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

fees on loans to SMEs, making capital not only expensive but restrictive (Obiageri et al., 2019). Even though establishment of specialized lending institutions may exists as a noble intervention, there is still lack of support to nurturing growth of SMEs (Beck et al., 2006). X. D iscussion The dynamism of the policy posture and regulatory framework governing funding in Zimbabwe changes dramatically. More importantly, the inflation in the marketplace has been going up and to patiently wait for inflation to go away while maintaining low interest rates, is difficult and this tend to affect business. It is clear from the above analysis that SMEs are the hardest hit by the changes in the macro-economic environment, and for SMEs to thrive, they have to be creative and innovative in order to keep operational. With bank loans now statutorised at 200%, the cost of money, investment in the SMEs and on the part of the consumer of the SMEs goods and services escalate so dramatically that the SMEs become uncompetitive. It has been shown that in the USA, the interest rate went up to 8% and in that comparison with a US$ denominated economy, one would expect something reasonable in as far as the cost of borrowing money is concerned. Regrettably, SMEs are being affected at the time when they are supposed to be the engines for growth, transformation and employment creation and empowerment of the populace. Funds set aside for various SMEs appear to be a pie in the sky as the liquidity seem not readily available in the market, hence the offers for loans remains a mirage to many aspiring SMEs in Zimbabwe. The financing of the facilities in Zimbabwe’s bank for lending to SMEs is good, but it would appear that this had fundamentally remained on policy papers and public pronouncement without evidently being complimented by real action on the ground to support the SMEs. This, in conjunction with limited incentives to buttress the SEMs in the economy, the SMEs end up using their own funds and they pass on the costs on the consumer, which complicate things especially the majority of them become uncompetitive. Ultimately, this reduce growth and, with more inflationary pressure, undermine the performance of the SMEs, prices increase and in the end, the SMEs fail. XI. R ecommendations One of the key recommended policy change is to address the critical issue of the informality of the SMEs sector. While the law provided for registration of these SMEs, about 6% of them operate without licences in Zimbabwe and have no traceable record. This matters when it comes to lending money. While important progress has been made in the communication and simplification of rules and procedures, for lending money through the banks that administer the loans for SMEs, the challenges persist related to geographical distribution of the institutions do not help the bigger population in the communal areas who account for about 67% of the population. Tangled improvements should be made to ensure that at least in each district, there is some facility that cater for each area. It has been realised that connectivity is a challenge but there are prospects to exploit ICT solutions to ensure seamless access to SMEs funding opportunities especially reaching out to most parts of the country so that there is intensive inclusion of the population. Countries such as Kenya through M-Pesa (Muriuki, 2011), have leveraged the ICT revolution as integrated model for financial inclusion and reaching out to as many SMEs in the country as is possible, and the effect has been dramatically positive in that country. Equally, simplification of policies and lowering of interest rate remains key if the SMEs are to be fully supported. Buttressing this point, is also the need to review the collateral requirements, which historically, disenfranchises SMEs from accessing investment capital. While it is acknowledged that loan defaults have been high in this sector, but it also reflect lack of follow up mechanisms, which should also be strengthened to ensure that loan repayment is achieved significantly. Another requirement is based on the observation that the loan access process in Zimbabwe is an extremely nebulous one. There is a lot of bureaucracy, and there is need for a new pathway of a comply-or-explain principle which should be introduced that helps to identify business regulations that SMEs perceive as the most burdensome and propose simplification to lessen the process ridden with bureaucracy. For example, the civil servants should be encouraged to develop smart regulations and policies that improves the ease of doing business and create flexible policy parameters that can reduce red tape. In the UK, there was a time when they introduced “the Red Tape Challenge website” which was dedicated to promoting open discussion on how the aims of existing regulations could be fulfilled in the least burdensome way possible. The public participated without taking any offence even on the most critical views from the public. The comments from such public policy discourse, were then used by the British government to design a package of 3000 reforms to cut red tape. Such public consultations when it comes to policies in Zimbabwe appear to be lacking hence the policies are clearly thumb-sucked on the beneficiaries, much to their surprise and disadvantage. Overall, the thrust should be an overhaul of the policy and regulatory framework and introduce policy changes that support and promote the growth of SMEs, including lowering interest rates. XII. C onclusion Overall, the institutional and regulatory frameworks taxonomy in Zimbabwe has provided 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 8