Abstract: A good number of microfinance schemes target micro enterprises in agriculture, which vary considerably in their use of external finances. This study analyses the determinants of use of external finances by micro enterprises and their implications for the success of microfinance schemes. Data obtained from 244 micro enterprises were analyzed using simple statistical tools and the multiple regression analysis. The results show that micro enterprises whose operators have low knowledge, low managerial skills and low net worth use more external finances, whereas operators with better net worth, knowledge and managerial know how use little or no external finances. For success of micro-finance schemes, operators of micro-enterprises that have better managerial skills and net worth in investment should be adequately informed and encouraged to become members of finance groups that enlist in the micro finance schemes. This would be invaluable in strengthening the finance groups to behave predictably in their relationship with the micro finance schemes.