Effects of Monetary Policy on Small and Medium Enterprises Financing for Hardware Stores in Kabwata Constituency of Lusaka District

Abstract

Monetary policy, including high-interest rates and tight credit conditions, significantly constrains financing for hardware store SMEs in Kabwata, leading to high financing costs and limited growth, while poor record-keeping and lack of collateral further exacerbate credit access challenges. Based on this background, this study aims to investigate the specific effects of monetary policy on small- scale enterprise financing focusing on the experiences of hardware stores in Kabwata constituency of Lusaka, Zambia. This study is important because it addresses a gap in existing literature by focusing specifically on how monetary policy affects small-scale enterprises in the hardware retail sector. The study adopted an explanatory research design. An explanatory research design is a structured qualitative research method used to investigate why and how a phenomenon occurs by testing hypotheses and establishing causal relationships between variables. The study was qualitative which adopts an inductive approve in its investigation. Purposive sampling was used to select the study participants. Furthermore, primary data collected from the study participants which was purposively sampled and analyzed through thematic analysis. The study findings note that monetary policy primarily affects hardware stores in Kabwata by dictating the cost of borrowing and the availability of credit through commercial banks and microfinance institutions. The monetary policy has both negative and positive effects on SME financing for hardware stores in Kabwata constituency of Lusaka KEY WORDS: Monetary policy, Small and medium-sized enterprises (SMEs) and Kabwata.