Access to Finance and its Challenges for Private Sector in Ethiopia

Abstract

The focus of this paper have been assessed and to evaluate access to finance that these private enterprises in Ethiopia are having and the factors that hinder them not to properly raise fund. To meet this end of this study, researcher identified the population to conduct this research were the private (small, medium and large sized) enterprises in Addis Ababa. Given its difficulty in covering all the population, the researcher selected a subset of the population. A descriptive survey method and purposive sampling method were employed to conduct this study. As such, the researcher identified judgmental sampling technique be more appropriate and preferable for this research work and data were collected document review and closed questionnaires. A descriptive methods were used to analyze the questionnaires which frequencies and percentiles with the help of tables and figures were used for data presentation and analysis. The data collected through questionnaires were from a sample of 150 private enterprises. The main findings of the research were despite the important role they play and the positive contribution they make to the overall economy, private enterprises especially SMEs are disadvantaged, and they are fondly referred to as the missing middle. Lack of access to financing on reasonable terms and conditions is probably the most serious constraint facing SMEs. In order to effectively address this challenge and avail the financial needs of the private enterprises; Promoting policies measures aimed at softening collateral requirements and innovation in financial products in the short run; And the need for the development of dew financial markets and instruments in the long run were the possible actions recommended to be taken by the government bodies as well as relevant stakeholders as per this study.