**3. Literature review**

There are many studies that have been done on entrepreneurship and SMEs on various issues concerning this sector. The following are some of the topics addressed in literature: security, technology use, employees, productivity, expertise, strategies and funding among others. Review of literature provides the foundation of knowledge on entrepreneurship and growth of business. There is also need for Identification of gaps in research in understanding the area better.

In a study focusing on the growth challenges and opportunities of SMEs in South Africa's food processing sector Mather [8] argues that the challenges faced must be viewed from a viewpoint of restructuring South Africa's agrifood system. Using a sample of 30 companies Mather [8] found that procurement practices are the most significant obstacles to the operations of these small firms. However this finding contradicts with Hanks et al. (2008), as supply chain management (SCM) used in the country operates within a regulatory framework set by the national government may be appropriate for bigger companies. However, the study did not address other factors affecting small to medium business operations.

Focusing on Small, Micro and Medium Enterprises (SMMEs) Ngcobo and Sukdeo [9] identified this sector as appropriate for job creation opportunities in SA. The study stresses the point that not many of these businesses succeed. The findings showed that challenges faced included the following: funding, regulations, inaccessible markets lack of confidence and labour costs.

Oyelana and Smith [10] focused on SMEs in South Africa to have a greater insight on their operations. The study used data collected through questionnaires. The study identified lack of finance, lack of managerial skills and training as important areas to consider in SMEs operation. Oyelana and Smith argue that these concerns must be addressed properly if the SMEs sector is to succeed in South Africa.

Yoshino and Taghizadeh-Hesary [11] revealed that SMEs made up more than 98% of Asian businesses providing two out of three private sector jobs. The authors also emphasised that functional support is vital for the sector. The study showed that SMEs face challenges such as insufficient use of information technology, limited access to finance, low research and development expenditures, lack of databases, low levels of financial inclusion and undeveloped sales channels. These were blamed for slow growth of SME businesses. However there are many other factors affecting SMEs that could have been included in the study.

Nkua et al. [12] focused on the effect of accessibility to credit on SMEs growth and operations. Nkua et al. [12] argue that credit availability is important for the survival and growth of SMEs. It is also argued that policy makers should pursue financial sector policies to boost financial intermediaries to design appropriate products and services for SMEs. In Ghana lack of adequate access to credit is a major limitation of small businesses growth. The argument is based on the premise that funds are required for investment in innovation and restructuring among other needs. This results of the study showed that a significant positive relationship between access to credit and certain attributes of a firm. Results also revealed that the following factors also affect SMEs access to bank credit: recording, business registration, asset ownership, documentation and business planning.

**217**

suitable credit schemes.

*The Factors Influencing SMEs Growth in Africa: A Case of SMEs in Zimbabwe*

advocated loan guarantee schemes and formalisation of SMEs.

Abeh [13] focused on the evaluation of different paradigms, prospects, challenges and policies towards SMEs in Delta State, Nigeria. A survey was used to collect data. The results of the study showed that the following affected the growth of SMEs; government efforts and prospects of SMEs. It was found that age and gender

Ocioo et al. [14] analysed the extent to which the SMEs were affected by competition and globalisation in Ghana. The study found that gloabalisation ushered in technological changes and greater competition levels. The study conducted a Kendall's Co-efficient of Concordance to assess the extent various challenges influenced businesses in competitiveness and globalisation. Ocioo recommended that SMEs must properly strategize to embrace the changes in the market place and culture around the globe. The study did not analyse other many other factors that have the potential to affect small business operations and growth in Ghana. Gombarume and Mavhundutse [15] assessed the challenges affecting SMEs in Chitungwiza, Zimbabwe. They also looked at SMEs accessibility to loans from formal financial institutions and the impact of government policy on their growth and operations. The study found that SMEs were getting inadequate financial support from financial institutions. However an unstable macroeconomic environment was also found to be limiting the sector's growth. Gombarume and Mavhundutse

