An assessment of the financing strategies employed by SME real estate firms under the liquidity constraints in Zimbabwe

Abstract

The study sought to assess or investigate the financing strategies employed by SME real estate firms operating under the liquidity constraints in Zimbabwe and the effect on their growth and success.

The phenomenal growth and contribution to the economy of SME real estate firms is widely observed in all developing and emerging economies such as Brazil, Russia, India, China, South Africa and even Zimbabwe. These firms have contributed towards the creation of employment, value addition, foreign currency and competition among others.

The study used both quantitative and qualitative methodologies with combined survey and interview methods. Data was collected from a sample of 110 small and medium sized firms in Harare out of a population of 227 firms trading in Zimbabwe.

The study arrived at the following conclusions: SME real estate firms lacked financing strategies; they rely heavily on private equity and leasing finance; they have little access to bank loans; venture finance and public equity. They also lack skills, training, technology and markets. However the SMEs have great growth potential and have the capacity to increase their contribution to GDP.

The study therefore recommended the following: greater use of financing strategies in their operations; increased access to other sources of finance; skills; training and markets; increase capacity building initiatives to enhance entrepreneurial leadership skills; promote business development services; enhance operation effectiveness; strengthening business associations and increase information sharing or dissemination on available SME initiatives.