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THE COPPERBELT UNIVERSITY DIRECTORATE OF

DISTANCE EDUCATION AND OPEN LEARNING


PO. BOX
KITWE

NAME: TIMOTHY NSHIMBI
P.O BOX 20515
KITWE

STUDENT NO.:09175202

PROGRAME: BBA4

COURSE: RESEARCH METHODOLOGY- BBA400

LECTURER: DR C. LUNGU

ASSIGNMENT: SIX

DUE DATE: 27
TH
DECEMBER 2013

The Copperbelt University Directorate of Distance Education and Open Learning
P.O Box
River Side
Kitwe









Analysis of the Factors Affecting Small to Medium Enterprise Development in Zambia
a Case of Kitwe Town.



Research Proposal








Timothy Nshimbi



Student No. 09175202






Bachelor of Business Administration







1.0 Introduction

Sub-Saharan Africa is a diverse collection of 46 countries, and each has a unique policy and
regulatory environment,set of environmental resources, profile of economic activity, technology, landscape
and demographic profile. As such, the appropriate policy for one country would not necessarily be
appropriate for another. In view of the above, it is useful for the decision-maker to
evaluate the national attributes of a developmental entrepreneurship opportunity along both
financial and social dimensions.The WBGES demonstrates a range of considerations to utilize
when comparing countries ability to provide an environment in which developmental
entrepreneurs will thrive, and in so doing help alleviate poverty and create employment

First, the quality and efficiency ofthe legal, regulatory and governanceenvironments are the primary determi
nants of entrepreneurial activity.Secondly, business density, or the number of
registered business per member of the labor force, is another key indicator of entrepreneurial
conduciveness.Third, the Doing Businessrankings are strongindicators of business density and
entry, or the number of new businesses registered relative to the size of the economy or
population( Klapper, et. al. (200&), pp. 18 21). Forth the cost of starting a business as a percentage of per
capita Gross National Income (GNI) is also a key factor in entrepreneurial activity. The business
entry rate will increase by 1% for every 10 percentage point decrease in the cost of starting a
Transparency International (2010). business (as a percentage of per capita GNI).

Fifth, the log Gross Domestic Product (GDP) percapita and domestic credit accessibility are both strongly
correlated with business entry, however no causal relationship has been established.

Concurring with these points, the IFC recently found that businesses are created at a faster rate in
countries with good governance, a strong regulatory and legal system, low corporate taxes, and
less administrative procedures when dealing with public-
sector agencies. IFC (2010), p. 1


A range of factors will determine the extent to which a given country provides an environment
in which SMEs will thrive, and the extent to which their growth will capacitate improvements
along the social dimension.

Despite the financial contraction in 2008-09 and its effects on entrepreneurs, the 2010 GEM survey
found that over 250 million people in 59 economies are engaged in early stage entrepreneurial
activity, or are running a business that was started less than 3 years prior. Of these people, 63
million expect to hire at least five employees over the next five years, and 27 million expect to hire
at least 25.Global Entrepreneurship Monitor (2010), pp. 7-11; World Bank (2010a), pp. 2-6

According to the findings of the WBGES; In developed countries four new firms register for every 1,000 p
eople in the labor force, while there is less than one for countries of medium and low
development; Data show that dynamic business creation occurs in countries that provide entrepreneurs supp
ortive policy and regulatory environments. World Bank (2010c)

A 2007 study of Micro, Small and Medium Enterprises (MSMEs) by the International Finance
Corporation, included eight Sub Sahara African countries, and captured 4.5 million such businesses,
or 27.5 MSMEs per 1,000 Sub-Saharan Africans.These MSMEs were shown to contribute
38% to 66% of their respective countrys employment. IFC (2011

Indeed, McKinsey recently agreed with this assessment of the importance of the entrepreneurial sector in A
fricas growth, stating, Entrepreneurship is seen as a significant component to private sector
growth (in Africa). The importance of entrepreneurship in Africas economic growth is apparent,
as is the importance of inclusive growth for the alleviation of poverty.


2.0 Back Ground Information About the Problem

Prior to the economic reforms undertaken in the early 1990s, Zambias economy was predominantly state
driven. This was so for obvious reasons, some of which included the duty on the part of the state to provide
employment, and the necessary social services that the state was obligated to, soon after independence in
1964. In the quest to achieve these objectives the state formed a number of companies in which it injected a
lot of capital and also had to nationalize a lot others in the program called nationalization. Born out this state
initiative were companies like Mwaiseni stores, Niec stores ZCBC, United Bus company of Zambia(UBZ)
indeco milling brought on board to provide goods and services to the public.

But as early as 1981, the Zambian government recognised the importance of the SME
sector and its contribution to economic development. At the same time, the government
recognised the challenges that the sector was facing and therefore, through the Small Industries
Development (SID) Act of 1981 made an attempt to enhance the effectiveness of the
sectors contribution to the national economy by establishing the Small Enteprise
Development Organisation (SIDO). In support of the SID Act, provisions were made for the
Fourth National Development Plan of 1989 to provide infrastructure for operations of SMEs, promote
access to credit by SMEs with growth potential and to improve production capacities of SMEs with the view
to increase incomes and employment.

The change of government in 1991 however accelerated the need to grow the Zambian economy through
SMEs. This brought about many changes in the way the economy of Zambia was to be managed. The new
goverment came on board with new policies totally different from the previous regime. This new era so the
introduction of the capitalist way of running enterprise. The belief here was that economic growth is
fostered faster and efficiently under private enterprise. Therefore all state owned companies had to be
privatized, but more so the emphasis was on the creation of employment, economic growth through SMEs.
This change in government brought about radical economic reforms, from state control to an economy led
by private sector development. The reforms included decentralization, privatization and liberalisation of the
entire economic system.

Small and medium sized enterprises are the backbone of virtually all economies in the world. However, the
process has long been constrained by the limited availability and accessibility of financial resources to meet
a variety of operational and investment needs within the SME sectors. SME and entrepreneurs play a
significant role in all economies and are key agents of employment, innovation and growth. A significant
number of entrepreneurs and SMEs could use funds productively if they were available, but are often denied
access to financing, thus impeding their creation, survival and growth. Although SME form a broad
spectrum as far as their relative size, sector of activity, seniority, location and performance are concerned;
there is a vital need for innovative solutions for their financing in particular for innovative and high- growth
SME in a globalised knowledge-based economy.
3.0 Statement of the Problem

3.1 Challenges of Growing Small Businesses in Zambia

The economic climate and land scape for carrying out business for SMEs in modern society differs from
country to country. As such, the appropriate policy for one country would not necessarily be appropriate for
another. With the advent , in 1991 of a more liberal economy it has become increasingly difficult for local
SMEs to grow and face up to competition being created by foreign companies. In view of this, the fairness
of the economic policies governing the way business is conducted in Zambia on the basis of companies
being local SMEs and foreign conglomerates is being questioned. The whole purpose of empowering local
Zambians is being defeated because they cannot face up to competition from foreign companies in terms of
capacity, quality of goods, access to financing and general management.
According to the Ministry of CommerceTrade and Industry (MCTI) (2006), these challenges and
constraints include:-
Limited access to markets,
Limited access to appropriate technology, machinery and equipment
Limited access to suitable business financing solutions
Inadequate business infrastructure such as roads and telecommunication facilities

In addition to the constraints identified by Ministry of Comerce Trade and Industry, the SME sector also
faces the following constraints;

Limited technical and management skills
Inadequate and unsuitable operating premises that can facilitate enterprise growth.
Inadequate regulatory systems
Excessive competition from unregulated importation of cheap products
All these business constraints and challenges manifest themselves in the failure by the sector to grow into a
viable bottom up development tool and an effective contributor to national development as is the case with
SMEs in economies such as India, Central Asia, and South Africa.

