Impact of the COVID-19 pandemic on survival of MSMEs in Zimbabwe

Published: Sep 13, 2023

Abstract:

Purpose: This study aimed to assess the impact of COVID-19 and its associated lockdowns on the survival of micro, small, and medium enterprises (MSMEs) in Zimbabwe, where more than 60 percent of economic activity is conducted through MSMEs.

Research methodology: This study was conducted through an online survey of 447 individuals representing MSMEs operating in Zimbabwe. Data were analyzed using the statistical package for social sciences (SPSS), guided by a binary logistic regression model, to assess the impact of COVID-19 on the survival of MSMEs in Zimbabwe.

Results: The model showed that the independent variables had a significant impact on the survival of MSMEs, with an overall accuracy of 87.9% in predicting the effects of COVID-19 on the survival of MSMEs. The study concluded that many MSMEs in Zimbabwe were negatively affected by the COVID-19 lockdown, except for those in strategic economic sectors that were not required to close their operations during the lockdowns.

Limitations: The major limitation of the study was the low response rate of MSMEs operators from remote areas who could not respond to the online survey because of the nature of their business operations, which is survivalistic in nature and would not afford them time to respond to the survey.

Contribution: The study recommends the provision of financial rescue packages by the government, development partners, civic organizations, and government policy realignment to ensure that MSMEs are resuscitated after lockdowns have been lifted.

Novelty: This study contributes to the post-COVID-19 discourse, as global economies are rebuilding after the relaxation of COVID-19 related business operation restrictions. This is more important for developing countries that are most negatively affected and require their economies to recover from COVID-19 related economic depression.

Keywords:
1. MSMEs
2. COVID-19
3. Zimbabwe
4. Lockdown
5. Resource Constrained Country
Authors:
1 . Tonderai Kapesa
https://orcid.org/0000-0002-5637-3047
2 . Brighton Nyagadza
https://orcid.org/0000-0001-7226-0635
3 . Gift Mugano
https://orcid.org/0000-0002-9392-6173
4 . Alexander Cheza
https://orcid.org/0000-0002-4730-3151
How to Cite
Kapesa, T., Nyagadza, B., Mugano, G., & Cheza, A. (2023). Impact of the COVID-19 pandemic on survival of MSMEs in Zimbabwe. International Journal of Financial, Accounting, and Management, 5(2), 179–194. https://doi.org/10.35912/ijfam.v5i2.1329

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References

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    Abubakar, A. (2020). Coronavirus (COVID-19): effect and survival strategy for businesses. Journal of Economics and Business, 3(2).

    Anoke, F., Ngozi, N. H., Uchechukwu, E. S., & Joyce, I. (2022). Entrepreneurial Marketing And SMEs Growth In Post Covid-19 Era In Awka, Anambra State, Nigeria. International Journal of Financial, Accounting, and Management, 4(2), 115-127.

    Bharti, S. S. (2021). Socio-Economic Impact of COVID-19 Pandemic on Small and Medium-scale Enterprises (SMEs) in India. Annals of Management and Organization Research, 3(2), 129-139.

    Bomani, M., Fields, Z., & Derera, E. (2015). Historical overview of small and medium enterprise policies in Zimbabwe. Journal of Social Sciences, 45(2), 113-129.

    Bouey, J. (2020). Assessment of COVID-19's Impact on small and medium-sized enterprises: Implications from China: Testimony of Jennifer Bouey, before the US House Committee on Small Business, March 10, 2020. Paper presented at the Rand Corporation.

    Centre, I. T. (2020). COVID-19: The Great Lockdown and its Impact on Small Business: International Trade and Investment.

    Chigora, F., Kapesa, T., & Svongoro, P. (2021). Revisiting nation branding: An infrastructure financing perspective in Zimbabwe. International Journal of Financial, Accounting, and Management, 3(2), 179-192.

    Chinembiri, T. (2011). Exploring the role of Small and Medium Enterprises in economic development: Some policy considerations for Zimbabwe. Retrieved from

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    Daubie, M., & Meskens, N. (2002). Business failure prediction: a review and analysis of the literature. New trends in banking management, 71-86.

    Di Domenico, L., Pullano, G., Sabbatini, C. E., Boëlle, P.-Y., & Colizza, V. (2020). Impact of lockdown on COVID-19 epidemic in Île-de-France and possible exit strategies. BMC medicine, 18(1), 1-13.

