Access to finance and its challenge for small businesses

Access to finance gives support business start-ups and growth, and creates the employment and wealth needed by developing countries economy. The government has to make significant progress in improving access to finance for small and growing businesses over time since these businesses will not stay small forever. This can be done through creating conducive environment for credit market development as micro finances are not handling the need of small and growing business as it gets complicated and cost of raising fund from these institutions is high. Therefore actions need to be taken both in short term and long term. In short term strengthening the capacity of micro finance institutions in order to fill the gap and cutting the business cycle(since micro finance institutions are borrowing the fund from banks) in order to reduce the cost of finance. In long term introducing stock and bond market that will take significant share of market from banks which in turn force banks to search for other market to compensate contribution margin lost.....

Autorentext

Fetene Zeru(Msc) in accounting and finance from Addis Ababa University. An instructor in accounting and finance department of Adama University