effectiveness of microfinancing in financing small businedss

8/20/2019 Effectiveness of microfinancing in financing small businedss

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CHINHOYI UNIVERSITY OF TECHNOLOGY

GRADUATE BUSINESS SCHOOL

THE IMPACT OF MICROFINANCE ON SMALL BUSINESSES. A CASE STUDY OF

HARARE

BY

RONALD NHENDE C13121082T

A disse!"!i#$ s%&'i!!ed !# !(e S)(##* #+ S)ie$)es "$d M"i$",e'e$! i$ P"!"*

F%*+i*'e$! Re-%ie'e$!s #+ !(e A"d #+ !(e M"s!e #+ S)ie$)e i$ S!"!e,i)

M"$",e'e$! De,ee

/UNE 201


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De)*""!i#$

I hereby declare that this submission is my own work towards the Master of Science in

Strategic Management and that, to the best of my knowledge, it contains no material

previously published by another person nor material which has been accepted for the award

of any other degree of the University, except where due acknowledgement has been made in

the text.

Ronald hende !!!!!!!!. !!!!!!!..

"#$%$&$'(&)* Signature +ate

Supervised by

+r -. Munyoro !!!!!!!!... !!!!!!!!

Signature +ate

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Dedi)"!i#$

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A)$#*ed,e'e$!

I wish to take the opportunity to thank my supervisor +r. -. Munyoro for the support he gave

me throughout my dissertation. eartfelt thanks go to my mum and dad and my siblings for

the encouragement, support and inspiration they give me. I wish to show appreciation to

small business operators and microfinance institutions and everyone else who made this

research a success.

/ver and above everything, I wish to thank the almighty for getting me this far.

A&s!")!

)he study discusses the impact of microfinance on small businesses in arare. )he study

assessed the accessibility of microfinance by small businesses in arare, identified the

challenged being faced in the financing of small businesses and determined the extent to

which microfinance was effectively used by small businesses. 0 survey was carried out in

arare1s small buniness sites of Siyaso, -a2aland and Machipisa as well microfinance

institutions which operate in arare. )wo sets of 3uestionnaires were administered4 56 for

small business operators and $& for microfinance institutions which comprised the sample

si2e. +ata was analysed with the aid of Statistical 7ackage for Social Sciences "S7SS*

software.)he study showed that microfinance institutions in arare do not have ade3uate

capacity to meet financing re3uirements of small businesses. It was observed in the research

that loan re3uirements and terms and conditions of most microfinance institutions. It was also

observed that most of small business operators who received credit from microfinance

institutions did not utilise the loans as intended thereby compromising the success of such

businesses from credit received. #apacity building was found to be necessary to small

businesses for effective utilisation of credit. It was recommended that M8Is should boost

their capacity and deviate from the traditional asset based lending inorder to effectively

finance small businesses as well as encourage the uptake of credit. 0lso for small business

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operators, it was imperative that they do not abuse credit and that they operate in a

professional manner.

T"&*e #+ C#$!e$!s

C#$!e$!s

+eclaration................................................................................................................................ii

+edication................................................................................................................................iii

0cknowledgement....................................................................................................................iv

0bstract.....................................................................................................................................iv

)able of #ontents......................................................................................................................iv

9ist of )ables...........................................................................................................................vii

#07):R $..............................................................................................................................$

$.6 I)R/+U#)I/...............................................................................................................$

$.$ ;ackground of the study..................................................................................................$

$.& 7roblem statement............................................................................................................%

$.% Research obuestions..........................................................................................................=

$.5 Significance of the study..................................................................................................=$.? Scope of the research.......................................................................................................5

$.@ +issertation structure.......................................................................................................5

$.( #hapter summary.............................................................................................................?

#07):R &..............................................................................................................................@

&.6 9I):R0)UR: R:AI:B.....................................................................................................@

&.$ Introduction......................................................................................................................@

&.& )he #oncept of Microfinance..........................................................................................@

&.% ;ackground of Microfinance in Cimbabwe.....................................................................(

&.%.$ #lassification of 7roviders Microfinance in Cimbabwe............................................'

&.= Microfinance 7roducts and Services................................................................................'

&.=.$ 8inancial intermediation..........................................................................................$6

&.=.& Social intermediation...............................................................................................$$

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&.=.% :nterprise developmentD capacity building.............................................................$$

&.=.= Social services.........................................................................................................$&

&.5 0pproaches to the supply of microfinance services to clients.......................................$&

&.? /rganisation of Microfinance Institutions................................................................$%

&.?.$ #oEoperative financial institution............................................................................$=

&.?.& -roup 9ending........................................................................................................$=

&.?.% Individual 9ending..................................................................................................$5

&.?.= SelfEhelp groups "S-*...........................................................................................$5

&.?.5 Aillage ;anking.......................................................................................................$?

&.@ 9ending methods and used by M8Is..............................................................................$?

&.@.$ 8inancial Statement 9ending...................................................................................$?

&.@.& Small ;usiness #redit Scoring................................................................................$?

&.@.% 0ssetE;ased 9ending...............................................................................................$@

&.@.= Relationship 9ending..............................................................................................$@

&.( )he +efinition of small business from the Cimbabwean perspective............................$(

&.' )ypes of small businesses..............................................................................................$(

&.'.$ StartEup or existing small businesses.......................................................................$'

&.'.& 9evels of small business development....................................................................$'

&.$6 Significance of Small businesses to the :conomy...................................................&6&.$$ Small business growth..................................................................................................&$

Market si2e.......................................................................................................................&&

&.$& #haracteristics of the target population of microfinance institutions..........................&&

&.$% #onstraints to small business financing.......................................................................&%

&.$%.$ 7roblems 0ssociated with M8Is............................................................................&%

&.$%.& 7roblems associated with small businesses...........................................................&=

&.$= #apital re3uirements considerations of small businesses............................................&?

&.$5 0lternative Sources of Small ;usiness 8inancing.......................................................&?

&.$? 0rguments on why microfinance has not worked........................................................&(

&.$@ #hapter Summary........................................................................................................%6

#07):R %............................................................................................................................%$

R:S:0R# M:)/+/9/-F............................................................................................%$

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%.6 Introduction..............................................................................................................%$

%.$ Research 7hilosophy.................................................................................................%$

%.& Research +esign........................................................................................................%$

%.% 7opulation................................................................................................................%&

%.= Sampling 7rocedure..................................................................................................%&

%.5 Research Instruments.....................................................................................................%%

%.? +ata #ollection 7rocedure........................................................................................%%

%.@ 9imitations................................................................................................................%%

%.( Reliability.......................................................................................................................%=

%.' Aalidity...........................................................................................................................%=

%.$6 :thical #onsiderations..............................................................................................%=

%.$$ +ata 0nalysis 7rocedure...........................................................................................%=

%.$& #hapter Summary.....................................................................................................%5

#07):R =............................................................................................................................%?

