Causes of failure of Micro, Small and Medium-sized enterprises in the Province of Bengo, for the period 2012 - 2017

Abstract

The objective of this research was to examine the factors underlying the failure of SMEs in Bengo from 2012 to 2017, and the specific objectives were: to identify the number of SMEs created and the number of SMEs that went bankrupt during the period under analysis, and to identify the main internal and external factors causing the failure of SMEs in Bengo. The research is explanatory, bibliographic, and documentary, with quantitative and qualitative (mixed) approaches. A sample of 31 SMEs was aggregated, consisting of 15 micro-enterprises, 10 small enterprises, and six medium enterprises. A survey was conducted using questionnaires sent to the National Institute for the Support of Small and Medium Enterprises (INAPEM), 21 former owners, and 29 former employees of SMEs that went bankrupt during the study period. SME bankruptcies in Bengo resulted from a combination of internal and external factors. The most frequently cited internal environmental factors were financial problems (low working capital; limited financial and accounting management skills), lack of management ability, lack of market vision, and the owner's death. The most frequently mentioned external environmental factors were lack of bank financing, economic crisis, low customer purchasing power, high tax rates, companies' dependence on public spending, high interest rates, and deteriorating access roads.