REPUBLIC OF ZAMBIA

MINISTRY OF COMMERCE, TRADE AND INDUSTRY

SMALL AND MEDIUM ENTERPRISES SURVEY 2003 – 2004

FINAL REPORT

JUNE, 2007 DISCLAMER

This Report has been formally edited by the Ministry of Commerce, Trade and Industry (MCTI). However, the designations employed and the presentation of material in it do not imply the expression of any opinion whatsoever on the part of the MCTI. The opinions, figures and estimates set forth in the report are the responsibility of the author, and should not necessarily be considered as reflecting the views or carry the endorsement of MCTI. All errors remain the responsibility of the author.

i ACKNOWLEDGEMENT

The author commends the MCTI for initiating and providing funding for the 2003-2004 Small and Medium Enterprises Survey. Further appreciation is given to the team that was responsible for data collection for their commitment and enthusiasm as well as the enterprises, their managers and employees for their willingness to participate.

The author is also grateful to the Central Statistical Office (CSO) for allowing access to published and unpublished data files

Finally, the author wishes to extend his special thanks to the MCTI for the opportunity availed to undertake the baseline study and for valuable comments which helped improve this report.

Report Prepared by: William S. Mbuta P.O. Box 320216, Plot 21, Masansa Close, Rhodespark, Lusaka Tel: 260-1-231236; 260-97-778982 Email: [email protected]

ii TABLE OF CONTENTS Item…………….…..………………………………………………………………………………..Page Number DISCLAIMER…………………………………………………………………………………………………………………………………..---…i ACKNOWLEDGEMENT…………….………………………………………………………………………………...…………………………….ii TABLE OF CONTENTS……………………….………………………………………………………………………………………………..…...iii LIST TABLES ………………..………………………………………………………………………………………………………………….v MAP OF ZAMBIA……..……………………………………………………………………………………………………………………...…....vi LIST OF ACRONYMS.…………………………………………………………………………………………………………………….………vii EXCHANGE RATES AND PRICE SERIES USED……………………………………………………………………………………………...…..….vii EXECUTIVE SUMMARY…..…………………………………………………………………………………………………………..……….….viii

CHAPTER ONE: INTRODUCTION AND BACKGROUND...... 1

1.1 Historical Background of the MSMEs Sector in Zambia...... 1 1.2 The Characteristics and Role of MSMEs ...... 3 1.3 The Poverty Reduction Strategy Paper and SMEs Development...... 4 1.4 Structure of the Report...... 5 1.5 Rationale for the Survey ...... 6 1.6 Terms of Reference for the Survey ...... 6 1.7 Limitations of the Survey ...... 7

CHAPTER TWO: SURVEY METHODOLOGY...... 8 2.1 Characteristics of the Study Population...... 8 2.2 Geographical Coverage ...... 8 2.3 Sampling Design and Procedures...... 8 2.4 Data Collection...... 8 2.5 Data Processing and Analysis...... 8 2.6 Definition of Terms...... 9

CHAPTER FOUR: REVIEWING THE 1996 SMALL ENTERPRISES DEVELOPMENT ACT DEFINITIONS FOR BUSINESS ENTERPRISES...... 11 4.1 Importance of Defining the Size Characteristics of Business Enterprises...... 11 4.2 Defining and Categorization of Business Enterprises based on Size...... 12

CHAPTER THREE: A PROFILE OF THE ZAMBIAN MSMEs SECTOR...... 19 3.1 Establishing a Business Enterprise ...... 19 3.2 Formalising the Business Enterprises ...... 23 3.3 Resourcing the Business Enterprise ...... 27 3.4 Other Factor Determinants to Business Performance of SMEs ...... 32 3.5 Business Performance...... 35 3.6 SMEs Contribution to the Economy...... 43 3.7 Trends in Living Conditions of Business Owners ...... 46 3.8 Business Constraints ...... 46

CHAPTER FIVE: SUMMARY AND POLICY CONCLUSIONS ...... 48

CHAPTER SIX: RECOMMENDATIONS...... 55

REFERENCES

APPENDICES

iii

LIST OF TABLES Table 1 Basic Social and Economic Indicators, 1991 - 1999 4 Table 2 Summary of Definitions for Business Enterprises 18 Table 3 Reasons for Choice of Business Activity 20 Table 4 Enterprise Distribution by Density per Province 21 Table 5 Enterprise Distribution by Status of Registration 24 Figure 1 Composition Structure of SMEs by Accessibility to Loans 28 Table 6 Enterprise Distribution by Level of Education and Profitability 29 Table 7 Enterprise Distribution by Association Services Received 32 Table 8 Enterprise Profitability by Type of sector 35 Table 9 Provincial Enterprise Distribution by Type of Goods and Services 41 Table 10 Distribution of Export Commodities by Number of Exporters 42 Table 11 Enterprise Distribution by Size and Quality of Products 43 Table 12 Enterprise Distribution by Type and Size of Assets 46 Table 13 Enterprise Distribution by Composition of Assets 46 Table 14 Enterprise Distribution by Type of Business Constraint 48

iv MAP OF ZAMBIA

v LIST OF ACRONYMS

CPI Consumer Price Index CTI Commerce, Trade and Industry CSO Central Statistical Office DBA District Business Association FDI Foreign Direct Investment FNDP Fifth National Development Plan GDP Domestic Gross Product GRZ Government of the Republic of Zambia HIPC Highly Indebted Poor Countries MCTI Ministry of Commerce, Trade and Industry MGDs Millennium Development Goals NELMP National Employment and Labour Market Policy NAPSA National Pensions Scheme Authority PRSP Poverty Reduction Strategy Paper SEDB Small Enterprises Development Board SMEs Small and Medium Enterprises UNIDO United Nations Industrial Development Organisation ZABS Zambia Bureau of Standards ZACSMBA Zambia Chambers of Small and Medium Business Association ZDA Zambia Development Agency ZRA Zambia Revenue Authority

EXCHANGE RATES AND PRICE SERIES USED

Kwacha/US Dollar Average Exchange Rate Year Consumer Year Exchange Rate Year Exchange Rate Price Index 1965 0,71 1986 7,79 1994 100.0 1966 0,71 1987 9,52 1995 134.9 1967 0,71 1988 8,27 1996 193.0 1968 0,71 1989 13,81 1997 240.2 1969 0,71 1990 30,29 1998 298.9 1970 0,71 1991 64,45 1999 376.9 1971 0,71 1992 171,38 2000 477.7 1972 0,71 1993 460,87 2001 579.9 1973 0,65 1994 677,50 2002 708.8 1974 0,64 1995 873,29 2003 839.5 1975 0,64 1996 1 207,38 2004 1,015.1 1976 0,70 1997 1 314,70 2005 1,201.1 1977 0,79 1998 1 853,05 2006 1,309.4 1978 0,80 1999 2 388,00 1979 0,79 2000 3 111,60 1980 0,79 2001 3 610,94 1981 0,87 2002 4 306,93 1982 0,93 2003 4 732,97 1983 1,26 2004 4 778,88 1984 1,81 2005 4 463,24 1985 3,14 2006 3 603,07 Source: CSO, Lusaka

vi EXECUTIVE SUMMARY

Since the early 1970s, Zambia’s growth strategy was anchored on parastatal -led large scale enterprises promotion in all sectors of the economy. However, the prolonged poor performance of the parastatal sector induced government to adopt a free market economic policy in 1991. In spite of the change in economic policy, the economy continued to decline resulting in drastic increases in unemployment and poverty levels. This caused the government to, apart from liberalising the economy, explore structural realignment of the economy as a possible remedy to back-stopping and even reversing the decline in the economy, employment and living conditions. Through the SED Act of 1996 and later on the PRSP, the SMEs sector was identified as such instrument on which basis a number of policy actions were developed.

In line with the shift in the political economic thought in favour of the small enterprises sector, the MCTI undertook the first ever Small and Medium Enterprises (SMEs) survey focusing on the period 2003-2004. The survey was conducted primarily for three reasons. In the short term, the survey sought to establish the impact of Poverty Reduction Strategy Paper (PRSP) policy actions on the performance of SMEs and also to establish how that performance translated into improvements in the living conditions of the owners of enterprises. Further, establishing the contribution of the SMEs sector to the national economy as well as provision of a platform on which definitions for micro, small, and medium enterprises would be established also formed part of the short term objectives. In the medium to long term, the survey sought to establish flexible baseline database system upon which periodical profiles of the various aspects of SMEs would be generated and thereby enhance the process of policy formulation, implementation and review.

The methodology for the survey involved identification of SMEs as those registered with the Small Enterprises Development Board (SEDB) and / or those who were members of the District Business Associations (DBAs) affiliated to ZACSMBA. The two institutions formed the SMEs sampling frame. The sample coverage involved all the 9 provincial headquarters and 10 other districts in Zambia purposively selected. Sample selection was initially by stratification by district and then by economic sector. Thereafter, systematic random sampling method was used to select the final sample. As a working definition, a simplistic but easily measurable definition was developed based on turnover, investment and employment. However, for the purpose of analysing the data, employment was used as the sole basis of size based categorisation largely due its rigidity against changes in inflation. Among the variables used in developing the definitions for the SMEs include the Average Growth in Employment levels among SMEs, Labour Productivity, Capital Intensity, and Consumer Price Index. Definition summaries are in the table below:

Table: Recommended Definitions for Micro, Small and Medium Enterprises for 2006 Business Enterprise Upper Limit Values Category Investment Value in Turnover Value in Number of Workers Kwacha (2006) Kwacha (2006) 2006 Micro 70,000,000 140,000,000 10 Small (Manufacturing) 500,000,000 800,000,000 45 Small (Trading / Services) 100,000,000 800,000,000 45 Medium (Manufacturing) 1,800,000,000 5,000,000,000 100 Medium (Trading / Services) 600,000,000 5,000,000,000 100

Based on the definitions above, the following is a summary of findings, conclusions and recommendations.

