This research aims to investigate Factors Affecting Transitional Development of Small Scale to Medium Scale Enterprise in Sebeta Town: Challenges, Opportunities and Prospects Hence, the situation whether the objective of these MSEs is met merits special consideration of transitional development of small scale Enterprises. This study tries to answer three important questions: What are the major internal and external challenges, opportunities and prospects in transitional development of Small

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... e to medium scale enterprise? What are the key strategies used to develop MSEs and to solve the challenges faced by the SMEs transitional development of Small Scale to medium scale enterprise? Do all MSEs actors in government sectors play their role according the MSEs strategy? With the above objectives in mind, data was gathered through Questionnaire, Interview and Review of both published and unpublished materials. The information gleaned through questionnaire from a sample of 358 operators and face-to- face interviews were conducted with 5 officials of MSEs actors in oromia region and sebata Town. Eventually, using a mix of qualitative and quantitative tools, the study found out major challenges which seem to affect transitional development of small scale Enterprises in Sabete Town which include: implementation problems related to government bodies at each level, inadequate finance. For the above challenges the Oromia regional government bodies should provide affordable alternative sources of finance and should be strength the government institutions at different levels, to play a major role in positively influencing the development of MSEs. Hence, there is a need for strengthening the MSEs growth, based on findings, recommendations to government bodies, to operators of MSEs and suggestions for other researchers are forwarded