Microfinance as a Driver of Small and Medium Enterprise Growth in Zimbabwe: Insightsfrom Market Vendors in Masvingo

Abstract

This study investigated the role of microfinance in influencing the growth, sustainability, and resilience of small and medium enterprises (SMEs) operating in a market in Masvingo, Zimbabwe, with emphasis on the support provided by microfinance institutions (MFIs). The research sought to explore vendors’ experiences with microfinance services, assess the role of MFIs in facilitating financial inclusion, identify operational and institutional barriers, and evaluate non-financial effects such as empowerment, skills development, and client relationship dynamics. The qualitative research approach was employed, with semi-structured interviews conducted with ten vendors and five MFI representatives purposively selected based on their active engagement in microfinance programs. Thematic analysis of the data revealed that access to microfinance significantly enhanced business growth, operational efficiency, and resilience, while training, mentorship, and financial literacy initiatives improved planning, record-keeping, and strategic decision-making. MFIs highlighted challenges including staff shortages, resource constraints, and difficulties in assessing creditworthiness for informal businesses, while vendors identified cumbersome application procedures, high collateral requirements, and rigid repayment schedules as barriers to effective loan utilisation. Non-financial benefits, including increased confidence, autonomy, entrepreneurial skills, and strengthened vendor–MFI relationships, were also found to contribute to SME sustainability. The study recommends that microfinance institutions adopt flexible, inclusive, and supportive strategies, including alternative collateral mechanisms, streamlined application processes, tailored loan products, and expanded training and mentorship programs, to maximise both financial and non-financial impacts.