ENTREPRENUERSHIP IN ZAMBIA: AN INVESTIGATION OF THE LOW SURVIVAL RATE OF MSMEs AND ITS EFFECT ON ZAMBIA‟S ECONOMY

Abstract

Purpose - The aim of this study is to find out why MSMEs in Zambia have a low survival rate and what impact this has on the nation‟s economic growth, as well as propose solutions that will enable MSMEs to become more sustainable and contribute positively to the country‟s economy. Research design and methodology - The study undertaken was guided by the epistemological approach of Positivism. To be specific, a variant of the this approach called the Soft Positivism paradigm. The study used a mix of both quantitative and qualitative research methods and obtained data from sources such as a survey, case study, and review of secondary data. Findings - The key outcome of the study indicated that survival of MSMEs is not only dependant to them accessing affordable financing but is also significantly impacted by a lack of a steady cashflow and low literacy levels. Limitations - The study was limited by scope and resources, as a result only 50 MSMEs from the formal sector were analyzed. A lack of data relating to the current contribution of each MSME sector to the country‟s GDP restricted the researcher from establishing a correlation between the sector with highest GDP contribution to the sector with the highest number of MSMEs. Recommendations - The study recommends that the Zambia government lowers the cost of doing business and makes effort to formalise MSMEs that operate in the informal sector in order to increase its tax base. Conclusion - The research concludes that Government can play a significant role in ensuring that MSME make a significant contribution towards the countrys economic growth. Value - The results of this study address the core issues and challenges faced by MSMEs in Zambia; these will be of interest to Government, financial institutions in the private sector as well as non-governmental organisations whose goal is to give MSMEs the right kind of support.