At present , the ZDA act does seem not to be having any impact at all on the promotion of the Zambian
entrepreneur through SMEs, and most SMEs in Zambia are ignorant of the provisions and powers given
unto them through this act. Given the circumstance how adequate are the provisions contained in the ZDA
act to empower the Zambian SMEs and what strategies and methods is the ZDA going to use to ensure that
the Zambian entrepreneurs are aware of the various provisions and policies the act brings on board to
empower them.
Although the SMEs in the private sector in Zambia have such great potential for economic development,
equitable wealth redistribution and poverty alleviation, they face many business constraints and challenges
which hinder growth and limit their ability to contribute effectively to national economic development.

4.0 Research Questions
What are the factors limiting the growth and success of small and medium enterprises in Zambia.
What should be done to mitigate these factors in order to necessitate the growth and success of Small
and Medium Enterprises?
How should an enabling business environment for stimulating the growth of the
MSE sector be created?

5.0 Objecctives
5.1 General Objective
Development, growth models and policies, that affect SME development in any country, should be
formulated on the basis of each countrys prevailing economic, social and political environment. This is for
the simple reason that an appropriate policy for one country would not necessarily be appropriate for the
other. In view of the above this study Intends to identify and analyse factors and challenges SMEs face in
Zambia and to analyse current government policies on SMEs if they are adequate.
The study will also look at the factors that limit the success and growth of smallbusinesses in Zambia and
eventually make suggestions on how to deal with the factors limitingsmall business growth. Taking into
account the authors interest in starting a small business in the future, this knowledge puts him in a better
position to overcome the threats that stand along the way while doing business in the future. Moreover, by
identifying the possible solutions to theproblems, it will not only help the author as an entrepreneur but it
could be of great advantage tothe Zambian business community and the government as a whole.

5.2 Specific Objectives
To highlight specific problems SMEs face in accessing finance
To identify key collateral requirements that hinder SME from fulfilling certain contractual
obligations in their quest to do business
To identify the key support structures and aspects of the support environment for Zambian
Enterprise growth activities.
To develop a profile of the enabling environment for the SME enterprise growth in Zambia that
eliminates unfair completion with foreign companies

To highlight the broader strategic issues impacting upon SME entrepreneurs individual choices and
performance as regards enterprise activities.


6.0 Reason for the Study
It is an internationally recognised fact that Small and Medium Enterprises (SMEs) play an important role in
the economic development of many countries. The aggregate contribution of SMEs to national
development cannot be over looked. According to UNDP (2004), SMEs have the highest capital
employment ratio and are a source of income for a broader layer of the population. The development of
SMEs is viewed as one sustainable way of reducing the levels of poverty and improving the quality of life
of households through wealth and job creation. The contribution of SMEs to employment, growth, and
sustainable development is a widely acknowledged fact.
For Example in Malaysian SMEs are a vital component of that countrys economic development. According
to SMIDEC(2002), SMEs accounted for 93.8 per cent of companies in the manufacturing sector. They
contribute 27.3 per cent of total manufacturing output, 25.8 per cent to value-added production, own 27.6
per cent of fixed assets, and employ 38.9 per cent of the countrys workforce.

SMEs are believed to deepen the manufacturing sector, foster competitiveness and help in achieving a more
equitable distribution of the benefits of economic growth thereby helping in alleviating problems associated
with uneven income distribution. SMEs achieve this by generating more employment for limited capital
investment, acting as seed bed for the development of entrepreneurial talent, playing an important role of
training citizens to run enterprise, supplying the lower income groups with affordable consumer goods and
services. SMEs also act as buffers in times of economic recession. Therefore the study is important in that
by identifying the various challenges faced by SMEs and proposing various solutions to these challenges it
shall enhance the growth of the SMEs and hence the country will record economic growth.

The identification of the factors affecting SMEs and the plausible interventions that the SMEs can put in
place will necessitate the growth of the SMEs themselves besides the growth of the entire Zambian
economy. The SMEs will know what procedures are involved to access funding, they will have the
knowhow to the marketing of their products and will be equipped with the general management of their
businesses.
The study will help in a proper understanding of the role and effect of small and medium scale enterprises
on an economy.
It is hoped that this research work if properly and adequately done to its logical conclusion will enable
policy makers and many others understand the impact and the need to encourage the establishment of small
and medium scale enterprises in Zambia
The study will help policy makers and business men and women to appreciate and evaluate the impact of
small and medium enterprises in general.
Finally it is hoped that this study will benefit future researchers in this area of study and also help every
Zambian appreciate the small and medium scale venture in Zambia and beyond
7.0 Scope of the Study

This research will be limited to the study of the various SMEs in Kitwe to find out what problems they face
in the quest of carrying out business.
It is the desire of the researcher to to interview various goverment agencies whose role relate to SME sector
growth, on what policies government has put in place to promote the growth of SMEs in Zambia and how
well these are being implemented

The researcher will examine the various journals and publications that has to do with the issue of small and
medium scale enterprises in Africa and beyond in order to ascertain the views and opinions of the writers.
The various small and medium scale enterprises in Kitwes metropolitan will also be examined with a view
of finding their response.
Also, the researcher will examine some individuals in the metropolis of Kitwe town in a bid to ascertain
their own views and opinions. The study is therefore confined to SMEs operating in Kitwe, and yet it is easy
to use the result of this research to gain insight into the whole country.

8.0 Literature Review

The researcher will borrow evidence of some of the empirical research done by experts in other developed
and developing countries, because Zambia is a developing country and hence may not have all the necessary
previous research for review, but will also try as much as possible to find evidence such research from
within Zambia
Despite the macroeconomic reforms undertaken by the government aimed at macroeconomic stabilization
for example, liberalization, privatization among others, the SMEs sector has not yet significantly benefited
from them. There have been a number of constraints that have hindered the growth of SMEs in Zambia. The
Task Force on SMEs in Zambia (2006) identified some of the constraints affecting the Zambian SMEs as:

8.1 Inadequate Policy Frame Work

Although in Zambias industrial policy, the existence of the informal SME sector is recognized, the
references made to the promotion and development of SMEs mainly refer to improving goods and services
in the formal sector but not those found in the micro and informal sub-sector. The Zambia Development
Agency (ZDA) Act of 2006, which is the currentstatute covering the promotion and facilitation of
investments in Zambia, is far beyond the reach of most SMEs,

