The Impact of Access to Finance on the Growth and Sustainability of SMEs in Ethiopia

Abstract

Small and medium-sized enterprises (SMEs) are central to Ethiopia’s economic growth, employment creation, and industrialization. However, limited access to finance remains a significant barrier to their growth and long-term sustainability. This study investigates the impact of financial constraints on Ethiopian SMEs, analyzing how access to credit, capital, and financial services affects business expansion, operational efficiency, and survival. A mixed-method approach is employed, using survey data from SME owners and secondary data from financial institutions and government reports. Findings reveal that inadequate financing limits SMEs’ ability to invest in technology, expand operations, and manage working capital, resulting in slowed growth and increased risk of closure. The study recommends targeted policy interventions, enhanced financial products for SMEs, and capacity-building programs to strengthen their financial resilience and sustainability.

Key words: Small and medium-sized enterprises (SMEs), Access to Finance, Growth and Sustainability

DOI: 10.7176/RJFA/17-4-01

Publication date: October 30^th 2026