On a macro level, the survey reveals why government was justified in considering the sector as critical to the economic recovery process:

vii ƒ The MSMEs sector employs 30 percent of the 4.9 million strong labour-force out of which 58 percent are entrepreneurs (self-employed) thus forming a seedbed for entrepreneurship growth essential for sustainable national economic growth. ƒ The MSMEs sector contributes 5 percent towards the national Gross Domestic Product. ƒ The MSMEs sector constitutes 8 percent of the national Gross Capital Formation. ƒ The MSMEs contribute income to more than 25 percent of the approximately two million households in Zambia thereby contributing towards poverty reduction and promoting the much needed social cohesion and stability. The results above are against considerably low levels of entrepreneurship among the owners of SMEs as only 20 percent engaged in business arising out of opportunity identification and these commanded the highest levels of innovation and profitability. The rest entered into business activity due to either family pressure, inheritance or because they had no other option. In fact, the high school and tertiary educated were the least entrepreneurial owing to the perception of education as a tool to formal employment. Further, a higher proportion of men exhibited a higher entrepreneurial level than women business owners. Among all the provinces, Luapula province had the highest concentration of entrepreneurs while North-Western province had the lowest. Apart from low entrepreneurship levels, the sector experienced critical shortage of start-up capital as less than 1 percent and 9 percent of the micro scale and small scale enterprises, respectively, had access to loans from financial institutions. This is a huge hindrance to the growth of small scale and medium scale enterprises sector whose establishments require considerable financial resources to commence a business activity. This is reflected in the less than 1 percent annual growth rate in SMEs number of establishments compared to 8 percent for micro enterprises. When business enterprises are established, the entrepreneurs are faced with a choice of whether to remain informal or register with Patents and Companies Registration Office (PACRO). Survey results show very low levels of formality as only 2 percent of MSMEs were registered with PACRO. This could explain why only a few MSMEs have had to access the incentives that government provided to the sector through the SED Act of 1996 as the precondition was that they have to be registered with the PACRO. On the other hand, this explains why the sector, especially that of micro enterprises, has failed to record noticeable growth qualitatively. Among the reasons for the low levels of formality include regulatory and administrative barriers, fees and financial requirements, corruption and criminality. Operational stability and expansion in business requires external sources of finance by way of working capital to attend to intermittent cash flow deficits and investment capital to purchase fixed production assets to facilitate expansion. The survey observes that albeit the number of beneficiary MSMEs being small, such financial assistance was more readily available as the results show that 7.2 percent of the micro enterprises accessed loans at one point while the figure was 25 percent for small scale enterprises. Medium sized enterprises had a much higher access at 86 percent. Stagnation in qualitative growth among micro enterprises against significant growth trends in population among the SMEs was as much a result of non- availability of such loans to this category. According to economics textbooks, human capital constitutes one of the factors of production in addition to finance capital. The survey results display very low human capital levels especially among the micro enterprises. The educational level for 83 percent of the workers was not beyond basic education while less than 5 percent had formal tertiary skills. As a result, sufficient capabilities were lacking in financial analysis and management, human resources management, production management, and innovations which could explain the low productivity and hence income as tertiary educated entrepreneurs was able to generate 7 times more profit than the basic educated ones. Further, women run enterprises and the rural areas were in a worse situation.

viii Fixed capital by way of tools, equipment and machinery constitute another aspect of production factors. In this case, embedded technology is critical aspect. The sector did not record any growth in the value of fixed capital assets during the period under review as the average value stagnated at K1 million. Using the source of power as a criterion to assess the technology level, the study established that most SMEs (39 percent) had very low levels of technology as they relied entirely on manual equipment. Another 39 percent had an average level as they relied on manual power with a component of electricity use. Only 20 percent entirely relied on electricity. However, no SME had an automated or semi automated (computerized) or the state-of-the-art technology at the time of the field study. This is also reinforced by the age of equipments of which was more than the recommended 4 years turnover. Further, the level of networking was strong among SMEs especially the urban based. However, the much needed linkages with large scale industries and support organisations were sufficiently weak. Against the poor supply of production factors, the sector recorded fairly high profit margins largely due to undeveloped markets. Capacity utilisation was also high owing to low capital intensity and so was the reliance on local raw materials. Product differentiation also increased. However, the employment quality was poor, and so was the product quality and export performance as only 2 percent of these MSMEs were exporting. The survey reveals that the business environment is not enabling. In order of intensity, the financial constraints, market constraints, human capital and infrastructure constitute the greatest challenges faced by the sector. Financial constraints in the form of inaccessible start-up capital, working capital, and investment capital, high interest rates, unstable foreign exchange rates, and poor customer repayments, were cited as major constraints. These were followed by market constraints by way of unfair competition from imports selling at below cost arising from subsidies and smuggling, inaccessible government tenders, having too few customers and having too many competitors. Low educational levels and skills among most of the workers with the resultant low productivity and poor product quality was quite evident. Other constraints included lack of appropriate production tools and machinery, high cost of spares. High cost and lack of availability of production inputs, lack of affordable business premises and land, and health problems related to HIV/AIDS constituted other constraints for SMEs in Zambia. The outlook for the sector is bleak as long as the conditions remain the same. The survey therefore recommends that government recognizes the sector as an integral part of the national economy and as such be captured in national accounts. Further, it is recommended that a cross cutting but stand-alone National Policy on MSMEs be established as a matter of urgency. Considering the continuously low levels of entrepreneurship, skills and technology and labour productivity in the MSMEs sector especially among the micro enterprises, coupled with their inability to compete on quality and scale with large-scale enterprises and with imports, passive government support and sheer exclusion of sector activities in the national economic accounts, the survey recommends that the MSMEs Policy vision be focused on international competitiveness, entrepreneurial culture and sustainable growth while the mission should be to ‘Facilitate and proactively support the development, growth and international competitiveness of the MSMEs sector as an integral part of the national economy’. The key policy objectives should be: ƒ Creation of an enabling environment for MSMEs to meet the challenges of an internationally competitive economy. ƒ Stimulate sustainable productivity and economic growth of the sector ƒ Facilitate competition, cooperation and collaboration among MSMEs ƒ Minimise the imbalance between large-scale enterprises and the MSMEs and strengthening the linkages. ƒ Foster long term quality employment. ƒ Improve income and wealth generating opportunities for low income groups through the micro enterprises. (Fenando, R., 2003) To improve the effectiveness of policy actions, improving targeting mechanisms of MSMEs has to be enhanced by adopting the proposed definitions for MSMEs. ix The survey further recommends establishment of financial support systems by way of low interest rates anchored on maintaining a single digit inflation rate, promotion of character- based collateral loans, establishment of a revolving fund, review of the BFS (Microfinance) Regulations that support and restricts micro loans to business activities rather than consumption, encourage the establishment of financial products catering for the small scale and medium scale enterprises which hitherto have been lacking, encourage new financial product innovations such as those that promote equity participation by the general public in MSMEs needing recapitalisation, and financial management and planning skills among entrepreneurs. The survey also recommends establishment of marketing support systems by way of sector based profitability profile monitoring system that indicates green field investment areas, and also levelling the playing field in the market by reducing smuggling of imported goods, imposing countervailing duties in proven cases of export subsidy, and invoking infant industry rules where necessary. Market remedies also include reserving a certain proportion of the government contracts to MSMEs apart from linking them to manufacturers and traders’ associations. Establishment of more trading premises is also recommended as well as building capacity in Business Development Support organisations, facilitating product quality improvement, and training in marketing techniques are recommended. The survey also recommends establishment of technical support systems which starts with increasing the proportion of entrepreneurs with high school and tertiary education qualifications and that also incorporates entrepreneurship training in the basic and high school education curricula. The study recommends maintenance of the current TEVET system but also incorporates the appreciation of the role of science, technology and innovation in business competitiveness and growth. Additionally, the survey recommends the enhancement of in-house and specialised training to not only impart the know-how part of production capabilities but also the know-why on which basis adapting engineering and even innovation can be achieved. Through the NTBC, measures should be put in place to assist MSMEs on technology selection, diffusion, transfer, innovation and commercialisation. The ZABS and FDB should be improved in capacity to effectively undertake their functions and where possible lobby for resources to enable MSMEs meet the necessary technical and quality standards needed. Regulatory harmonisation is also recommended coupled with incentives for formalisation of MSMEs. Other recommendations include improving access to electricity, water, production premises, and good transportation system as well as telecommunications services. It is also recommended that the national HIV/AIDS/STD/TB strategic framework incorporates the specific health needs of the workers in the MSMEs sector to improve their health. The report also recommends the periodical undertaking of baseline surveys once every five years and rapid assessments once every year to monitor the sector performance. Recommending the above policy measures is very important but not the end in itself. Problems can surface at the implementation phase and there could be several factors for this. The critical one is that as expected, there are quite a number of policy measures recommended for the development of the SMEs sector but the challenge is how these should be implemented or which of those measures should come first and for what reason. It is a challenge of ranking and prioritizing and getting this right is as important as putting up the policy itself. Where ranking is not well-organized, there is a great risk of failed implementation. It is therefore recommended that the following ranking or prioritization criteria be adopted to ensure effectiveness of the recommend policy measures: i) Level of resource investments required to implement; ii) Potential for greater linkages with other existing policy measures; iii) Level of fiscal distortion to be created; iv) Duration that the policy measure will require, v) Extent of dependencies of the specific policy measure on others; and vi) implication of the policy on regional and international protocols. In this case, implementing the policy measure on market support system by way of apportioning part of Government tenders to SMEs would require minimum implementation cost and as such should be the first to be implemented.

x The 2003-2004 Zambia Small and Medium Enterprises Survey

CHAPTER ONE: INTRODUCTION AND BACKGROUND

1.1 Historical Background of the MSMEs Sector in Zambia

It is widely recognised that while in the developed countries Small and Medium Enterprises (SMEs) play an important role in many sectors of the economy, in Less Developed Countries such as Zambia, they constitute the fabric on which social and economic stability depends upon. In these countries, SMEs constitute more than 90 percent of all firms and hence play an important role in economic development, job creation and poverty reduction.

As early as 1981, the government formally recognised the importance of the SMEs sector and its contributions to the urban and rural economy. With the same token, the government recognised the challenges that the sector was facing and through the Small Industries Development Organisation (SIDO) Act of 1981 made an attempt to enhance the contribution of the sector to the national economy by addressing the inherent sector challenges. Further attempt for policy support to the sector was made in the Fourth National Development Plan (1988 to 1993) which set the objectives as follows:

a) Identify and promote SMEs that have potential for output expansion and employment generation in a manner that structurally integrates such activities to complement the large- scale enterprises sector, b) Upgrade production, managerial, organizational and marketing capabilities of entrepreneurs particularly among the youth; c) Identify training schemes for youth in engaged in SMEs that have potential for production expansion, income and employment generation, d) Provide the necessary infrastructure for the operation of SMEs, e) Promote, where possible, accessible credit facilities for SMEs that have potential for growth in output, incomes and employment; and, f) Improve and expand production of the SMEs, particularly that of subsistence farmers and self- employed workers, in order to increase their levels of incomes.