8.2 Difficulties in filling capacity Gaps for SMEs

Analysis of the SME sector in Zambia (MCTI, 2003) indicates severe deficiencies in basic management and
technical skills relating to the following fundamental areas:
1. Strategic management capacities, for example the ability to manage entry into new markets and
organizing labour and capital to respond to the changing markets, technologies and regulations. Such
skills are usually acquired through family experience, or through formal education in business
strategy development, followed by associated experience in modern firms;
2. Functional management skills, for example skills required in production, finance, purchasing and
marketing to improve production of capital, and quality control
3. Technical management skills, for example the actual technical know how to achieve the required
quality and quantity.
Small to Medium Enterprises cannot exploit economies of scale in the same way as large conglomerates
can, they face more financial constraints. Since young companies have not accumulated sufficient cash
flow and are unable to rely on bank financing, they have to depend on the equity investments. The analysis
of the effects of financial constraints on the firms survival and growth therefore is important.
8.3 Challenges at the Enterprise Level

The financing constraint literature has been the first to recognize that partitioning firms helps to provide
important insights into their behaviors. The pioneers in this field have undoubtedly been Fazzari, Hubbard
and Petersen (1988) who point out the fact that firms are definitely not homogeneous. They classify firms
according to their dividend payout ratio. Their main aim in doing this is to show that firms that have
different dividend payout ratios and therefore belong to different categories, have differential access to
finance. Some firms are financially constrained while others are not. Following Fazzari, Hubbard and
Petersen (1988), a number of studies have tried to distinguish between various categories of firms.

Despite recent huge capital inflows into Africa and Zambia in particular, Small to Medium Enterprises
find it difficult to access credit and equity financing to expand their business ventures.

Mushinski & Pickering observe that microenterprises have virtually no access to formal
credit markets, although the microfinance industry is beginning to address this market gap.
According to Aghion (2007), access to external finance improves market selection by allowing small firms
to be more competitive. Additionally, financial accessibility significantly facilitates the growth of firms.
Unlike large firms, SME are restricted in their funding options
Mushinski, D. and Pickering, K. (2007).

8.4 Lack of premises and land

For micro and enterprises lack of premises in unquestionably a serious problem most micro operators do not
get access to suitable locations where they can get enough space for their machinery and equipments,
storage and access to markets The issue of acquisition and transaction cost has become very prohibitive to
the emergence of new enterprises and to the growth and survival of existing ones. The issue of land
provision and the land system has greatly constrained the chance of SMEs which aspire to start up business.


8.5 The Financial Limitations

Previous research done on SMEs, show that small firms are so limited in their financing accessibilities to an
extent that they do not even recognize their own growth potential Scott & Rosa (1996).This is so because
most of the managers of the small and medium size enterprises are more concerned about the survival of the
firm rather than the growth of the firm. The lending institutions are so careful in lending to SMEs fearing
defaulting rates. For example, Musona (2002), Chiumya (2006), and Dixon etal (2007) reveal how
relatively high operating costs, delinquency and default, potential fraud, and high staff turnover impede
sustainability.
Financial capital is a primary input for the microenterprise, and microfinance providers are well positioned t
o providing this crucial step out of poverty. How ever because of the factors highlite above
microfinance providers are hesitant to provide such facilities to SMEs. If they are willing to, the collateral
requirements are so rigorous that it is almost imposible for an SME to afford them.

8.6 Financial Return Dimension

In order to attract sufficient competitive capital through debt and equity sources, a business venture
must demonstrate its capacity to repay the debt, or the extent of returns on money invested, including
appropriate risk premiums. For start up businesses in these markets, access to finance is vital, and
lending criteria are typically based upon the size of the loan amount, collateral requirements, interest
rates and other service fees, compulsory savings or group contribution requirements, and
other terms and conditions.

For the the money lender, the most accepted yardstick of firm performance is financial returns
as measured by Total Return to Shareholders. This measure of financial returns is a useful tool for
understanding the projected end result. However, a range of underlying factors contribute
to the new Business ventures ability to perform. The due diligence process undertaken by an
investor, venture capitalist or creditor in considering a potential investment would rely heavily
upon the business plan, including a range of analyses and projections related to market size,
ability to differentiate, risk mitigation, and others. These analyses, although separate,
are also closely related to the financial performance projections. In essence, these factors for
screening opportunities are the generally accepted indicators of the financial performance, as measured by
Total Return to Shareholders. The underlying factors related to a business ventures ability to generate
these financial returns, and hence their attractiveness, have been considered by Timmons and Spinelli
and by Cochrane. Timmons & Spinelli (2004), pp.91-103; Cochrane (2004).

There are several studies related to the financial feasibility of developmental entrepreneurship.
Ferh e al utilise corporate finance techniques to estimate the difference between market rates of
returns and actual rates of return in determining the outcomes of microfinance initiatives.
Finn provides a case study on Village Enterprise Funds, a provider with over 9,000 micro-grants in
developing countries, and shows the prevalence of micro-entrepreneurs to repay loans and to start
subsequent businesses. Finn, B. (2005) De Mel et al calculated the real (i.e. net of inflation) return
to capital at 5.7% per month for micro-enterprises in developing countries.
De Mel, S., McKenzie, D. and Woodruff, C. (2007).

In 2009, Raiz published a case study on a for profit incubator based in South Africa, which
is profitably investing in local start ups. Raiz, A. (2009), pp.61-62 Similarly, Copeland provided a case study
on a new venture providing lighting solutions in India and Africa, which recently received $6M in venture f
unding. Lastly, Masakure et al utilisedthe resource-based theory of the firm to assess financial
performance of Ghanaian SMEs. Masakure et al (2009)

In short, there is currently a body of research that supports the assertion that micro enterprise
development opportunities are commercially attractive. In fact, Tambunan argues that SMEs in
In Developing Countries can survive, and even grow in the long run, as they create a niche market for
themselves, they act as a last resort for the poor, and they will continue to grow alongside larger
enterprises for whom they often supply required inputs.


8.7 The effect of government policies and Regulation

Microenterprises are also dependent on the regulatory environment provided by
the government.The extent to which these factors create a challenge or an advantage for a given
entrepreneur is primarily country-driven. Facets of the regulatory environment include:
1) efficiency in acquiring business permits or in closing a business,
2) property rights and contract enforcement protections,
3) efficiency in taxation administration, and
4) the regulations that are industry specific.
Other domestic regulatory supports are often more indirect, but of consequence are:
1) financial sector stability,
2) domestic infrastructure and human capacity investments,
3) fiscal sustainability,
4) public sector governance, and
5) stances on human rights.( World Bank (2010e),

Indirect international policy is often more remote to the entrepreneur, but still relevant based on
the entrepreneurs competitive market for example the extent of importing and exporting goods.
These factors include: trade agreements, security, and monetary stability. Some examples of
related research, include: Beck et al on financial market policy to broaden access, the World Banks
Doing Business series covering cross-border comparisons of reforms related to improving efficiency in
operating businesses; Aubert on promoting developing world innovationAyele on investment
incentives and resultant market distortions the World Bank working paper on regulatory conditions
required to attract FDI; Phillips et al on policy recommendations to foster entrepreneurial activity
; and Bennetts argument for government support of informal firms. ( Beck, T., Demirg-
Kunt, A. and Honohan, P. (2009), p. 119 World Bank (2009b) and World Bank (2010b)
Phillips, C. and Bhatia-Panthaki, S. (2007) )

8.8 The effect of internal capital structure.

It should be noted that growth is not the objective of all firms. For example, when firms are faced with
serious difficulties during periods of economic downturns, they may shift their objective from growth to
survival waiting for better economic conditions to expand. This has been observed in crisis economies
where firms downsize and try to keep their costs as low as possible until the economic situation improves.
Some firms may choose to remain small if their entrepreneurial capabilities are inconsistent with large size
because financial constraints force the poor to start small business, the lack of firm growth could result in
social immobility where the small firms remain poor.

