Determinates of Financial Inclusion and its Effect on the Growth of Micro and Small Enterprises in Addis Ababa: Empirical Evidence from Selected Wordas in Lemi kura Subcity Addis Ababa

Abstract

Examining the determinants that influence financial inclusion and how they affect the growth of micro and small enterprise in Addis Ababa was the aim of this study. The following specific objective served as the study's compass: to determine the primary factors that influence financial inclusion and to investigate how financial inclusion affects MSE growth. The study, which focused on the 2651 MSE operators of the four chosen Wordas (03, 04, 08, and 13) in Lemi Kura Sub-city, employed a descriptive mixed research approach. Conveniently, 336 operators were selected from the population. The data was examined for descriptive statistics once the completed surveys were entered into the SPSS statistical program. Eight criteria were used in the study to gauge MSE operators' financial inclusion. The results showed that financial inclusion is positively and significantly affected by outreach, penetration, availability, technology, financial knowledge, trust, and income. The conclusionwas that financial inclusion is significantly affected by both supply-side and demand-side factors. However, the perceived advantages of use had a detrimental and substantial impact on financial inclusion. Additionally, financial inclusion significantly increases the growth of MSEs. According to the survey, MSE operators should participate in training courses designed to fill in any knowledge gaps around financial inclusion. In addition to the training, financial literacy, spending habits, and saving habits should be promoted. Such a program would improve MSE operators' saving practices, improving their wellbeing and increasing productivity at work.