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A latest survey has revealed that the Micro, Small and Medium Enterprises (MSMEs) employ about 1.9 million people in Zambia.
The report dubbed 2022 Micro Small and Medium Enterprise Finance survey report was launched by Bank of Zambia in Lusaka on Friday.
Among the key findings were that about 1.5 million MSMEs employed 1.9 million people.
Out of the 1.5 million, 95.6 percent of them were in the informal sector.
Zambia’s Central Bank Governor, Denny Kalyalya, mentioned a number of challenges faced by MSMEs, as established in the report.
Notable results included the high cost of credit, lack of collateral and proper documentation, low income, as well as unsuitable loan products that do not meet the needs of the MSMEs.
Other findings were that only three percent of start-up capital was sourced from formal Financial Services Providers (FSPs), while 7.3 percent of MSMEs applied for a loan during the five years prior to the Survey (2017-2022).
“As to be expected, these factors limit the ability of MSMEs to invest, expand, and create jobs in the economy.
“Consequently, addressing these barriers is essential to unlocking the full potential of MSMEs for them to upscale and prosper and thus be able to play their much-expected role,” Kalyalya said.
He, therefore, urged all the key stakeholders, notably, policymakers, regulators, FSPs and MSMEs themselves, to leverage the solutions provided in the report to inform their decision-making and actions.
Speaking at the same event, Small and Medium Enterprise Development Permanent Secretary, Subeta Mutelo, encouraged MSMEs to formalise their businesses for easy access to finance.
One key finding of the report was that most MSMEs had not registered their businesses.
It was from such findings that Mutelo said the Ministry, through various initiatives and awareness programmes, was working to educate MSME owners on the advantages of formalisation.
“As the Ministry, we have taken note of this challenge and have intensified our efforts to raise awareness on the benefits of formalisation and incentivise MSMEs to register their businesses.
“It is our belief that by creating an enabling environment and providing the necessary support and incentives, we can encourage more MSMEs to formalise their businesses,” she said.
Secretary to the Treasury, Felix Nkulukusa, said government was actively exploring various fiscal policies to enhance private investment in the MSMEs.
Nkulukusa explained that these strategic initiatives aimed to foster economic growth, increase employment opportunities and nature innovation within Zambia.
He noted that recognising as pivotal drivers of economic vitality, government was dedicated to elevating productivity, enhancing competitiveness and promoting holistic development.
“It is for this purpose that the Ministry of Small and Medium Enterprise Development has received a budget allocation of K535.7 million for 2024, an increase from K501.4 million in 2023,” Nkulukusa said.
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