8.9 Social Return Dimension

Developmental entrepreneurship opportunities provide social benefits as well. It is believed that
the extent of these outcomes for a given business venture is based on a number of contributing factors.
Firstly, there are a range of primary benefits that will result. These are:
1) to varying degrees income increases for the entrepreneurs that own a new business,
2) standard of living improvements for customers that purchase goods or services, and
3) increased employment or livelihood opportunities that empower greater economic choice.
Secondly, there are several secondary benefits, which are relevant based on the nature of the
Opportunity. These are:
1) purchases of locally procured goods and services from value chain partners,
2) improvements in life expectancy and child or maternal mortality rates,
3) increased educational enrolment, improved gender equality, improvements to food supplies,
and
4) new benefits related to environmental sustainability.
Third, the tertiary benefits include:
1) skills and knowledge spill-over in target communities (or the building of human capacity);
2) the growth in social capital, or local networks that attract future investment, trade, and
mentorship;
3) benefits associated with future uses of new intellectual property resulting from new
technologies/innovations;
4) and cultural benefits of producing models that can influence policy changes and attract
people to entrepreneurial undertakings.


A number of examples in the literature demonstrate the validity of the primary benefits. Tamvada
documents increases in income for micro-entrepreneurs, and the route out of poverty that
entrepreneurship provides. Tamvada, J. (2010), p. 65

Similarly, Morris draws broader conclusions related to the importance of entrepreneurship to an
economy and shows correlations in GDP increases, improvements to societal wealth, and quality of life
enhancements. Morris, M. (2001), p. v

Research by the UNDP provides evidence regarding standards of living improvements for those
availing of the offerings micro-entrepreneurs provide. UNDP (2008)

Regarding labour utilisation associated with a given developmental entrepreneurship opportunity, Koo pro
vides evidence regarding the upward social mobility entrepreneurship and related employment opportunities
provide. Ahmed and Peerlings find that labour productivity, incomes and welfare are all positively correlate
d to improved working conditions in related SMEs, and Kellogg develops a scorecard to measure employee
poverty rate improvements in the small business customers of a nonprofit microfinance provider.
Koo H. (1976), Ahmed, N. and Peerlings, J. (2008); and Kellog, C. (2009)

Regarding the secondary benefits Milder provides evidence of the benefits related to value chain
partnering.
Broader economic development, encompassing effects related to improvements in health, education and
hunger are also documented, such as those reported by Songco on household welfare related to rural infrastr
ucture projects, Reardon on the impacts of the agribusiness on rural poverty alleviation for small hold farme
rs, and Mair & Marti on the poverty reduction impacts related to those entrepreneurs that work to fill instit
utional voids.Songco, J. (2002); Reardon, T. et al (2009); and Mair, J. & Marti, I. (2008)

An ILO study on Zambian women entrepreneurs identified the following challenges faced by women entrepreneurs:
lack of access to start-up capital, lack of business training/skills and experience, bureaucratic business registration
systems and negative attitudes by society towards women in business (International Labour Organisation, 2003:xvii).
As this study was conducted in 2002, it is necessary to investigate whether these challenges still exist, or whether
they have been minimised or they have become worse.


From the preceding, the following have can be concluded:
1) Developmental entrepreneurship is one such approach the establishment and growth of
micro-, small and medium enterprises which engage the poor;
2) These entrepreneurs face significant challenges in operating within these markets, and have
adopted innovative strategies in the pursuit of local business opportunities;
3) Frameworks and techniques for identifying and assessing new opportunities for both
established market players and new ventures have been primarily created for developed
market contexts; and
4) There are social and financial returns accruing from development entrepreneurship.

9.0 Hypothesis testing
In order to enable the researcher adequately arrive at answers to the already outlined research problems and
research questions, the following hypothesis were drawn.

To achieve this, we intend to test two hypotheses in this research. The hypotheses are;

1. Ho: There are enough government policies to promote SMEs development and
growth in Zambia

Ha: There are no enough government policies to promote SMEs development and growth
in Zambia

2. Ho: There is adequate access to collateral and Micro financing by SMEs in Zambia

Ha: There is no adequate access to collateral and Micro financing by SMEs in Zambia

3. Ho: There is a significant relation between the performance of small and medium industries and
government economic economic policies in Zambia

Ha: There is no significant relation between the performance of small and medium industries and
government economic economic policies in Zambia

10.0 Methodology

10.1 Study Design

The researcher will mainly use secondary research methodology although the tertiary methodology or the
search tool will also be used for the purpose of this research. This will include books, magazines,
newspapers to collect data and information regarding the topic. The researcher will also make use of the
internet to obtain information about SME and other related information. It is the desire of the researcher to
be very intensive in the process of carrying out this study. The researcher will examine the various journals
and publications that has to do with the issue of small and medium scale enterprises in order to ascertain the
views and opinions of other writers. The various small and medium scale enterprises in Kitwe will also be
examined with a view of finding their response. Also, the researcher will examine some companies within
Kitwe town in a bid to ascertain their views and opinions on small scale enterprise development.
Secondary data are data that have been collected for some other purpose. Secondary data can provide a
useful source from which to answer the research question(s). Punch (1998) mentions several advantages of
using existing data. Expenditure on obtaining data can be significantly reduced and data analysis can begin
immediately, so saving time. Also, the quality of some data may be superior to anything the researcher
could have created alone Thomas (2004). On the other hand, the chosen research method also has several
disadvantages such as data that have been gathered by others for their own purposes can be difficult to
interpret when they are taken out of their original context. It is also much more difficult to appreciate the
weak points in data that have been obtained by others.
This study will utilize both quantitative and qualitative data collection tools, which will use graphical
presentation of observed phenomena order to give accurate information on the impact of government
policies, micro finance institutions and the development bank of Zambia on growth of the SME sector in
Zambia. The process will depict the prevailing situation using random sampling and stratified sampling
methods
10.2 Limitations of the Study
Owing to different objectives and methodologies (and study designs) of previous studies, the data from
secondary research might not be in the right format or specific enough to answer the objectives of the
current study.
This research work is also subjected to limitations associated with survey research and student projects.
Taking into consideration that there is no grant to this study, there will most likely be the problem of finance
and transportation that will enable a more enormous study of this research work. Having taken into
consideration the large and vast nature of the area of study the researcher wants to limit the population of
this study to only the small and medium scale enterprises within Kitwe.
10.3 Sample Size
The research will be focused on a fairly small sample size to facilitate meaningful depth of analysis in the
light of time and resource constraints. This is to enable the sample with reasonable accuracy, to reflect the
thinking, opinions, attitudes and behaviour of the entire population. The sample size makes it possible to
integrate and critically examine theory and practice (Ngwenya &Ndlovu, 2003).
For the purpose of this study, a sample of 20 will be used included among these are Government agencies
ZDA, ZPPA, ZRA, CEEC, PACRA and NCC. The SMEs and big companies like Mopani, KCM, NFC, and
Lunshya Mine will also be surveyed for their business conditions, experience, constraints and expectations.
The 20 firms will be chosen in order to get a better representation about the number of medium and small
sized industries in the Country and also the policy facilitating agencies. To enable us draw valid
conclusions from the survey as applicable to small and medium sized enterprises generally, representative
companies from each of the different groups ( ie suppliers, and contractors) will be studied so that at the
end, different companies with different categories of business and processes will have been studied.