=.6 +0)0 7R:S:)0)I/, 009FSIS 0+ I):R7R:)0)I/..................................%?

=.$ Introduction....................................................................................................................%?

=.& Research findings...........................................................................................................%?

#07):R 5............................................................................................................................55

5.6 #/#9USI/S 0+ R:#/MM:+0)I/S.............................................................555.$ #onclusions....................................................................................................................55

Importance of small businesses............................................................................................55

0ccess to credit....................................................................................................................55

#hallenges faced by small businesses in accessing credit...................................................5?

:ffective utili2ation of credit...............................................................................................5?

Impact of microfinance on small business growth indicators..............................................5?

5.& Recommendations..........................................................................................................5@

M8Is to boost their capacity.................................................................................................5@

Monitoring of credit.............................................................................................................5@

/rder financing....................................................................................................................5(

#redit Reference ;ureaus....................................................................................................5(

Regulation of Microfinance Institutions..............................................................................5(

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Recommendations for further research................................................................................5(

Lis! #+ T"&*es

9ist of figures

0bbreviations

M8Is G Microfinance Institutions

SM: G Small and Medium :nterprises

R;C G Reserve ;ank of Cimbabwe

S:+#/ G Small :nterprise +evelopment #orporation

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CHAPTER 1

1.0 INTRODUCTION

)his chapter gives an outline of the study on the impact of microfinance on small businesses

in arare. It sets out the background of the study, discusses the problem statements, and

outlines the ob


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utilisation. )his has in turn caused a rise in small businesses as a source of livelihoods for

many families.

S:+#/ "&66=* reports that (5H of small businesses fail in their first three years of

establishment while only $5H are likely to survive. 0ccess to finance, poor marketing

channels, inade3uate management resources, insufficient capacity to do research and

development, weak business structures among others were cited by R;C "&66'* as the main

challenges facing the growth of small businesses. Many scholars point out to lack of finance

as the ma


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+espite the emergence of M8Is the bulk of small businesses have remained technically

financially excluded. Borking capital financing, e3uipment financing are some of the ma


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1.4 Research #uest!ons

)he research will attempt to answer the following 3uestions

• Bhat is the impact of microfinance on small businesses in arareJ

• )o what extent is microfinance accessible to small businesses in arareJ

• Bhat challenges do small businesses face in accessing microfinance from

mifrofinance institutionsJ

• )o what extent is credit effectively utili2ed by small businessesJ

1.5 $!gn!%cance of the study

)he extraordinary growth of small businesses in the past few years created employment to

millions of people as the country pulls through a challenging phase, according to R;C

"&66@*. Social and economic goals can be achieved by promoting the growth of small

businesses in Cimbabwe. Small businesses are important as they play a pivotal role in

promoting grassroots economic growth and e3uitable sustainable development. )he results of

the study will enlighten small business owners of the challenges they have to overcome

inorder to survive and grow. Small businesses will learn about the critical success and failure

factors of small businesses. It will provide the necessary recommendations on how M8Is

can successfully finance small businesses. )he study will expose the microfinancing gap that

exists that might be important input in the government1s policy making. -overnment policy

should be crafted to synchroni2e efforts of M8Is and small businesses so as to ensure survival

and growth of both parties.

1.6 $co&e of the research

)he study shall seek to find out the impact of small businesses on the growth of small

businesses in arare. owever, owing to time and financial constraints the research will

cover sites of Siyaso of Mbare and -a2aland of ighfield and Machipisa. Respondents of

this research shall be small businesses operators and microfinance institutions. Small

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1.8 (ha&ter summary

)his chapter has served as an overall introduction to the research pro


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CHAPTER 2

2.0 LITERATURE REVIE

2.1 )ntroduct!on

)his chapter focuses on some of the concepts of microfinance and its impact on small

businesses. )he chapter gives a review of the background of microfinance, an assessment of

the contribution of microfinance to small businesses highlighting the challenges to the

financing of small business as well.

2.2 *he (once&t of +!cro%nance

Microfinance is considered as a development tool that seeks to address the financing needs of

the marginali2ed members of the population and small businesses excluded part of the

population. )he concept of microcredit became prevalent in the $'(6s, although an early

experiment of this scheme dates back %6 years ago in India, ;ra2il and ;angladesh.

Microfinance provides financial services and products such as small loans, savings, insurance

and money transfer to assist the poor in expanding or establishing their businesses. Robinson

"&66%* asserts that microfinance is mostly used in developing economies where small businesses have limited access to financial services. In addition to financial intermediation,

some M8Is provide social intermediation services such as the formation of groups,

development of self confidence and the training of members in that group on financial

literacy and management "9edgerwood, $'''*. )here are different providers of microfinance

services and some of them are4 nongovernmental organisations "-/s*, savings and loans

cooperatives, credit unions, government banks, commercial banks or non bank financial

institutions. )he target group of M8Is are self employed low income entrepreneurs who are4

traders, seamstresses, street vendors, small farmers, hairdressers, rickshaw drivers, artisans

blacksmith among others "9edgerwood, $'''*. ;ennett "$''=* also subscribes to the same

viewpoint that M8Is can offer their services to individuals who are generally below or

slightly above the poverty line. )hese are the less privileged group of the society.

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2.3 Background of +!cro%nance !n ,!mbab-e

Microfinance is a fairly new industry in Cimbabwe which began to show face in the early

$''6s which grew tremendously in the &666s because of the unprecedented growth of

Cimbabwe1s informal sector that was propagated by various factors. 0ccording to C0M8I

"&6$&*, chief of the factors stimulating microfinance activity in Cimbabwe was the high

unemployment rate that was pegged at (6H in &6$$ according to U+7 "&6$&*. )his has

caused a significant rise in activity in the informal sector in Cimbabwe. )he informal sector

is characterised by large numbers of small businesses. Small businesses have become the

source of livelihood for the ma


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)he common understanding of the term microfinance refers to the provision of small loans

by service providers which are microfinance institutions "M8Is*. )he terms microfinance and

microcredit are often used interchangeably though they are different. ;aner


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2..1 Fi$"$)i"* i$!e'edi"!i#$

8inancial intermediation refers to the provision of financial products and services such as

savings, insurance, credit cards, credit, and payment systems in the process connecting

surplus and deficit units "-orton and Binton, &66&*. 8inancial intermediaries are firms that borrow from savers and lend to those that need resources for investment such as the case with

deposit taking microfinance which consolidate deposits and use the funds to transform them

into loans. 9opa "&66'* defines this role of M8Is as the indirect facilitating of channelling of

funds from people who have extra money or surplus savings "savers* to those who do not

have enough money to carry out a desired activity borrowers.

