Abstract
Micro, Small and Medium Enterprises (MSMEs) are increasingly becoming the dominant players in the economies of most countries especially in Sub Saharan Africa, constituting 97% to 99% of industry. What is worrisome though, is the high rate of failure and absence of growth in this sector despite various interventions to promote their growth which is inhibiting the contribution to economic development. This study sought to determine whether the size of enterprise affects the impact of various determinants of MSMEs growth in Zimbabwe. It used 2012 Finscope national MSMEs survey data which was modeled using probit model on a sample of 3222 MSMEs with growth as the binary dependent variable. The sector was divided into three main categories being individual, micro and the small to medium categories. The growth determinants that proved robust include, age of the firm, motivation, and education background of entrepreneur and sector whose coefficients were found to be significant in at least two of the three subcategories in addition to being significant in the main overall model. The legal form, tax status, banking status, exports and prior sector experience variables produced mixed results with coefficients being significant in at least one of the three subcategories to reflect peculiarities in the respective categories which had been lost in the aggregated model. Thus, for MSMEs growth policies to be effective, there is need to incorporate these peculiarities with respect to various size categories.
Highlights
IntroductionIn the Organisation for Economic Co-operation and Development (OECD) area, MSMEs constitute approximately 99% of all firms, accounting for about 70% of employment and 50% - 60% of value addition (OECD, 2017)
The majority (56%) of the respondents revealed that they were in business out of necessity while a mere 7% confessed to having prior sector experience before venturing into business
On age of the firm, the results are consistent with the findings by Woldie, Leighton and Adesua (2008) who concluded that young firms tend to have better chances of growth than older firms as old firms suffer productivity losses as they become older due to failure to invest sufficiently in existing or emerging technologies
Summary
In the Organisation for Economic Co-operation and Development (OECD) area, MSMEs constitute approximately 99% of all firms, accounting for about 70% of employment and 50% - 60% of value addition (OECD, 2017). Estimates of their contribution to GDP range from 12% to 60% and even higher when informal small businesses’ contribution is considered (IFC, 2010). It has become increasingly imperative that MSMEs are growing sustainably in order to accommodate new players from the previously marginalised groups which include women. The architecture of MSMEs sector in developing countries is such that women are the dominant players; promoting growth of MSMEs becomes a means to achieve equity and gender-related goals
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