The plan outlined five strategies to achieve the above-stated objectives. These were: i) Provision of collective services, infrastructure, and specialized tools and equipment for common use of related activities that have been identified as having relatively higher potential for increasing efficiency and productivity and for generating higher incomes and employment; ii) Establish innovative institutionalized credit facilities that are appropriately tailored to meeting the needs of SMEs engaged in potentially productive and dynamic activities, especially with respect to the purchase of input requirements; iii) Promote the use of appropriate technology and of available local resources; iv) Encourage the formation of small cooperative unions or mutual assistance organizations for the bulk purchase of inputs, the sale and distribution of output, and the joint use of tools and equipment for which considerations of cost or efficiency demand a larger scale of production or more intensive utilization; and, v) Promote the upgrading of skills through formalized training schemes in terms of extension

Ministry of Commerce, Trade and Industry, Lusaka. 1 The 2003-2004 Zambia Small and Medium Enterprises Survey

advisory services.

During the implementation of the Plan, emphasis was placed on collective enterprise rather than individual ownership. Private enterprises were not encouraged. The resources that the Government allocated to the small enterprises sector were reported to be inadequate and the role of public institutions such as the Small Industries Development Organization (SIDO), the Development Bank of Zambia and the Village Industries Services (VIS)), which were the primary source of small enterprises support was not defined, except in the broadest terms. Moreover, these organizations faced serious financial and organizational constraints even at that time.

After 1991, the environment became more business friendly, particularly towards small enterprises. This is demonstrated by the establishment of the Industrial, Commercial and Trade Policy in December 1994 with pronouncements that: a) Government considers the development of small-scale enterprises as an important component of its Industrial, and Commercial policy. Its aim is to devise a strategy, with the participation of the private sector, to encourage the growth of small-scale enterprises; b) Government will encourage local governments to review their infrastructure services and licensing regulations so as to support small enterprises; c) Government will provide legislation and incentives that promote the rapid growth of the sector; d) Government will decentralize business registration to enable the sector to operate efficiently and have access to incentives; and e) Government will set out to review and harmonize all existing laws and regulations with a view to identifying and removing impediments to the operations of the sector.

The development of the Industrial, Commercial and Trade Policy in 1994 was subsequently followed by the establishment of the Small Enterprises Development (SED) Act of 1996 as successor to the Small Industries Development Act of 1981. Among the salient features of the incentives in the Act included the following: a) Exemption from payment of tax on income for the first three to five years, b) Operating a manufacturing enterprise for the first five years without a manufacturing licence required for such an enterprise under any law. c) Exemption from the payment of licensing fees required for such an enterprise under any law. d) Exemption from Trading Licence for an enterprise registered under the SED Act. e) Exemption from payment of tax on income received from rentals on buildings or premises for use by micro and small enterprises f) Exemption from the payment of rates on factory premises g) Exemption from payment of tax on income or interest payable by any financial institution providing loan, or other financial relief or facilities to registered micro and small enterprises carrying on manufacturing activities h) Such institutions shall be allowed to maintain concessionary core liquid assets ratios and

Ministry of Commerce, Trade and Industry, Lusaka. 2 The 2003-2004 Zambia Small and Medium Enterprises Survey

reserve requirements i) Expenditure incurred on training staff that specialise in micro and small-scale enterprise financing shall be treated as tax deductible for tax purposes. (GRZ SED Act 1996) However, as in the past, these policies and their derivative regulations have remained public pronouncements, with little effort to implement them.

1.2 The Characteristics and Role of MSMEs

The SMEs sector is broadly characterised by the activity of enterprises engaged in the production of goods and services with the primary objective of generating employment and income to persons concerned. Further, the SMEs are concentrated in the traditional economic sectors characterised by use of low technology, rely largely on social networks and inter-firm cooperation, and are oriented towards the local and less affluent segments of the market. Most SMEs and especially the micro-sized have the characteristics of household enterprises. They are operated mostly by a single person with or without the help of family members, and usually not licensed with a government agency. Their business activities are largely in trading, and simple manufacturing and only a small portion are engaged in service related businesses. The range of activities is usually in the production of consumer goods. Among their manufactured products include textile products, carpentry & other wood products, light engineering and metal fabrication, food processing, leather products, handicrafts and ceramics. The services sector include restaurants and food preparation, hair salons and barbershops, passenger and goods transport, building construction, telecommunication services, business centre services and cleaning services. The trading sector is largely concentrated in consumable products, industrial products, and agricultural inputs and produce.

One of the characteristic elements of the Zambian economy is the existence and growth of SME activities. Since the introduction of structural economic reforms and the country’s transition to a market economy in 1991, there has been increased activity in the SMEs sector. The existence of a large SMEs sector, 98 percent of which is informal has implications on the macroeconomic policy and the functioning of the economy. However, there is scanty information regarding the SMEs sector activities and as such, it is difficult to estimate the size of the private sector in totality, as data from the Central Statistics Office (CSO) do not disaggregate national output in relation to enterprise size. Based on the 1996 Baseline Survey on the micro and small enterprises, the sector consisted of approximately 97 percent of all enterprises and employed 18 per cent of the labour force of whom 47 percent were women. Women owned 46 per cent of these enterprises although they tended to be concentrated in low return activities and employed fewer workers (Parker, 1996). The study further revealed that the sector in Zambia is dominated by enterprises with a workforce of less than 10 employees. About 46 per cent of all enterprises represented those in self-employment while 52 percent of all activities were based in rural areas. Manufacturing accounted for 41.3 per cent of the sector activities, while commerce accounted for 48.5 per cent, and services for 10.2 per cent.

Against these contributions to the national economy, Zambian SMEs have been reported to be facing a horde of business constraints that include inaccessible markets, shortage of inputs, inaccessible finance, poor transport facilities and lack of appropriate tools/machinery, anti SMEs government regulatory barriers, lack of skilled labour, shortage of shop/rental, Space, unavailable utility services, and technical problems. Working conditions are also usually poor as certain production areas are considered health hazards. Further, workers are subjected to long

Ministry of Commerce, Trade and Industry, Lusaka. 3 The 2003-2004 Zambia Small and Medium Enterprises Survey

working hours, and unstable income. According to a World Bank Report of 1997, Zambian firms of all sizes identified the lack of access to credit, excessive competition from imports, insufficient demand and infrastructural weaknesses as their most pressing constraints. (Parker 1996) All these business constraints are manifestations of market failures which appear to be endemic in the SMEs sector and which justify government intervention by way of relevant policies.

1.3 The Poverty Reduction Strategy Paper and SMEs Development

From 1991 to 2001, Zambia experienced the most severe economic recession largely owing to public policy shifts. The drastic opening up of the domestic market to low cost and high quality foreign products made the hitherto protected and inefficient local producers to be uncompetitive. In order to stay afloat, most of enterprises were forced to restructure and reduction of labour ranked among the first options. Where downsizing was not attainable, most of the firms closed down. The result was a decline in the GDP and employment, and in the absence of corresponding social protection measures, poverty increased drastically among Zambians. Details of the social and economic performance of Zambia during the period are illustrated in Table 1 below.

Table 1: Basic Social and Economic Indicators, 1991 - 1999

Type of Indicator Indicator Year 1991 1995 1999 GDP (K’Billions @ 1994 Constant Prices) 2,404.4 2,176.9 2,412.7 Annual GDP Growth Rates (%) (1.3) (2.8) 2.2 GDP per Capita (K’000 @ 1994 Constant Prices) 298 239 237 Inflation Rate (%) 80 191 27.4 Employment (In ‘000) 544.2 485.0 477.5 Poverty Index (%) 70 74 73 Source: www.zamstats.gov.zm

The continued deterioration in the performance of the economy and hence the living conditions in spite of the adoption of free market economic policies induced government to explore an alternative development strategy within the free market economic framework. In collaboration with the external and local cooperating partners, the Poverty Reduction Strategy Paper (PRSP)1 anchored on the Millennium Development Goals (MDGs), was adopted as the principal national policy. Through the PRSP, Zambia hoped to attain the minimum social and economic pre-conditions necessary for take off on to the path of sustainable development. The attainment of these pre- conditions by the year 2015 still remains a challenge that Zambia has to overcome as indications already show that out of all regions implementing the MDGs Programme, only sub Sahara African countries may not meet them.

In line with its multi sectoral approach to national development, the Government, through the PRSP identified the SMEs sector as one of the instruments to economic recovery, employment creation and poverty reduction. The government realized that SME development contributes to poverty reduction when it creates employment either through the start up of new SMEs or the expansion of existing ones. Job creation in the SMEs sector provides income to the poor such as the poor owners

1 A typical PRSP consists of detailed plans, targets, programmes, monitoring and reporting arrangements in respect of public sector and governance responsibilities (IMF and IDA, 2003a). It generally contains at least four core policy elements: i) Macroeconomic stabilization measures; ii) Associated structural reforms; iii) Explicit Poverty Reduction Strategies; iv) A variety of ‘enabling environment’ and ‘investment climate’ initiatives designed to facilitate a robust private sector response.

Ministry of Commerce, Trade and Industry, Lusaka. 4 The 2003-2004 Zambia Small and Medium Enterprises Survey

of Enterprises; the working poor who are employed in enterprises; the dependants of such poor workers and owners; the unemployed who may obtain employment from small enterprises, and the poor people who purchase goods and services from small enterprises.

UNIDO’s Industrial Development Report 2004 observes that poverty reduction strategies have a higher multiplier effect in economies dominated by SMEs than those dominated by large-scale firms. These unique characteristics of SMEs encouraged government to commit itself through the PRSP to developing the sector further through the following policy actions:

ƒ Train owners of SMEs in business management and technical skills ƒ Establish a revolving fund to be administered by an appropriate institution ƒ Conduct a study to review and harmonise the existing legal and regulatory framework to remove any impediments to SMEs development including women participation. ƒ Encourage development of intermediate input supply linkages between SMEs and large scale enterprises. ƒ Encourage procurement of goods and services, especially in the health and education sectors from SMEs. ƒ Encourage establishment of central buying agencies for SMEs. ƒ Disseminate SME business and trade information. ƒ Establish database for SMEs. ƒ Support the construction of industrial estates by the private sector for leasing to SME sector. (Zambia-PRSP, 2002)

These policy actions were designed to put the sector on the path to sustainable growth. Therefore, by profiling the SMEs sector through a baseline survey, it was envisaged that MCTI would acquire in-depth understanding of the unique performance characteristics of the sector and determine appropriate policy actions. The study would also enable MCTI to assess SMEs’ contribution to the economy, as well as the living conditions of business owners during the PRSP period.

