In every economy of the world, Small and Medium Enterprises are the largest investment sector (Culkin & Smith, 2000) and contribute almost 60% output of global economy (Gerstenenfeld & Roberts, 2000). Therefore, due to this strong importance of Small and Medium Enterprises, governments and scholars has been paid attention on different aspects of the sectors in developed nation. However, in developing nation like Africa and particularly in Ethiopia, lack of government and other stakeholders’ attention and support towards small enterprises is major bottlenecks, despite the sector is still major contributor for national output. From academic wing, except a few empirical investigations on challenges and opportunities of Small and Medium Enterprises in Ethiopia; there are no well-organized reviews of literature to date. Hence, this study aims to review literature on opportunities and growing bottlenecks of Small and Medium Enterprises in Ethiopia using library datasets and internet search. Specific research questions are: i) what are the opportunities for Small and medium Enterprises in Ethiopia? ii) What are the challenges for Small and medium Enterprises in Ethiopia? iii) What are the development strategies of Small and Medium Enterprises in Ethiopia? The literature review tries to examine this research questions and call for future researches.

Keywords: Challenges and Opportunities, Development Strategies, SMEs, Ethiopia.