CHALLENGES OF SMALL AND MEDIUM ENTERPRISE LEASE FINANCING IN ETHIOPIA: EVIDENCE FROM DEVELOPMENT BANK OF ETHIOPIA

This paper was focused on challenges of small and medium enterprises lease financing in Development Bank of Ethiopian The purpose of this study was to assess the overall challenges related adequacy of leasing laws affecting the SME leasing business in Development Bank of Ethiopia, the bank’s police and procedures to finance small and medium enterprises reduces costs associated with the program, to evaluate the overall lease financing activities of the Bank, the awareness and demand level of SME for lease financing and assess internal & external factors that affect lease financing service. In this study, mixes approach; both quantitative and qualitative methods were used. The researcher used both primary and secondary data. Purposive sampling was used to select respondents from the population. Data was collected using a questionnaire, main informant interview, and record analysis. The data obtained via a questionnaire from Development Bank of Ethiopia workers was analyzed using summary statistics from the Statistical software for Social Science. The sample included all District offices of the Bank, branches, and selected work units from the Head office. The study identified the complexities of lease financing for small and medium businesses. The study also discovered that tight lease conditions, a shortage of hard currency, insufficient MIS, policy and procedure amendments on a regular basis and a lack of resources were the main internal and external challenges of lease financing in DBE. Leasing parties' lack of understanding, based on the existence of the identified problems, the researcher forwarded its conclusion and advice to parties who are specifically involved with Small and Medium Enterprise lease financing, , so that they can use the research as guidance to provide a solution or pave the way to a solution of the highlighted problems. Since small and medium enterprise lease financing is a government development program initiated through the Development Bank of Ethiopia, the majority of the respondents have strongly recommended that the government should give due attention of for the development of lease finance schemes, furthermore it is recommended that problems from MSE side such as awareness should get improved by designing different strategies by the government, and there must be a clear proclamation which could support the service providers for handling default issues.