Survival strategies for SMES in hyperinflationary environments: lessons from SMES in Harare Central Business District.

Abstract

Lack of credit led to the failure of many Small to Medium Enterprises (SMEs) in Zimbabwe from 2005 to 2009 when inflation peaked at 231 million percent. The article attempted to determine how SMEs survived during this period. Survey data collected from 120 SMEs in Harare was analyzed using descriptive statistics. Results show that SMEs encountering credit constraints use illegal strategies such as hoarding of stock and converting cash sales to stable currencies in the black market. The article demonstrates that policy makers should create a stable operating environment in order to benefit from SME participation in the economy.