Accessing formal financing by Small and Medium Enterprises in Zimbabwe: The case of SMEs and banks in Chiredzi Urban

The purpose of the study was to evaluate the barriers faced by small and Medium Enterprises (SMEs) in accessing financing from banks and to identify possible solutions. The study was necessitated by the observed failure of SMEs to grow and develop into larger profitable enterprises, despite their immense contribution to economic growth. Data collection was done through key informant interviews, comprehensive analysis of secondary sources and field surveys. It emerged from the study that the biggest barriers to SME financing are lack of collateral, a small equity base and information asymmetry. The study recommends that banks and SMEs must form alliances and strategic partnerships to formulate solutions that will remove barriers and improve SME access to financing. Also, the government of Zimbabwe must adequately fund the Ministry of Micro, Small and Medium Enterprises and Co-operative Development (MMSMECD) so that it can fulfill its mandate of supporting SMEs.