Global Journal of Management and Business Research, C: Finance, Volume 22 Issue 4

The independent and dependent variables are at the centre of factors that affects accessibility to capital by the SMEs with independent variables being informed by the existing national and bank related policies, regulations and conditions. These are further informed by the monetary and macro-economic policies (dependent) variables. The central critique is that there should be complementarity in terms of the relationships between independent and dependent variables to have the ultimate positive impact on the indicators in as far as the outcomes and outputs of the interplay of the two (independent and dependent) variables (Baker et al., 2009). It has to be stated that the overall macroeconomic, legal, regulatory and financial infrastructure in Zimbabwe plays a role both in facilitating and inhibiting SMEs growth, and they are critical determinants of SMEs’ prospects to succeed through access to capital. For example, the initial announcement barring any lending by banks announced by the Ministry of Finance, meant tremendous uncertainty in the marketplace. Even though the policy had to be withdrawn, the confusion and negative impact in the business environment had already been done, hence the mention of the Zimbabwe environment as ambiguous and complex. Coupled with this came the prescribed 200% interest rate on bank loans – which ordinarily implies that the cost of borrowing escalated, which in this case, is part of the regulatory framework in terms of policies that are enacted by the government in terms of access to financing. Essentially, policies have been tried and announced by the government of Zimbabwe through the Ministers responsible for Finance, the Reserve Bank of Zimbabwe. However, it should be mentioned that when it comes to the SMEs, the Minister responsible for the SMEs, has little leverage in as far as determining the direction of funding of the sector. For example, the 200% interest rate signifies exorbitant amount on any loan for new SMEs enterprises, which means that the probability of the SMEs failing to access capital becomes too high. It is imperative to note that there seem to be dissonance when it comes to policy pronouncements and the trajectory of growing the SMEs from an economic development perspective. The complex correlations of the financial ecosystem and access to financing in Zimbabwe following years of economic meltdown of the formal sector, means that the policies should be flexible to allow SMEs to thrive. However, the financial loan acquisition process go through various stages within the financial institutions, and these processes, need to be revamped in order to allow flexibility on capital accessibility to enable SMEs growth. The argument this paper makes is that the commercial banks and private sector SMEs microfinance institutions, are not adequately facilitate SMEs growth. Gombarume and Mavhundutse (2014) assessed the challenges affecting SMEs in Chitungwiza, Zimbabwe and their overall conclusion was that accessibility to government aided financing through bank loans from formal financial institutions and the impact of government policy on their growth and operations, had a strong bearing on the SMEs performance. Their study found that SMEs were getting inadequate financial support and the various financial services conditions in most financial institutions, were a big limiting factor for the sector’s growth. However an unstable macroeconomic environment, which at the time had an effect, was also found to be limiting also the sector’s growth as much as it is in 2022. Ultimately, Gombarume and Mavhundutse (2014) advocated flexibility in terms of loan conditions, including offering loan guarantee schemes and formalisation of SMEs. It is imperative to note that the independent variables have a stronger bearing on the dependent variables which are discussed below. IV. C ollateral R equirements and C ost of F unds Collateral requirements coupled with cost of funds worry many SMEs in developing countries (Njanike, 2019). Collateral requirements have both the positive and negative effect on the firm’s ability to have access to finance be it government aided financing or from private capital through commercial banks. In many cases, collateral requirements is mandatory to accessing bank loans – which ordinarily increases the costs of funds since several SMEs start-ups do not have the assets to secure the loans from the financial institutions. The central critique is that collateral security limits investments. Over and above that, the fact that SMEs will be compelled to look for assets as security, also increases the costs on the part of the SMEs aspiring candidates as they look for funds, leaving them in indebtedness. In the majority of cases, SMEs ability access to finance affects business and this emanates from the regulatory frameworks that have been found to have significant effect on SMEs, implying that the challenges encountered due to some regulations in the banks have an effect on the operations and profitability of SMEs in Zimbabwe. Some studies that were carried out have shown that regulations indeed have had a negative effect of SMEs business operations and profitability (Ocloo et al, 2014; Njanike, 2019).The relationship between collateral requirements and costs of funds affects access to finance which can be interpreted as when the SMEs collateral requirement decreases the firm’s access to finance also decreases because the two variables move in the same direction to influence not only the ability but the credibility to access even government aided financing of the SMEs, which in the majority of the cases in Zimbabwe, are channelled Taxonomy of Small and Medium Enterprises (SMEs) Constraints: An analytical Perspective of Zimbabwe Global Journal of Management and Business Research Volume XXII Issue IV Version I Year 2022 ( ) C © 2022 Global Journals 3