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

Cooperatives in Zimbabwe”. One of the aspect this paper established is that informality of the sector makes lending difficult from an accountability perspective and most of the loans, have, in the past, not been paid because the beneficiaries are considerer a high risk informal traders – which again is a challenges that the SMEs in Zimbabwe present as high risk to lenders. It is imperative to note that the government has traditionally left out SMEs from its incentive structures such as tax rebates. This has also caused the sector to avoid paying taxes. Consequently, their pricing regime becomes high to recover their costs, and as a result, they fail to be competitive. The government is also losing a lot on potential revenue and the contribution of the sector to the national treasury by the SMEs sector is hard to quantify so that the sector can be the respect that the sector deserves (Maunganidze, 2013). Therefore, the small business support services are weak, the support the enterprises receive or that are provided by national agencies, both private and public, have not been helpful. Indeed, most SMEs are not aware of funding opportunities, the ever changing policies and programs. This affects them adversely, and most of the SMEs face difficulty in accessing funds to invest in their projects. VI. F inancial I nfrastructure and L ocational C ompetitiveness Location offers mixed advantages to enterprises and resource accessibility which ultimately enhances the chances of different enterprises to benefit from the funds. As such, location of financial services infrastructure such as banks determine specific resources that could serve the SMEs in developing economies. It is understood from the Resource-Based View (RBV) theory that the closer the institutions are to the centre of business activities, the more likely the SMEs can have access to the funds (Lee et al, 2012). Thus, RBV remains relevant in SMEs studies and its development and the central call is that the informal sectors which are scattered in the majority of cases, they would perform better if the financing institutions are closer to them. It is the argument of this study that as it stands, Zimbabwe’s financial service sector are unevenly distributed. Hence, it is difficult for SMEs in the rural areas and smaller towns to access capital for their growth, development and improvement. This variable will be examined and determine the impact it has to the growth of the SMEs in Zimbabwe. VII. A symmetric of I nformation and A gency P roblems Information asymmetry theory postulates that when two parties are making decisions or transactions, there exists a situation where when one party has more or better information than the other. Thus, information asymmetry may cause an imbalance of power between the parties. In this context, for example, the borrowers are more likely to get more information than the lenders. Information related with the risk associated with the investments is likely to be available to the borrowers. Zhao et al., (2021) observed that this may lead to the problems of moral hazard, where a party will take risks because they assume final cost of that risk, as well as adverse selection, where there are adverse results because parties have different/imperfect information; therefore, the problems may cause inefficiency related to the flow or transfer of funds from the lenders (surplus) to the borrowers. Furthermore, for overcoming these issues, the financial intermediaries use three major ways such as providing the commitment for long-term relationship with the clients. The second way is through the sharing of the information. Lastly is through the delegation and monitoring of the credit applicants. When the customers borrow money directly from banks, the banks should consider the need for relevant information to be addressed and so as to redress the asymmetry of the information (Zhao et al., 2021). It is argued that the acuteness of information asymmetries between the banks that are given the mandate to loan the funds to the SMEs, including micro- finance institutions and entrepreneurs is one of the stumbling blocks to SME financing in Zimbabwe. This problem is pervasive across Sub-Saharan Africa. However, the gap between government aided financial institutions that support the businesses and the SMEs, can be narrowed by developing financial systems that are more adaptable to the changing scenarios so that the emerging SMEs are not pushed out through lack of information at the local contexts level. Additionally, avenues should be explored in this instance for intense sharing of information, advising the SMEs aspirants about what is expected, the risks consideration and the expected reduction of perceived risks should be shared with the borrowers so that they better prepare their projects portfolios to the government aided financing institutions promoting the sustainable development of SMEs and their better access to financing (Leffileur, 2009). Information asymmetries are actually concerned with the two players in the financial market – that is the borrowers who are SMEs entrepreneurs who represent their business interests and the bankers who may not be aware of the businesses and the intensions of SMEs owners. In addition, there is also the critical issue of the lack of timely, accurate, quality, quantity, and complete information regarding the ability of the applicants – and this include an understanding of their credit history, credit worthiness and the ability to repay back the loan in order to access financial products from the government aided financing institutions (Bazibu, 2005). Thus, a study that was done by Agostino (2008) on agricultural SMEs pointed out that the failure of the current African markets is because of a number of the 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 6