An Assessment of the impact of microfinance institutions on growth and development of small and medium enterprises: a case study of Harare town · Electronic Theses and Dissertations

Author

Chitsotso, Beullah

Title

An Assessment of the impact of microfinance institutions on growth and development of small and medium enterprises: a case study of Harare town

Abstract

The primary goal of this study was to evaluate how microfinance organisations affected the expansion and advancement of small and medium-sized businesses (SMEs) in Harare. The objectives were to assess how microfinance organisations help SMEs by offering business money, accumulating stocks and enhancing management abilities. The study demonstrates the important role microfinance organisations play in facilitating SMEs’ access to financing, as they may not be able to obtain financing from major banks due to inadequate collateral security. The majority of SMEs are able to obtain funding from microfinance institutions, according to the research findings, which were gathered mostly through questionnaires and a study carried out in ten microfinance institutions. Tables illustrating the data analysis from the research findings demonstrated the beneficial effects of microfinance institutions on SMEs. The majority are raising money to grow their company’s operations and capital base, which aids in raising the quality and range of their products, market share and their cash flow levels. However, this makes it simple for them to enter other lucrative industries, achieving their primary goal of reducing poverty and creating jobs. Even though these financial institutions deal with SMEs’ ability to obtain financing, they may encounter a number of difficulties, including the inability to satisfy the needs of these businesses, high interest rates, short repayment terms for those who can obtain credit, and high default rates on loans. Microfinance institutions should continue providing non-financial services such as managerial training business development strategies to increase capacity and overall performance. In order to ensure that funds are used effectively, the study suggests that MFIs implement the Credit Reporting Act and provide financial management education to SMEs prior to granting them loans therefore the research should be carried out covering a wider range involving 2 or more cities.

Date

June 2025

Publisher

BUSE

Keywords

Microfinance Institutions

Small and Medium Enterprises

Supervisor

Nil