SMEs Funding & The Implications of An Unstable Economy Evidence from Zimbabwean SMEs

Abstract

The purpose of this dissertation was to research into the title; “SMEs Funding & the implications of an unstable economy. Evidence from Zimbabwean SMEs” The main objective of the study was to seek to understand how an unstable economy affects the accessing of funding by Small and Medium Enterprises (SMEs). The research made use of quantitative and qualitative research methodology, making use of questionnaires and interview questions. A sample of 120 participants was selected from a population of 210. Data was analysed and presented using graphs and charts. The main findings were that finance institutions are the major sources of finance for SMEs in Zimbabwe, while very few SMEs are funded from owners’ investments. The research established that SMEs face problems related to insufficient collateral and poor documentation when applying for funding. The research also established that the structure of the economy and the government policies affect funding of SMEs. Finally the research established that other funding available options to SMEs are venture capital, issue of equity shares to fund their businesses. The study concluded that the structure of the economy through policies promulgated by the government impacts funding of SMEs. The study recommended that, the government through the Ministry of Small to Medium Enterprises should craft a policy tailor-made for SMEs to access funding in financial institutions and through institutional investors such as the national pension’s entity NSSA. The research suggested that further studies can be conducted in order to improve policy inconsistencies related to SMEs in Zimbabwe.