailed carefully, arranged and structured in tables
and analyzed using percentages. The results obtained from the study pointed out that MFI play the
greatest role in providing the loan, technical supports which as skill, training on how to use their money
effectively and how to run their business properly. Recommendations were drown based out the findings
that so as to MFIs need to provide continues and sufficient skill development training for SMES member.
ACKNOWLEDGEMENT

First and for most I would like to thank JESUS for endowing me endurance and courage of going
through to reach at this point! Then I would like to take my deepest, gratitude to Advisor
Solomon Molla for his constructive comment, technical and professional guidance in writing
this research paper.
 List of Table
Title page
1, Characteristics of Respondents………………………………………………………………..
2, respondents from microfinance institution……………………………………………….
3, The Establishments of the organization…………………………………………………….
4, Response from SME chair person………………………………………………………………
5, response related to the money provided to SMES……………………………………….
6,Supervision given by MFI……………………………………………………………………………
7, Effective use of money……………………………………………………………………………….
8, Training given by MFI………………………………………………………………………………..
 TABLE OF CONTENT
Contents Pages
Abstract…………………………………………………………………………………………………………………………I
Acknowledgment……………………………………………………………………………………………………………II
Acronyms……………………………………………………………………………………………………………………III
List of Table…………………………………………………………………………………………………………….........IV
Table of content……………………………………………………………………………………………………………V

CHAPTERONE INTRODUCTION…………….
……………………………………………………………………………………………….1
1.1 Back ground of the study………………………………………………………………………………… 1
1.2 Statement of the problem……………………………………………………………………………..2
1.3 Objective of the study ………………………………………………………………………………………3
1.4 Significance of the study………………………………………………………………………………….4
1.5 Scope of the study……………………………………………………………………………………………..4
CHAPTER- TWO
2 Review of the literature……………………………………………………………………………………………. .5
2.1 Concept of micro finance and small enterprises……………………………………………………… .5
2.3 Role of micro finance and small enterprises in economy………………………………………….. .6
2.4 Prudential regulation as a tool to implement MFIS effective governance in Ethiopia……6
2.5 Effective governance of MFIS in Ethiopia…………………………………………………………………..7
2.6 Minimum capital required in new MFI entrants …………………………………………………………7
2.7 Micro finance target …………………………………………………………………………………………………7
CHAPTER- THREE
3 Research methodology …………………………………………………………………………………………….. 8
3.1 source of data………………………………………………………………………………………………………… 8
3.1.1 Primary data ………………………………………………………………………………………………………..8
3.1.2 Secondary data……………………………………………………………………………………………………..8
3.2 method of data collection………………………………………………………………………………………..9
3.3 sampling technique ………………………………………………………………………………………………… 9
3.4 method of data analysis…………………………………………………………………………………………….9
CHAPTER FOUR
4. Data Analysis and Presentation……………………………………………………………………………………..

ACRONYMS

ACSI- Amhara credit and saving Institution

FDRE-Federal Democratic of Ethiopia

ILO-international labor organization

MDG-Millennium Development Goal

MFI- Microfinance institution

MOTI- Ministry of trade and industry

MSE- Micro and small enterprises

MSEDP- Micro and small enterprises development programmed

NGOS- Non Governmental Organization

 CHAPTER ONE
1. INTRODUCTION
1.1 BACK GROUND OF THE STUDY
It is impossible to evaluate the process of improving the quality of all human lives or the
overall economic development of a nation without financial services, financial help poor
communities to expand their economic activities and increase their incomes and assets and
also their self-confidence i.e. grows simultaneously(gobzie,2005).
The formal microfinance industry began in EecadEthiopia in 1994/95 with the government
licensing and supervision of microfinance institution proclamation (MFI) to extend credit
to both the rural and urban peoples of the country.(gobies’ 2005)

The establishment of long-lasting microfinance institution serving a large number of poor

people has been a crucial element in Ethiopia as development strategy.Althouth.in Ethiopia
the establishment of microfinance institutions is relatively a recent phenomena within the
last decade. The number of microfinance institutions, the funds which have been allocated
to them and the number of people will be befitting from the services will be rapidly
growing.(essayas,2004)

On other hand, microfinance’s is the provision of financial service to the poor people with
very small business or business projects(marzys.2006).for example, some microfinance is a
movement those objectives is a world in which as many poor and near poor households as
possible will permanent access to an appropriate range of high quality financial services,
including not just credit but also savings, insurance and fund for other micro finance is a
way to promote economic development, employment and growth through the support of
microenterprises and small business.(Robinson ,2001)