1.4 Structure of the Report

The first Chapter outlines the Introduction and Background to the study, describing the Characteristics of the SMEs and their contribution to the Zambian economy. The Chapter also describes the evolving policy and regulatory environment under which SMEs operated before and after 1991. The chapter also explains the Rationale for the Study. This is followed by a description on the Structure of the Report and ends with the Terms of Reference.

The Second Chapter discusses the Methodology used in the Survey. The chapter explains the sample frame and geographical coverage. This is followed by a description of the sample characteristics and structure. Thereafter, data collection tools and procedure for both secondary and primary used as well as data processing and analysis techniques are discussed.

Chapter Three explains the rationale for defining SMEs, provides details on method used and further outlines the appropriate definitions for each category of enterprises. The method applies econometric models in deriving SMEs definitions.

Chapter Four discusses the Profiles of SMEs and the living conditions of the owners.

Chapter Five discusses and Concludes based on the results generated.

Ministry of Commerce, Trade and Industry, Lusaka. 5 The 2003-2004 Zambia Small and Medium Enterprises Survey

Chapter Six makes Recommendations on the way forward taking into account the current capabilities in both the SMEs, the government and the macroeconomic environment prevailing.

1.5 Rationale for the Survey

SMEs in Zambia constitute more than 95 percent of all firms and hence play an important role in job creation and poverty reduction and economic development. They also help create an environment for innovation and entrepreneurship. Since 1991, the SMEs sector population has experienced exponential growth. In spite of the significant role that SMEs have come to play in the economy, most of the policies have tended to favour large-scale enterprises.

Lack of baseline data and information on the characteristics and extent of the SMEs which are also generally referred to as the ‘informal sector’, constitute among the reasons for absence of effective policies and regulatory framework for the sector. Information about the different categories of SMEs has hitherto been obtained from a wide variety of both government and non- governmental institutions. It may be relevant to speculate that prior to this study, there was lack of an authoritative secondary data source to construct the SMEs profile. As a result of this lack of identification, government has been losing large amounts of uncollected revenue in addition to inaccuracies in establishing the real size of GDP. Therefore, carrying out this survey was envisaged to provide readily available data that relevant government departments and other stakeholders can use for the benefit of the nation at large. Above all, it was expected that the survey would assist in streamlining policies on the PRSP and have a more focused view on the dimension of implementing the programme in order to assess the impact and outcome later. The data thus generated would reduce resource waste as target enterprises would be easily identified.

1.6 Terms of Reference for the Survey

1.6.1 Survey Objectives a) Long Term Objective

To create a flexible baseline data frame upon which policies regarding the sector can be developed and effectively implemented

b) Short-Term Objectives

(i) To come up with a base for formulating a uniform definition (ii) To come up with a profile of SMEs (iii) Assess the PRSP Impact on the SMEs

1.6.2 Expected Outputs

i) Definition of Small Business Enterprise and Micro Business Enterprise in manufacturing, Trading and Services sectors developed based on Fixed Capital Assets, Turnover and Employment.

Ministry of Commerce, Trade and Industry, Lusaka. 6 The 2003-2004 Zambia Small and Medium Enterprises Survey

ii) Contribution of SMEs sector to the Zambian economy established by way of trends in the value of production (fixed) assets, turnover and value added, and employment established. iii) Trends in the living conditions (income, household assets, accessibility to food, shelter, education for children, clothing) of the SME owners established.

1.7 Limitations of the Survey

The high rate of non response of the respondents on critical variables constitutes major limitations of the survey.

Ministry of Commerce, Trade and Industry, Lusaka. 7 The 2003-2004 Zambia Small and Medium Enterprises Survey

CHAPTER TWO: SURVEY METHODOLOGY

2.1 Characteristics of the Study Population

The study population consisted of SMEs engaged in manufacturing activities, services and trading. The sampling frame used constituted SMEs membership registers for the Small Enterprises Development Board (SEDB) and the Zambia Chambers of Small and Medium Business Associations (ZACSMBA). This approach was adopted with the full understanding that the larger share of membership in these two organisations was constituted by small and medium enterprises. Micro enterprises constituted a small percentage. However, since the survey was also qualitative in its approach and as such focused on establishing the intensity of performance and constraint profiles of SMEs rather than on how widespread the phenomena were, it was felt that the micro enterprises sampled from the two institutions, albeit their small number, would provide sufficient information. Part of the quantitative data was expected to be generated from secondary sources.

2.2 Geographical Coverage

The study was a national baseline survey which covered all the nine provincial headquarters and 10 other purposively sampled districts.

2.3 Sampling Design and Procedures

SEDB and ZACSMBA had a combined active membership list of 2000 SMEs. Therefore, in terms of detailed interview, the survey planned to capture 50 percent of the population or in this case 1000 SMEs. This was with full realisation that the closer the sample is to the total population, the higher the confidence interval level. However, due to a number of factors, the team was only able to capture 647 (65 percent) of the target sample. Following the purposive selection of the 19 districts, the stratification of SMEs according to the sub sectors was made. Once the sample was disaggregated to district level and the firms stratified into sub sectors, systematic random sampling method was applied to select the final sample.

2.4 Data Collection

The survey used one type of questionnaire containing both open ended and closed ended questions. Close-ended questions were designed to assist in the collection of fact or quantifiable aspects of data, while open ended-questions were useful in exploring qualitative aspects of study such as entrepreneurs’ attitudes and perceptions regarding issues under examination.

2.5 Data Processing and Analysis

Two different types of software were used in principle and these include the Statistical Package for Social Sciences (SPSS) and MS Excel. Initially, the responses from individual questionnaires were coded and inputted on the SPSS platform and analysed. However, where limitations were observed as in the case of financial calculations, data was exported to MS Excel for further processing.

Ministry of Commerce, Trade and Industry, Lusaka. 8 The 2003-2004 Zambia Small and Medium Enterprises Survey

2.6 Definition of Terms

In this survey, the under listed terms have been used to mean the following: a) Average Workforce per Enterprise (AWE)

Total number of workers in the SMEs sector divided by the number of SMEs b) Capacity Utilisation

Capacity Utilisation is a concept in economics which refers to the extent to which an enterprise or a nation actually uses its installed productive capacity. Thus, it refers to the relationaship between actual output produced and potential output that could be produced with installed equipment, if capacity was fully used. c) Capital Intensity (CI)

Capital Intensity means a measure of the ratio of fixed capital (in the case of a manufacturing enterprise) or other factor investments to labour expressed in monetary value terms. d) Consumer Price Index (CPI)

Consumer Price Index refers to an index of prices used to measure the change in the cost of basic goods and services in comparison with a fixed base period. e) Enterprise

Enterprise means any entity, regardless of its legal form, engaged in economic activities, and includes self-employed people, family businesses, partnerships, and social economy and craft enterprises. f) Gross Capital Formation (Investment)

Gross Capital formation consists of gross fixed capital formation and the changes in stocks g) Labour Productivity (LP)

Labour Productivity refers to the quantity of output by way of sales that is produced per worker. h) Lower Limit Workforce Threshold (LLWT)

The minimum number of workers that qualifies an enterprise to be in a given size category of an SMEs. i) Lower Limit Turnover Threshold (LLTT)

The minimum monetary value of annual turnover that qualifies an enterprise to be classified in a given size category of SMEs.

Ministry of Commerce, Trade and Industry, Lusaka. 9 The 2003-2004 Zambia Small and Medium Enterprises Survey j) Lower Limit Investment Threshold (LLIT)

The minimum monetary value of investments that qualifies an enterprise to be classified in a given size category of SMEs. k) Lower Limit Manufacturing Investment Threshold (LLMIT)

The minimum monetary value of fixed or production assets that qualifies an enterprise to be classified in a given size category of SMEs. l) Lower Limit Trading and Services Investment Threshold (LLTSIT)

The minimum monetary value of fixed or inventory assets that qualifies an enterprise to be classified in a given size category of SMEs. m) Provincial SMEs Population Density

The ratio of the number of enterprises to that of the human population within a particular province. n) Small and Medium Enterprises (SMEs)

The term includes micro, small and medium enterprises. o) Upper Limit Workforce Threshold (ULWT)

The maximum number of workers that qualify an enterprise to be classified in a given size category of SMEs. p) Upper Limit Turnover Threshold (ULTT)

The maximum value of annual turnover that qualifies an enterprise to be classified in a given size category of an SMEs. q) Upper Limit Investment Threshold (ULIT)

The maximum monetary value investment that qualifies an enterprise to be classified in a given size category of an SMEs. r) Upper Limit Manufacturing Investment Threshold (ULMIT)

The maximum monetary value fixed or production assets that qualifies an enterprise to be classified in a given size category of an SMEs. s) Upper Limit Trading and Services Investment Threshold (ULTSIT)

The maximum monetary value fixed or inventory assets that qualifies an enterprise to be classified in a given size category of an SMEs.

Ministry of Commerce, Trade and Industry, Lusaka. 10 The 2003-2004 Zambia Small and Medium Enterprises Survey

CHAPTER FOUR: REVIEWING THE 1996 SMALL ENTERPRISES DEVELOPMENT ACT DEFINITIONS FOR BUSINESS ENTERPRISES

4.1 Importance of Defining the Size Characteristics of Business Enterprises

Precision in the classification of enterprises usually helps agencies in both the public and private sectors to better target their policies and support programmes to enterprises which exhibit specific characteristics. Against this understanding, the Government, through the Small Enterprises Development Act of 1996 prescribed the definitions for micro and small enterprises. Medium enterprises were then perceived not to be requiring any special policy action as they were considered to be mature enough to withstand an internationally competitive macroeconomic environment. However, in 2003, Government realised that the definitions that were developed in 1996 were no longer effective in addressing the emerging challenges besetting the SMEs sector and as such had to be revised. Among the specific reasons for the review of SMEs definitions include (European Commission, 2005):

(a) The perceived changes in the macro economic environment since 1996 which among others include growth the Consumer Price Index, general increase in the average size of workforce per enterprise, increases in labour productivity and in capital intensity in the SMEs.