• Cedi! )hese are funds borrowed with definite terms of repayment. Individuals

borrow when there have insufficient savings to finance their business operations.)hey also compare the return on borrowed funds and interest charged on the loan and

if it is beneficial to borrow rather than to defer business operations until a time they

can accumulate sufficient savings assuming the ability to service the loan is certain

"Baterfield and +uval, $''?*. 9oans are usually ac3uired for productivity reasons4

that is to generate revenue within a business.

• S"4i$,s )he mobilasation of savings in microfinance is 3uite a contentious issue.

7axton "$''?* pointed out that there has been increased scrutiny and awarenessamong policy makers and practitioners over a large number of informal savings

schemes. Microfinance institutions such as credit unions around the globe have been

successful in encouraging clients to save.

• I$s%"$)e Insurance is one of the services that are tried out by microfinance

institutions. 0 number of group lending programs provide insurance or guarantee

scheme in place of collateral and the -rameen bank is such an example "9edgerwood,

$'''*. 0 proportion of the loan is re3uired to be offered by group members as their contribution to insurance of the loan.

• Cedi! )"ds #redit cards allow borrowers to have prviledge to a line of credit

whenever neccessary. )he card can also be used make purchase provided the supplier

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of the goods accepts the credit card. 0 client is access his or her own savings in which

case the card will be known as a debit card according to 9edgerwood "$'''*.

• P"5'e$! Se4i)es these services include cashing che3ues and che3ue writing for

clients who maintain deposits as suggested by #askey "$''=*. In addition, paymentservices also include the remittance and transfer of funds from one area to the other

"9edgerwood, $'''*.

2..2 S#)i"* i$!e'edi"!i#$

)his refers to the process of building human and social capital needed by sustainable

financial intermediation for the poor. Subsidies should be eliminated but social

intermediation may re3uire subsidies for a longer period than financial intermediation.

:dgcomb and ;arton "$''(* assert that it is mainly aimed at the marginalised sectors of

society in terms of credit and savings facilities.

2..3 E$!eise de4e*#'e$!: )"")i!5 &%i*di$,

)hese are non financial services that assist small business operators include skills

development, business training, technology services, marketing and subsector analysis.

U+7 "&666* defines capacity building to cover human resources development and the

strengthening of managerial systems, institutional development that involves community

participation and creation of an enabling environment. 02ikiwe "&66?* defines capacity

building as the process by which individuals are e3uipped with skills and knowledge they

need to perform effectively and efficiently in their different callings. )he key issue is that it is

imperative for entrepreneurs to undergo trainings that will enhance capacity which will in

turn drive sustainable development. 9edgerwood, "$'''* observed that there is little or no

difference between enterprises that receive credit alone and those that receive both credit

packages and integrated enterprise development services.

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2.. S#)i"* se4i)es

)hese are non financial services that focus on advancing the welfare of micro entrepreneurs

and this includes education, health, nutrition, and literacy training ";ennett, $''@4

9egerwood, $'''*. )hese social services mostly re3uire ongoing subsidies and are provided

by donor supporting -/s or the state.

2.5 0&&roaches to the su&&ly of m!cro%nance ser"!ces to cl!ents

Microfinance institutions adopt principally either the KminimalistL approach or KintegratedL

approach in the manner they operate depending on the degree to which they offer each of the

services discussed above. )he minimalist approach according to 9edgerwood "&66'* offers

only financial intermediation services and partial social intermediation services in some

cases. )his approach is based on the idea that there is a single Kmissing pieceL for the growth

of enterprises and it is believed to be the lack of accessible, affordable, shortEterm credit

which the M8Is can offer.

)he integrated approach, on the other hand, takes a more comprehensive view of the client.

Under this approach, clients benefit from financial and associated services like social

intermediation, social services and enterprise development. M8Is take advantage of its the

niche market they serve and provide value added services that are recognised as important to

small businesses, giving competitive advantage at the same time. 9edgerwood, $''' suggests

that the demand and supply of these services will determine the approach that a M8I will

choose and also the circumstances in which it is operating. )he diagram below illustrates the

two different approaches used by M8Is in the supply of services.

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Source 9edgerwood "$'''*

2.6 rgan!sat!on of +!cro%nance )nst!tut!ons

Microfinance institutions are organised under cooperative financial institutions, group

lending individual lending, self help groups "S-s*, and village banking which dertemine

their approaches to lending.

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2.;.1 C#


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2.;.3 I$di4id%"* Le$di$,

)his is the lending of loans to individuals with collateral. ;esley and #oate "$''5* propose

that it is an advantage over group lending as some members of groups may default in

repaying their loans. Montgomery "$''?* in support of individual lending adds that this

method of lending avoids the social costs of repayment demands that are exerted to some

group members in case of default. Stiglit2 "$''6* points out that members in group lending

bear high risk because they are not only accountable for their loans as individuals but for that

of all group members1 loans. ava


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model financially sustainable. atch and atch "$''(* claim that village banking loans and

savings continue to grow over time.

2.7 end!ng methods and used by +)s

)his section discusses the various lending methods used by M8Is in offering credit to small

businesses.

2.?.1 Fi$"$)i"* S!"!e'e$! Le$di$,

8inancial statement lending refers to the issuing of loans based on the strength of a client1s

financial statements. ;erger and Udell "&66=*, suggest that borrowers provide informative

financial statements as an important re3uirement for this lending techni3ue. 0udited financial

statements would be preferred. Microfinance Institution s will seek out to lend those

borrowers with good financial perfomance and sound expected future cashflows. #ontrary to

the idea of M8Is helping small businesses, this form of lending shuts out small businesses as

most of them do not have financial statements. #olletaral can be used as as a secondary

source of repayment.

2.?.2 S'"** B%si$ess Cedi! S)#i$,

)his is a lending method based on the information available about the business and its owner.