Microenterprises will a significant employment contribution and can operate successfully

in place small towns where large and medium enterprises in relation to job creation, the
small microfinance sector contributes to the important socio economic objectives, such as
gross national product(GNP),value added and foreign exchange savings.
Finally, in order to promote microenterprises in cities or town, it is there for essential to
provide them vying local business more over business should be encouraged to form
network associations and market local demand should also be enhanced way and made up
people with access to finance, improving information availability import

1.2. Statement of the problem

The role of microfinance in strengthen the development of small micro enterprises will
receiving extensive recognition as strategy for poverty reduction and for economic
improvement, microfinance is a way for fighting poverty particularly in rural areas, where
most of the world poorest people lives.(www.academia.edu---)

Accessing small amount of credit at reasonable interest rate given poor people to have
access to financial services they can earn more, build their assets and moderate them
serves against external stocks, poor household use microfinance to move from every day
survival to plan for the future .(www.cordaid. Org/microfinance)

Microfinance is seen as one of the most efficient instruments to promote economic

development and to fight poverty in poor countries, numerous microfinance development
and microfinance institutions all over the world have high proven that financial services
can be offered on a sustainable basis without programmers that support the industry as a
whole.(ledger wood,1999).

Before enters entered the arena of formally established microfinance institutions , the main
sours of micro credit in the urban and rural areas where accessed informally through,
relatives and many lenders .Informally through informal institutions remain an important
source of microcredit for rural and urban poor economy communities so, the creation of
microfinance institutions that will be established by proclamation 40/965 issuing by the
Ethiopia government in 1996 solved the problem peoples face in informal institution even
if Ethiopia will strong culture of informal institutions system the creation of MFIS will lead
them to cooperate peoples in formal way and made up people to fight poverty together
informal small and microenterprise .(Teqegne and mulat,2005)

Thus, the researcher is to assess the role of microfinance institution in strengthening small
micro enterprises in Dessie Town; to this end the following research questions are
formulated.
The researcher is to access the role of microfinance institutions in strengthening small
microenterprises in dessie town. To this end the following research questions are
formulated.

1. To what extent are the micro finance institutions providing the necessary support for
the small micro enterprises?

2. What are the present roles of the microfinance institutions to empower the small
microenterprises?

3. In what way current MFI play their roles in light with the current poverty reduction?

1.3 Objective of the study

1.3.1 General objective

The general objective of the researcher was to access the roles that microfinance institution
are playing in strengthening the small microenterprises

1.3.2 Specific objectives

The specific objectives of the study were:

1. To identify the specific technical support that provided from microfinance institutions
to the small and microenterprises funds in the town Dessie.

2. to verify how microfinance institutions aware the small microenterprises of the town
and community of the town. In order to enter into formal institution

3. To access the role of small microenterprises towards job creations in the town.

1.4 Significance of the study

Studying on the area of the microfinance and small enterprises has great significant to
community of the Dessie town on particular and also to the whole country in the general.

-the research would provide further information for the microfinance planner as well as
research results for empower the small microenterprises.
-it must be help, the literature in the experts of microfinance to follow clear approach for the
provision of necessary support for small microenterprises.

-It contributes for the policy to the improvement of microfinance institutions system in the city in
particular and to the country in general.

-It would give the present picture for the researcher the picture of microfinance institutions role in
strengthening small microenterprises.

1.5 SCOPE OF THE STUDY

Thus study would be conducted on the role of microfinance in strengthening small microfinance,
even if as a whole and to the workers of micro and small enterprises duo to vary limitations this
study is limited to access the role of microfinance institutions in strengthening SMI in Dessie town.
 CHAPTER- TWO

REVIEW OF LETRATURE

2.1 CONCEPT OF MICROFINANCE AND SMALL ENTERPRISES

Informal financial market, the poor are exclude from establishing their own small business
because they are not recognized as being credit worthy. I.e. UN able to save, lacking
verifiable credit history or goods to offer as collateral to secure loans, forcing them to turn
to traditional money lenders

Recognizing the needs, capacity and the talents of the poor to repay the loans, micro
lending programs are extended the group members rather than to individuals. In view of
the contingent group loan approach, it is generally assumed that group members would
have an incentive to monitor their progress and that this would lead to a greater rate of
repayment of their loans since each borrowers credit worthiness would be a factor in the
overall credit worthiness would be a factor in the overall credit worthiness of the group
Robinson 2001). In short, the success of group lending creates positive incentive for
members to repay because in case of default, no member of the group will receive future
loans .For repayment, their repeat lending to the group. In group lending, the probability of
moral hazard is largely reduced because all borrowers are members of the group and
subject to peer pressure, group dynamics, cohesiveness and the ultimate success of each
member of the group (Liedholm and Mead, 1997).