(b) The growing awareness of the specific and ever changing hurdles confronting the sector in areas such as financial and capital markets, continued internationalization of the domestic market, erratic inputs supply, inaccessible transport, inaccessibility of durable tools and machinery, as well as the deterioration of personal health among a number of entrepreneurs and workers arising from the increasing HIV/AIDS incidences, as well as technical and business management skills inadequacies among entrepreneurs in the sector

(c) The introduction of the PRSP as the principal policy tool with its own vision of what role the sector should play in terms of GDP contribution, employment creation and income provision, and generally towards the poverty reduction process.

(d) The need for interested entrepreneurs running micro, small or medium-sized enterprises who may also want to know if they satisfy the criteria to benefit from specific legislative provisions for SMEs to apply for finance and other facilities aimed at SMEs.

(e) The need for promotional agencies to draw up and run the various schemes, process the applications and ensure that their support is solely given to enterprises that satisfy the eligibility criteria.

(f) The need to provide guidance on how to group firms to those in charge of carrying out national statistical surveys of industrial and business establishments such as the CSO without which their use may yield a faulty classification of enterprises and would not, therefore, be useful to the MCTI and other policy makers and those in charge of enterprise development.

(g) The changing typology of the SMEs and the need for a new definition more suited to the different categories of enterprises including the medium enterprises.

Ministry of Commerce, Trade and Industry, Lusaka. 11 The 2003-2004 Zambia Small and Medium Enterprises Survey

4.2 Defining and Categorization of Business Enterprises based on Size

4.2.1 Micro Business Enterprise

a) Employment Based Definition

The SED Act of 1996 defined the ULWT for a micro business enterprise as one “employing up to ten persons”. At that time, the AWE for micro business enterprises was two workers. This produced a ratio of 1 to 5 of the AWE to ULWT. In the year 2003, the AWE for micro enterprises continued to be two workers per enterprise implying stagnation in the average workforce among micro business enterprises. Therefore, since the AWE is a major determinant in ULWT, and since there has been no quantitative change in the AWE, the ULWT should be maintained at ten workers. This is further expressed in the following equation:

ULWT for 2003 = ULWT 1996 x AWE 2003 AWE 1996

ULWT for 2003 = 10 x 2 2

ULWT for 2003 = 10

ULWT for 2006 = 10

Since the ULWT has been stagnant between 1996 and 2003, it is also assumed that the status quo would be maintained even in 2006. Hence the ULWT for 2006 was recommended to be ten.

b) Investment Based Definition

The SED Act of 1996 prescribed the ULIT of K10 million excluding land and buildings, for a micro business enterprise or a Capital Intensity of K1 million. The only variables to the ULIT are inflation and ULWT. Since then however, inflation has generally been on the increase thereby producing a Consumer Price Index factor of 6.79 times between 1996 and 2006. This has translated the capital intensity index to Kwacha Six Million, Seven Hundred and Ninety Thousand (K6,790,000) as at end of 2006. Meanwhile, the ULWT has stagnated over the whole period. Therefore, for an upper limit threshold of 10 workers, the recommended ULIT for a micro enterprise should be sixty seven million and nine hundred million kwacha (K67,900,000). This is illustrated in the equation below:

ULIT for 2006 = ULIT1996 x ULWT 2006 x CPI 2006 Factor ULWT1996

ULIT for 2006 = 10,000,000 x 10 x 6.79 10

ULIT for 2006 = K67,900,000

Since the Capital Intensity has remained constant over the years, the only variable has been inflation expressed through the CPI. Hence the ULIT for 2006 translated to Kwacha Sixty Seven Million and Nine Hundred Thousand. It is recommended however that Kwacha Seventy Million (K70,000,000) be adopted as the ULIT for micro business enterprise.

Ministry of Commerce, Trade and Industry, Lusaka. 12 The 2003-2004 Zambia Small and Medium Enterprises Survey

c) Turnover Based Definition

The SED Act of 1996 prescribed the ULTT of K20 million for a micro business enterprise or a Labour Productivity of K2 million. The only variables to the ULTT are inflation and ULWT. Since then, inflation has increased to a Consumer Price Index factor of 6.79 times between 1996 and 2006. This has translated the Labour Productivity index to Kwacha Thirteen Million, Five Hundred and Eighty Thousand (K13,580,000) as at end of 2006. Meanwhile, the ULWT has stagnated over the whole period. Therefore, for an upper limit threshold of 10 workers, the ULTT for a micro enterprise should be Kwacha One Hundred and Thirty Five Million, and Eight Hundred Thousand (K135,800,000). This is illustrated in the equation below:

ULTT for 2006 = ULTT1996 x ULTT 2006 x CPI 2006 Factor ULTT1996

ULTT for 2006 = 20,000,000 x 10 x 6.79 10

ULTT for 2006 = K135,800,000

It is recommended however that Kwacha One Hundred and Forty Million (K140,000,000) be adopted as the ULTT.

Below is a summary of the revised definition of a micro business enterprise.

“Micro enterprises” means any business enterprises -

(a) Whose amount of total investment, excluding land and buildings, does not exceed seventy million Kwacha (K70,000,000). (b) Whose annual turnover does not exceed One Hundred and Forty Million Kwacha (K140,000,000); and (c) Employing up to ten (10) persons.

4.2.2 Small Business Enterprise

a) Employment Based Definition

The SED Act of 1996 defined the ULWT for a small business enterprise as one “employing up to thirty persons”. At that time, the AWE for micro business enterprises was seventeen workers. This produced a ratio of 1 to 1.77 of the AWE to ULWT. In the year 2003, the AWE for micro enterprises twenty two workers per enterprise implying a 29.4 percent growth in the average workforce among small business enterprises. It was estimated to grow to twenty four workers by 2006. Therefore, since the AWE is a major determinant in ULWT, and since there has been an increase in the AWE, the ULWT should be adjusted upwards to forty point two (42.4) workers per enterprise for 2006. Details of calculations are expressed in the following equation:

Ministry of Commerce, Trade and Industry, Lusaka. 13 The 2003-2004 Zambia Small and Medium Enterprises Survey

ULWT for 2003 = ULWT 1996 x AWE 2003 AWE 1996

ULWT for 2003 = 30 x 22 17 ULWT for 2003 = 38.8

OR

ULWT for 2003 = 30 x 24 17

ULWT for 2006 = 42.4

The study recommends adopting forty five (45) as the ULWT for small enterprises.

b) Investment Based Definition

(i) Manufacturing Business Enterprise

The SED Act of 1996 prescribed the ULIT in plant and machinery of K50 million for a small business enterprise or a Capital Intensity of K1.67 million. The only variables to the ULIT are inflation and ULWT. For the period 1996 to 2006, inflation has increased thereby producing a Consumer Price Index factor of 6.79 times. This has translated the capital intensity index to Kwacha Eleven Million and Three Hundred and Forty Thousand (K11,340,000) as at end of 2006. Meanwhile, the ULWT has also increased to 42.4 over the period. Therefore, for an ULWT of 42.4 workers, the recommended ULIT for a small business enterprise should be Kwacha Four Hundred and Seventy Nine Million, Eight Hundred and Twenty Seven Thousand Kwacha (K479,827,000). This is illustrated in the equation below:

ULIT for 2006 = ULIT1996 x ULWT 2006 x CPI 2006 Factor ULWT1996

ULIT for 2006 = 50,000,000 x 42.4 x 6.79 30

ULIT for 2006 = K479,827,000

It is recommended however that Kwacha Five Hundred Million (K500,000,000) be adopted as the ULIT for a small business enterprise.

(ii) Trading or Services Business Enterprise

The SED Act of 1996 prescribed the ULIT of K10 million for a small business enterprise or a Capital Intensity of K333,333. The only variables to the ULIT are inflation and ULWT. For the period 1996 to 2006, inflation has increased thereby producing a Consumer Price Index factor of 6.79 times. This has translated the capital intensity index to Kwacha Two Million and Two Hundred and Sixty Thousand (K2,267,000) as at end of 2006. Meanwhile, the ULWT has also increased to 42.4 over the period. . Therefore, for an upper limit threshold of 42.4 workers, the recommended ULIT for a small business enterprise should be Kwacha Ninety Five Million, Nine

Ministry of Commerce, Trade and Industry, Lusaka. 14 The 2003-2004 Zambia Small and Medium Enterprises Survey

Hundred and Sixty Five Thousand, Three Hundred and Thirty Three (K95,965,333). This is illustrated in the equation below:

ULIT for 2006 = ULIT1996 x ULWT 2006 x CPI 2006 Factor ULWT1996

ULIT for 2006 = 10,000,000 x 42.4 x 6.79 30

ULIT for 2006 = K95,965,333

It is recommended however that Kwacha One Hundred Million K100,000,000) be adopted as the ULIT for a small business enterprise engaged in Trading or Services activities.

c) Turnover Based Definition

The SED Act of 1996 prescribed the ULTT of K80 million for a small business enterprise or a Labour Productivity of K2.67 million. The only variables to the ULTT are inflation and ULWT. Since then, inflation has increased to a Consumer Price Index factor of 6.79 times between 1996 and 2006. This has translated the Labour Productivity index to Kwacha Eighteen Million, One Hundred and Twenty Nine Thousand, and Three Hundred (K18,129,300) as at end of 2006. Meanwhile, the ULWT has also increased to 42.4 over the whole period. Therefore, for an upper limit threshold of 42.4 workers, the ULTT for a small enterprise should be Kwacha Seven Hundred and Sixty Eight Million (K768,000,000). This is illustrated in the equation below:

ULTT for 2006 = ULTT1996 x ULTT 2006 x CPI 2006 Factor ULTT1996

ULTT for 2006 = 80,000,000 x 42.4 x 6.79 30

ULTT for 2006 = K768, 000,000

It is recommended however that Kwacha Eight Hundred Million be adopted as the ULTT.

Below is a summary of the revised definition of a small business enterprise.

“Small Business enterprise” means any business enterprise -

(a) Whose amount of total investment, excluding land and buildings, does not exceed:- (i) In the case of manufacturing and processing enterprises, Five Hundred Million Kwacha (K500,000,000) in plant and machinery; and (ii) In the case of trading and service providing enterprises, One Hundred Million Kwacha (K100,000,000); (b) Whose annual turnover does not exceed Eight Hundred Million Kwacha (K800,000,000); and (c) Employing up to forty five (45) persons.

