An Analysis of the Obstacles to the Success of SMEs in Chinhoyi Zimbabwe

Abstract

This paper sets out to analyze the obstacles hindering the success and development of SMEs in Chinhoyi, Zimbabwe. To achieve this, the research hypothesised that limited access and cost of finance,?lack of marketing skills and market knowledge inadequate  management and entrepreneurial skills,?lack of access to infrastructure, inaccessible to land,?lack of information and?a hostile regulatory environment are some of the factors hindering the development of SMEs in Chinhoyi. This is a conceptual paper and the methodology used is a secondary research in which in depth literature review has been from books and journal as well as articles. The findings of this paper confirm that, SMEs view it as advantageous to remain part of the unregulated market because of perceived advantages like not paying taxes and other statutory dues, not having to comply with regulations that apply to formal business, being able to take short-cuts and being accountable to no-one. This then creates barriers against those same SMEs doing business with registered operators, who are the large companies. It therefore severely curtails the SME's potential market. Again the "informal" setup is the fact that the SMEs themselves do not keep proper accounting records of their activities and as such there is no track record of what the proprietor would have done and this makes banks reluctant to offer them credit facilities resulting in financial difficulties to finance operations for expansion. Again SMEs have a tendency to jump from one thing to another, depending on what will be making money at any particular time, an approach referred to as "kiya-kiya" (patchy/quick-fix) which makes them to fail to deliver the service promise and as a result they lose customers. Therefore the study concludes that SMEs firms need to transform their mindset that will see them succeed and graduate to becoming large corporations.

Keywords: MoSMEs - Ministry of Small and Medium Enterprises,SME- Small and Medium Enterprise, RBZ -Reserve Bank of Zimbabwe.