“Financing challenges faced by retail SMEs in multi- currency environment a case of Gulf Complex in Harare, Zimbabwe”

Abstract

This study was carried out to investigate the financing challenges faced by SMEs in Zimbabwe using a case study of retailers operating at Gulf Complex, Harare. Literature on the funding challenges faced by SMEs was reviewed and a conceptual framework was developed for the study. The conceptual framework developed hadindependent constructs namely; perceived business risk, lack of collateral, lack of information, poor business performance and entrepreneurial orientation as the major challenges faced by SMEs in their efforts to seek funding.Access to funding was the dependent variable. Quantitative research methods were used to collect and analyse data. The questionnaire was carefully designed to ensure that it captureddata that answered the research questions. A total of70 SMEs were targetedfor study. Questionnaires were administered to the targeted70 retailers at Gulf Shopping Complex. Out of the 70 questionnaires 64 were completed in full and returned to the researcher, thus the study response was 91.4%. SPSS and Microsoft Excel were used to analyse collected data. Descriptive statistics, in the forms of averages, variances, standard deviations and frequency distributions,were used to answer the research questions. Correlation and regression analysis were used to establish the relationship between the independent variables and the depended variable. The study revealed that; high perceived business risk, lack of collateral and lack of information are the major challenges that hinder SMEs from accessing funding, while poor business performance and entrepreneurial orientation were found to be not very significantfactors. Based on the study conclusion the study hypotheses that; there is a negative relationship between perceived business risk and access to finance,positive relationship between availability of collateral and access to funding and positive relationship between availability of information and access to funding were confirmed. The hypotheses that there is a positive relationship between business performance and access to funding and positive relationship between entrepreneurial orientation and access to funding for SMEs’ were refuted. The main recommendations drawn from the study were that; SMEs make use of joint ventures and matching maturities of accounts payables and accounts receivables as the main source of funding. It was also recommended that SMEs make use of financial statements, proper accounting records and business plans as a strategy of sourcing external funding. Also, market research was recommended as an important strategy for SMEs to stay up to date with information about availability of business funding in the market.