    Di Gennaro, F., Pizzol, D., Marotta, C., Antunes, M., Racalbuto, V., Veronese, N., & Smith, L. (2020). Coronavirus diseases (COVID-19) current status and future perspectives: a narrative review. International journal of environmental research and public health, 17(8), 2690.

    DSBD. (2017). Comparative Analysis of SMME legislation from eight countries to the National Small Business Act No 102 of 1996, as amended in 2003 and 2004. Retrieved from http://www.dsbd.gov.za/report/comparative-analysis-smme-legislation-eight-countries-national-small-business-act

    DSBD. (2019). Revised Shedule 1 of the National Definition of Small Enterprise in South Africa.

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    Harapan, H., Itoh, N., Yufika, A., Winardi, W., Keam, S., Te, H., . . . Mudatsir, M. (2020). Coronavirus disease 2019 (COVID-19): A literature review. Journal of infection and public health, 13(5), 667-673.

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    Kapesa, T., Kufakunesu, F., & Cheza, A. (2021). Financing the ‘working of talents’ Ventures: The Role of Innovative Finance Matarenda/Talents in Zimbabwean Pentecostalism (pp. 49-75): Brill.

    Karedza, G., & Govender, K. K. (2017). Enhancing the export performance of the SMEs in the manufacturing sector in Zimbabwe. Academy of Marketing Studies Journal, 21(2), 1-19.

    Khatri, P. (2019). A Study of the Challenges of the Indian MSME Sector. IOSR Journal of Business and Management, 21(2), 05-13.

    Kooli, C. (2020). Islamic financing initiatives stimulating SMEs creation in Muslim Countries. Journal of Islamic Research, 31(2), 266-279.

    Kooli, C. (2021). COVID-19 and the mental health of professionals in the health sector in the UAE: An analytical study. Avicenna, 2021(2), 9.

    Kooli, C., & Lock Son, M. (2021). Impact of COVID-19 on mergers, acquisitions & corporate restructurings. Businesses, 1(2), 102-114.

    Kooli, C., lock Son, M., & Beloufa, I. (2022). Business ethics in the era of COVID 19: How to protect jobs and employment rights through innovation. Avicenna, 2022(2), 7.

    Kooli, C., Shanikat, M., & Kanakriyah, R. (2022). Towards a new model of productive Islamic financial mechanisms. International Journal of Business Performance Management, 23(1-2), 17-33.

    Majoni, T., Matunhu, J., & Chaderopa, B. (2016). SMEs policies and challenges: A comparative analysis of Zimbabwe and South Korea. International Journal of Scientific and Research Publications, 6(6), 377-384.

    Maliszewska, M., Mattoo, A., & Van Der Mensbrugghe, D. (2020). The potential impact of COVID-19 on GDP and trade: A preliminary assessment. World Bank policy research working paper(9211).

    Messabia, N., Fomi, P.-R., & Kooli, C. (2022). Managing restaurants during the COVID-19 crisis: Innovating to survive and prosper. Journal of Innovation & Knowledge, 7(4), 100234.

    Naab, R., & Bans-Akutey, A. (2021). Assessing the use of e-business strategies by SMEs in Ghana during the Covid-19 pandemic. Annals of Management and Organization Research, 2(3), 145-160.

    Perspectives, B. (2020). COVID-19 Facts, scenarios, and actions for leaders: Version.

    Ponto, J. (2015). Understanding and evaluating survey research. Journal of the advanced practitioner in oncology, 6(2), 168.

    Sahin, A.-R., Erdogan, A., Agaoglu, P. M., Dineri, Y., Cakirci, A.-Y., Senel, M.-E., . . . Tasdogan, A.-M. (2020). 2019 novel coronavirus (COVID-19) outbreak: a review of the current literature. EJMO, 4(1), 1-7.

    Seifert, R. W., & Markoff, R. (2020). Digesting the shocks: how supply chains are adapting to the COVID-19 lockdowns. IMD. https://www. imd. org/researchknowledge/articles/supply-chains-adapting-to-COVID-19.

    She, J., Liu, L., & Liu, W. (2020). COVID?19 epidemic: disease characteristics in children. Journal of medical virology, 92(7), 747-754.

    Sugiarto, I. (2018). Obstacles and challenges in the development of MSMEs: case study. Budapest International Research and Critics Institute (BIRCI-Journal): Humanities and Social Sciences, 1(4), 93-98.