9enders under this method compile information about the owner which is primarily personal

consumer data such as personal income, debt, financial assets and home ownership obtained

from consumer credit bureaus "8eldman $''@*. Inorder to evaluate a borrowers credit

worthiness the data is entered into a loan performance prediction model, whose score would

form basis of underwriting decisions. akamura "$''%* emphasi2es the existence of

significant information asymmetries between borrowers and lenders in small business creditmarkets. Such market imperfections are believed that they can result in credit rationing by

lenders, especially when loans are unsecured "Stiglit2, $''(*. owever, borrowers and

lenders use long term relationships as a counter strategy to mitigate such problems as this

will generate useful information about the borrowers as suggested by Frame, 1994.

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Moreover, small businesses are thought to be dependent on local banks for such relationshipE

based borrowing.

2.?.3 Asse!


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Small businesses in have been defined differently world over. ;usiness scale is usually

measured in terms value of assets, turnover and number of employees. )he most commonly

used criterion is the number of employees of the enterprise as suggested by ayanula and

>uartey, "&666*. )he value of assets of the firm has also been used as another criterion for

defining small businesses. Steel and Bebster "$''$* defined small business in -hana as

enterprises with employment cutEoff point of %6 employees. /sei et al "$''%*, on the other

hand classified small businesses s into three categories which are micro employing less than

? people4 very small employing ?E' people and small employing between $6 and &'

employees.

In Cimbabwe small businesses are usually defined in terms of turnover and number of

employee. ;elow are some of the definitions of small business in Cimbabwe

• Small and Medium :nterprise 0ssociation of Cimbabwe "SM:0C* defines a small

business as one with a turnover of less than USN&=6 666 or assets less than USN$66

666.

• CIMR0 defines a small company as one with six to =6 employees, annual turnEover

of USN56 666 to USN566 666 and assets valued at between USN56 666 to USN$

million.

)he researcher in this study defines a small business as an enterprise employing less than %6 people.

2. *y&es of small bus!nesses

0ccording to 9edgerwood "$'''*, small businesses exist at different levels and the products

and services provided to them by the M8Is are aimed at addressing their financing needs.

Small business financing is determined by the level of development of the firm. Small

business exist either in the start up phase or existing one phase. )he various stages of

development of small business are stable, unstable, or growing.

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[email protected] S!"!


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• S!"&*e s%4i4#s are those who gain from having access to the financial services

provided by M8Is to address their production and consumption needs. Stable

survivors were mostly found to be women who engage in kinds of business activities

to provide basic needs such as food, water, child health, cooking for the household

according to 9edgerwood "$'''*. )hese types of small enterprises rarely grow due to

small profit margins which inhibit reinvestment and an unstable operating

environment caused by seasonal changes which makes them to consume at the

expense of investing in their businesses.

• G#!( e$!eises are small enterprises with high prospects to grow. M8Is focusing

on these types of small enterprise are those that have as goal to create


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repayment capacity and effective demand. )he market for M8Is takes into consideration the

type of microenterprise being financed and the characteristics of the population group.

2.12 (haracter!st!cs of the target &o&ulat!on of m!cro%nance !nst!tut!ons

Fe'"*e )*ie$!s: E'#e'e$!

Most M8Is direct their efforts in empowering the women by who are generally considered

marginalised especially in 0frican economies as suggested by Moyoux "&66$*. )hey seek to

afford women e3ual opportunities to those of men. )he poorest people in the society are

commonly women and they are responsible for the upkeep of families including education

and health. #ultural barriers are characteristic in 0frican communities where women areknown to stay at home making thereby depriving them of access to financial services. Some

financial institutions are unwilling to lend women because most of them do not possess any

property acceptable as colletearal security as contended by 7axton "$''?*. ;ased on research,

women generally are very responsible "Moyoux, &66$*4 when the income level of a woman

increases, the effect is noticed throughout the household and into community than with a man

"7axton, $''?*. )hey are also the least defaulters and have high savings rate compared to

their male counterparts as observed by 9edgerwood "$'''*.

T(e *e4e* #+ #4e!5

7overty alleviation is the focal point of microfinance institutions and the poorest form a

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the M8Is are intended to meeting the expectations of the target location or area. )hose in the

rural areas have greater need for microfinance than those in the urban areas and the

infrastructural development in those areas also matters. )he challenge to produce and

distribute goods because of lack of infrastructure will hamper growth of businesses thus

limiting the financial services that will be available. -rameen ;ank is a good example of a

successful microfinance institution that has branches in geographical areas right where their

clients are located as claimed by 9edgerwood "$'''*.

2.13 (onstra!nts to small bus!ness %nanc!ng

8inancial support to small businesses has remained limited, due to a number of factors,

hindering their ability to grow and contribute meaningfully to the economic recovery of the

nation. )hese factors include the following

2.13.1 P#&*e's Ass#)i"!ed i!( MFIs

)he below discussed are problems associated with microfinance institutions that limit their

ability to extend credit to small businesses.

MFIs is


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)here relatively large numbers of small businesses which re3uire small loan amounts

re3uired make small businesses financing cumbersome and expensive to administer "R;C,

&66'*. 0 loan amount of say N$66,666.66 which can be ordinarily lent to one client could be

lent to &66 small businesses getting N566 each.

Hi,( *e$di$, "!es

+ue to the high risk associated with small businesses, microfinance institutions charge a risk

premium, resulting in high borrowing costs. R;C "&66'* is of the opinion that the high

interest rates charged by M8Is are also not conducive to the development of small businesses.

2.13.2 P#&*e's "ss#)i"!ed i!( s'"** &%si$esses

)he below discussed are problems associated with small businesses that compromise their

ability to obtain finance from microfinance institutions.

L") #+ s%i!"&*e )#**"!e"*

+ue to the perceived risk related to small businesses, microfinance institutions demand

collateral which most small businesses, particularly startEups fail to avail. /n the other hand,

microfinance institutions which conventionally are expected to place less dependence on

collateral are also demanding security from the small businesses. 0s a result many small

businesses are left to rely on informal sources of funds such as family, friends, supplier credit

and customer advances because the formal banking sector prefer selected customers such as

large corporations with collateral, thus crowding out small businesses.

• I$"de-%"!e +i$"$)i"* e)#ds

Many of small business enterprises are owner or family operated. 0s a result, they do not

usually keep business and personal finance separate as observed by R;C "&66'*. 8urther,

many small businesses do not have ade3uate skills to ensure maintaining of financial records

and accounts. )his is worsened by the lack of investment in information technology and

accounting systems.

