Conclusions have been drawn by researchers that women have always been subjected to discrimination in various spheres of life including the socio-economic, politics, legal matters, education and in the work place (Dune and Mapedzahama, 2017; Wirth, 2001). Furthermore, Carter and Silva (2010) are of the view that while both men and women may have similar qualifications women’s education tends to be devalued positioning them on the periphery of the job market, where they remain in low paying jobs while men take up leadership positions. Derera (2015) concluded that most women in Zimbabwe are still dominating the informal sector.
Furthermore, Wright et al., (2015), Henry et al. (2015) and Davidson and Wiklund (2000), established that the reason for the lack of informed knowledge among women-owned SMESs is that the literature in this sector is extremely fragmented. This notion affirms the existing paucity of research about the bank SMES lending criteria and gender issues related to lending in Gweru, Zimbabwe. At present, seventy percent of women-owned SMESs in the emerging economies experience difficulties in accessing business financing (Zhu and Kuriyama, 2016). Women-owned SMESs are either excluded by banks or financers or only access high-interest or short-range funding (International Finance Corporation, 2017). Women-owned SMESs also face other limitations which include inadequate availability of technology and knowledge capacities and business development (Zhu and Kuriyama, 2016).
2.5 Comparison of funding opportunities and gaps between developed and developing countries
Reviewing literature on funding in developed countries provides the study with a comparative knowledge of the challenges and information of how women-owned SMESs in developed countries source their business funding. Shi (2012) observes that the successful establishment of the China Association of Women-owned SMES economic model in 1995 enhanced the situation of women- owned SMESs at a faster rate in China. The China Association of Women-owned SMES (2013) released data which confirmed that 25 percent of all enterprises belong to women-owned SMESs.
Shi (2012) further affirms that these women are more educated than men, enthusiastic about their future and progressively expected to seek trade information from the internet and reach worldwide markets (Henry et al., 2015).
Regardless of some SMES’s ability to obtain adequate funding from banks or financiers and other investors, the funding gap continues to affect female entrepreneurs (OECD, 2015). The economic environment contributes to whether an economy experiences a funding gap; it rests on which on environmental factors sufficiently influencing its operational conditions to enable borrower and creditors’ confidence towards interaction with each other at an arm’s length basis (OECD, 2015).The Organisation for Economic Cooperation and Development (OECD, 2006), bankers recognise women-owned SMES funding as a profitable line of commercial activities leading to the development of operational monitoring techniques, and; confirm that member economies limit public access to information about the general women-owned SMES funding gap. According to Cruz-Cunha (2010), SMESs generally make up the bulk segment of enterprises, worker engagement, and production in various embryonic and developing countries. However, SMESs acquire a relatively negligible portion of business funding (Cruz-Cunha, 2010). The bulk of SMESs are frequently deprived of the right to formal funding markets (Naala et al., 2017; Kalafatoglu et al., 2017).
The emerging markets experience the phenomenon of informality (OECD, 2015:9) with many enterprises operating outside the formal system (Cruz-Cunha, 2010). This development is comprised of three factors in favour of informality, which are reputable funding organizations or banks’ lack interest in having big business with SMES; therefore, there exist only a few affirmative incentives to function ethically (Kalafatoglu et al., 2017). In the second instance, SMESs look for ways to evade directives and taxation attached to the recognized business sector (Naala et al., 2017). The third factor is that governments have no managerial capacity to enforce laws and regulations (OECD, 2016). Crucial to the theories emerging from the developed framework researched is the conception emanating from statistical asymmetries leading to sub-optimal movements of funding availed to SMES in comparison to larger corporations (Claessens, 2016).
In Table 2.1 the researcher to compares the business funding environments between the developed countries and developing countries.
Table 2.1: Comparison between funding environment in developed and developing countries
Small Firms in the UK Small Firms in Low Income
(developing) Countries
• Small firms have a high reliance on short term financing through the banking sector
• A low proportion of their assets are financed by shareholders so debt to equity ratios are relatively high compared to larger firms
• Fixed assets are relatively unimportant in the balance sheets of smaller firms
• Trade credit and trade debt are relatively important
• Importance of leasing and hire purchase and venture capital
• Small firms have higher transactions costs than larger firms
• Smaller firms have greater information imperfections than larger firms
• Smaller firms have poor business planning lack of interfirm cooperation between small firms weakens relations with financial institutions
• Small firms rely on formal and informal sectors for short term finance
• Family and friends contribute a high proportion towards financing small firms’ assets
• Unestablished
• Unestablished
• Relatively less important
• Confirmed
• Confirmed
• More significant in developing countries particularly with respect to financial accounting and management
• Networks shown to be important but little research on relations with financial institutions
Source: Cook and Nixson (2000)
Evidence from Table 2.1 shows that small firms in the United Kingdom (UK) are operating in more supportive business environments than those operating from low-income countries. Women-owned SMESs in Zimbabwe are not exempt. Research has been carried out on the performance of numerous banks or financiers providing funding to SMESs in developed countries which shows preferential treatment of other citizens (Aizenman, Chinn and Ito, 2016; Binks, Ennew and Reed, 1992). Thus, in Table2.1, it can be argued that small businesses in the United Kingdom benefit from a well-structured environment which gives access to business funding to all sectors of business, women SMES owners or managers included.
Insight from several studies on the differences of funding opportunities and growth prospects between SMESs in developed and in developing countries show that developing countries are lagging (Usher and Touhami, 2006; Henry et al., 2015; Naala et al., 2017; Kalafatoglu et al., 2017;
Cook and Nixson, 2000). Small businesses, for example, do not require providing assets as collateral towards acquiring a business loan in the UK, unlike in the developing countries. Such
ease of access to loans is based on concepts that elaborate on models of borrowing performance grounded in an SMES intervention framework.