Coach Stephen Mukuka Ph.D …talking Business Strategy and Entrepreneurship

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Coach Stephen Mukuka Ph.D …talking
Business Strategy and Entrepreneurship

steve.mukuka@gmail.com +26061330010

Coach Stephen Mukuka Ph.D:

Supporting SMEs: A Key Strategy for Boosting Economic Resilience in Zambia

Small and Medium Enterprises (SMEs) have long been recognized as vital contributors to economic growth, job creation, and social stability. In Zambia, the potential of SMEs to drive economic resilience is often overlooked. However, with the right support, SMEs can become a cornerstone of Zambia’s economic recovery, diversification, and sustainable growth. As the country grapples with challenges such as rising unemployment, inflationary pressures, and an over-reliance on copper exports, focusing on SMEs can play a transformative role in reshaping Zambia’s economic outlook.
The Importance of SMEs in Zambia’s Economy
SMEs are the backbone of many economies worldwide, and Zambia is no exception. According to the Zambia Development Agency (ZDA), SMEs represent about 97% of all businesses in the country and contribute approximately 40% to the Gross Domestic Product (GDP) and 60% of total employment. These enterprises operate across various sectors, including agriculture, manufacturing, retail, construction, and services. Given their widespread presence and potential to drive local innovation, SMEs have the ability to diversify Zambia’s economy, reduce dependence on copper, and stimulate inclusive growth.
However, SMEs in Zambia face numerous challenges, including inadequate access to finance, high operational costs, poor infrastructure, and complex regulatory environments. For Zambia to harness the full potential of its SME sector, it must implement policies and strategies that address these barriers while fostering an environment conducive to growth and development.
Key Strategies for Harnessing the Power of SMEs
1. Access to Finance
One of the most significant challenges faced by SMEs in Zambia is limited access to affordable financing. According to a 2020 – 2023 report by the Bank of Zambia, less than 10% of SMEs have access to formal credit, largely due to high-interest rates and stringent lending criteria. This is a major obstacle for business expansion, innovation, and job creation.
To address this, the Zambian government could enhance initiatives like the Development Bank of Zambia (DBZ) and the Lusaka Stock Exchange (LuSE), which focus on facilitating access to credit for SMEs. Additionally, creating a more robust and accessible financial ecosystem—such as providing credit guarantees, supporting micro-finance institutions, and incentivizing private investors—could enable SMEs to grow and scale. The creation of government-backed funds or grants specifically targeted at startups in key sectors like agriculture, manufacturing, and renewable energy would provide much-needed liquidity for entrepreneurs.
2. Simplification of Regulatory Processes
Regulatory and bureaucratic hurdles often stifle the growth of SMEs in Zambia. According to the World Bank’s Doing Business report, Zambia ranks poorly in terms of starting a business, registering property, and enforcing contracts. To foster entrepreneurship, Zambia must streamline its regulatory frameworks and make it easier for businesses to start, operate, and grow.
This could include digitizing business registration processes, reducing the time and cost of obtaining permits, and enhancing transparency in tax administration. Moreover, strengthening the capacity of Zambia’s Competition and Consumer Protection Commission (CCPC) to enforce fair practices could further level the playing field for SMEs, ensuring they are not overburdened by unfair competition from larger, more established players.
3. Infrastructure Development
The lack of reliable infrastructure—such as electricity, transportation, and digital connectivity—remains a major bottleneck for SMEs in Zambia. Many small businesses, both in urban and rural areas, struggle with inconsistent power supply, poor road networks, and limited access to information and communication technology (ICT). (bad networks)
To overcome these challenges, the Zambian government must prioritize infrastructure development in its national budget and economic plans. Projects aimed at improving roads, expanding electricity grids, and increasing broadband access would significantly reduce operating costs for SMEs, allowing them to become more competitive and efficient. Furthermore, creating industrial parks with shared facilities and resources can offer small businesses a cost-effective way to scale.
4. Training and Capacity Building