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• I$+#'"*is"!i#$ #+ Oe"!i#$s

Many small businesses have poor corporate governance systems resulting in lack of

professionalism as highlighted by R;C "&66'*. In addition, most small businesses do not

have ade3uate succession planning structures which are re3uired for sustainable business

operations.

e" M"$",ei"* C"")i!5

Many small businesses lack skilled manpower and managerial capacity as suggested by

;arnes "&66$*. In support of this view R;C "&66'* claim that a large number of small

businesses are owner managed and operated compromising professionalism in the manner

the businesses are run. )his results in limited ability to manage the operating environment in

a sustainable manner.

Di4esi#$ #+ F%$ds

Small business operators often divert funds from the proposed business purpose resulting in

high default rates. 0s such small businesses are perceived risky at loan repayment. +ue to the

relatively high prevalence of nonEperforming assets in the small businesses sector, M8Is

become too strict in lending this sector. Scattered research suggests that less than half of loan

proceeds are fully used for business purposes ";ennett, $''@*. )he remainder is used for a

wide range of household needs, including stabili2ing consumption and other cash needs like

education fees, medical expenses, or lifecycle events such as weddings and funerals as noted

by R;C "&66'*.

I$)#$sis!e$)5 i$ P#d%)!s "$d Se4i)es #++eed

Most small businesses lack ade3uate technology and skills to ensure production of

standardi2ed 3uality products and services. In addition, small businesses fail to establish backward and forward integration with key stakeholders such as suppliers and their markets.

)his limits their chances of survival, particularly in the face of fierce competition.

2.14 (a&!tal reu!rements cons!derat!ons of small bus!nesses

25


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Small businesses rely mostly on informal finance as sources of startEup capital for their

businesses since credit markets are limited. Most of the startEup capital of small businesses is

personal savings and borrowed money from friends and relatives. 8ew obtain startEup capital

the formal institutions like banks. )he granting of loans for large enterprises is relatively easy

than for small ones "-ary and -uy, &66%*. Microfinance institutions consider one1s ability to

honour debt and assess the minimal amount small scale businesses can contribute as e3uity

before granting a loan. )he rationale to this is that business should not be entirely financed

using borrowed money. 0 business that is in the startEup phase would it re3uire assets of a

minimum value for the M8I to consider the loan application. In situations where enterprises

are unable to meet the re3uired e3uity capital, some M8Is would re3uire household items to

be held as a security before the loan can be granted. )hese microfinance institutions use some

form of financial and psychological


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isrich and 7eters "$''5* assert that banks constitute the most widely used source of

financing for small enterprises. Supported by 9ongenecker et al. "$''=*, they claim that

banks offer loans to small businesses mostly shortEterm, though a few offer longEterm loans.

0ccording to uriloff et al. "$''%*, banks usually working capital financing or for the

purchase of capital e3uipment. )hey re3uire evidence of a businesses ability to pay the laon

as scheduled. )his evidence re3uired is usually in the form financial statements. )hey also

re3uire some form of security in the event of default .

B%si$ess S%*ies

Small businesses can en


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/#i$! Ve$!%e

)here are various forms of strategic alliances which can be taken advantage of by small

businesses. )he most common is


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asluck "$''6* found out that poor communities in advanced countries often experience

significant Odisplacement1 effects. )he research showed that demand for the basic products

and services of most small enterprises is generally limited, with new enterprises doing little

more than displace existing enterprises. /nly a few additional


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about small businesses, their nature and the challenges they face in accessing finance. It

thereby paves way for research methodology in the next chapter.

3/


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CHAPTER 3

RESEARCH METHODOLOGY

3./ )ntroduct!on

)his chapter focuses on the research methodology used for this study with the purpose of

achieving the research ob


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0 survey research design is adopted in this research to assess the impact of microfinance on

the growth of small businesses in arare. 0 survey is a nonEexperimental, descriptive

research method as suggested by Saunders et al "&66@* where the study can be a case study or

a survey. )he researcher chose the survey research as it allows the observation of sampled

elements and variables without making effort to control and manipulate them. 0lso the

design is chosen because 3uantitative and 3ualitative information can be collected through

the use of a semi structured 3uestionnaire.

3.3 Po&ulat!on

)he study areas selected for the research are the sites of Siyaso of Mbare and -a2aland of

ighfield and Machipisa. )hese are the most industrious small business sites of arare.

)hese sites fall in the highly populated surbubs of Mbare and ighfield and draw customers

all over arare. )he sampling frame of the study comprised @(( small businesses in arare.

0n en3uiry from the arare ome Industries 0ssociation showed that @(( small businesses

have registered with by %$ +ecember &6$% to operate in these areas. In addition, a population

of $6% registered Microfinance Institutions are based arare according to R;C M8I Register

"&6$=* as at &( 8ebruary &6$=. Registered M8Is have been used for the purposes of this

study. ;usiness activity carried out by small businesses is predominantly trade and commerce

with manufacturing for selected products. Aarious business activity carried out ranges from

vending, hardware, vehicle repair and maintenance, spare and accessories, electrical products

and services, farming e3uipment and many more. #ommercial activity is basically on

wholesaling and retailing.

3.4 $am&l!ng Procedure

#luster sampling techni3ue was used to select participants according to areas they operate in

this case from Siyaso, -a2aland and Machipisa. 0 simple random sampling techni3ue was

used to select a total of 56 small business operators that constituted the sample si2e. Simple

random sampling was used because it gave all the respondents e3ual chance of being

selected. 7urposive sampling techni3ue was used to select $& microfinance institutions out of

the registered $6%. Microfinance respondents were chosen whose operations are in arare.

3.5 Research )nstruments

32


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)he study employed the use of 3uestionnaire. )he 3uestionnaires were used to gather

information from small business owners and microfinance institutions. )he ma


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In order to collect reliable data, the researcher will design the interviews and 3uestionnaires

through an elaborate procedure which involved a series of revisions under the guidance of the

study supervisors to ensure that fieldwork will be conducted by use of high 3uality data

collection.

3. al!d!ty

)o ensure validity study will apply the triangulation techni3ue by using both 3uantitative and

3ualitative approaches. >uestionnaires and secondary data will be used concurrently to

collect data. 7iloting of the data collection instruments will be done to capture as mush

responses as possible. )he data collection instruments will also be designed in a manner that

allows the researcher to measure attitudes and opinions of respondents. Issues developed

from conceptual framework will be compared with issues obtained from interview

3uestionnaires so as to ensure construct validity.