    TechnoServe. (2020). COVID-19 and Entrepreneurs in the Developing World: Supporting Business Survival and Recovery. Retrieved from

    WHO. (2020). Coronavirus disease 2019 (COVID-19) Situation Report–32. Retrieved from

    Yoshino, N., & Taghizadeh Hesary, F. (2016). Major challenges facing small and medium-sized enterprises in Asia and solutions for mitigating them.

    Zindiye, S., Chiliya, N., & Masocha, R. (2012). The impact of Government and other Institutions' support on the Performance of Small and Medium Enterprises in the Manufacturing Sector in Harare, Zimbabwe. International Journal of Business Management & Economic Research, 3(6).

  1. Abdelghaffar, W., Haloui, N., Bouchrika, N., Yaakoubi, S., Sarhane, A., Kalai, E., . . . Bourgou, S. (2021). Psychological support unit design and implementation during COVID-19 pandemic: Case of Mongi Slim Hospital, Tunisia. Avicenna, 2021(1), 2.
  2. Abubakar, A. (2020). Coronavirus (COVID-19): effect and survival strategy for businesses. Journal of Economics and Business, 3(2).
  3. Anoke, F., Ngozi, N. H., Uchechukwu, E. S., & Joyce, I. (2022). Entrepreneurial Marketing And SMEs Growth In Post Covid-19 Era In Awka, Anambra State, Nigeria. International Journal of Financial, Accounting, and Management, 4(2), 115-127.
  4. Bharti, S. S. (2021). Socio-Economic Impact of COVID-19 Pandemic on Small and Medium-scale Enterprises (SMEs) in India. Annals of Management and Organization Research, 3(2), 129-139.
  5. Bomani, M., Fields, Z., & Derera, E. (2015). Historical overview of small and medium enterprise policies in Zimbabwe. Journal of Social Sciences, 45(2), 113-129.
  6. Bouey, J. (2020). Assessment of COVID-19's Impact on small and medium-sized enterprises: Implications from China: Testimony of Jennifer Bouey, before the US House Committee on Small Business, March 10, 2020. Paper presented at the Rand Corporation.
  7. Centre, I. T. (2020). COVID-19: The Great Lockdown and its Impact on Small Business: International Trade and Investment.
  8. Chigora, F., Kapesa, T., & Svongoro, P. (2021). Revisiting nation branding: An infrastructure financing perspective in Zimbabwe. International Journal of Financial, Accounting, and Management, 3(2), 179-192.
  9. Chinembiri, T. (2011). Exploring the role of Small and Medium Enterprises in economic development: Some policy considerations for Zimbabwe. Retrieved from
  10. Chivasa, S. (2014). Entrepreneurship culture among SMEs in Zimbabwe: A case of Bulawayo SMEs. International Journal of Economics, Commerce and Management, 2(9), 1-13.
  11. Daubie, M., & Meskens, N. (2002). Business failure prediction: a review and analysis of the literature. New trends in banking management, 71-86.
  12. Di Domenico, L., Pullano, G., Sabbatini, C. E., Boëlle, P.-Y., & Colizza, V. (2020). Impact of lockdown on COVID-19 epidemic in Île-de-France and possible exit strategies. BMC medicine, 18(1), 1-13.
  13. Di Gennaro, F., Pizzol, D., Marotta, C., Antunes, M., Racalbuto, V., Veronese, N., & Smith, L. (2020). Coronavirus diseases (COVID-19) current status and future perspectives: a narrative review. International journal of environmental research and public health, 17(8), 2690.
  14. DSBD. (2017). Comparative Analysis of SMME legislation from eight countries to the National Small Business Act No 102 of 1996, as amended in 2003 and 2004. Retrieved from http://www.dsbd.gov.za/report/comparative-analysis-smme-legislation-eight-countries-national-small-business-act
  15. DSBD. (2019). Revised Shedule 1 of the National Definition of Small Enterprise in South Africa.
  16. Durica, M., Valaskova, K., & Janoskova, K. (2019). Logit business failure prediction in V4 countries. Engineering Management in Production and Services, 11(4), 54-64.
  17. Harapan, H., Itoh, N., Yufika, A., Winardi, W., Keam, S., Te, H., . . . Mudatsir, M. (2020). Coronavirus disease 2019 (COVID-19): A literature review. Journal of infection and public health, 13(5), 667-673.
