EFFECTS OF MICROFINANCE SERVICES ON THE FINANCIAL PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES.

ABSTRACT Microfinance is a most vital source for small businesses, this study was, therefore, designed to investigate the role of micro-finance on small business growth. The researcher set three specific objectives namely: - (1) to examine the role of micro-credit on small business growth. (2) To examine the role of saving facilities on small business growth. (3) To examine the role of training skills development on small business growth. In pursuit of the objectives, survey research was carried out in Amal Bank and suuq-yare in Galkio-mudug -Somalia. The population used for the study was 61 which contained staff of Amal Bank and small business owners in suuq-yare of Galkio--mudug -Somalia. Researchers used a total population sampling technique, the study made use of data from primary sources which were collected using a questionnaire administered to the 61 staff of Amal Bank and small business owners of such-yare. The data analyses were carried out using the Statistical Package for the Social Sciences (SPSS). Findings from the study reveal that the three variables namely micro-credit, saving facilities, and training skills development. [Independent variables] were used to measure small business growth [dependent variable]. The study descriptive correlation and quantitative design were used, and the study used descriptive research design utilizing qualitative data captured using a self-administered questionnaire. This study showed considered individually that micro-finance plays a role in small business growth based on three variables namely (micro-credit, saving facilities, and training skills development), based on objective one showed that the majority of respondents agree that microcredit is important to small business and takes a role in small business growth, objective two (91.3%) of respondents agreed that the saving facilities take a role on small business growth, objective three majority of respondents agreed that training skills development takes a role on small business growth. Finally, this study showed that micro-finance plays a role in small businesses' growth, the researchers recommend banks enhance the micro-finance service to allow improvement of small business growth, Banks always allow small businesses to borrow a specific amount of money and pay back through regular monthly payments with more than one year to decrease the regular payment that will pay to the small business owners also no collateral required, and The small business owners should always make sure that their services and products are reliable to all groups of customers, bank should do a better of teaching small business on good financial management practices, This will assist small business in accounting for borrowed funds, making better financial decisions, and, as a result, growing in the long run and also provide risk management training.