In simple terms, micro credit refers to process of lending small amount of seeds money to
groups rather than to one person, without collateral, to help poor people to establish their
own business. Micro credit especially designed for eco-entrepreneurship, encourages
innovation in rural and urban areas to produce environmentally friendly product market
place. Thus, philosophy of demand led- micro credit finance visualize the poor not as
objectives of charity but as socially productive persons. Micro credit is an investment in
people, the poor and their abilities, which sharpens entrepreneurial initiative and
strengthens developing countries’ economies. Micro credit is vital tool for economic
development because it enables the poor to built assets, increase income and reach self-
sufficient (peter, 2001)

2.2 Micro finance in Ethiopia

In 1990s the commercialization of micro credit continues to gain force as one of the key
tools of development. The World Bank, the U.N, capital development fund, the European
bank for reconstruction and development has created full –scale movements to promote
the availability of microcredit programs to a number of developing countries. Especially
united nations has advocated the reduction of both extreme poverty and united nations
had advocated the reduction of both extreme poverty and hunger by half or more by the
year 2016 of those whose income is below US Dollar one(1) per person/day(national Bank
of Ethiopia,2007/8).

The millennium development goals (MDGS) are seen by many as being overly modest.
However, it needs to be mentioned in passing that this assessment omits or glosses over
some of the greatest challenges to lowering the poverty rate.

As Ethiopia is one of the poor countries, they adopt different policies in order to overcome
the economic problem people’s face at a particular and countries as a general. One of the
strategies Ethiopia used to decrease poverty is expanding microfinance institutions over
place then they establish different policy to facilitate the strategy of expanding
microfinance institutions all over the country. Rough instructive, the forbe magazine study
pursued the study from the point of view of the lender. That is, the study is based on once
total rather than on arigorus empirical assessment of the repayment rates and hardly
focuses on whether or not micro credit programs have improved the levies of the
marginalized participants or beneficiaries. The main aim of present t study is therefore to
review the existing literature which has burgeoned over the past decades and to
investigate the impact of micro credit programs on the participants. Specifically, the study
is organized as follows the first section reviews the methodological issues used by credit
ventures to measure target poverty. It is followed by an account of the marginalized
participants of the micro credit programs that are involved in environmentally sensitive
business ventures.
Accordingly, micro enterprises sector in Ethiopia is defined based in quantitative criteria in
terms of both paid up capital and number of workers. MOTI (1997) has adopted the
following definition of MSE in its policy oriented research.

- Micro-enterprise are those business enterprise found in all sectors of the Ethiopia
economy with paid- up capital of hot exceed birr 20000 and with less than 10 employees,
but in excluding high technical consultancy firms and other technical establishments.

- Small enterprises are business enterprises found in all sectors of the Ethiopian economy
with paid up capital of more 500,000 and with less than 50 employees but including high
technical consultancy firms and other high technical establishment. Even though there is no
universal definition of micro and small enterprises (MSES) there is agreement as to their
general characteristics in developing countries. Over all MSE are characterized by low
levels of technology. Limited access to credit, lack of managerial capacity and lack of
linkages with the modern economy And also micro enterprises are defined as employing up
to 50 workers (ILD,1999).

2.3 Role of microfinance and small enterprises in economy

Micro and small and small enterprises are justified for the following recourses (Rapodaki
and chami 2002).

1 They offer potential for resources mobilization growth in developing countries will
be constrained by shortage of capital industrialization.
2 The centralization argument small scale enterprise will be desirable because they
can be located in rural and small town or village areas. 0ffen large and medium
industries are concentrated in little urban migration. This flow of people from rural
area to urban areas could create social problem to the urban centers on the one
hand and draw productive labors focus from the rural areas on the other hands.
3 They are sources of income and employment for many people.
4 They are serving as agent of ruler transformation; they constitute centers
innovations as well as economic and social changed.
5 They are flexible and adapt to market changes quickly.
 6 They are seed for development entrepreneurial and offer excellent opportunities for
enterprises and managerial talents to develop and mature the critical shortage of
which will be often stressed as a major handicap to economic development of most
developing country.
7 They add to verify of consumer goods. They produce relatively chapter foods and
services locally using labor intensive methods. These satisfy the needs of the people
particularly the poor people that are why contributing to variety of consumer goods.

