The impact of lines of credit on the survival and growth of oil companies in Zimbabwe

Abstract

The purpose of this study was to examine whether the unavailability of lines of credit has resulted in liquidity constraints within the oil industry which has affected their survival and growth. Studies done in other countries have suggested that liquidity constraint do affect the growth and survival of firms. However these studies have been done in other parts of the world, so the researcher’s aim was to fill in this research gap by analyzing Zimbabwean oil companies.Empirical evidence for this study was gathered through direct face to face interviews of senor personnel of the chosen sample firms. Questioners with open ended questions were also used to get an in-depth knowledge of the area under study. The phenomenological approach was adopted in this study and the data gathered was analyzed using data displays and content analytic summary tables.

The study concluded that liquidity constraints are an important aspect in determining the growth and survival of oil companies in Zimbabwe. The study, however also revealed that other than liquidity constraints, the entrepreneurship skills of companies play an important role in ensuring growth and survival of firms. Other companies operating within the same liquidity constrained environment experienced phenomenal growth whilst others folded.