Title:
AN ANALYSIS OF MICROFINANCE INSTITUTIONS’ PERSPECTIVES ON THE INTRICACY OF PROMOTING SMALL ENTERPRISES’ FINANCIAL PERFORMANCE THROUGH MICROFINANCE: CASE OF HARARE, ZIMBABWE

Authors:
Hosho Norbert , Gumbo Victor and Pamu Emmanuel Mulenga

Abstract:
The present study is firmly grounded on the widely established notion that the Small Enterprises (SEs) sector could be the probable key for unlocking economic emancipation and global competitiveness for developing countries. The study identifies microfinance institutions as a catalyst for the sustainability, growth and development of SEs. However, the process of financing SEs has never been easy for microfinance institutions (MFIs), according to global literature. The objective of the current study was to analyse both general and significant factors contributing to the intricacy associated with MFIs’ efforts to promote small enterprise growth and development. The study uses financial performance as a proxy for SE growth and development. A ‘mixed method’ design was adopted for the study so as to combine the strengths of the qualitative and quantitative approaches while also offsetting the weaknesses of either approach. The research identified eleven factors influencing the promotion of SE financial performance by MFIs. The Stepwise Regression approach was applied to build the regression model. The results show that information access amongst SEs ranked as first followed by lack of collateral, limited training and diversion of loans by SE beneficiaries. Adequate liquidity in MFIs, clear plans amongst SEs and high competition in the market had the least impact. This implies that improving information access amongst SEs, addressing the collateral issue, providing adequate training to the SEs and addressing the diversion of loans among SEs may help to obtain significant positive impact on SE financial performance through MFI activities