Abstract

Micro and small enterprises (MSEs) aid the growth of national economy to assume increasing importance especially in job establishment, poverty reduction and reducing income variation. Numerous organizations have treaded in to finance their operations, resolve this problem and uphold their commercial success. This study was therefore conducted to investigate the effect of financial factors on success of MSEs business firms in three selected zones. Success of MSEs is measured in expressions of their working-capital, number of workforces, revenue, expansion plus diversification of the work. It was possible to identify finance as the major problem of MSEs firms. Respondents were selected using stratified sampling method. This study focused on MSEs sectors in three selected zones of Afar region. From the study, the most problems identified are credit availability and inappropriate delivery of the finance. MSEs are facing difficulties such as loan payment duration, interest rate, loan amount, as well as other accessibility of monetarist instruments. Thus, most designated independent variables have meaningfully explained the differences in the dependent variable at 10% degree of significance. MFIs should identify appropriate businesses for region before credit.

Key words: Finance, interest-rate, loan, MSEs, success.