An evaluation of the factors affecting growth of small and medium enterprises (SMEs) in Zimbabwe: A case study of SMEs in Harare (2009 – 2015)

Abstract

The study sought to establish and quantify the key factors affecting the growth of SMEs in Zimbabwe and also investigate the influence of the characteristics of SME operators and SMEs on small business growth. SMEs in Zimbabwe are credited with providing employment opportunities for more than half of the working population and contribute about 60% of the nation’s GDP. A cross sectional survey was carried out on a sample of 272 SMEs drawn from the Province of Harare, Zimbabwe. Data on the socioeconomic factors that were suspected to affect SME growth were collected from the sampled SMEs. Statistical Quantitative data analysis tests were carried out to extract the key factors affecting growth of small businesses. The findings were that access to financial resources, regulatory environment and skills shortages in entrepreneurship and management were the main factors affecting SME growth in Zimbabwe. Pearson’s correlation tests results showed a positive relationship between the identified factors and growth while the regulatory environment had the highest influence on small business growth. Linear regression results also confirmed the identified factors as key predictors of SME growth. Based on the findings, the study also provides some recommendations to entrepreneurs, policy makers and development agencies. Policy makers are urged to develop tailor made training programs to capacitate SME operators with appropriate skills for managing small and medium businesses. The regulatory environment should also be improved by implementing targeted policies to stimulate growth of SMEs. Financial assistance programs must also be made available to SMEs to facilitate and accelerate growth.