Khalique et al. [16] considered the competitiveness of SMEs in a knowledgebased economy and explored the challenges that they face in Malaysia. The study also focused on intellectual capital and argued that it has become a lubricant of modern organisations in becoming competitive in knowledge-based economies. Decker et al. [17] acknowledged that currently the operation and development of a service that uses wireless and mobile terminals is yet to be accepted by many SMEs in developing countries. This is mainly due to market structure and technical reasons that have become obstacles mobile business. This makes it imperative to also

investigate the influence of mobile phones on SMEs operations and growth. Kazimoto [18] found that SMEs often experience challenges on meeting the standards of their products for the international market and in securing microloans at initial stages of their life. This mainly applied to unemployed starting the business. The study assessed challenges that SMEs face in meeting international marketing standards. The results showed that SMEs experience the following on the international market: ignorance of standards and regulations; inadequate financial support; lack of government support; lack of consumer knowledge; lack of vital entrepreneurial and poor networking structures. Kazimoto recommended the need for more information availability to SME owners and the government to avail funds at concessionary rates. The study also use of more adverts, latest technology, attend-

ing networking events, seminars and trainings by entrepreneurs.

hampering SMEs from formalising their business.

Turyahikayo [19] researched on challenges experienced by SMEs in raising funds in Uganda. The study used the social capital theory to show that SMEs in Uganda experience challenges in raising finance. Other challenges investigated include inadequate collateral, information opaqueness, low technical skills, poor managerial knowledge, competition, lack of professionalism and unavailability of

Tinarwo [20] studied the challenges faced by the SMEs influencing their business operations, performance and growth in Gazaland industrial area in Harare, Zimbabwe. The findings showed that lack of government support, local authority unfair treatment, stiff competition, lack of markets, lack of finance, unfair treatment from the local authority, stiff competition, lack of training and low levels of technology use. Suppliers mistrust and poor infrastructure were also highlighted as

*DOI: http://dx.doi.org/10.5772/intechopen.87192*

were not significant.

#### *The Factors Influencing SMEs Growth in Africa: A Case of SMEs in Zimbabwe DOI: http://dx.doi.org/10.5772/intechopen.87192*

Abeh [13] focused on the evaluation of different paradigms, prospects, challenges and policies towards SMEs in Delta State, Nigeria. A survey was used to collect data. The results of the study showed that the following affected the growth of SMEs; government efforts and prospects of SMEs. It was found that age and gender were not significant.

Ocioo et al. [14] analysed the extent to which the SMEs were affected by competition and globalisation in Ghana. The study found that gloabalisation ushered in technological changes and greater competition levels. The study conducted a Kendall's Co-efficient of Concordance to assess the extent various challenges influenced businesses in competitiveness and globalisation. Ocioo recommended that SMEs must properly strategize to embrace the changes in the market place and culture around the globe. The study did not analyse other many other factors that have the potential to affect small business operations and growth in Ghana.

Gombarume and Mavhundutse [15] assessed the challenges affecting SMEs in Chitungwiza, Zimbabwe. They also looked at SMEs accessibility to loans from formal financial institutions and the impact of government policy on their growth and operations. The study found that SMEs were getting inadequate financial support from financial institutions. However an unstable macroeconomic environment was also found to be limiting the sector's growth. Gombarume and Mavhundutse advocated loan guarantee schemes and formalisation of SMEs.

Khalique et al. [16] considered the competitiveness of SMEs in a knowledgebased economy and explored the challenges that they face in Malaysia. The study also focused on intellectual capital and argued that it has become a lubricant of modern organisations in becoming competitive in knowledge-based economies.

Decker et al. [17] acknowledged that currently the operation and development of a service that uses wireless and mobile terminals is yet to be accepted by many SMEs in developing countries. This is mainly due to market structure and technical reasons that have become obstacles mobile business. This makes it imperative to also investigate the influence of mobile phones on SMEs operations and growth.

Kazimoto [18] found that SMEs often experience challenges on meeting the standards of their products for the international market and in securing microloans at initial stages of their life. This mainly applied to unemployed starting the business. The study assessed challenges that SMEs face in meeting international marketing standards. The results showed that SMEs experience the following on the international market: ignorance of standards and regulations; inadequate financial support; lack of government support; lack of consumer knowledge; lack of vital entrepreneurial and poor networking structures. Kazimoto recommended the need for more information availability to SME owners and the government to avail funds at concessionary rates. The study also use of more adverts, latest technology, attending networking events, seminars and trainings by entrepreneurs.

Turyahikayo [19] researched on challenges experienced by SMEs in raising funds in Uganda. The study used the social capital theory to show that SMEs in Uganda experience challenges in raising finance. Other challenges investigated include inadequate collateral, information opaqueness, low technical skills, poor managerial knowledge, competition, lack of professionalism and unavailability of suitable credit schemes.

