MICROFINANCE INSTITUTIONS AND RURAL ENTERPRISE: UNDERSTANDING THE ROLE OF MICROFINANCE INSTITUTIONS IN FOSTERING ENTREPRENEURIAL ACTIVITY IN THE CASE OF TEMBARO WOREDA

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