10.4 Target Population
The research intends to cover SMEs, various government Agencies set up under the acts of parliament ( i.e,
ZDA, ZRA, PACRA, CEEC and ZPPA). Others targeted are Micro finance lending Isnstitutions, SME
sector Associations like the Mining Contractors Association of Zambia and the big mining giants doing
business in Zambia

10.5 Sampling Technique

The general population for this study is composed of Small scale and medium Enterprises in Zambia.
Basically these respondents will be asked regarding the current status of policies, procedures, collateral
requirements, tendering process, registration and the general playing ground is fair for all to participate in
business and compete effectively with outside companies.


10.6 Measurement

First, the respondents shall fill out a self-administered questionnaire. Ideally, the respondents will grade
each statement in the survey-questionnaire using a Likert scale (Barnett, V. 1991), with a five-response
scale wherein respondents will be given five response choices.
The equivalent weights for the answers will be:

10.7 Range Interpretation

4.50 5.00 Strongly Agree
3.50 4.49 Agree
2.50 3.49 Uncertain
1.50 2.49 Disagree
0.00 1.49 Strongly Disagree
The researcher opted to use the questionnaire as a tool since it is easy to construct and the rules and
principles of construction are easy to follow. Moreover, copies of the questionnaire could reach a
considerable number of respondents either by mail or by personal distribution. Generally, responses to a
questionnaire are objectified and standardized and these make tabulation easy. But more importantly, the
respondents' replies are of their own free will because there is no interviewer to influence them. This is one
way to avoid biases, particularly the interviewers' bias. The researcher will also use graph and charts for
data presentation.

For validation purposes, the researcher will initially submit a sample of the set of survey questionnaires and
after approval; the survey will be conducted to five respondents. After the questions were answered, the
researcher will ask the respondents for any suggestions or any necessary corrections to ensure further
improvement and validity of the instrument. The researcher will again examine the content of the interview
questions to find out the reliability of the instrument. The researchers will exclude irrelevant questions and
will change words that would be deemed difficult by the respondents.
10.8 Statistical Treatment of the Data

When the entire survey questionnaire have been collected, the researcher will used statistics to analyze all
the data; and will be assisted by the SPSS in coming up with the statistical analysis for this study. Because
of this research design, the results of the data gathered will be limited to the determination of factors that
affect the Small scale and medium Enterprises development in Zambia. Thus, other possible findings in the
field of general business environment in Zambia and potential for growth, customer satisfaction and
business performance will also analyzed.
Comparisons will be drawn between the overall responses to the questions and the differing responses
(Creswell, 1994) the following statistical formulae will also be used:
1. Percentage to determine the magnitude of the responses to the questionnaire.
n
% = -------- x 100 ; n number of responses
N N total number of respondents

2. Weighted Mean
f
1
x
1
+ f
2
x
2
+ f
3
x
3
+ f
4
x
4
+ f
5
x
5

x

= ---------------------------------------------;
x
t

where: f weight given to each response
x number of responses
x
t
total number of responses

The researcher will be assisted by the Statistical Package for the Social Sciences (SPSS) in coming up with
the statistical analysis for this study. SPSS is one of the most widely available and powerful statistical
software packages that covers a broad range of statistical procedures, which allows a researcher to
summarize data (e.g., compute means and standard deviations), determine whether there are significant
differences between groups (e.g., t-tests, ANOVA), examine relationships among variables (e.g.,
correlation, multiple regression), and graph results (e.g., bar charts, line graphs) (Kirkpatrick and Feeney,
2003).


10.9 Data Collection
Both primary and secondary data will be used in collecting information. Data collection will consist of
surveys, observations and interviews with various officers heading the Government agencies, heads of the
Micro financing institutions, commercial and procurement managers of the big mining companies and other
parastatals and the SME company managers.
Initially, a survey instrument to measure how ideal and convenient are the government policies in
promoting SME sector growth are will be speculated and also how ideal and convenient are the lending
conditions from the Micro finance leading institutions. Beside this the questionnaire will also cover how
easy is it for the SMEs to get business and or fulfil tenders from the big mining companies and Government
paratsatals given the issues of performance and advance payment guarantees and other requirements
regarding professional roles and responsibilities of contract management .This will be administered to a
broad spectrum of participants (ideally, n=30). Subsequently, a purposeful sample will be identified to
participate in the second round of data collection. An interview protocol rooted in the literature will be
developed to act as a guide for the semi-structured interviews. Multiple interviews are planned with each
participant in order to provide more in depth data collection and opportunities for follow up. The goal is to
interview approximately 20 participants who embody a range of identity positions and who come from
different target populations highlighted above.

A qualitative evaluation shall be utilized for this research project leveraging subjective methods such as
interviews and surveys to collect substantive and relevant data. These interviews shall be conducted with
practicing officers from the SME sector as well as visiting officers of the various government agencies and
Micro finacing institutions. Such a qualitative approach is valuable here due to the varying experiences of
the officers in the SME sectors, Government agencies and the Micro institutions.Upon collecting the
qualitative data derived from the said interviews, careful analysis shall be done to prepare a SWOT
(strengths, weaknesses, opportunities, and threats) to analyze how to best customize the various suggestions
brought out by the vsrious players in the sector. Recent research on the subject matter and literature review
and instructional design shall be consulted to validate collected data.
Literature in this area is extensive both in form and content. In form it ranges from traditional academic research
papers, to government, donor and NGO statements or commentary in a range of informal or grey literature, and on a
multitude of different web sites. In content terms it addresses generic enterprise issues, those specific to womens
enterprise or gender and enterprise, and those pertaining to experience in both the developed minority northern world
and the developing majority southern world.

In order to find an entry into this extensive field of work and guide the research, I shall to adopted a constructive
framework to encapsulate and elucidate the topics to be covered. This framework, will set the boundaries of the
research, shape the content and context of the work, and provided a framework and language for discussion during the
research process, as well as a means of organizing and presenting the findings of the research.

Collecting the completed questionnaires will also provide the opportunity to ask follow-up questions on
some salient points raised in the questionnaire. It also will provide the opportunity to enquire from
management, staff and union leaders. Face-to-face interviews will be arranged with management of the
targeted companies so that relevant issues and questions are raised, and answers obtained for them as the
interviews will greatly help to throw light on the answers to the questionnaire and give additional
information that will be utilized in the research.

