Factors Influencing the Performance of Small & Medium Enterprises (SMEs) in Trade: Empirical Evidence from Afghanistan

In Afghanistan, the SME area is considered one of the significant supporters of the economy by providing revenue and employment to a huge extent of the population. Companies with less than 100 employees make up 80% -90% of all the country’s businesses, and they contribute 50% of the GDP and 75% of the labour force (MoCI of Afghanistan). Despite the SME’s significance to the Afghan economy, three out of five organisations fall during the first three years of activity. The failure of SMEs prompts loss of employment and thus expanded uncertainty, low liquidity in the economy, and decrease in financial development There had been significant challenges of restricted resources, consequently causing SMEs to be overseen in non-proficient structures as a large number of the business entrepreneurs lacked adequate resources to successfully connect all elements of production sufficiently. Human resources stay to be the biggest causality as the owners infrequently put resources into this. The absence of specialisation of obligations and feeble administration issues leave these little firms inclined to have distorted reports. The financial reports, which give a general outline of the financial strength of the organisation, may, on occasion, give false information as the books of account are set up by individuals with restricted knowledge and experience. In situations where the finance staff are very much prepared, they, for the most part, become overpowered as they assume various parts, remembering going about as human resources for charge, organisation director and operations manager. There is no new research on factors influencing the financial performance of SMEs in various zones around Afghanistan. Notwithstanding, none of these investigations has focused on the factors that influence the financial performance of small and medium enterprises (SMEs) in Afghanistan.