obstacles faced by the SMEs

SMEs have been played a critical role in the economy of Zimbabwe, however we must not underestimate the fact that do have challenges that still hold them back in improving the economy of Zimbabwe.

Some of the challeges are that SMEs face lack of access to capital from financial institutions, lack of collateral which bankers insist on having if they are to give loans to SMEs,absence of business track record due to the fact that most SMEs are informal businesses which sometimes do not even bank their sales revenues, perceived lack of business management skills and lack of know-how on how to raise capital from banks.

Clive Mphambela in his paper Burden of Compliance in SME , Growth said although formalisation might contribute to the national economy, the problem was that even with the most formal businesses, very few of them followed all rules governing formal enterprise behaviour, adding on the extreme scale of informality some businesses will also follow none of the rules set for formal businesse.

According to Sunday Day other issues hampering the SMEs growth were said to be high fees, especially in the mining sector which demanded huge amounts for registration purposes, as well as high costs encountered in clearing goods for import and export. 

He is also quoted in the Southern Eye paper saying, the vast majority of these MSMEs are operating as unregistered businesses. There are, however, significant gains to be made by partially or fully formalising one’s operations for both the economy at large and the businesses themselves.

Unregistered businesses forced to take their business to the streets due to high rates.