11.0 Data
Data will be analysed according to a frame work that will be as follows:
The first part of the study will review literature from different parts of the world including Zambia and
describe and evaluate different SME policies in these countries and compare them with our Zambian
policies. This will be basically a desk research which will examined previous research papers and practices
in these countries in order to map the current understanding of SME enterprise development and to identify
critical issues
The second part will critically analyse the genesis of the SMEs in Zambia focusing on the role of
Government in promoting SME development. This will involve careful study and analysis of literature and
documents in Libraries, at the ministry of commerce Trade and industry, Zambia Development agency,
Zambia Revenue Authority (ZRA), Zambia Public Procurement Agency (ZPPA) and Patents And
Companies Registration Agency ( PACRA)
Data will be analysed according to a frame work that includes the following:
What were the policies of government on SME growth soon after independence
What guide lines did the ministry then put in place to guide the formation of the SMEs.
How much emphasis did the government then put in regarding the growing of the private sector led
economy through SMEs
what percentage of employment ratio did the SME run companies provide in comparison to the state
run companies
What challenges did the SMEs face due to the heavy presence of state run companies
Thus the various stages of development towards a private led enterprise will be highlighted taking note of
the various constraints encountered and the strategies put in place to overcome these obstacles for the entire
SME journey in Zambia will be identified
The third part will now zero in on the current policies and will be primarily qualitative in focus, employing
semi structured interviews of selected executives from SME associations like the small scale miners and
contractors association of Zambia, the Zambia Chamber of commerce and industry, the Economic
Association of Zambia, Non Govermental organizations involved in empowering the SMEs and foreign
missions with interest in enterprise development. Other people to be interviewed will be heads of
commercial departments in mining conglomerates, governments heads of procurement and business units,
Government agencies established through various acts of parliament like ZDA, ZPPA, PACRA and CEEC.
This will be aimed at gathering and analyzing the views, opinions and general understanding of the current
liberal, decentralized and private driven economic system. This part of the research will also indicate or peer
into new ways in which SMEs in an emerging liberal market can be of value to the nation by being
innovative, building capacity in their operations and become competitive and grow at the same level with
foreign companies

11.1 Sources of Data:

The data to be used in this research are primarily those to be derived from the answers to the questionnaire
administered on SME survey and interviews with government agencies. Where they could be obtained,
statistical reports of what the government has been doing previously will be used. Also the results of
interviews conducted will be used as complementary to the questionnaire obtained from data. Other sources
include textbooks, seminar papers, bulletins and journals.

11.2 Data Analysis Procedure:

Data collected from the survey will be analyzed statistically using Chi-Square and the percentage analysis
methods. The analysis is undertaken to establish the degree of relationships between some pertinent factors
and issues as well as to show the relative size or significance of each factor relative to the others.
Descriptive analysis method will also be used.
11.3 Observation
To judge the effect of financial constrains on survival and growth of a small business in Zambia. The
researcher will have to visit the local banks and financial institutions and find out how ones access to
finance limits the growth of the business. I propose to use time-series method to judge the observation. The
observation will assist me to ascertain that the formal financial sector has provided very little or no service
to small business men hence they are unable to finance their small business.
11.4 Interview
This will be conducted individually. Structured and unstructured questions will be used to collect
information on the subject under investigation. This is to help the researcher obtain responses to questions
like; in your view is business growing? How best can it be financed? ,and others. I propose to conduct the
interview in such a manner that each sector will have equal probability of being selected. Interviews will
enable me to do most of the qualitative part of my research, and the information gained here is usually more
realistic.
11.5 Questionnaire
I will prepare systematic and well organized questions that will enable me; have responses to the questions
raised in the introduction and moreover test the hypothesis of the research. This is demonstrated in Chapter
1 where several questions to this effect have been formulated.I will not only rely solely on the information
from the various responses from the varied sectors but, also the statistical publications from international
organization in world over who have done a similar research on SME. I propose to make a thorough
analysis of the official and unofficial data received. I will propose the use of quantitative and the qualitative
analysis.
12.0 Ethical Consideration

The following are some of the ethical considerations in this research


12.1 Honesty:

Strive for honesty in all research communications. Honestly report data, results, methods and procedures,
and publication status. Do not fabricate, falsify, or misrepresent data. Do not deceive colleagues, granting
agencies, or the public.

12.2 Objectivity:

We shall strive to avoid bias in experimental design, data analysis, data interpretation, peer review, expert
testimony, and other aspects of research where objectivity is expected or required. Avoid or minimize bias
or self-deception. Disclose personal or financial interests that may affect research.
12.3 Integrity:
We will keep the promises and agreements and act with sincerity, strive for consistency of thought and
action.
12.4 Carefulness:
We shall try to avoid careless errors and negligence, carefully and critically examine our own work and the
work of our peers. We shall keep good records of research activities, such as data collection, research
design, and correspondence with agencies or journals.
12.5 Respect for Intellectual Property:
We shall honor patents, copyrights, and other forms of intellectual property. We will not use unpublished
data, methods, or results without permission. And we shall give proper acknowledgement or credit for all
contributions to research and ever plagiarize.
12.6 Confidentiality:
We shall protect confidential communications, such as papers or grants submitted for publication, personnel
records, trade or military secrets, and any records.









WORK PLAN
























SR/N

ACTIVITY
MONTHS
1 2 3 4 5 6 7 8 9 10

1

PROPOSAL WRITING AND DEFENSE

X

X


2

LITERATURE REVIEW

X

X


3

PREPARATION OF RESEARCH TOOLS

X

X


4

PILOT STUDY AND CORRECTION RESEARCH
TOOLS

X

X

X


5

FIELD DATA COLLECTION



X

X


6

DATA CLEANSING AND ANALYSIS

X

X


7

MARKET RESEARCH WRITING (REPORT)

X

X


8

WORKSHOPS

X


9

AMENDING FINAL REPORT

X

10

SUBMISION OF FINAL REPORT

X

BUDGET



1

ITEMS

COST


2


VEHICLE AND FUEL



3
DAILY SUBSISTENCE ALLOWANCE FOR
ONE CHIEF RESEARCHER, ONE
ASSISTANT CHIEF RESEARCHER,THREE
RESEARCH ASSISTANTS AND ONE DATA
ENTRY CLERK AT K 1,000