  18. Jackson, J. K., Weiss, M. A., Schwarzenberg, A. B., & Nelson, R. M. (2020). Global Economic Effects of COVID-19.
  19. Kapesa, T., Kufakunesu, F., & Cheza, A. (2021). Financing the ‘working of talents’ Ventures: The Role of Innovative Finance Matarenda/Talents in Zimbabwean Pentecostalism (pp. 49-75): Brill.
  20. Karedza, G., & Govender, K. K. (2017). Enhancing the export performance of the SMEs in the manufacturing sector in Zimbabwe. Academy of Marketing Studies Journal, 21(2), 1-19.
  21. Khatri, P. (2019). A Study of the Challenges of the Indian MSME Sector. IOSR Journal of Business and Management, 21(2), 05-13.
  22. Kooli, C. (2020). Islamic financing initiatives stimulating SMEs creation in Muslim Countries. Journal of Islamic Research, 31(2), 266-279.
  23. Kooli, C. (2021). COVID-19 and the mental health of professionals in the health sector in the UAE: An analytical study. Avicenna, 2021(2), 9.
  24. Kooli, C., & Lock Son, M. (2021). Impact of COVID-19 on mergers, acquisitions & corporate restructurings. Businesses, 1(2), 102-114.
  25. Kooli, C., lock Son, M., & Beloufa, I. (2022). Business ethics in the era of COVID 19: How to protect jobs and employment rights through innovation. Avicenna, 2022(2), 7.
  26. Kooli, C., Shanikat, M., & Kanakriyah, R. (2022). Towards a new model of productive Islamic financial mechanisms. International Journal of Business Performance Management, 23(1-2), 17-33.
  27. Majoni, T., Matunhu, J., & Chaderopa, B. (2016). SMEs policies and challenges: A comparative analysis of Zimbabwe and South Korea. International Journal of Scientific and Research Publications, 6(6), 377-384.
  28. Maliszewska, M., Mattoo, A., & Van Der Mensbrugghe, D. (2020). The potential impact of COVID-19 on GDP and trade: A preliminary assessment. World Bank policy research working paper(9211).
  29. Messabia, N., Fomi, P.-R., & Kooli, C. (2022). Managing restaurants during the COVID-19 crisis: Innovating to survive and prosper. Journal of Innovation & Knowledge, 7(4), 100234.
  30. Naab, R., & Bans-Akutey, A. (2021). Assessing the use of e-business strategies by SMEs in Ghana during the Covid-19 pandemic. Annals of Management and Organization Research, 2(3), 145-160.
  31. Perspectives, B. (2020). COVID-19 Facts, scenarios, and actions for leaders: Version.
  32. Ponto, J. (2015). Understanding and evaluating survey research. Journal of the advanced practitioner in oncology, 6(2), 168.
  33. Sahin, A.-R., Erdogan, A., Agaoglu, P. M., Dineri, Y., Cakirci, A.-Y., Senel, M.-E., . . . Tasdogan, A.-M. (2020). 2019 novel coronavirus (COVID-19) outbreak: a review of the current literature. EJMO, 4(1), 1-7.
  34. Seifert, R. W., & Markoff, R. (2020). Digesting the shocks: how supply chains are adapting to the COVID-19 lockdowns. IMD. https://www. imd. org/researchknowledge/articles/supply-chains-adapting-to-COVID-19.
  35. She, J., Liu, L., & Liu, W. (2020). COVID?19 epidemic: disease characteristics in children. Journal of medical virology, 92(7), 747-754.
  36. Sugiarto, I. (2018). Obstacles and challenges in the development of MSMEs: case study. Budapest International Research and Critics Institute (BIRCI-Journal): Humanities and Social Sciences, 1(4), 93-98.
  37. TechnoServe. (2020). COVID-19 and Entrepreneurs in the Developing World: Supporting Business Survival and Recovery. Retrieved from
  38. WHO. (2020). Coronavirus disease 2019 (COVID-19) Situation Report–32. Retrieved from
  39. Yoshino, N., & Taghizadeh Hesary, F. (2016). Major challenges facing small and medium-sized enterprises in Asia and solutions for mitigating them.
  40. Zindiye, S., Chiliya, N., & Masocha, R. (2012). The impact of Government and other Institutions' support on the Performance of Small and Medium Enterprises in the Manufacturing Sector in Harare, Zimbabwe. International Journal of Business Management & Economic Research, 3(6).