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Research Paper | Economics | Zimbabwe | Volume 3 Issue 9, September 2014 | Popularity: 6.9 / 10

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Small Enterprise Development Constraints in Zimbabwe

Washington Muzari, Daniel Jambwa

Abstract: This paper is a discussion article on the constraints of small scale enterprises in Zimbabwe. It is based on findings from a survey of secondary sources of data. The major constraints faced by small enterprises in general, and rural small-scale enterprises in particular, are markets, finance (credit), the legal and regulatory framework, physical infrastructure, managerial, marketing and technical skills, and access to research, extension and information services. From the point of view of most of the established institutions, in particular commercial banks, disbursing loans to small enterprises is an extremely risky venture. They argue that the majority of SSEs do not have adequate collateral to act as security against the borrowed funds. The lack of title deeds is the major reason why they are considered as not possessing adequate collateral. The high administrative costs of handling small loans also explain the financial institutions attitude and behavior in this regard. Infrastructural constraints for small scale enterprises include lack of good roads, transport, electricity, telephones, and reliable water supplies. Legal, institutional and policy constraints have also been identified as some of the impediments to increased investment, expansion and growth of the small enterprise sector. Some of the bottlenecks include numerous registration and licensing regulations which do not have adequate justification within the post-independence scenarios of most African countries. To address the skills constraint, several key areas of focus in training and skills upgrading that have been identified include are basic book-keeping; project planning, appraisal and evaluation; estimation of working capital needs; costing of products and services; identifying market niches; accounting; finance; and production techniques. Any drive towards improving access to information to the SSE sector by various agencies should focus on a number of key areas. One of the most effective mechanisms to supply up-to-date information is to set up computerized data bases for quick access to useful information.

Keywords: small scale, markets, credit, infrastructure, legal framework, skills

Edition: Volume 3 Issue 9, September 2014

Pages: 1708 - 1713

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