Tinarwo [20] studied the challenges faced by the SMEs influencing their business operations, performance and growth in Gazaland industrial area in Harare, Zimbabwe. The findings showed that lack of government support, local authority unfair treatment, stiff competition, lack of markets, lack of finance, unfair treatment from the local authority, stiff competition, lack of training and low levels of technology use. Suppliers mistrust and poor infrastructure were also highlighted as hampering SMEs from formalising their business.

*Regional Development in Africa*

**3. Literature review**

The rest of the chapter is arranged as follows: Section 3 presents Literature Review; Section 4 describes the data used; Section 5 outlines the research methods used; Section 6 reports, analyses and discusses the results; and Section 7 concludes.

There are many studies that have been done on entrepreneurship and SMEs on various issues concerning this sector. The following are some of the topics addressed in literature: security, technology use, employees, productivity, expertise, strategies and funding among others. Review of literature provides the foundation of knowledge on entrepreneurship and growth of business. There is also need for

In a study focusing on the growth challenges and opportunities of SMEs in South Africa's food processing sector Mather [8] argues that the challenges faced must be viewed from a viewpoint of restructuring South Africa's agrifood system. Using a sample of 30 companies Mather [8] found that procurement practices are the most significant obstacles to the operations of these small firms. However this finding contradicts with Hanks et al. (2008), as supply chain management (SCM) used in the country operates within a regulatory framework set by the national government may be appropriate for bigger companies. However, the study did not address other

Focusing on Small, Micro and Medium Enterprises (SMMEs) Ngcobo and Sukdeo [9] identified this sector as appropriate for job creation opportunities in SA. The study stresses the point that not many of these businesses succeed. The findings showed that challenges faced included the following: funding, regulations,

Oyelana and Smith [10] focused on SMEs in South Africa to have a greater insight on their operations. The study used data collected through questionnaires. The study identified lack of finance, lack of managerial skills and training as important areas to consider in SMEs operation. Oyelana and Smith argue that these concerns must be addressed properly if the SMEs sector is to succeed in South

Yoshino and Taghizadeh-Hesary [11] revealed that SMEs made up more than 98% of Asian businesses providing two out of three private sector jobs. The authors also emphasised that functional support is vital for the sector. The study showed that SMEs face challenges such as insufficient use of information technology, limited access to finance, low research and development expenditures, lack of databases, low levels of financial inclusion and undeveloped sales channels. These were blamed for slow growth of SME businesses. However there are many other

Nkua et al. [12] focused on the effect of accessibility to credit on SMEs growth and operations. Nkua et al. [12] argue that credit availability is important for the survival and growth of SMEs. It is also argued that policy makers should pursue financial sector policies to boost financial intermediaries to design appropriate products and services for SMEs. In Ghana lack of adequate access to credit is a major limitation of small businesses growth. The argument is based on the premise that funds are required for investment in innovation and restructuring among other needs. This results of the study showed that a significant positive relationship between access to credit and certain attributes of a firm. Results also revealed that the following factors also affect SMEs access to bank credit: recording, business registration, asset ownership, documentation and business

Identification of gaps in research in understanding the area better.

factors affecting small to medium business operations.

inaccessible markets lack of confidence and labour costs.

factors affecting SMEs that could have been included in the study.

**216**

planning.

Africa.

On a study focusing on business start-ups in Zimbabwe, Nyoni and Bonga [3] found that majority of SMEs in Zimbabwe were prompted by unprecedented a shrinking job market as many workers were laid off. Nyoni and Bonga argue that SMEs have a great potential to play a crucial position in addressing socio economic challenges such as poverty and unemployment in Zimbabwe. It is also argued that many developed economies trace their development from SMEs growth and development. The results of the study show that enterprises in Zimbabwe are mainly influenced by the following factors technology, start-up funding, marketing, management skills, education level, social networks, age of owner, government, gender and financial support.

In sum extant literature reveals that factors influencing SMEs operation and growth include: technology, start-up funding, marketing, management skills, education level, social networks, age of owner, government, gender, financial support, lack of government support, local authority unfair treatment, stiff competition and research and development. There is no study that has considered or analysed the effect of these factors in a single study, The current study seeks to consider 26 variables in investigating the determinants of SMEs profitability with special reference to Zimbabwe.