4


PROFESSIONAL FEES



5

SUPPORT SERVICES E.G SECRETARIAL,
PHOTOCOPYING, TELEPHONE,FAX,
INTERNET FACILITIES



6


CONTIGENCIES


7

TOTAL

References
1. Unlocking the Potential of Zambian Micro, Small and Medium
Enterprise(Chsala Chibwe2008) Zambia
2. Report on the Review of the Development Agency (ZDA) Act 2006. 2007. Zambia
3. The Challenges of Growing Small Businesses: Insights from Women Entrepreneurs in Africa- SEED
Working Paper No. 47 by Pat Richardson, Rhona Howarth and Gerry Finnegan
4. The Micro, Small and Medium Enterprise Development
Policy- 2006 Republic of Zambia
5. Development Economics and Public Policy working papers- Chiara Chiumya
University of Manchester 2004
6. Small Enterprise Development Act, 1996. Republic of Zambia
7. Enhancing the Competitiveness and Productivity of SMEs in Africa: An Analysis of Differential
Roles of National Governments Through Improved Support Services, African Development
Journal, Vol XXVII, No. 3 pp 130-156. Beyene, Asmelash (2002
8. Doing business 2012: Doing business in a more transparent world, World Bank, 20 October 2011,
http://ictsd.org
9. Creswell, J. W. Research Design: Quantitative, Qualitative, and Mixed Methods
approach.SAGE. Thousand Oaks. USA, (2003).
10. Research Methodology-A Step-by-Step Guide for Beginners, (2nd.ed), Singapore, Pearson
Education, Kumar, Ranjit, 2005,
11. Qualitative evaluation and research methods, Sage Publications, Newbury Park, California
12. Barriers to Growth in Small Firms. Barber, Metcalfe and Porteous, (1989).
13. Small and medium enterprises development policy, 2002, ministry of industry and trade,
Tanzania.
14. Policy Reform for Investment: The case of Zambia, Chola Abel Mwitwa , Director-Aftercare &
Business Development Services Zambia Investment centre, December 2006
15. An Evaluation of SME Development in Malaysia, International Review of Business Research Papers
Vol.2. No.1 August 2006 pp.1-14
16. Regional Programme for Enterprise Development (RPED): in Zambia / World Bank, World Bank
(1994):
17. Investment Policy Review: Zambia, Geneva: UNCTAD, UNCTAD (2006)
18. Manufacturing Sector Ministry of Commerce, Trade and Industry (MCTI) (2003) Survey, Lusaka:
MCTI
19. Steel W (1994) 'Changing the institutional and policy environment for small enterprise development
in Africa', Small Enterprise Development, 5 (2), 4-9
20. Punch, K F. (1998), Introduction to social research: Quantitative and qualitative approaches.
21. Modigliani, F. and Miller, M. (1958), the cost of capital, corporation finance and the
theory of investment.

22. Petersen, M. and Rajan, R. (1994): The benefits of firm-creditor relationships: Evidence from small
business data, Journal of Finance, 49, 338.
23. Aghion, P., Fally, T. and Scarpetta, S. (2007): Credit constraints as a barrier to the entry
24. Fazzari, S., G. Hubbard, and B. Petersen (1988), Financing Constraints and Corporate Investment,
Brookings Papers on Economic Activity, 1, pp141-95.
25. Responsible Conduct of Research, 2nd ed. (New York: Oxford University Press). Shamoo A and
Resnik D. 2009.

26. Relationship Marketing and Data Quality Management. SAM Advanced Management Journal,
64(2), Khalil, O. E., & Harcar, T. D. (1999).

27. Guidelines for research proposal, Research hand book, Likumbi Mwila, October 2008 Copperlt
University Kitwe
28. Central Bureau of Statistics, International Center for Economic Growth, and K-Rep Holdings,
National Micro and Small Enterprise Baseline Survey, 1999.
29. 7. SME Succes in Challenging Times:Bank Finance- Lost in Translation , Ngwenya & Ndlovu, 2003
30. New era dawns for Zambia women entrepreneurs? Chisala, C. (2002)
31. Challenges and Opportunities for Zambian Women Entrepreneurs, Journal of Management and
Administration, Gabriel Konayuma
32. UNIDO (2004) Industrialization, Environment and the Millennium Development Goals
in Sub Saharan Africa: The New Frontier in the Fight Against Poverty, Vienna: UNIDO.

33. Literature Review on Small and Medium Enterprises Access to Credit and Support in South Africa,
Edmore Mahembe 2011Capital Park South Africa
34. Andu Alem Tegene (1997). SmallScale Enterprise and Entrepreneurship Development in
Ethiopia.
35. Yossi Dashti, Department of Business Administration, School of Management,
Ben Gurion University of the Negev, Beer-Sheva 84105, Israel

36. Dr. Dafna Schwartz, Department of Business Administration, School of Management,
Ben-Gurion University of the Negev, Beer-Sheva 84105, Israel

37. Prof. Ayala M. Pines, Head, Department of Business Administration, School of Management, Ben-
Gurion University of the Negev, Beer-Sheva 84105, Israel






Annexure A

Questionnaire for Data Collection
Part-One
Back Ground of the Enterprise
1. Sex of the Owner a) Male b. Female
2. Age of theOwnerr <18 b) 18-30 c) 13-45 d) over 46
3. Marital Status a) Single b) Married c) Widow d) divorced
4. Family size a) 0-3 b) 4-5 c) 6-11 d) above 11
5. Education level a) can read & write b) Up to Grade Twelve
c)Vocational Certificate d) Diploma
e) First Degree f) Post Graduate
Part- Two
1. Type of business sector
a) Manufacturing/service
b) Trading (wholesale, retail trade)
c) Construction
f) Other( Specify)

2. When has the enterprise established?
a) Less than one year ago b) 1-2 years
c) 2-5 years d) greater than 5 year

1. Do you have access to all the information you need to run your business effectively and profitably in
your sector? Yes/No, please explain




2. Need for information
In the list below are some types of information that you may need in order for you to grow your business.
Please think about each type and indicate how important that kind of information is for your business.
Concentrate on your need for each type of information rather than how much you actually use information
of that type
Please tick one box in each case
0= Not important; 1 = less important; 2 = important; 3 = very important
Type of information

Legal information 0 1 2 3
Training information 0 1 2 3
Investment information 0 1 2 3
Marketing and Market Intelligence Information 0 1 2 3
Competitors information 0 1 2 3
Import/Export Information 0 1 2 3
Company financial information 0 1 2 3
Tax refund /Tax exemption information 0 1 2 3
Tax returns Information 0 1 2 3
Tendering procedures information 0 1 2 3



3. Are there any other types of information that you think are important for your business?

No go to question 4; Yes, Answer question 3.1
Please list other types of information and indicate how important these are for the growth of your
business by ticking the appropriate box in each case

Type of information Important Very important
.





4. Have you experienced any difficulties in obtaining the type of information marked important and
very important in Q. 2 and Q. 3.1 above?

No go to part 3; Yes, Answer question 4.1

4.1.Please state which type of information and what difficulties for each
Type of information Difficulties
..
.


.





..



