Sources of Finance for SMEs in Zimbabwe: A case study of SMEs in Bindura

Author

Nhemwa, Takundanashe

Title

Sources of Finance for SMEs in Zimbabwe: A case study of SMEs in Bindura

Abstract

This research aimed to identify the sources of finance available to Small and Medium Enterprises (SMEs) in Bindura, evaluate their effectiveness, and propose recommendations for improving access to finance for SMEs in the area. The objectives of the study were to identify the current sources of finance used by SMEs in Bindura, to evaluate the effectiveness of the current sources of finance in meeting the financial needs of SMEs in Bindura and to propose recommendations for improving the access to finance for SMEs in Bindura. A mixed methods approach was applied utilizing questionnaires and interviews for quantitative and qualitative data gathering respectively. As key findings, a majority of SMEs had friends and family as a source of finance which they found to be moderately effective in meeting their financial needs. A significant proportion of SMEs obtained loans but reported difficulties in loan repayment, attributing these challenges to factors such as high interest rates, limited collateral, and complex application processes. The findings of the study align with previous research conducted in Zimbabwe and other African countries, emphasizing the importance of both formal and informal financing sources for SMEs. The study also confirms the impact of the accessibility and effectiveness of formal financing options on SME growth and development, the hindrance caused by the lack of financial literacy, and the significance of collaborative efforts among stakeholders in improving access to finance. The study recommended the development of more inclusive loan products tailored for SMEs to address their specific financing needs and constraints.

Date

June 2023

Publisher

BUSE

Keywords

SMEs

Finance

Supervisor

N/A