PRESS RELEASE

Zambia Takes a New and Closer Look at Micro, Small and Medium Enterprises

June 16, 2010



Lusaka, June 16, 2010 - The Zambian Business Survey (ZBS), the first of its kind in the country, was launched in Zambia to help policymakers, donors, training institutes and financial service providers to better serve the Micro, Small and Medium Enterprises (MSMEs) that dominate the Zambian economy.
 
Lack of information has made it difficult to design programs and develop products that can improve the productivity and growth of MSMEs.  The ZBS, which was created to fill this gap, was designed and implemented by a public-private partnership. The Partnership comprises of the Government of the Republic of Zambia through the Private Sector Development Reform Program, the Zambia Business Forum, FinMark Trust and the World Bank Group.
 
The survey shows that Zambian businesses are sharply divided into two worlds – one comprising large business and the other a wide range of MSMEs. Most MSMEs are informal, owner-operated businesses.
 
Most have no paid employees and are more like home-based, income-generating activities than clearly structured businesses. Most are in rural areas (81 percent) and are involved in agricultural production (70 percent) or wholesale/retail trade (21 percent). Very few MSMEs are registered with any government agencies.
 
Most MSMEs do not have access to basic infrastructure such as energy, transport and water, whereas most large enterprises do. Similarly, few MSMEs have access to formal financial services, whereas almost all large enterprises use some form of financial services.
 
Close to 60 percent of MSME owners said that lack of access to finance services, including bank credit, was a serious constraint to their operations. Concern was particularly high among the smallest microenterprises and among farm owners. About 40 percent of MSMEs do not have physical access to bank branches that can provide these services.
 
The effect of not having access to these facilities is highlighted by the finding that MSMEs that do have energy, transport, water and information communication technology (ICT) are far more productive that those that do not. MSMEs using financial services are also more productive that those which don’t.
 
Education is also important – non-agricultural MSMEs owners who have completed secondary school are 25 percent more productive that their counterparts who lack a secondary school education.
 
Speaking at the launch, the Minister of Commerce and Trade, Mr. Felix Mutati, said he was highly impressed with how the survey measures Zambia’s business landscape in a clear and simple language.
 
“The Survey is an eye opener and I am totally transformed by its results.  If you can’t measure, you can’t manage and if you can’t manage, you can’t implement.” he said.
 
And a visibly pleased Senior Private Sector Specialist, Marie Sheppard, said she was delighted with the outcome. She said, “From inception through to implementation, the ZBS was a joint venture driven by equal partners. Not only is the quality very good but the ownership is very high. This is how it should be."
 
The ZBS identifies a number of priority areas to improve the productivity of Zambian businesses. These include:

  • Investing in infrastructure such as such as electricity, transport, cell-phones and water.
  • Encouraging the provision of financial services to this market, and improving ICT infrastructure to make access to finance easier for MSMEs. This includes stimulating mobile banking and other innovative approaches to improve access to financial services and reduce costs.
  • Expanding access to basic education. The research identifies strong complementarities between education and other forms of investment, beyond the direct effects of improving education. The return on improving physical infrastructure – whether for irrigation or access to cell-phone banking – will be lower unless concomitant investments in education are made.
  • Improving the delivery of business services. Helping MSME owners keep business records, identify more profitable lines of business, develop business plans, and improve general business administration could allow them to increase productivity and make it easier for them to access financial services.   

The results of the ZBS are detailed in the main summary report, The profile and productivity of Zambian businesses. Further analysis of the data resulted in four technical papers:

  • The business landscape, which looks at the environment in which Zambian businesses operate (The business landscape for MSMEs and large enterprises in Zambia)
  • Productivity, which examines the productivity of Zambian enterprises (Who’s productive in Zambia’s private sector? – Evidence from the Zambia Business Survey)
  • Access to finance, which explores the demand-side data relating to access to financial services (Demand-side analysis of access to financial services for businesses in Zambia)
  • The Business Facilities Measure, a model that groups enterprises and divides the market into more manageable segments 

These reports are also available via the web or from the offices of the four partner agencies that produced this work: Zambia Business Forum; Private Sector Development Reform Programme; FinMark Trust; and World Bank Zambia Country Office.

Media Contacts
In Lusaka
Jumbe Ngoma
Tel : 260-211-252811
jngoma@worldbank.org
In Washington
Francois Gouahinga
Tel : 1-202-473-0696


PRESS RELEASE NO:
2011/039/AFR

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