Ministry of Commerce, Trade and Industry, Lusaka. 15 The 2003-2004 Zambia Small and Medium Enterprises Survey

4.2.3 Medium Business Enterprises

As a starting point, the survey considered the upper limit thresholds on employment, investment and turnover of a small enterprise to form the minimum threshold for a medium enterprise. To this effect, the recommended minimum limit thresholds for medium enterprises are as follows:

Employment 46 workers Investment (Manufacturing) K501 Million Investment (Trading & Services) K101 Million Turnover K801 Million

In determining the upper limit thresholds, a number of factors were considered. In the case of employment, the limit adopted in the region by a number of countries with whose economies are fundamentally similar to that of Zambia were factored in. The upper limit in terms of employment that has been ruling in the region for medium enterprises is 100. a) Employment Based Definition

Secondly, in all the definitional characteristics of employment, investments and turnover, the ratio of the micro to small enterprises was used as a basis of inference and extrapolation to that of small enterprises and medium enterprises. Both the linear and exponential growth patterns of the micro enterprises and small enterprises were used to arrive at appropriate definitions of medium enterprises. The following are the assumptions:

The AWE in small enterprises bracket was 22 for 2003 and after consideration of 5 percent annual growth patterns was paged at 24 for the year 2006. In the case of medium enterprises, the AWE was 47.5. Assuming that the sub sector was also experiencing a 5 percent annual growth, the mean for 2006 grew to 52.3 workers per enterprise. Determination of the threshold would require extrapolation by 1.77 and this translates into 92.3 workers. Therefore, using the stated formula, the ULWT for medium enterprises was is 92.3 per enterprise. Details are in the equation below:

ULWT for 2006 = AWE 2006x ULWT 2003 AWE 2003

ULWT for 2006 = 52.3 x 30 17

ULWT for 2006 = 92.3

It is recommended that 100 be adopted as the ULWT for medium business enterprises.

b) Investment Based Definition

In determining the investment limits of the medium enterprises, the capital intensity differentials between micro and small enterprises was further inferred on to the medium enterprises. In this case, it was observed that while the capital intensity in micro enterprises was K6.79 million, that of the small enterprises was K11.34 million for manufacturing and K2.26 for trading and services enterprises. This produced a ratio of 1.67 which when translated into the 2006 threshold resulted into K18.94 million for manufacturing enterprises and K3.77 million for trading and services

Ministry of Commerce, Trade and Industry, Lusaka. 16 The 2003-2004 Zambia Small and Medium Enterprises Survey enterprises. However, since capital intensity does not diminish as the enterprise grows especially in the case of trading business, the ratio of 1.67 applicable to manufacturing enterprises was also adopted for trading and services enterprises. When multiplied with the 92.5 upper limit employment threshold, the result is K1,752 million for manufacturing and processing industries, and K581,111,570 million for trading and services.

(i) Manufacturing Business Enterprise

ULIT for 2006 = ULWT x Capital Intensity Ratio between MEs and SEs x CI for SEs

ULIT for 2006 = 92.3 x ULIT2003 (MBEs) / ULIT2003 (SBEs) x ULIT2003 ULWT2003 ULWT 2003

ULIT for 2006 = 92.3 x (11,340,000 / 6,790,000) x K11,340,000

ULIT for 2006 = 92.3 x 1.67 x 3,770,000

ULIT for 2006 = K1,747,958,940

It is recommended however that Kwacha One Billion and Eight Hundred Million (K1,800,000,000) be adopted as the ULIT for a manufacturing medium business enterprise.

(ii) Trading or Services Business Enterprise

ULIT for 2006 = ULWT x Capital Intensity Ratio between MEs and SEs x CI for SEs

ULIT for 2006 = 92.3 x ULIT2003 (MBEs) / ULIT2003 (SBEs) x ULIT2003 ULWT2003 ULWT 2003

ULIT for 2006 = 92.3 x (11,340,000 / 6,790,000) x K3,770,000

ULIT for 2006 = 92.3 x 1.67 x K3,770,000

ULIT for 2006 = K581,111,570

It is recommended however that Kwacha Six Hundred Million (K600,000,000) be adopted as the ULIT for a medium business enterprise engaged in Trading or Services activities.

c) Turnover Based Definition

In determining the ULTT for medium enterprises, the ratio of labour productivity between a micro and small enterprise had to be established first. This ratio was 1 : 1.33 which when multiplied by the upper limit for small enterprises translated into K24.2 million. Multiplying this figure with the ULWT of 92.3 results into the upper limit turnover of Kwacha Two Billion Two Hundred and Thirty Three Million, Six Hundred and Sixty Thousand. On the other hand, using the ratio of turnover between that of a micro enterprise and a small enterprise which is 5.71 and using the ULTT of K800 million, it is equally logical to estimate the appropriate ULTT for medium enterprises to be K4,600,000,000. It is recommended therefore that Kwacha Five Billion be adopted as the ULTT.

Ministry of Commerce, Trade and Industry, Lusaka. 17 The 2003-2004 Zambia Small and Medium Enterprises Survey

Below is a summary of the revised definition of a medium business enterprise.

“Medium Business enterprise” means any business enterprise -

(d) Whose amount of total investment, excluding land and buildings, does not exceed:- (iii) In the case of manufacturing and processing enterprises, One Billion and Eight Hundred Million Kwacha (K1,800,000,000) in plant and machinery; and (iv) In the case of trading and service providing enterprises, Six Hundred Million Kwacha (K600,000,000); (e) Whose annual turnover does not exceed Five Billion Kwacha (K5,000,000,000); and (f) Employing up to One Hundred (100) persons.

4.2.4 Large Scale Business Enterprise

Developing a definition for large enterprises was outside the expectations of the survey. However, in order to have a holistic understanding of the whole sector and how the SMEs sector relate to large enterprises sector, it was considered necessary develop a definition for large scale enterprise. The motivation is also derived from the understanding that MCTI is also responsible for promotion of large enterprises. That being the case, the definition of a large enterprise was constituted as outlined in table 2 below.

ULWT for 2006: More than 100 Workers

ULIT for 2006 : More than K1,800 Million (Manufacturing Enterprise)

ULIT for 2006 : More than K600 Million (trading or Services Enterprise)

ULTT for 2006 : More than K5,000 Million

Table 2: Summary of definitions for Business Enterprises

Business Enterprise Upper Limit Values Category Investment Value in Turnover Value in Number of Workers Kwacha (2006) Kwacha (2006) 2006 Micro 70,000,000 140,000,000 10 Small (Manufacturing) 500,000,000 800,000,000 45 Small (Trading / Services) 100,000,000 800,000,000 45 Medium (Manufacturing) 1,800,000,000 5,000,000,000 100 Medium (Trading / Services) 600,000,000 5,000,000,000 100 Large (Manufacturing) No ULIT No ULTT No ULWT Large(Trading / Services) No ULIT No ULTT No ULWT Source: Researchers’ Field Work, 2004

The aforegoing definitions are largely applicable for the year 2006 due to continuous changes in the macroeconomic environment which also affects the variables used. What is more important however is to master the principles in formula so as to adapt definitions to periodic changes in the environment.

Ministry of Commerce, Trade and Industry, Lusaka. 18 The 2003-2004 Zambia Small and Medium Enterprises Survey

CHAPTER THREE: A PROFILE OF THE ZAMBIAN MSMEs SECTOR

The findings and analysis thereof presented here encapsulate the quantitative and qualitative information collected from owners of SMEs in Zambia. Where information gaps were identified, findings from other studies on the Zambian MSMEs sector were used as supplement. In broad terms, the Chapter examines the source of motivation for entrepreneurs to engage in a business activity and further explores external factors that affect this motivation as reflected by distribution of business activities. The chapter also examines the mechanisms used by entrepreneurs to resource the start-up of business and the challenges faced. This is followed by examination of the formality status of businesses and the reasons for formalising or not to formalise. The chapter goes on further to examine the next stage of business development which is Growing, Managing and planning the business. Assessing the impact of resources applied on business performance constitutes another section on this chapter. This is followed up by examining how the business performance translates into the living conditions of the entrepreneurs. On a macro level, the chapter also examines the contribution of the MSMEs sector to the national economy. The chapter ends with an assessment of the business environment by way of business constraints under which such performance was attained.

Employment based definitions for MSMEs extrapolated to the year 2003 general employment levels recommended in the preceding Chapter were adopted as working definitions for the analysis of the profile of the sector.

3.1 Establishing a Business Enterprise

3.1.1 Motivation for Starting a Business

According to the Encyclopedia Britainica 2007, John A. Schumpeter is said to have anchored the modern growth theory on the role of the entrepreneur, or businessman. He argued that it is the quality of his performance that determines whether to employ his personal resources in an enterprise and whether the capital would grow rapidly or slowly and whether this growth would involve innovation and change such as the development of new products and new productive techniques (Encyclopedia Britainnica 2007 Ultimate Reference Suite). Differences in growth rates between countries and between different periods in any one country could be traced largely to the quality of entrepreneurship. The latter in turn reflect certain historical and cultural values carried by the citizenry in general, and the business class in particular.

In most African countries, entrepreneurship was suppressed for a long time by the colonialists largely through the education system that tailored students towards formal employment rather than self employment. Further, enterprises promotion was highly restricted to very few trading activities. With the adoption of a public sector led economic growth model, countries such as Zambia further excluded its citizens from engaging in business activities with the threat of nationalization if an enterprise grew beyond a certain size. These two factors are widely cited as primary contributors to the low level of entrepreneurship among Zambians.

The subsequent adoption of a liberal economic policy framework in 1991 as the most viable option for economic recovery for Zambia was premised on availability of a highly entrepreneurial class capable of responding effectively to the demands of the market. However, it has also been widely observed that the response has been very slow. To this effect, it has been widely argued that the perceived slow response to the incentives regime of a free market

Ministry of Commerce, Trade and Industry, Lusaka. 19 The 2003-2004 Zambia Small and Medium Enterprises Survey

economy is due to the low entrepreneurship levels in the country. This provided the motivation for including entrepreneurship assessment among the owners of SMEs as a starting point in understanding the factors underlying the general performance of the SMEs sector and its future contribution to the economy. This was established by examining the reasons behind decisions by owners of businesses to not only engage in business but also the choice of particular business activities.

Against this background, the results of the survey indicate that entrepreneurs decide to open a business for a variety of reasons. Some have no income generating options. Others have been entrepreneurs in the past, but have changed from one business to another. Yet others train for specific trades or inherit businesses from family members. The survey did not ask why people chose to be entrepreneurs. Rather, it asked why people chose the specific type of activity that they did. Their answers are provided in Table 3.

