Impact of COVID-19 pandemic on performance of SMEs in Zimbabwe: Case of SMEs in Harare

Abstract

This study was hinged upon analysing how Micro, Small and Medium Enterprises (MSMEs) are affected in Zimbabwe by COVID-19 and to provide recommendations for mitigating the impact. The research objectives were fourfold; to determine the potential economic and financial impact of COVID-19 on SMEs in Zimbabwe; to determine the impact of COVID-19 on supply chains of SMEs; to establish factors which make SMEs highly vulnerable to the impact of COVID-19, and to suggest models that can be employed to manage the financial impact of COVID-19 on SMEs in Zimbabwe. The research proposed that COVID-19 and government response measures have had a negative impact on SME performance for the majority of SMEs. A pragmatism research philosophy was adopted. A mixed methods (abductive) approach was adopted. An explanatory research design with a mixture of qualitative and quantitative methods was adopted. A survey research strategy was adopted. The population of the study were 200 000 Harare SMEs owners/managers/accountants/supervisors. A sample of 383 was taken using the Krejcie and Morgan (1970) formula, with 360 being for questionnaires and 23 being for interview guide. Quota sampling and random sampling techniques were adopted. The response rate was 83.03%. SPSS was used for quantitative data analysis and Excel was used for presentation. The study concluded that for the majority of SMEs, Covid-19 has resulted in reduction of sales volumes, reduction of profit figures, increase in cost of doing business, shortage of working capital, difficulties in accessing liquidity and financial credit and has resulted in SMEs facing difficulties in meeting fixed and statutory financial obligations like wages, loan repayments and rent. The study also concluded that for the majority of SMEs in Zimbabwe, Covid-19 has resulted in a significant reduction in the demand of SMEs’ non-essential products, significant increase in demand of essential products, significant disruptions in supply of materials and products and significant disruptions in supply of imported materials and products. The study further concluded small size of stocks, non- essentiality of products, high labour intensiveness and being on congested locations make SMEs more vulnerable to the effects of Covid-19. The study recommended that SMEs be flexible enough to be able to switch to the production of Covid-19 related essentials like face masks and sanitizers. Also, the SMEs were recommended to adopt the work-from-home strategy during lockdowns. The government was recommended to assist SMEs financially especially after lockdowns to allow them restock. Future researchers were recommended to use other methodologies like correlation, regression and ANOVA analysis, and to draw sample from other places in Zimbabwe apart from Harare, such as the rural areas