3.1/ th!cal (ons!derat!ons

)he research carried out will be purely for academic purposes. )he researcher will disclose

full information on the purpose of the study, his role and status in the study. )he researcher

will also get informed consent from the university authori2ing participation in the study.

Respondents of the survey will be treated e3ually and there shall be respect for views and

opinions

3.11 'ata 0nalys!s Procedure

+ata collected from the 3uestionnaire were analysed, summarised, and interpreted

accordingly with the aid of descriptive statistical techni3ues such as fre3uencies and simple

percentage. >ualitative as well as 3uantitative methods were used in the analysis of the

primary data collected. )he 3uantitative data will be analysed using Statistical 7ackage for

Social Scientists "S7SS* and Microsoft :xcel. )he findings were presented in the form of

tables, charts and figures.

3.12 (ha&ter $ummary

34


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)he above discussion gave detail of the how data will be collected, defined the study

population and sample and highlighted important issues regarding validity and reliability of

the study in an attempt to carry out a research in an ethical manner. )he data collected in this

chapter will pave way for discussion and interpretation in the following chapter.

35


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CHAPTER

.0 DATA PRESENTATION6 ANALYSIS AND INTERPRETATION

4.1 )ntroduct!on

)his chapter is concerned with presentation, analysis and interpretation of findings of the

study with reference to the responses received in the survey. +ata will be presented, analysed

and interpreted through the use of relevant tables, figures and charts. +ata collected for the

study were 3uantitatively and 3ualitatively analy2ed.

)wo sets of 3uestionnaires were distributed, one category for small businesses and the other

for microfinance institutions. 0 total of ?@ 3uestionnaires were distributed for responses. /ut

of ?@ 3uestionnaires issued, ?& were received representing an overall response rate of '$H.

#ollected responses comprised of $& completed 3uestionnaires from M8Is, and 56 from the

small business.

)able =.$ Response rate

C"!e,#5 %es!i#$$"ies iss%ed Res#$ses Re)ei4ed Res#$se "!e =>

Small businesses 56 56 $66

M8Is $& $& $66

)otals ?@ ?& $66Source 8ield Survey "&6$=*

4.2 Research %nd!ngs

.2.1 De'#,"(i)s

)able =.$.$ below shows the gender distribution of small business respondents. )here were

%% male respondents representing ??H of responses while $@ were female representing %=H.

)his implied that males have a greater entrepreneurial drive than females. 8rom the data,

statistics indicated that $?H of the respondents were below &5 years of age, &( H were aged

&5E%= years, %=H aged %=E== years, $=H aged =5E5= years while (H were more than 55

years old. Responses from the survey show that &?H of small business operators are single,

5(H are married, =H are divorced while $&H are widowed. Most of the small business

36


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operators were married. )he implication is that the married are lured into business because of

the need for extra income to provide their families and growing responsibilities Similar to the

survey carried in #opperbelt Cambia out by 9opa "&66'* the married makes up the ma


46/73

=5E5= years @ $=.6 $=.6 '&.6

55 years = (.6 (.6 $66.6

)otal 56 $66.6 $66.6

Source 8ield Survey "&6$=*

. M"i!"*s!"!%s

8re3uency 7ercent Aalid

7ercent

#umulative

7ercent

Aalid

Single $% &?.6 &?.6 &?.6

Married &' 5(.6 5(.6 (=.6

+ivorced & =.6 =.6 ((.6

Bidowed ? $&.6 $&.6 $66.6

)otal 56 $66.6 $66.6


/f the 56 small business respondents, &$ were educated up to ordinary level, @ up to

0dvanced 9evel, $@ were holders of degrees D +iplomas while 5 were holders of Masters

+egree and above.

)he implication is that +egreeD+iploma holders are motivated to get into small business

because of the high unemployment they fail to secure formal employment in line with their

3ualifications as supported by findings of ;hattachar


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.7 %"*i+i)"!i#$s


7ercent

#umulative

7ercent

Aalid

/rdinary level and

below&$ =&.6 =&.6 =&.6

0dvanced 9evel @ $=.6 $=.6 5?.6

+iplomaD +egree $@ %=.6 %=.6 '6.6

Masters +egree and

above5 $6.6 $6.6 $66.6

)otal 56 $66.6 $66.6


)he study revealed a declining trend in length of small business operations as shown in 8I- below. It was noted that %&H of small businesses are less than % years old, %&H again are

aged % G = years while &&H are aged 5 G ? years and $=H are @ years and above. )he most

common business carried out falls under commerce with %$ respondents followed by service

with $$ respondents and manufacturing with (. 0s supported by 9edgerwood "$'''*, small

businesses exist for a limited period of time, and are termed stable survivors. e also claimed

3


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that these are less preferable to serve. 0 cross tabulation between period of business

operation and number of people employed also showed an association between the two

variables as showed by results of the chiEs3uare test "pT6.66*. )he implication is that small

businesses create more


49/73

6E5 people ?E$6

people

$$E$5

people

$?E&6

people

#ommencement

ofoperations

6E& years $= & 6 6 $?

%E= years $& = 6 6 $?

5E? years $ ' $ 6 $$

@ years and

above

& % 6 & @

)otal &' $( $ & 56

T"&*e .? C(i


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a. $$ cells "?(.(H* have expected count less than 5. )he

minimum expected count is .$=.Source 8ield Survey "&6$=*

A))essi&i*i!5 #+ )edi! &5 s'"** &%si$esses

)he research showed that only ? small business operators had enough financing while == did

not. 9ack of financing is a serious challenge facing small businesses growth as postulated by

R;C "&66'*.

es9 12:

;o9 88:

Availability of adequate nancing

8ig =.&

42


51/73


)he survey found out that banks were the most preferred source of financing with a

fre3uency of &= out of =&. M8Is were ranked second with a fre3uency of $6. 8riends and

relatives and other sources had fre3uencies of = each. /ther sources observed included

partnerships and trade credit.