Skills development and capacity building are essential for enhancing the productivity and sustainability of SMEs. Many entrepreneurs in Zambia face challenges related to business management, financial literacy, marketing, and technology adoption. To support SMEs in this regard, the government could collaborate with business associations, local universities, and international organizations to offer training programs focused on entrepreneurship, financial management, and innovation.
The Technical Education, Vocational and Entrepreneurship Training Authority (TEVETA) could play a key role in equipping SMEs with the necessary skills, while also addressing the country’s skills gap. Programs aimed at building the capacity of small businesses to access digital platforms, adopt modern technologies, and improve their supply chain management will be crucial for ensuring long-term competitiveness in a rapidly evolving global economy.
5. Government Incentives and Fiscal Policies
Zambia’s fiscal policies and government incentives play a crucial role in stimulating SME growth. The current National Budget and Economic Recovery Program (2021-2024) highlight the importance of SMEs in the context of economic recovery. However, these policies need to go further in directly supporting SMEs through targeted tax breaks, subsidies, and incentives. For instance, the introduction of tax relief for SMEs in the manufacturing, agriculture, and tech sectors could encourage investment and expansion this is due to extended electricity rationing and bad networks being experienced.
In addition, policies that promote public-private partnerships (PPPs) can help address the funding gap faced by SMEs. The government should consider offering subsidies for technology adoption, export facilitation programs, and tax deductions for SMEs that hire local talent or invest in sustainable practices.
6. Export Promotion and Regional Integration
For SMEs to grow sustainably, access to external markets is crucial. The African Continental Free Trade Area (AfCFTA) presents an opportunity for Zambian SMEs to tap into larger regional markets, this is called internationalization of a business’s operations, particularly for agro-processing, manufacturing, and consumer goods. To make the most of this opportunity, the government must create export-oriented policies that reduce trade barriers, simplify customs procedures, and help SMEs access international trade platforms.
Moreover, supporting local SMEs to engage in regional and global value chains could provide avenues for business expansion. Promoting Zambian-made products abroad and offering training in export standards would help position SMEs as key players in the global market.
The Role of the Zambian Government’s Economic Plans
The 2023-2024 National Budgets and the Economic Recovery Program outlined several priorities that can positively impact the SME sector. These included fostering a conducive environment for business development, promoting industrialization, and enhancing trade. However, for these strategies to succeed, it is crucial for the government to prioritize the SME sector as a central pillar of economic growth in the 2025 plan.
In particular, the government’s commitment to improving business regulations, expanding digital infrastructure, and addressing energy challenges will directly support SMEs in realizing their full potential. Furthermore, by aligning fiscal policies with long-term objectives for diversification and inclusivity, Zambia can transition from a copper-dependent economy to one that is diverse, resilient, and driven by innovation and entrepreneurship.
Conclusion
Supporting SMEs is more than just an economic policy; it is a long-term strategy for ensuring economic resilience in Zambia. By addressing the challenges faced by small businesses—ranging from finance and infrastructure to regulation and skills development—the government can create a robust ecosystem that enables SMEs to thrive. In doing so, Zambia will not only achieve greater economic diversification but also reduce unemployment, alleviate poverty, and secure a prosperous future for generations to come.
To harness the full potential of SMEs, the government must adopt a holistic approach, working in collaboration with the private sector, development partners, and civil society. The time for Zambia to invest in its SMEs is now, and with the right policies and strategies, SMEs will emerge as key drivers of the country’s economic transformation.

References
Bank of Zambia. (2020). SME Access to Finance in Zambia.
Zambia Development Agency (ZDA). (2021). SMEs and Their Role in the Zambian Economy.
World Bank. (2020). Doing Business Report.
Government of Zambia. (2023). National Budget 2023: Economic Recovery and Growth.
Ministry of Finance, Republic of Zambia. (2023). Economic Recovery Program (2020-2023).