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Master's Thesis from the year 2017 in the subject Business economics - Business Management, Corporate Governance, grade: Very Good, , course: Project Planning and Management, language: English, abstract: Micro and small industries have a significant and vital role in the economies of developed countries. Especially in developing countries small scale industries considered as a backbone of their economies. In regard of this, the study intends to examine the challenges and prospects of Micro and Small enterprises in construction sector, specifically on the construction material producer enterprises in Yeka and Bole sub-cities. To satisfy the objectives of this study, descriptive and inferential analyses were used. The information was collected from the sample of 150 MSEs with face to face interviews. The sampled MSEs were selected by simple random sampling technique. Besides that, the study draws out with nine key challenges which seem to influence the profitability of MSEs in both sub-cities. The results point to that, there is a strong relationship between the independent and dependent variable. Furthermore, the selected explanatory variables may significantly explain the variations of the explained variance at 5% and 10% level of significance. Based on the results, financial, managerial, raw material, work premises and technologies are the main challenges of MSEs, those to be profitable and successful. Therefore, recommendations are forwarded to government bodies, micro and small construction material producer enterprise and to other researchers.