Bank

+)

r!ends and relat!"es

ther

/ 5 1/ 15 2/ 25 3/

Prefered sources of nancing

reuency

8ig =.%


.8 H"4e5#%e4e"*ied+#)edi!+#'"$MFI


7ercent

#umulative

7ercent

Aalid Fes &( 5?.6 5?.6 5?.6

43


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o && ==.6 ==.6 $66.6

)otal 56 $66.6 $66.6


/ut of the 56 respondents in the study, %( indicated that they would not want to borrow from

M8Is. )he ma

44


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$&eed of &rocess!ng loans

(a&ac!ty bu!ld!ng

0ccess!b!l!ty

ther

/ /.5 1 1.5 2 2.5 3 3.5 4 4.5

Reasons for borrowing from MFIs

reuency

8ig=.5

0sset based lend!ng9 82:

=rou& end!ng9 18:

ending technologies used by MFIs

8ig =.?


It was observed that M8Is used predominantly asset based lending as &% out of &( small

business operators accessed asset secured loan while 5 accessed under group lending method.

45


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Survey findings show that microfinance has a generally positive impact on sales volumes. $&

small business operators were of the perception that sales volumes slightly increased as a

result of microfinance credit while $? perceived an increase. )here is an average ?'.&H

positive impact of microfinance on sales volumes of small business.

0ccording to the below graph, microfinance has had the most desired impact on sales

volumes which recorded a fre3uency of $? and the least desired impact on li3uidity with a

fre3uency of 6 out of &(. /n the other hand, the most undesired impact of microfinance was

recorded on li3uidity were ? respondents claimed that microfinance had a negative impact on

li3uidity of their enterprises. Most of the small business respondents claimed that

microfinance had no impact at all on management skills, employment creation and value of

assets.

)m&act on "alue of assets

)m&act on number of em&loyees

)m&act on sales "olumes

)m&act on management sk!lls

)m&act on l!u!d!ty

/ 5 1/ 15 2/ 25

'ecreased$l!ghtly 'ecreased

'!d not change

$l!ghtly !ncreased

)ncreased

8ig =.@


46


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.@ C#ss!"& Use #+ *#"$sEis!e$)e #+ )"")i!5 &%i*di$,

#ount

Use of loans )otal

/ther

business

expenditure

8amily

upkeep

7ersonal

emergencie

s

0c3uisition

of non

business

assets

one

+oesyourM8Iof

fercapacitybuildi

ng

Fes 6 6 6 6 ' '

o $ $ ? ? 5 $'

)otal $ $ ? ? $= &(


.10 C(i


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9inearEbyE9inear

0ssociation(.@%? $ .66%

of Aalid #ases &(

a. ' cells "'6.6H* have expected count less than 5. )he

minimum expected count is .%&.


)he survey findings revealed that there was a significant positive relationship between

capacity building and loan use "p T 6.6$6*. owever, contrary to 9edgerwood "$'''*

observations, capacity building had an impact on enterprise development.

It was observed in the study that 5 out of $& M8Is "=$.@H* were below & years old

representing the ma


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25:

75:

!"istence of capacity building services

8es ;o

8ig =.' Source 8ield Survey "&6$=*

It was observed in the study that the success rate of loan applications ranged from =$H up to

$66H.)he ma


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8ig =.$6


C("**e$,es +")ed i$ +i$"$)i$, s'"** &%si$esses

)he capital ade3uacy of M8Is posed a ma


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//.5

11.5

22.53

3.54

4.5

Ma"imum loan amount granted

reuency

8ig =.$&


2:

71:

Possible capacity

41 > 6/: 61 > 8/:

8ig =.$%


51


60/73

)he limited financing capacity on the part of M8Is because of limited capital has an effect on

the uptake of credit by small businesses. It has resulted in some of the following

• Shunning of M8Is by small businesses when operators deem the amounts offered too

low• )urning down of some credit applications by M8Is in the event that they cannot grant

re3uested loans beyond their capacity as illustrated in 8I-

• #redit rationing by M8Is as suggested by "Stiglit2, $''(*.

)he above highlighted give an indication that M8Is are operating on thin capital bases and

cannot fully meet loan demands of small businesses as claimed in press a statement by

#hitambo "&6$%*

Research findings claim that %%.%H of M8Is have average interest rates of ? G $6H, &5H

have interest rates ranging $$ G $5H, %%.%H have interest rates of $? G &6H while (.%H have

interest rates of above &6H. 0 cross tabulation of interest rates and default rate show at '5H

confidence level interest rates do not influence clients1 ability to meet their loan obligations

as shown by shown by the p value of 6.%&& in the !"&*e below.

.11 A4e",e'#$!(*5i$!ees! De+"%*!"!e C#ss!"&%*"!i#$

#ount

+efaultrate )otal

6 E &6H &$ E =6H =$ E ?6H ?$ E (6H

? E $6H % $ 6 6 =

52


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0veragemonthlyinter

est

$$ E $5H & 6 $ 6 %

$? E &6H & $ 6 $ =

0bove

&6H6 6 6 $ $

)otal @ & $ & $&


.12 C(i


62/73

)he study found out that M8Is mostly prefer to offer credit for working capital purposes

which was ranked $ by respondents with a weighted average score of $.&5. /rder financing

was preferred second with a weighted score of $.@5 while capital financing was least

preferred with a weighted score of &.%% as illustrated in )0;9: below. Indications are that

M8Is prefer working capital financing because of their low credit ceilings, short loan tenures

and incapacity to finance all successful applications. 9ong term capital pro


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9oantenur

e

6E% months & % 6 6 5

=E? months 6 $ & 6 %

$6E$& months 6 6 & 6 &

More than $&

months6 6 6 & &

)otal & = = & $&


.1 C(i


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C("**e$,es MFIs +")e i$ ,"$!i$, )edi!

:fforts of the M8Is in financing small businesses were due to a number of challenges

observed during the study. /ut of $& M8Is, ( pointed out the high default rate of small

businesses as a challenge they face in their operations. )he high rate of default is associated

with the instability of small businesses. 9ack of acceptable was a common observation

among the ma)nade5uate secur!ty

+!sa&&ro&r!at!on of loans

ack of cred!t h!story

ack of rele"ant documentat!on

ther

/ 2 4 6 8 1/ 12 14

$hallenges faced by MFIs in granting credit

(hallenges faced by +3)s !n grant!ng cred!t

8ig =.$=


E++e)!i4e )edi! %!i*i"!i#$

56


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0 cross tabulation of responses by M8Is between the re3uirement of collateral and default

rate shows no relationship as proven by chiEs3uare value "pT6.&&%*. It therefore does not

follow that the re3uirement of collateral does not encourage clients fail to repay their loans.

)his is contrary to observations made by ;uckley "$''@* that there is minimum default on

asset based loans compared to others.

