An Assessment of SMEs’ Financing by Commercial Banks in Zimbabwe
An Assessment of SMEs’ Financing by Commercial Banks in Zimbabwe

Summary/Abstract: Small-to-medium enterprises (SMEs) play a key role in the world economy and contributesignificantly to an economy’s output, income and employment. This paper seeks to assess the extentto which Zimbabwe’s commercial banks finance SMEs. Document analysis and an extensive reviewof the literature was undertaken to contextualize and draw a framework of analysis for the study. Theliterature shows that SMEs are of great socio-economic importance in developing countries but accessto financial services for SMEs in Zimbabwe remains low. Zimbabwe’s economic challenges since2000 to dollarization in 2009, the informalization of the SME sector, customers’ financial illiteracyand lack of training, lack of collateral security for loans, a high non-performing loans ratio, the lack ofunderstanding of SMEs’ needs by banks, the inaccessibility of banks and the general lack of financialinnovation are some of the major reasons for the low level of SME financing. A harmonised approachto policy suggestions for SMEs, lending institutions, the central bank and government to ensure theviability and growth of the SME sector are required and outlined. The research helps to formalize theSME sector considering its attendant benefits to the relevant players in the economy.

• Details
• Contents