Global Journal of Interdisciplinary Social Sciences

Abstract

Could It Be a Case of Financial Management Ignorance? AnAnalysis of Financial Strategies Employed by Smes in Zimbabwe

Olipha Mpofu

SMEs have great potential to serve as engines for economic growth particularly in developing countries like Zimbabwe. However, SMEs face a number of constraints, which include financial, technical, raw materials, managerial, legal, regulation and competitive policies that hinder their development. According to many researches carried out about the challenges faced by SMEs, the major obstacle faced by this sector is finance. This paper is meant to analyse the effectiveness of financial strategies applied by the Zimbabwean SMEs as well as to evaluate their performance and contribution towards economic developments. Research has been carried out through administering questionnaires to the SMEs owners and managers and conducting interviews with the interested stakeholders like SEDCO, Micro King and Economic executives of Reserve Bank of Zimbabwe to gather information on the financing and investment issues of the SMEs. The study revealed that most SMEs in Zimbabwe have very limited sources of finance, inadequate access to loans, poor working capital management techniques and ineffective financial risk management policies. Recommendations had been given in this study on how to manipulate these variables in order to come up with the financial strategies that would boost the growth of this sector and the Zimbabwean economy as a whole.