An Assessment of Informal SMEs Governance Practices: A Case Study of SMEs in Harare CBD.

Abstract

The study sought to assess the impact of implementing governance practices on the performance of Small and Medium Enterprise (SMEs) in the clothing sector operating in Harare’s CBD, Zimbabwe. Primary data was obtained mainly from structured interviews accompanied by questionnaires that sought to gather general information about the respondents. Face to face, verbal interviews were used to collect data during the study. The study made use of a sample that consisted of 100 respondents drawn from the target population using purposive sampling. The research study revealed that firms that implement corporate governance practices are more productive and perform well financially as compared to those that do not implement governance practices. The study also revealed that firms with corporate governance practices have better chances of surviving and acquiring funding for expansion and growth from banks and finance companies. The study concludes that governance practices impact the performance of SMEs operating in Harare’s CBD including their ability to introduce strategic changes. To encourage adoption of corporate governance practices by SMEs, government is encouraged to make the Code of Corporate Governance more relevant to SMEs as well as raising awareness through training and information dissemination.