An imperical investigation into the factors affecting the performance of small and medium enterprises in the manufacturing sector of Harare, Zimbabwe

Abstract

This research investigates the factors that affect the performance of Small and Medium Enterprises (SMEs) in the manufacturing sector of Harare, Zimbabwe. To achieve this objective, the research hypothesised that a lack of skilled human resources contributes to the poor performance of SMEs in the manufacturing sector of Harare, Zimbabwe. The research further hypothesized that poor management skills such as human resources, financial management, general management, production management and marketing management result in the poor performance of SMEs in the manufacturing sector of Harare, Zimbabwe. A research proposition was also stated which stipulated that the current hyperinflation environment affects the profitability of SMEs in the manufacturing sector of Harare in terms of profitability. This study is important because SMEs, despite their contributions to the Zimbabwean economy, have not been given due attention as the research of performance has been biased towards large enterprises. The results indicate that managerial aspects which are in short supply have negative effects on the performance of SMEs in the manufacturing sector. The results also indicate that the high rate of inflation and other economic factors such as foreign currency shortage, interest rate and exchange rate affect their performance negatively. Lastly, the study recommends that SMEs, the Zimbabwean government and other supporting institutions such Empretec, ILO and SEDCO take measures to ensure the survival, growth and development of this sector which has the potential to steer the economy. These measures are expected to improve the managerial skills in the SME sector and consequently result in improved performance.