Abstract:
This Thesis aims to explore the influence of microfinance institutions in fostering rural business
performance with special emphasis on the on-farm, off-farm and non-farm sectors in Tembaro
woreda. For the sake of achieving the objectives of this study, questionnaires were analyzed
using statistical analysis such as descriptive and inferential analyses. The information was
gleaned through a questionnaire from a sample of 246 rural entrepreneurs and face-to-face
interviews were conducted with 5 Tembaro woreda sport and opportunity creation office head
and microfinance institution manager. The respondents were selected using a stratified sampling
technique. Besides, the interview questions were analyzed using descriptive. The empirical study
was elicited four major constraints which seem to foster rural business performance in Tembaro
woreda: these constraints were access to finance, business training, access to technology, and
access to the market. The findings further indicate that there exists linear and positive significant
ranging from substantial to the strong relationship was found between independent variables and
dependent variables. Moreover, the selected independent variables might significantly explain
the variations in the dependent variables at a 5% level of significance. From the regression
analysis the constraints of business training, access to finance, and access to technology were
positive influences business performance. Based on findings, recommendations to Microfinance
institution manager, to operators of rural enterprises, and suggestions for other researchers are
forwarded
