Determinants and challenges of financial inclusion among SMEs in Zimbabwe

Author

Mandere, Ndaizivei M.

Title

Determinants and challenges of financial inclusion among SMEs in Zimbabwe

Abstract

Zimbabwe has been experiencing historically high levels of unemployment and poverty. In this context, the expansion of small and medium sized enterprises (SMEs) has been viewed as a practical measure to assist Zimbabwe’s ailing economy in addressing the complex macroeconomic challenges. SMEs, on the other hand, receive only 5% of the total loans despite contributing 50% of GDP. This has resulted in a high level of financial exclusion among SMEs owners. According to the empirical evidence 60% of SMEs are financially excluded. The purpose of this study was to examine the determinants and challenges of financial inclusion among SMEs in Zimbabwe. This study explores the determinants that influence financial inclusion as age, gender, education, income, financial literacy and documentation and these are positively relate to financial inclusion. The study further explains the challenges the SMEs faces to access financial services and products. There is a challenge of liquidity whereby there is high demand of capital and the supply is low which might cause financial exclusion to SMEs. Another challenges SMEs face is lack of awareness, lack of proper documentation, gender inequality and poverty and lack of faith and confidence. The study goes to explain the strategies to the challenges being faced and these included financial literacy, financial innovation and agent based banking. The population of the study targeted the SMEs in Harare with a sample of 36 SMEs. Questionnaires were used as the primary data source and the secondary data we use textbooks, journals, internet and documentation. The study also used descriptive statistical measures such as mean, mode and standard deviation to analyze the primary data. The results of the findings shows that the all the independent variables are significantly related to financial inclusion of SMEs. Based on the findings, the study recommended that the government implement financial education and policy mandating financial institutions to provide relevant products and services to SMEs as a means of encouraging poverty reduction and economic developments. It also recommends a strong and efficient financial system to provide financial services to SMEs that are affordable and sustainable.

Date

December 2022

Publisher

BUSE

Keywords

Financial inclusion

SMEs

Supervisor

N/A