The Role of small and medium enterprise (SMEs) on economic development in Zimbabwe

Author

Tamwa, Kelly R.

Title

The Role of small and medium enterprise (SMEs) on economic development in Zimbabwe

Abstract

The main objective of this study was to investigate on the role of SMEs on economic development in Zimbabwe, hence to achieve that the model used time series data obtained from the World Bank World Development Indicators from 1990-2022. Even if some adjustment where made on the model employed for this study, the model was adapted from a research by . Real Gross Domestic Product (RGDP) was used as the dependent variable in this model and the main independent variable used was Credit to SME (CSME) wich was used as the proxy to measure capital per SME worker. CSME was used to study the role of SMEs on economic development and the Domestic Credit To Privater sector (% GDP) was the measure of Credit to SME. Gross Capital Formation (GCF), Capacity utilization (CPU), Electricity Distribution (ED) and unemployment (UNER) were the other explanatory variables employed on this study. The findings after using an Auto-regressive distributed lag (ARDL) model for estimating the regression, suggested that a 1% increase on credit to SME is associated with 0.047853 increase in economic development in the long run and 0.040209 increase crease in economic development in the long run. More so Gross Capital Formation has an insignificant negative relationship with economic development in Zimbabwe both in the Short run and in the long run, Capacity utilization has a positive significant impact on economic development of Zimbabwe in the long and in the short run. Electricity distribution has negative relationship with economic development both on the short run and in the long run in the economic development of Zimbabwe mainly due to poor quality and reliability of electricity in the country. Unemployment portrays a positive relationship to economic growth both on the short run and in the long run.

Date

June 2025

Publisher

BUSE

Keywords

Small And Medium

Economic

SMEs

Supervisor

Mr S Bindu