Table 3: Reasons for Choice of Business Activity

# Reason for Choice % of Owners Average Hourly Profit 1. No Other Options 24.4 73 2. Met Capital Limitations 21.4 30 3. Allowed Flexibility 11.7 26 4. Family Pressure 11.8 102 5. Inherited Business 2.3 85 6. Trained For This 5.8 60 7. Saw as Profitable 20.0 272 8. Other 2.6 62 Total 100.0 K117 Source: 1996 Nationalwide Survey on MSEs in Zambia

The first three responses in the table (capturing 58% of MSE owners) represent entrepreneurs who were highly constrained in choice of activity. One out of four individuals reported that they had absolutely no options to this sort of business. Another 21 percent chose based on a resource constraint - capital - opening the type of business that required the same amount of start-up capital that they had been able to raise. A third group of entrepreneurs (12%) was limited by another input requirement: time. Not surprisingly, businesses in which entrepreneurs cited constraints as the reason for choice of activity show low financial returns. Most dramatically, entrepreneurs meeting time or capital requirements have businesses with hourly returns in the K20 - 30 (US$0.02) range, well below the sectoral average.

A second group of entrepreneurs (14 percent) choose activities based on direction from their family. Either they inherited the business or they were strongly encouraged by the family to enter that type of business. Such businesses show moderate returns. A third category of entrepreneurs (26%) made active decisions to pursue specific types of activity. While only a small percentage of respondents, 6 percent of entrepreneurs trained specifically for their current activity. Another 20 percent entered because they saw a market opportunity and expected to make a profit. On average, businesses of these entrepreneurs showed higher profits than either the first or second group examined.

Ministry of Commerce, Trade and Industry, Lusaka. 20 The 2003-2004 Zambia Small and Medium Enterprises Survey

The findings suggested that individuals who enter an activity through choice rather than to meet a variety of constraints or to satisfy family were likely to have a more successful business experience. Unfortunately, the sector is dominated by those owners who report limited choices.

Additionally, decisions on business choice varied by the owner’s gender orientation. Women entrepreneurs were more likely to choose their activity based upon family pressure or the need for flexibility. Men entrepreneurs were more likely to choose based upon previous training or perceived profitability.

Geographically, Luapula province exhibited very strong culture of entrepreneurship. In spite of the low infrastructural development and a limited market, the province constitutes 16.8 percent of all SMEs in Zambia thereby capturing a second position from Copperbelt province. In per capita terms, Luapula province has the highest density of SMEs at 13 per 100 persons. Details are in the table 4 below.

Table 4: Enterprise Distribution by Density per Province

Name of Province Population of Number of SMEs SMEs/100 Persons

Central 12,4 8 Copperbelt 17.3 7 Eastern 11,0 5 Luapula 16,8 13 Lusaka 13,5 6 Northern 9,7 5 N/Western 0.9 1 Southern 9,4 5 Western 9,0 7 Totals 100 Source: Researchers’ Field Work, 2004; LCMS 2004

The challenge that arises from the distribution structure of the SMEs especially in per capita terms is how to ensure that North Western, Southern, Northern and Eastern provinces increase their entrepreneurship levels and hence the rate of SMEs activities in their respective areas;

Alternative Livelihoods as an Indicator of Entrepreneurship

A number of studies recognize that most owners of SMEs rely on more than one income generating activity as a way of increasing its income and food security and not necessarily wealth creation. The 1996 survey revealed that 62 percent of business owners relied on more than one income generation activity. In line with this observation, the 2003-2004 SME Survey also established that 44.6 of the business owners had secondary sources of income in addition to the primary one. Survey details reveal that 69 per cent of business owners with secondary income were in the micro category while there was no medium business owner with a secondary income source. By size category, micro enterprises had the highest proportion of entrepreneurs with alternative income source followed by the small scale ones. Owners of medium enterprises on the other hand had none. Details are illustrated in the table 9 below.

Ministry of Commerce, Trade and Industry, Lusaka. 21 The 2003-2004 Zambia Small and Medium Enterprises Survey

Table 9: Enterprise Distribution by Size of Secondary Income

Status on Secondary Income Size of Enterprise Micro Small Medium Has Secondary Income Source 69 37 0 Has No Secondary Income Source 31 63 100 Total 100 100 100 Researcher’s Field Work, 2003-04

The most common types of the secondary sources of income for the business owners include trading, farming, formal employment and household rentals. Details are outlined in the table 10 below.

Table 10: Enterprise Distribution by Type of Secondary Income Source

Secondary Income Sources Percentage of SME Owners

Pottery 0,3 Metal fabrication 0,3 Studio 0,3 Beekeeping 0,3 Traditional doctor 0,3 Clearing & forwarding 0,3 Consultancy 0,3 Surgery 0,7 School service 0,7 Fishing 1,0 Guesthouse 1,7 Construction 2,1 Cross border trading 2,4 N/A 3,4 Not Stated 4,8 Rentals/hire 9,0 Other Income Sources 10,3 Formal employment 14,5 Farming 18,6 Trading 28,3 Total 100,0 Source: Researchers’ Field Work, 2004

By locality, the results reveal that Southern province had the highest proportion of business owners who had secondary income sources followed by Eastern province. On the other hand, Copperbelt, Luapula and Lusaka provinces had the least proportion of business owners who had secondary income sources. The survey did not reveal any variations of the basis of sector. However, gender was observed to play a factor as a higher proportion of women had secondary activities than their men folk.

The high percentage of entrepreneurs who engaged in business for reasons other than opportunity identification, and the high percentage of entrepreneurs with secondary income sources is a clear indication of the low entrepreneurship levels amongst SMEs in Zambia. This

Ministry of Commerce, Trade and Industry, Lusaka. 22 The 2003-2004 Zambia Small and Medium Enterprises Survey

assertion is also confirmed by the focus on meeting the basic needs in living conditions as the primary motivation rather than passion for exploiting a business opportunity and wealth creation

3.1.2 Main Source of Capital for Setting up the Enterprise

The ability to identify a business opportunity is not in itself sufficient to enable one to commence a business activity. Starting of a business activity also requires start-up capital. As a result, the study endeavoured to explore how entrepreneurs resourced their business at start-up capital. Owners of SMEs cited many sources of capital that were used in setting up their enterprises though they were categorised under five broad categories. Personal savings constituted the main form of capital source for 40 percent of entrepreneurs followed by those who borrowed or received a gift from relatives or friends with 19 percent. Entrepreneurs who had successfully acquired start up capital from the financial institutions constituted a paltry 9.3 percent.

3.2 Formalising the Business Enterprises

The informal economy forms a large part of Zambia’s economy. It comprises a notable percentage of the value added and provides 91 percent of employment and income for many who lose or cannot find work in the formal economy. The sector is also characterised by a disproportionate number of women, young people and others from the disadvantaged groups (CSO-2002/03 Non Farm Informal Sector-2006). Against such background, it is only sensible that most of these informal SMEs are captured into the mainstream formal economy. Formalising an SME would normally impose some cost on the enterprise. As such, entrepreneurs usually make repeated economic calculations of the costs and benefits of following the rules, and embrace formality up to the point where the potential benefits outweigh the costs. However, while informal enterprises may provide a short term solution to a household’s livelihood needs, creating an economy with a higher proportion of formal enterprises and jobs has been found to be important to long-term welfare creation, stability and poverty reduction. Therefore, to a policy maker, the long term benefits for formalising the SMEs include:

ƒ Broadening the tax base (potentially permitting lower tax rates). ƒ Provision of higher quality, better paid, and more sustainable jobs. ƒ Strengthening of the reliability of agreements between firms. ƒ Building of investor confidence (and increased investment). ƒ Improved access to business services, formal markets and productive resources such as capital and land. ƒ Increased information on local enterprises to facilitate deal-making and strengthen frameworks for policy advocacy ƒ Reduction in the cash economy and provision of more resources for intermediation by the formal financial sector. ƒ Reinforcement of the social contract between citizens and the state. (OECD, 2006)

In Zambia, formality is primarily associated with business registration (rather than being a licensed business), getting premises and opening bank accounts. Firms are required by law to register under either the Business Names Registration Act after which when they are issued with a Certificate of Business Names Registration, or under the Companies Act upon which when they are issued with a Certificate of Incorporation.

Ministry of Commerce, Trade and Industry, Lusaka. 23 The 2003-2004 Zambia Small and Medium Enterprises Survey

One of the aims of the study was to develop some greater understanding of the business formalisation process as experienced by the SMEs. As is widely acknowledged, informality has long been a characteristic associated with SMEs as 98 percent of them (618,000) are still classified as informal enterprises by the CSO (Living Conditions Monitoring Survey, 2003-3). Against this background, the survey examined the registration status with PACRO as the ultimate step to formality. This was with the awareness that there is a continuum between informality and formality most SMEs preferring to start with an operating license obtained from the Local Authority as the primary formality instrument before registering with PACRO. Because of this, the study also assessed the secondary formality by way of such a license.

3.2.1 Registration Status with PACRO

The survey results show that 54 percent of the enterprises were registered with PACRO. However, the highest proportion was in the medium scale category followed by the small scale category. The micro enterprises scale comprised the least number of enterprises registered with PACRO. Among the factors influencing the registration preference appears to be the level of income generated by the firm. As the business grows, demands for formality also increases. It is common practice for example for banks to put fewer restrictions on applicants for account opening when the applicant is a legal business entity rather than an individual. The larger the enterprise become, the more it will be drawn into the formal sector of the economy as table 5 below shows.

Table 5: Enterprise Distribution by Registration Status

Size of Enterprise Total Registration Status Micro Small Medium Registered 45 63 87 54 Not Registered 55 37 13 46 Total 100 100 100 100 Source: Researchers’ Field Work, 2004

Further analysis reveals that Copperbelt province had the highest percentage of firms registered with PACRO followed by Western province. On the other hand, North-western province had the lowest.

In terms of gender distribution, there were more SMEs owned by men who were registered with PACRO than those owned by women. Sector wise, the services sector was dominant followed by commerce and in the last place was manufacturing.

Among the reasons that induced the owners of SMEs to registering their businesses with PACRO in the order of preference include:

ƒ To acquire orders from government and other big customers ƒ To facilitate access to loans, materials and other services ƒ For security and expansion of business ƒ To make my own business known ƒ To comply with the law and avoid harassment by law enforcement officers ƒ To separate business from personal activities ƒ Do not know (spouse did it).

