THE CHALLENGES AND PROSPECTS OF SMALL SCALE BUSINESSES IN

ZAMBIA: A SURVEY OF SOME SELECTED SMALL SCALE BUSINESSES IN

KATETE.

SIN: 1503118475

ASSIGMENT: TWO

LECTURE: DR. S. MBETWA

BY

SIMUNTHALA BRIGHT

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 TABLE OF CONTENTS

CHAPTER ONE: INTRODUCTION

1.1 Background to the study …………………………………………………1

1.2 Statement of the Problem……………………….......................................4
1.3 Research objectives………………………………………………………7
1.4 Research Questions……………………………………………………….8
1.5 Research Hypotheses……………………………………………………..9
1.6 Significance of the Study…………………………………………………9
1.7 Scope of the study………………………………………………………...11
1.8 Chapter summary………………………………………………………..11

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 ABSTRACT
The rising failure rate of small scale businesses in Zambia is a serious problem demanding for
urgent attention. In respect of this, the research project examined small scale businesses in
Zambia and in relation to those challenges which affect small scale businesses from realizing
their full potentials as well as the prospects for improvement and development. The chi-
square(X2) model test was applied on the data obtained through questionnaires from some
selected small scale businesses in Katete. The findings indicate that inadequate infrastructure,
paucity of finance, lack of qualified personnel ,and poor accounting records ,in that order, are the
major challenges affecting small scale businesses in Zambia. Out of the 90 respondents that
participated, 41%, 28%, 17% and 14% respectively considered poor infrastructure, paucity of
finance, unqualified personnel and poor accounting records as the greatest impediment to the
survival of small scale businesses respectively. It is suggested therefore that reviving the small
scale businesses with strengthened commitment to economic reform would offer a turning point
in facilitating the recovery of Zambia economy and national development. The collective efforts
of both the government, Non-Governmental Organizations, stakeholders, and small scale
businesses’ operators is advocated.

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 CHAPTER ONE: INTRODUCTION

1.1 Background to the study:

The process of industrialization is very important to all nations, both developed and
developing (Allah, 1988). In achieving economic growth and development, the establishment
of vibrant businesses becomes an issue of emphasis. This, as noted by Oyeyide (1973), is in
recognition of the fact that industrialization seems much easier to push when the vibrancy of
businesses is maintained.

1.2. Statement of the Problem.

The rising failure rate of small scale businesses in Zambia is a serious problem demanding
for urgent attention (Fabayo, 2009). This problem is deeply felt considering the fact that
small scale businesses, which are adjudged the engine of economic growth and development
have lost their pride of place in the Zambian.
1.1 Objectives Of the study:
Given the vital roles and contributions which small scale businesses play in other developed
and developing economies and considering the ongoing reforms by the government of
Zambia, which are essentially targeted at creating wealth, alleviating poverty, generating
employment, re-orientating values, and stimulating real economic growth, it becomes
compelling for the small scale businesses to be revamped, overhauled, and energized toward
playing their expected roles. This research comes in with the intention of identifying the
challenges militating against the success of small scale businesses in Zambia. This will pave
the way for recommendations for addressing and, if possible, eliminating them so that small
scale businesses could occupy their pride of place. To achieve this, the project will attempt
the following:
1.2 Research Questions:
The questions this research intends to answer revolve around proffering solutions to the
critical challenges hindering small scale businesses in Zambia from improving and
stabilizing their performance and hence attending their expected roles in the economic
development of Nigeria. The questions to be answered include:

1.5 Research Hypotheses:

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 In line with the above questions, the following conjectural statements which are subject to
verification are made
1. H0: Policies implemented for SMEs have a negative relationship of the survival of
SMEs in Zambia.
2. H0: There is no prospect of SMEs in Zambia.
1.3 Significance of the study:
This research work, when successfully completed, will be uniquely relevant in a number of
ways. This is highlighted hereunder.
Considering the incessant dwindling of small scale businesses, it becomes urgent that
measures be embarked upon to restore them to their pride of place as the engine to the
economic development of Zambia. However, it is contended that, the first step to problem
solving is the identification of the problem itself. Hence, the challenges so identified will
help in revamping, overhauling and energizing small scale businesses to restore them to their
pride of place in reducing crippling poverty, embarrassing high unemployment rate, and
economic stagnation. In this wise, the solutions proffered will be of a useful guide. This
study will also be of great benefits to the small scale business entrepreneurs, owners, present
or potential in creating awareness as to those challenges. The recommendations given will
be of immense help to them in combating the challenges.
This study will also be of tremendous benefits to researchers, students, who would want to
advance knowledge in the pursuance of further research works relating to this work.
Above all, the study, upon completion, will contribute knowledge aimed at complementing
stakeholders’, Non-governmental Organizations’, and governments’ efforts to improving the
economic development of the country. The project is therefore, a “must read” to all and
sundry.
1.7 Scope of the study
This research work is centered on the challenges and prospects of small scale businesses in
Zambia. However, this is considerably vast. Therefore, for easier and smooth conduct of the
study, efforts will be made to dwell mostly on some selected small scale businesses in
Katete.
The above becomes necessary as the project work is constrained by limited time and lack of
sufficient funds. However, regardless of the limitations, possible generalizations can be made

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 as the small scale businesses under focus would be used to represent the entire small scale
businesses in Zambia.

1.1 Chapter Summary

The incessant dwindling of small scale businesses in Zambia is worrisome. This must be
investigated upon, considering the cardinal position these businesses occupy in relation to the
economic growth and the development of the Zambian economy. Poised by the desire to
unravel the challenges facing the small scale businesses sub-sector, the researcher delves into
this project work. Accordingly, chapter one sets the ball rolling with the background to the
study, statement of the problem, objectives of the study, research questions, the research
hypotheses, significance of the study, as well as the scope of the study.
REFERENCES
Adebusuyi, B. (1997). Performance evaluation of small and medium scale enterprises SMEs
in Nigeria. CBN, 21(4).
Adelaja, M. (2004), How SMEDAN plans to lift SMES. Small Business Journal Business
Day, 3(183).
Adeniran, O. (2004). Cash management for small and medium scale enterprises. Business
Day, 3(191).
Adeyemi, S. L. and Badmus, A. L. (2001). An Empirical Study of Small Scale Financing in
Nigeria, Journal of Unilorin Business School, 1 (1).

Questionnaire
1. What is your sex?

a. Male

b. Female

2. What group of enterprise do your business fall into?

a. Small Scale Enterprise

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 b. Medium Scale Enterprise.

c. Large Scale Enterprise.

3. How long have you been in this business.

a. 1 – 5 years

b. 6 – 10 years

c. 11 – 15 years

d. 16 – 20 years

e. 21 – 25 years

f. 26 – 30 years

4. Environmental effect on small and medium scale enterprise development.

a. Favourable

b. Undecided

c. Unfavourable

5. Minimum of how much do you need to start this type of business?

a. Less than 100,000 kwacha

b. 100,000 – 1million

c. Above 1million

6. How much do you need to sustain your business?

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 a. Within 50,000 – 100,000

b. Within 100,000 – 1million

c. Above 1million

7. SMEs have a positive impact on the development of Zambia Economy.

a. Strongly Agree

b. Agree

c. Undecided

d. Disagree

e. Strongly Disagree

8. Federal Government programs designed by government to boost SMEs

Survival and Performances are effective in achieving its role.

a. Strongly Agree

b. Agree

c. Undecided

d. Disagree

e. Strongly Disagree

9. There is prospect in SMEs in Zambia.

a. Strongly Agree

b. Agree

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 c. Undecided

d. Disagree

e. Strongly Disagree

10.Your are satisfied with the returns in your business.

a. Strongly Agree

b. Agree

c. Undecided

d. Disagree

e. Strongly Disagree

11.Policies implemented for SMEs have a negative relationship on the survival

of SMEs in Zambia.
a. Strongly Agree
b. Agree
c. Undecided
d. Disagree
e. Strongly Disagree

12.What are the key factors militating against the survival and low performance
of your business?

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