2.4 prudential regulations as a tool to implement an MFIS effective government in

Ethiopia

Based on the development of the microfinance industry at national and global level,
Ethiopia took the direction of building sustainable deposit taking MFIS to deliver financial
services to those who has be no access to formal banks. This required establishing
sustainable financial institutions operating on sound commercial principles that can attract
private capital investment and private saving in order to increase permanent access to
financial services (Ibid).

Microfinance will be the part of the financial sector. The need for providential regulation
and supervision has also brought the activities of the MZIS under Ethiopians monetary and
financial policy frame work.

2.5 Effective government of MFIS IN Ethiopia

Prudential regulation is very critical in ensuring in the sustainability of MFIS. It also plays a
key role in ensuring governance’s .According to the achieve and gonzo 3-vega (1993)
prudential regulation of MFIS refers to government regulation that should serve three basic
goals.

1. Microeconomics in nature is to insure the Slovenes and financial soundness of all

intermediates in order to protect the stability of the countries payments system.
2. To provide consumer protection against un due risks of losses that may raises from
failures, frond or performance of institutions and markets and the proper working
of competitive a market forces.(chave,1993).
3. To promote the defiant performance of institution and markets and the proper
working of competitive a market forces.(chave,1993).

2.6 minimum capitals required of new MFI entrants

According to, MFI/01/96in starts that MFI applying for a license shall have a minimum
paid up capital of 200000 birr. This is deliberated action of the government to improve
entry and growth microfinance industry. on the other hand , as of dismember 31,2007
the two largest MFIS DESCI and ACSI, have mobilized 9,742,247 birr and 5,652,200 birr
of savings, respectively.

2.7 micro finance targets

The regulation frame works has been quite related on the maximum of loan size that
MFIS can lend to an individual borrower, with a view of to accommodate clients who
can manage a loan specifically. The latest regulation state that MFIS can lend to an
individual borrower a loan size at least of 0.5% their capital, with a precondition that
the total sum of money to this kind of lending not exceed some 20% of the preceding
years disbursements, This is helped greatly MFSI to accommodate the demands of
successful clients who needs high loan sizes.

Generally microfinance targets women, A basic premise is that economic participation

is foundation for other dement ions of empowerment the recent micro credit summit
report indicates that women constitute over 65% client in the industry globally. As
employment and traditional livelihood strategies for men disappear poor women in
increasing numbers have had to make their ways into then formal sector, primarily in
low paying and often manual works, vending, petty trading, agricultural labor,
collecting garbage, cleaning toilets and factory employment .In fact it is now believed
that about 40% of the house holds in Ethiopia are headed clearly MFIS vision is poverty
all aviation and this can never be attained with out reaching women who suffer all kinds
of poverty.(Woodley Amha,2004).
 CHAPTER THREE
RESEARCH METHODOLOGY
3.1 RESEARCH DESIGN
The study was to assess the role of microfinance in strengthening small micro enterprise.
Thus, the descriptive survey enables the researcher to picture out the current role of
microfinance institutions.
3.2. The Source of Data
3.2.1 Primary Data
The primary sources of data , would be collected from the microfinance institution head and small
micro enterprises ,like chair person as well as the ordinary worker of small micro enterprises
through open and close end.

3.3.2 Secondary Data

The source of secondary data would be obtained from the policy and strategies of the microfinance
system of Ethiopia and also different written book on microfinance institution.

1.1 Method of Data collection

The instruments for primary data collection of this study are both close and open ended
questionnaire

. This help to the researcher together relevant data from heads of microfinance and chair person.
For this the researcher where prepared different questionnaires for both respondent
independently.
Sampling Technique

For MSEs; from the total seven (7) (small microenterprises in Dessie Town, one (1) small
enterprises will be selected as a sample of the study. In the selection of this sample, the researcher
will use

Convenience sampling technique because, convenience sampling techniques is a non-probability

sampling techniques where subject of the population to represent the whole population.

