WORKING CAPITAL MANAGEMENT IN LIQUIDTY-CONSTRAINED ECONOMY: A CASE OF ZIMBABWEAN STOCK EXCHANGE-LISTED FIRMS IN THE MULTI-CURRENCY ERA

Accounting

This study explores the management of working capital in non-financial companies listed in Zimbabwe, focusing on the period since the adoption of the multi-currency regime in 2009. This regime was implemented to revive the country's economy after years of political, social, and economic challenges. Coinciding with the global economic recovery from a severe recession, the multi-currency regime exacerbated liquidity issues faced by Zimbabwean companies. To investigate this topic, data was collected from 55 companies listed on the Zimbabwe Stock Exchange during the period of 2017-2022. Descriptive statistics and trend analysis techniques were employed to analyze the data. The findings reveal that these Zimbabwean companies heavily rely on trade credit as a primary source of short-term financing. Furthermore, their main investments in working capital are directed towards trade receivables and inventory. The study concludes that in countries where accessing funding from formal capital markets is difficult for companies, trade credit plays a vital role. It serves as a significant means of financing working capital requirements. The author suggests further exploration of this subject by developing an econometric model to analyze the financing of working capital and investment strategies employed by listed firms in Zimbabwe. Understanding the working capital management practices in Zimbabwe is crucial for policymakers, investors, and business practitioners. By investigating the financing sources and investment patterns of listed companies, this research contributes valuable insights into the financial dynamics of the Zimbabwean economy. Furthermore, it provides recommendations for potential improvements in working capital management and encourages further research in this area.

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