Effectiveness of the National Financial Inclusion Strategy (2016-2020) in enhancing access to financial services by Micro, Small and Medium Enterprises operating in Harare, Zimbabwe

Abstract

Although several policy frameworks and strategies have been put in place, access to finance and financial services by MSMEs remains low. The role of Small and Medium Enterprises (SMEs) in the Zimbabwean economy has been a subject of debate. SMEs account for at least 60% to the country’s Gross Domestic Product (GDP), create jobs, promote innovation and serve as growth engines. Despite these contributions, the sector is faced with many challenges including limited access to finance, markets and technology among others. In 2016, the Government of Zimbabwe launched the National Financial Inclusion Strategy (NFIS) that sought to address challenges faced by SMEs in accessing finance. Against this, the current study investigated the effectiveness of the NFIS by assessing SMEs’ awareness of the strategy, available products and services as well as constraints that SMEs continue to face. Primary data were collected through questionnaires targeting managers and owners of SMEs in Harare from 116 SMEs registered with the Small and Medium Enterprises Association of Zimbabwe (SMEAZ). Distribution of the questionnaires was done online using google forms which allowed emailing of the questionnaires to the targeted respondents. Convenience sampling was also used given the national lock down which restricted access to potential respondents to support the simple random sampling. The data was analysed using both descriptive and inferential statistics. Correlation analysis was the main inferential statistical tool used to analyse the data. The study revealed that, of the three variables, available financial products and services and barriers to finance access had a statistically significant association with financial inclusion of SMEs. The study recommended that all support institutions for SMEs be integrated into one adequately resourced entity, establishment of a fund for entrepreneurs, financial institutions to concentrate on innovative products that meet needs of SMEs, reforms to know you customer (KYC) requirements government consistency in financial policies and capacitation of SMEs through training in financial management