For employee; from The total OF 4001 SMALL MICRO ENTERPRISES IN Dessie town
40(fuorty) of the enterprise has been selected as a sample, using judgmental sampling techniques
because of judgmental sampling techniques is a type of non-random sample that is selected based
on the opinion of an expert.

METHOD OF DATA ANALYSIS

After collection data, data read for investigation, the questionnaires where for completeness and
confidentiality. The collected data would be arranged carefully and structured in tables and
analyzed using percentages. Finally the organized data would be interpreted. Analyze and based on
the finding of the study and the possible solution was suggested.
 CHAPTER FOUR

Data Analysis and Presentation

In this chapter data collected from both primary and secondary sources have been
edited ,coded, processed and finally the results presented using descriptive analysis
techniques that applies tables and percentages in an attempt to identifying basic finding.
Characteristics of respondent
The following description of target population gives some basic information about the sample
population involved in the study. The main categories of the respondents involved in this research
were microfinance institutions head and small micro enterprises chai person. Because the
researcher have strong believed that these respondents are the direct stake holders of the
development financial system, as a result the data they provide are quite relevant for the finding of
the study.
Table 4. 1. Characteristics of respondents

No variable Characteristic MFIS head SME CHAIR PERSON

categories No % No %
1 SEX MALE 3 100 23 57.5
FEMALE 0 0 17
NO Response - - - -
2 Degree 10 75 6 24
Diploma 21 25 16 60
Others 21 45
3 Worker experience <5 year 2 65 14 35
6-10 year 1 25 26 65

11-15 year - - - -
>20 - - - -
No response

As displayed in the table 4. 1 . Above, most of the sampled population 26(62%) are male, females

Constitute only 16(38%) of the sampled population. This indicates that female's participation in
the MFI and SMES are very low Thus, it can be concluded that the area under the study is
dominated by male academic staffs which shows gender bias. With regard to the qualification of the
respondents, high percentage of the sample population (45%) are below diploma and it is only few
respondent (16%)who have degree. This indicates that the small micro enterprises are
concentrated with the majority of respondents who have below diploma qualifications. As far as
their work experience is concerned, the majority of respondents (65%) have served between6and
10 years. The percentages of the respondents in micro finance institutions who have served bellow
5 year where 50%. This implies that the majority of the respondents have relatively good work
experience contributing to the valid and reliability of the data obtained from them. As t also indicate
that their work experience was positively contribute to the proper realization of financial activities.

4.2.2. Response from the SE chair persons.

Table 4.2 response related to the establishment of SME

No Name of SMES YEAR OF SOURSE OF START UP OF

ESTABLISHEMENT LOAN LOAN
1 Andinet 1999 Kebiddir 1999
2 United 1999 >> 1999
3 Tiger 2000 >> 2000
4 Selma no 1 2000 >> 2000
5 Enegetnet 2000 >> 2000
6 Ene Melaku 2000 >> 2000
Tadese
7 Ene Tariku 1998 >> 1998
Mohammed
8 Mohammed 2002 >> 2002
Sultan
9 Awuraamba 2002 >> 2002
10 Finotehiwot 2000 >> 2001
11 Eta Fanta 2001 >> 2001
12 Tateqilesira 2001 >> 2001
13 Melaku 2001 >> 2001
14 Anleyayim 2003 >> 2003
15 Kokob 2000 >> 2000
16 Wondimenaehit 1998 >> 1998
17 Edget no 1 1998 >> 1998
18 Bruhtesfa 1998 >> 1998
19 Buanbawuha 1999 >> 1999
20 Teramed 1999 >> 1999
21 Zelalem 1999 >> 1999
22 Anbesetg 1999 >> 1999
23 Tesfablocket 1999 >> 1999
 24 Yeglegate 2003 Karas 2003
25 Meazadingel 2002 >> 2002
26 Zertihunarega 2003 >> 2oo3
27 Eframbirhane 2000 >> 2000
28 Asegidhussen 2002 >> 2002
29 Jerjeromahber 2001 >> 2001
30 Meseyamengesh 2003 >> 2003
31 Eneabdela 2004 meyad 2004
32 Zuriyashasfaw 2005 >> 2005
33 Enemeseretmoges 2003 Karas 2003
34 Asefagebeyaw 2005 >> 2005
35 Fate Yusuf 2005 >> 2005
36 Tiruworkabegas 2005 >> 2005
37 Etaferahuali 2003 >> 2003
38 Abebechhailu 2003 >> 2003
39 Said Mohammed 2003 >> 2003
40 Emmaus 2002 >> 2002

As indicated by the table4.2.1 those enterprises establish in earlier time was not get loan
provision as so as they are established ,This mean that the role of micro finance played in
providing loan to SE as the time they established is very low. But, As the time goes this
problem is solved and the enterprise would get money from micro finance easily. Those
enterprises who established in recent year get enough money from their lenders.

