MICRO, SMALL AND MEDIUM ENTERPRISES ACCESS TO FINANCE CONSTRAINTS IN ETHIOPIA: DEMAND SIDE ANALYSIS

Despite the immense importance of micro, small and medium enterprises (MSMEs) to job creation alleviation abject poverty, significant numbers MSMEs cannot realize their full potential because limited access finance other factors, mostly in developing countries. The study investigates enterprises' constraints Ethiopia from a demand-side perspective. This employed descriptive analysis using survey data collected 814 randomly selected sample enterprises. results show that about 76% were established by initial capital majorly generated own savings, family or friends, Equub, saving credit cooperatives among others. remaining 24% accessed formal financial institutions. From total, 39.4% did not apply for loans due high collateral requirements, complex application procedures, unfavorable interest rates, insufficient loan size, maturity, grace period, lack transparency. also reveal 22%, 46%, 32% are partially constrained, fully non-credit respectively. difference between average demand supplied is estimated be 3241, 11444, 30949 USD each small, medium-sized enterprise, total gap all 31.7 billion USD. findings this suggest establishment public guarantee schemes, cash flow-based lending, psychometric testing scoring automating MFIs' services improve MSMEs' finance.