.17 De+"%*!"!e D#5#%"*"5se-%ie)#**e!e"*

C#ss!"&%*"!i#$

#ount

+oyoualwaysre3uirecol

leteral

)otal

Fes o

+efaultrat

e

6 E &6H 5 & @

&$ E =6H & 6 &

=$ E ?6H 6 $ $

?$ E (6H & 6 &

)otal ' % $&Source 8ield Survey "&6$=*

57


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CHAPTER 7

7.0 CONCLUSIONS AND RECOMMENDATIONS

)his chapter presents a summary of findings of the research, addressing the research problem

and gives recommendations based upon the research findings. It also provides

recommendations for further studies.

5.1 (onclus!ons

)m&ortance of small bus!nesses

Small businesses play an important role in the in the economy. Small businesses have an

immense contribution in the creation of employment. Small businesses are made up of

various subEsectors such as4 commerce, service, manufacturing and other artisan bodies. )he

research shows that the small businesses are largely dominated by commerce which is

basically buying and selling. )his is due to the fact that very little capital is needed to begin

and operating such businesses re3uires minimum regulatory processes.

)he research revealed a downward trend in the number of small businesses over time

implying that most small business are closing shop because of various reasons including

financing challenges. Small businesses are also exploiting new opportunities in the market

which cannot be efficiently exploited by large corporations.

0ccess to cred!t

)he study found out that M8Is do not have ade3uate capacity to deal with financing needs of

small businesses. 0s observed, the ma


68/73

+espite the contribution of M8Is in the activities of small businesses, there are some

challenges that small businesses face in the process of accessing credit. Some of the small

business respondents find the process of accessing credit as cumbersome. Some these

challenges are

• Some small business operators borrow from many different financial institutions and

fail to disclose such borrowings when they seek additional funding from M8Is. )his

results in the overburdening of small businesses1 cash flows thereby compromising

their ability to service their debts.

• Some small businesses do not have sufficient assets to satisfy asset based lending

re3uirements of microfinance institutions.

• igh interest rates charged by M8Is deter small businesses from lending and is the

ma


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)he research which was undertaken to find the impact of microfinance on the growth of

small businesses reveals that M8Is have little positive impact on the growth of the latter,

notwithstanding the inherent

5.2 Recommendat!ons

In light of the findings made and conclusions drawn from the study, the following

recommendations are made to help enhance the growth of small businesses as far as

microfinance is concerned.

+)s to boost the!r ca&ac!ty

Microfinance institutions should seek more funding in order to boost their capacity to finance

small businesses. )hey could seeks lines of credit from the mainstream banking system and

also seek aid from nonEgovernmental organi2ations. Strong capital bases would enhance

M8Is1 capability to finance re3uired loan si2es in the market and also finance capital

e3uipment pro


70/73

to meet other business obligations. /n the other hand, it benefits M8Is as they can reduce

default exposure as payments are.

(red!t Reference Bureaus

)he setting up of a credit bureau will seek to correct the information asymmetry which is

being exploited by small business operators who commit against the same cash flows from

different financial institutions. 0 credit bureau will enable M8Is to evaluate risks more

accurately. )hese will go a long way in controlling levels of default in the in microfinance

institutions, ensuring their survival and sustainable growth of M8I.

Regulat!on of +!cro%nance )nst!tut!ons

)he Reserve ;ank of Cimbabwe is making remarkable efforts to regulate M8Is such as

evidenced by the minimum capital re3uirements. )he researcher is however of the opinion

that interest rates charged by M8Is should encourage sustainable borrowing which should

stimulate the growth of small businesses.

Recommendat!ons for further research

In light of the above noted conclusions and recommendations the researcher feels there is

need for research in the following areas

• )he sustainability of nonEcollaterali2ed methods of financing to small businesses.

• In3uiry into ways of formali2ing the informal sector.

62


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My name is Ronald hende a Master of Science in Strategic Management student at

#hinhoyi University of )echnology1s -raduate ;usiness School. 0s part of my program I

have undertaken to carry out a survey on the above mentioned topic. Fou are kindly

re3uested to answer all 3uestions honestly. Four coEoperation is greatly appreciated. Fou are

assured that any information provided would be used for academic purposes only and will be

held strictly confidential.

Please tick your response or fill in as appropriate.

$. -ender Male 8emale

&. 0ge &5 years &5E%= years %5E== years =5E5= years V55 years

%. Marital Status Single Married +ivorced Bidowed

=. >ualifications / 9evel and below 0 9evel +iploma +egree

Masters +egree 7+ and above

5. Bhen did you commence operatingJ ..................................................................................

?. Bhat is your primary businessJ )rading 0rtisan works Service

/ther Specify

@. ow many people does your business employJ

$E % employees = G ? employees @ G ' employees $6 E$&

employees $& and above

(. ave you ever applied for credit from an M8IJ Fes o

'. In what ways has microfinance impacted your business operationsJ

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

!!

$6. 7lease kindly give suggestions on how M8Is can contribute to the growth of small

businesses

63


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Thank you for your cooperation

My name is Ronald hende a Master of Science in Strategic Management student at

#hinhoyi University of )echnology1s -raduate ;usiness School. 0s part of my program I

have undertaken to carry out a survey on the above mentioned topic. Fou are kindly

re3uested to answer all 3uestions honestly. Four coEoperation is greatly appreciated. Fou are

assured that any information provided would be used for academic purposes only and will be

held strictly confidential.

Please tick your response or fill in as appropriate.

$. Bhen did your company commence operationsJ !!!!!!!!!!!!

&. +o you offer training to ensure effective use of loansJ

Fes o

%. /n average how many loan applications you receive from your clientsJ

+aily!!!.. Beekly!!!. Monthly!!!!

%.$. ow many applications are successfulJ

+aily!!!.. Beekly!!!. Monthly!!!!

=. +o you have sufficient funding to meet loan demand of your clientsJ

Fes o

=.$ If not what proportion of applications can you handleJ (as a percentage)

!!!!!!!.

5. Bhat maximum amount of loan do you

offerJ..............................................................................

?. /n average how many clients default their loan obligations on a monthly

basisJ......................

@. Bhat do you think are the reasons for defaultJ

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!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

!!!!

(. Bhat challenges do you face in doing business with small businessesJ

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

!!!!

'. #omments on the state of microfinance microfinance industry in Cimbabwe and its

capacity to deal with financing needs of small businessesJ

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

!!!!!!

Thank you for your cooperation

effectiveness of microfinancing in financing small businedss

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