Table 4.2.2 Responses related to the money provided to SMES

Item SMES chair persons

1. Do you get enough money or loan from MFI? NO %
YES 40% 85%
NO 20% 15%
As it revealed in table 4.2.2 majority of the respondents (85%) indicated that they have got enough
money while (15%) of the respondents confirmed that they have not supported with enough
money from the MFIS. On the other hands, with regard to an open ended question most of the
respondents replied that they are getting loan according to their capacity and they are performing.

Hence, it can conclude that SMES in Dessie administration town are provided with enough money
to run activities properly.
T able 4.2.3. Supervision Given by the MF

ITEMS SMES chair persons

No. %
Do you get enough money or loan from MFI? Are you supervised
by MFI?
YES 21 78.5%
NO 9 17.5%

As of activity Pointed out in table 4.2.3 above 78.5% of respondent replied that they are supervised
by the MFI coordinators while, 17.5% of the respondent responded that as they are not supervised,
on the other hand, the response for an open ended question indicates the MFI are supervising the
SME to help term on some extent

Table 4.2.4 Effective use of money

Items SMES chair persons

Are you effective performing by the money you borrowed No %
Yes 38 95%

No 2 5%

As indicated in table 4.2.4. Above 95% of respondents replied that they are effective performing by
the money is borrowed from MFI while 5% of them did not use effectively by various reasons. As
the response on open ended questionnaires majority of SME have bought different machine,
vehicles and other fixed assets. This can be generalized in that SME are effectively performing with
money borrowed from micro finance institutions.
Table 4.2.5. Training given by the MFI

Items SMES chair persons

No %
Did you get sufficient training from MFI?
YES 20 25%
NO 30 75%
As indicated in the table 4, 2,5. Above 75% of respondents replied that they have got sufficient
training from MFI while 25% of the respondents replied for an open questions that they get
training from MFI only at beginning of their activities or only during they are receiving loans This
means that MFI did not provide training for the enterprises found in Dessie administrative town.
 CHAPTER FIVE

5. CONCLUTION AND RECOMMENDATION

This chapter encompasses the conclusions part which is based on the majority finding of the study
and the recommendation part which have been made to provide the necessary solution to problem
of the study.

5.1 CONCLUSION

Microfinance is a business and has a programmers which aim to assist those their income level is
low so, in order to help a society it must be designed and managed properly in a business world.
The main conclusion is therefore microfinance institution need to be managed like any other
business and their role of strengthening small micro enterprises should be identified.

The care many manuals and guideline which have been designed the field, that stress the
importance of good management of financial which must be designed to address clients needs. It is
clear that there are millions of people who could presumably benefit from financial services in the
same way as the numerous clients who are identify.

As a result, based up on the analysis and interpretation made, the following conclusions have been
made.

As it has been already stated, the role of micro finance institutions has a great importance for
strengthening small micro enterprises. As identified in the researcher, microfinance institutions
have a great role in providing loan, technical supports such as a kill training on how to use their
money effectively, and how to run their business.

In small and micro enterprises large number of person is hired, it increases the employment rate
and reduces poverty, this make a chance to the growth of DESSIE Administrative town. ,

5.2 RECOMMENDATION

In order to avoid the impact of MFIS on small micro enterprises successfully and generate more of
the micro finance institutions, the following points are to be recommended.

. Since both micro finance institution and small micro enterprises play a great role in the
development of Dessie Administrative town, especially in reducing un employment and poverty, in
a giving technical supporting to society they must provide great attention for them, so as to
overcome the complicated societal problems.

.micro finance institution need to provide continues and sufficient skill development training for
SMEs member so as to enrich them with skill, knowledge and attitude that help them to perform
their overall activities of their business.

-micro finance institutions need to supervise SMEs activities after they provide loan, so that the
development of SMES can be enhanced.