Part Three
Please refer to one business venture and Answer the below questions
1. Your Company's core business


2. Year your company was established


3. Location of your
Company


4. Does your company have any other branches outside Kitwe? If so
where..

5. Current Number of employees

.
6. How do you measure the Businesss success (mark all that apply)?
Revenue growth Profit Innovation/patents .
Employee growth .. Other (specify).
7. Which of the above success measurement criteria (question 6) is the most important to you?
..
8. How important were the following to the success of your Business?
Not at All Very Important
a) technology 1 2 3 4 5 6 7 n/a
b) Financial resources 1 2 3 4 5 6 7 n/a
c) Skilled resources 1 2 3 4 5 6 7 n/a
d) Strategic partners 1 2 3 4 5 6 7 n/a
e) Product/Market readiness 1 2 3 4 5 6 7 n/a
f) Other(specify).. 1 2 3 4 5 6 7 n/a
9. How important are government policies to
Not at All Very Important
a. Company growth 1 2 3 4 5 6 7 n/a
b. identifying market 1 2 3 4 5 6 7 n/a
c. accessing information about technology 1 2 3 4 5 6 7 n/a
d. obtaining services (legal, accounting, etc.) 1 2 3 4 5 6 7 n/a
e. recruiting investors (early stage) 1 2 3 4 5 6 7 n/a
f. raising seed funds 1 2 3 4 5 6 7 n/a
g. establishing strategic partnerships 1 2 3 4 5 6 7 n/a
h. getting expert advice 1 2 3 4 5 6 7 n/a
i. building relations with suppliers 1 2 3 4 5 6 7 n/a
j. other situations (specify)____________ 1 2 3 4 5 6 7 n/a
10. To what extent does Zambia Development Agency help to: Low High
a. Introduce you to network contacts 1 2 3 4 5 6 7 n/a
b. Introduce you to strategic partners 1 2 3 4 5 6 7 n/a
c. Introduce you to customers 1 2 3 4 5 6 7 n/a
d. Introduce you to other investors 1 2 3 4 5 6 7 n/a
e. Access critical information 1 2 3 4 5 6 7 n/a


11. How do you describe the Business environment in Zambia and Kitwe in Particular:
Disagree Agree
a) Rigid regulations are maintained 1 2 3 4 5 6 7 n/a
b) Business environment is stable 1 2 3 4 5 6 7 n/a
c) Economic volatility is high 1 2 3 4 5 6 7 n/a
d) Existential threats to business exist 1 2 3 4 5 6 7 n/a
e) Policy & procedures of doing business are adhered to 1 2 3 4 5 6 7 n/a


12. What are the major problems affecting the performance of your Company?

a) Handicap in obtaining finance.
b) Inadequate of Infrastructural facilities (e.g. electricity and water).
c) Problem of market and marketing services.
d) Poor Management skills/Inadequate competent personnel.
e) Problems of policies, incentives and operating environment.
f) Problems of dumping of cheap foreign products.
g) Others(specify)




13. Are you satisfied with the current efforts being made by government to address the following
problems affecting the performance of SMEs?

Disagree Agree
a) Access to finance. 1 2 3 4 5 6 7 n/a
b) Problem of market and marketing services 1 2 3 4 5 6 7 n/A
c) Problems of policies, incentives and operating environment. 1 2 3 4 5 6 7 n/A
d) Problems of dumping of cheap foreign products 1 2 3 4 5 6 7 n/A
e) Sensitisation of SMEs on how to do Business in Zambia 1 2 3 4 5 6 7 n/A


14. What actions can Governments and other stakeholders do to alleviate these
problems?


15. Do you belong to any associations relevant to your business?

Yes 1
No 2

16. What specific roles do the associations identified play in relation to you
business?


.
17. What specific benefits have you got from being a member?


.




Part Four: Challenges of the enterprises

A. Finance Related
1. How much was your start up capital? (state year when started)
a) Less than ZMK 10000 b) 10000-20000
c) 20000 to 30000 d) Above 30000

2. How did you get initial capital?
a) Borrowing from relative & friends b) Borrowing from Micro finance
c) From NGOs d) personal saving

3. What kind of problems do you face when getting credit?
a) Lack of collateral b) Problems of Micro financing Institutions
c) Problems of credit service d) lack of information (get finance)

4. If getting from microfinance, is the amount of loans adequate?
a) Yes b) No

5. If No, how much do you suggest?

6. Do you have saving? a) Yes b) No

8. If yes, where do you saving?
a) Microfinance b) Bank c) In the house d) Other

9. What is the source of capital for your saving?
a) From business profit b) From micro finance
c) Other
10. How much do you have in your account? (If you have saving)

Part Four. Access to working place & physical infrastructure

1. Is it appropriate your work place for infrastructure?
a) Yes b) No

2. If yes, what type of infrastructure?
a) Electricity b) Water c) Telephone
d) Road f) Other

3. If No, what impact does it have on your business?

4. Does your enterprise have enough places for running the business?
a) Yes b) No

5. If yes, how did you get the working place?
a) By Renting b) By city Council
c) Familys resident d) other
6. If you got from city Councils. How was the procedure of transferring the work place?
a) Bureaucratic b) good c) very good

7. From where are you finding input for your enterprises?
a) Local market b) Imported outside Africa
c) Within Africa d) other place

8. Do you have problems getting the goods/raw materials?
a) Not accessible (available) b) High cost
c) Shortage of finance d) other (transport, quality, inflation etc)

9. How is your business performance?
a) Increase b) constant c) fluctuate d) decreases

10. If your answer in Q. #9 decreases, what is the reason?
a) Constraint of market problem b) High competition in the market
c) Poor production quality d) other reason
Part Five- Managerial skill and training
1. Do you have enough skill to carry out your business?
a) Yes b) No

2. If yes, what type of skills does you has.
a) Marketing b) Managerial
c) Technical d) Book keeping (accounting)


3. Which institution gave you training?
a) National Coulncil for Construuction b) (TEVET)
c) Private sector d) other

4. What benefit do you get from the training?
a) Improve the quality of the production b) Increase profit
c) Effectively efficient manage the business
d) Facilitate my interaction with customer and supplies

5. If you haave not taken any training, why?
a) Not necessary
b) No opportunity to get training
c) Not got training related with my business
d) Can not afford training

6. Identify the major problems of your enterprise and rank them
1..........................................................................................................
2
3
4.
7. What are the possible solutions for the problems?
1..
2
Part Six: For Government officials
Questions to interview key information from officials in the study area
1. What kind of SME Support programes are provided by the Agency


2. So far how many SMEs have benefited from these programes of the agency

3. If there are SMEs who have benefited, what do you intend to do to ensure more Companies benefit from
these programs

4 How adequate do you think these measures taken by goveerment are to improve or facilitate the
growth of SMEs
5. How do you find the performance of the SME enterprises in Zambia?
a) Strongly increasing b) Increasing
c) At constant (no change) d) Decreasing
e) Strongly decreasing

4. Currently, what are the challenges of the Zambia Development Agency agency?
a) Lack of human resource b) Lack of clear rules & regulation
c) Lack of enough budget
d) Lack of coordination among relevant stakeholder e) other or

5. What remedy action do you take to reduce the challenge that hinder the performance of Zambia
Development Agency
a) Request the administration Additional budget
b) Better to implement business-processing reengineering (BPR)
c) Establish coordination net work system among stakeholders
d) Try to improve rules & regulation on SMEs
e) Other solution
6 As I have been doing my research, I noticed that many business owners are not aware of organizations
like ZDA in order for them to benefit from these support services. What is ZDA doing to reach as many
SMEs as
possible?...............................................................................................................................................................
..............................................................................................................................................................................
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7. Tell us more about how ZDA conducts its training and development services, since it
is obvious many business owners lack adequate knowledge and training in doing business.


Part Seven: Questions to the Micro finance institutions and Banks
1. What are the Banks/Mocrofinaces requirement on giving Loans?

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2. What are the repayment terms and interests on most
loans?...........................................................................................................................................
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3. What are you doing as a bank to make it easier for SMEs to have access to finances or what
should be
done?............................................................................................................................................
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