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

designing projects and assist SMEs in order to link them to the larger developmental vision of a nation with the main focus being poverty reduction, empowerment, transformation and growth of small firms (Charbonneau & Menon, 2013). A number of initiatives for SME support are rare, understood not to be easily available and inaccessible in many parts of the Zimbabwean context. Evidence from empirical review indicate that policy initiatives that have been pursued over the years through various Statutory Instruments and legislation appear to change dramatically much to the disadvantage of the small businesses. Consequently, SMEs support channelled by governmental institutions which involves but not limited to the financial institutions, but the Reserve Bank of Zimbabwe in its quasi-government interventions, have not been consistent, which further affects the lending banks in their administration of the facilities. In India for example, they have Micro and SME Development Act, in Kenya there is the Micro and Small Enterprises Act while in Malaysia they have the SME Master Plans. In Tanzania they came up with the SME Development Policy, and in the USA they put in place a consistent Small Business Act which provide the policy guidelines and regulatory framework to support the SMEs and they have been consistent (Charbonneau & Menon, 2013), thereby providing stability in the SMEs sector in as far as support is concerned. It is imperative to note that one of the key element of the success of financing SMEs in any country, are consistent policies that prescribe minimum lending rates and do not change dramatically. In as much as there Chapter 24:12 in Zimbabwe which was enacted to govern the Small Enterprises Development Corporation (SEDCO) Act, which has changed to SMEDCO as initiative aimed at encouraging establishment of SMEs by creating an enabling environment for small businesses to thrive and enhancing access to funding capital (Maunganidze, 2013), it remains a fact that Statutory Instruments in the macro-economic environment tend to change the pathway and situations for SMEs access to capital. Recently, the Ministry of Finance and Economic Development announced a 200% interest rate. That figure makes loans very expensive yet other countries, the average interest rate is about 10%. In the USA, the Bureau of Labor Statistics point to a continued growth of SMEs due to favourable bank support that has been loosening lending standards for loans to large firms and SMEs, and SME surveys reported that loan availability in 2022, was perceivably near historical high at 8%, an increase by 75-point, which in any case, is very low compared to Zimbabwe’s 200% in a US$ denominated economy. The 200% interest rate applies to all lending regardless it’s in the local currency or the US$ terms. However, the same data sources point to soft increased demand for SME loans because the interest rates for SME loans by any comparisons are affordable in the USA in the business recovery process. The Main Street business owners were also no exception. As much as 8% is considered higher interest rates in the USA, it is in nowhere comparable to Zimbabwe which is a fairly self- dollarized economy, and one would anticipate some convergence in terms of interests rate or much more reasonable interests rates that support business growth and development. Fundamentally, the cost of business loans from a borrower’s perspective, is too high and unaffordable – making investment in the SMEs sector difficult. Even more significantly, the SMEs have had an economic slowdown in Zimbabwe which is being engineered by the influences high interest rates, and when one borrows the loan, the costs of the loan is passed on to the consumer which again escalates the costs of doing business. The ripple effect has been slow demand and slow growth outlook of SMEs. With the odds of recession mounting in the economy in Zimbabwe as a result of the general economic difficulties, debt repayment and higher cost on new loans will maintain stunted business growth or slow it down drastically. Essentially, for their sustenance, SMEs need to use a number of enabling tools to thrive including marketing of their products, leverage information and technology in order to become more competitive and create opportunities to participate in the global value chains. The environment in Zimbabwe is tough, although some SMEs thrive through supply of products that are of high quality, and it has been emphasised in literature that credibility of products matters a lot, including conforming to good environmental standards (Charbonneau & Menon, 2013). The setting up of the Ministry of Small and Medium Enterprise and Corporative Development and the Small Enterprises at the time and its subsequent transformation to the current Ministry of Women Affairs, Community, Small and Medium Enterprises Development with its vision to “To be the “nerve’ centre for economic development and empowerment through the development of MSMEs and Cooperatives in Zimbabwe”, epitomise a great deal of commitment by the government to support SMEs. The number of SMEs, however, have regrettably been underfunded and they have not been able to realise the milestones to fully support SMEs because perennially, the Ministry is underfunded (Maunganidze, 2013). The principal in the same Ministry indicated that more can be done to support SMEs because these SMEs are the most resilient in the economy, yet the support is minimum. Consequently, this paper is of the view that government is not adequately funding this critical Ministry of Women Affairs, Community, Small and Medium Enterprises Development with its vision to “to be the “nerve’ centre for economic development and empowerment through the development of MSMEs and 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 5