- small and micro enterprises should work in collaboration with MFIS specially on effectively
performed with borrowed money at their hand, As a result they can enhance their income
generation ability as well as the realization of self help and self employment opportunities for
themselves and others.

- The MFIS should continue its restless efforts for the development and success of SMES. As a result,
the living standard of SMES member and other communities will be changed in particularly and the
objective of poverty reduction can be realized at large.

- Microfinance institution must give incentive or reward o0ther material or birr to successful
enterprises, this may attract new customers. So, MFIS should increases.

- MFIS must increase loan size and giving more awareness for the new comers in order to
succeeded in the business world.
REFERENCE

Esayas Bekelo (2009) - A lesson of success in micro finance in Africa; the experience of ACSI in
Ethiopia

Kereta B (2007) - outreach and financial performance analysis of micro finance institution in
Ethiopia, African Economic conference, Addis Ababa.

Lidgerwood; (1999) - sustainable Banking with the poor microfinance Hand book, in institutional
and financial perspective the World Bank, Washington, DC.

Ministry of trade and industry (MOTi) (1997) - micro and small enterprises development strategy
Addis Ababa Ethiopia.

National Bank of Ethiopia; www .nbe. gov.et/2007/2008 - Annual report, Governs speech.

Oromia National regional state trade industry and transport report (2008) - week Adama,
Ethiopian Oromia national state micro and small enterprises.

Petetk K (2001) - micro level institution and enterprises productivity in sights from Kenya small
business sector Nairobi.

Robinson M (2001) - The microfinance revolutionary; sustainable Banking for the poor,
Washington

Tegegne G and Mulat D (2005) - micro enterprises in small town Amhara region, Ethiopia nature
and performance.

Wolday A (2004) - micro and small enterprises development in Ethiopia survey report.
 APPENDIX

WOLLO UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ACCOOUNTING AND FINANCE

Research Questionnaires

General Direction to Respondents

This questionnaire is designed to get information on the role of microfinance in strengthening
small micro Enterprises (in Dessie Town)

The main purpose is to obtain your options, thoughts and experiences regarding the role of
micro finance in strengthening small micro enterprises. The data will be used to develop the
research project aimed at fulfilling requirement of BA degree in Accounting and Finance Wollo
university college of Business and Economics and to ascertain the role of micro finance.

Please feel free to respond to all the items. The information you provide will be kept
confidential and you rill not be responsible for the finding of the study. Writing your name is
not needed.

I thank you in advance for your cooperation and completion of this form.

Part 1 , General questionnaires that is common for both micro finance and small micro
enterprises personnel

Instruction 1: please put a think ( ) mark in the boxed corresponding your opinion.

1. Sex male female

2. Qualification diploma Degree
3. Work experience <5 year 6-10year
11-15 year >16

Part 2 Questions to be conducted only with micro finance coordinators.

Instruction 1 . the following items are related with role of finance and other factors. Please
provide your answer for questions based on your serves and experiences.

1, when your organization was established as micro finance in the Dessie

Town?...............................................................................................................................................
.
2, do you provide loan service?....................................................................................................

3, when your organizations start loan provision the town?.............................................................

4, for whom do you provide loan?………………………………………………………………………………………………

5, Do you organization has schedule for loan provision?.................................................................

6, how much Ethiopian birr you provide for SME at once?..............................................................

7, how do you supervise the provided money after provision?.......................................................

8, List out the technical support that you provide for SME
organization?....................................................................................................................................
.

9, Are they all effective in using the

money?.............................................................................................................................................
..

10, do you provide training for SME?.............................................................................................

11, If yes how money times you provide the training in a

year?....................................................................

Thank you for genuine cooperation.

Part 3 : questionnaires to be filled only by the small micro enterprises chairperson.

Instruction3: provide your own answers for the following questions based on your experience as SME
personal.
1) When your organization
established?.....................................................................................................
2) From where did you get money?....................................................................................................
3) Are you getting enough money? Yes no
4) If your answer for question threes (3) is yes how much money did you get?
5) When your organizations start to borrow
money?...................................................................................
6) From whom you borrow money?.............................................................................................
7) Are you supervised by the lender? Yes no
8) If your answer for number seven (7) is yes, how many times in a
week?....................................................
9) Are you effective performing by the money you borrowed? Yes no
10) If your answer for number nine (9) is yes, write the effect that they provide for your
company…………………………………………………………………………………………………………………………..
Thank you for your genuine cooperation!