Ministry of Commerce, Trade and Industry, Lusaka. 24 The 2003-2004 Zambia Small and Medium Enterprises Survey

3.2.2 Status of the Operational License

In order to conduct business activities, an enterprise requires authority from an appropriate regulator. However, the primary regulator at district level is the local authority which provides a manufacturing, trading or services license. Using the license as a proxy for determining formality of enterprise operation, the results show that unlike the situation with PACRO where only 54 percent of the SMEs were registered, results show that 86 percent of the enterprises had operating licenses from the local authorities. Size of enterprise was the major determinant as all medium sized enterprises had licenses while the compliance levels for small and micro enterprises was 95 percent and 87 percent, respectively.

Further analysis reveals that compliance in this aspect was higher with the enterprises in commerce at 94 percent followed by services with 89 percent. Enterprises engaged in manufacturing were the least compliant at 69 percent.

Disaggregated results on provincial basis shows that North-western province out of all the provinces had the lowest compliance level. The highest was Central and Luapula provinces. By gender distribution, results show that a higher proportion of women had been compliant than men. Details of the above are illustrated in the table below.

Unlike the case of registering with PACRO, most of the SMEs that initially registered with the licensing authorities were induced primarily by the need to comply with the law and avoid harassment by law enforcement officers.

3.2.3 Barriers to Formality from the Entrepreneur’s Perspective

The study sought to establish some of the reasons that hinder SMEs from formalising their businesses. Responses to the question were varied but are broadly categorised under regulatory barriers, administrative barriers, fees and financial requirements, corruption in public places, socio-cultural attitudes, and criminality.

(a) Regulatory Barriers

Regulatory barriers are interpreted in this study as inappropriate requirements stemming from government that do not appreciate the impact on SMEs, especially the micro enterprises, of additional reporting, inspection and other compliance procedures. The study observed that indeed, regulations and bureaucracy pose problems for SMEs as they contain higher transaction costs in complying with regulations and procedures. This is because much of the business legislation and the related support mechanisms for business have long been oriented to large scale businesses. In this respect, most SME owners were found to be at a disadvantage.

Some SMEs complained that the time required to maintain and grow their business is not valued by the regulatory authorities. They identified burdensome and costly government regulation as the most significant deterrent to formality, and a source of corruption. Examples cited included the need to submit audited accounts to the Zambia Revenue Authority on a quarterly and annual basis which required hiring of an auditor. This was apart from inspections from various government departments all of which take a lot of the entrepreneurs’ time. This was exacerbated by the lack of the necessary specialised expertise that is sometimes required for filling forms and complying with procedures which skills often reside in larger enterprises.

Ministry of Commerce, Trade and Industry, Lusaka. 25 The 2003-2004 Zambia Small and Medium Enterprises Survey

In the same line, SMEs in the food sub sector reported to have particular problems with some of the regulations. It was observed that for the food sector, many of the legislative requirements pertaining to international food hygiene and safety standards were extremely difficult for SMEs to comply with. Consequently, finding accessible and affordable premises that meet with healthy and safety compliance requirements was a problem. In addition, further investigations provided little evidence of particular support programmes aimed at assisting SMEs to understand or move towards compliance with health and safety standards. Compliance with these standards was commonly viewed as a cost and burden by many SMEs, rather than as an investment leading to greater productivity, improved quality and expanded business opportunities.

(b) Administrative Barriers

Administrative barriers stem from the way regulations pertaining to SMEs in Zambia are enforced. They include excessive paper work, inefficiency or delayed decisions, inaccessibility of services, bureaucratic obstruction and abuse of authority. These barriers have many sources, including over complicated regulations, out-dated ways of working, lack of capacity, over-centralisation of authority, distrust of the private sector and – linked to all this – corruption. In short, there was a perception that public institutions should create a more service oriented culture with respect to SMEs as opposed to a culture that sees its role as one of control and enforcement.

(c) Fees and Financial Requirements

The fees and financial regulations consist of regressive fees that penalise SMEs, overly complex tax regulations and poor tax and tariff administration. Most SMEs interviewed pointed out that the initial business registration and licensing fees were set too high a level. However, the study also observed that the unregistered SMEs were timid in formalising there businesses because of a number of reasons that include the following:

ƒ They were worried about the tax levels, ƒ They did not understand how to comply with tax requirements, ƒ They feared the behaviour of the Zambia Revenue Authority officials ƒ They did not believe that they would receive any services in return for payment.

The study observes further that financial barriers were integrally entwined with regulatory and administrative barriers related to the general registration of business activity and licensing for operations in specific sectors. The main obstacles cited by the SMEs were excessive costs and time spent dealing with the registration process which required a memorandum and articles of association developed by a legal firm. The financial barriers were further exacerbated by making Lusaka as the only registration office which meant that entrepreneurs had to travel to the capital to conduct registration procedures.

Therefore, ignorance amongst SMEs about tax issues, the negative behaviour of tax officials, lack of appreciation on the impact of revenue collected on the public good, high registration fees and related costs, delays in the registration of business, and the high transport and other logistical costs have acted as deterrents to formalisation of SMEs.

Ministry of Commerce, Trade and Industry, Lusaka. 26 The 2003-2004 Zambia Small and Medium Enterprises Survey

(d) Corruption Corruption is a major factor deterring formalisation, as businesses stay off registers and tax rolls in order to minimise contact with corrupt public officials. A study in 69 countries found a direct link between decreases in corruption and increases in the size of the formal economy. Corruption erodes the trust that SMEs may have in government and leads informal businesses to conclude that their long term prospects in the formal economy are poor. In relation to the study, a number of SMEs reported to have evaded the dragnet of pension and tax authorities by bribing officials that identified them as eligible entities. “I was confronted by a pension scheme official for not registering my employees for membership to which I even never contribute. When she calculated the outstanding contributions and the penalty, I was supposed to pay K48 million. I negotiated with her such that I gave her K9 million as a bribe and she registered my workers as if they were just beginning employment with me instead of the five years they had worked for me”.

(e) Criminality

Some SMEs reported that their reluctance to formalise is due to the fact that they are involved in some illegal activities such as selling of smuggled goods, dealing in stolen goods, employing under age workers, or are engaged in illegal activities such as brothel/prostitution business or pornographic movies. Other SMEs are reluctant to provide information about their personal wealth or indeed their nature of business transactions and circumstances to government officials, because they are concerned that this information may be passed on to their competitors.

Summary on the Formalisation of Business Enterprises

The study has established that the level of formalisation among SMEs is miserably low as only 2 percent are registered with PACRO. Among the most informal are SMEs located in rural provinces, owned by women, manufacturing SMEs, and micro enterprises. Reasons for formality preference include the need to acquire orders from government and other big customers, improve accessibility to bank loans, materials and other services, security and expansion of business, self identity, and avoiding harassment from law enforcement officers.

Among the perceived barriers to formalisation include inappropriate regulations that are costly and largely appropriate to the large enterprises; time consuming and complicated requirements such as periodic inspections and provision of audited accounts. Other legislation especially pertaining to application of international standards in food preparation were simply difficult to comply to and the absence of policy actions to assist SMEs meet the required standards exacerbated the informality standards. Delays in decision making or simply having an inefficient administrative system acts as a barrier to formalisation of SMEs. Additionally, ignorance amongst SMEs about tax issues, the negative behaviour of tax officials, lack of appreciation on the impact of revenue collected on the public good, high registration fees and related costs, delays in the registration of business, and the high transport and other logistical costs have acted as deterrents to formalisation of SMEs.

3.3 Resourcing the Business Enterprise

3.3.1 Main Source of Credit for Operating an Enterprise

In order to operate effectively, enterprises borrowed from other sources to finance their operations. These sources of credit included banks, money lenders, family and friends, and

Ministry of Commerce, Trade and Industry, Lusaka. 27 The 2003-2004 Zambia Small and Medium Enterprises Survey

proceeds from other business. The 1996 survey established that only 14 percent of business owners had ever used credit in their business. This was further reflected in 2003 by the CSO’s survey on micro enterprises that revealed that only 7.2 of the enterprises had ever used credit in their business operations. Majority had never used credit. For those who used credit, Family or Friends provided the main source as it applied to 86 percent of them followed by the local money lender at 3.9 percent. The banks were the least relied on with 1.3 percent of the entrepreneurs relying on them. For most of the entrepreneurs (85 percent) who accessed the credit, purchase of raw materials or stock formed the major purpose. These were followed on a distant third by the need for purchase of hand tools and in third place, those who purposed to acquire machinery and equipment

The foregoing was reinforced by the results of the field survey which showed that less than 17 percent of the micro enterprises has accessed loans from a bank at one point while the figure was 25 percent for small scale enterprises. Medium sized enterprises had a much higher access at 86 percent. Details are in figure 1below.

Figure 1: Composition Structure of SMEs by Accessibility to Loans

120

100

80

60

Percentage 40

20

0 Micro Small Medium

Own Finance Loan/Grant

Source: Researchers’ Field Work, 2004

3.3.2 Labour (Skill and Availability)

A number of studies have confirmed a strong and positive relationship between the level of education of the business owner and the growth performance of business. However, this variable was not captured in this study and in its place, results of the 1996 SMEs Baseline Survey were used. The study attempted to address the question of how much formal schooling is required for a successful SME operation. Average hourly profits shed some light on this question as shown in Table 14. Specifically, entrepreneurs who had stayed in school through upper secondary had markedly higher business profits than those with less education. This finding mirrored results in Kenya that showed that some secondary education is a necessary endowment for owners running expanding enterprises. Details are discussed in the table 6 below.

Ministry of Commerce, Trade and Industry, Lusaka. 28 The 2003-2004 Zambia Small and Medium Enterprises Survey

Table 6: Enterprise Distribution by Level of Education and Profitability

# Level of Schooling % of Owners Cumulative Average Hourly Percent Profit in K 1. No Schooling 11.9 11.9 16 2. Lower Primary 15.7 27.6 19 3. Upper Primary 35.6 63.2 15 4. Lower Secondary 20.6 83.9 38 5. Upper Secondary 11.1 95.0 255 6. College or University 4.5 99.4 880 7. No response 0.6 100.0 147 Total 100.0 K117 Source: 1996 Nationalwide Survey on MSEs in Zambia

In order to understand the implications of the foregoing information on the sector, it is necessary to examine the educational distribution of the SME owners. As shown in Table 14, nearly two thirds of entrepreneurs (63 percent) did not go beyond primary school. Another 32 percent had started or completed secondary school, and only 5 percent had post secondary school. In general, women had lower levels of education than men in both the unschooled and primary school only categories. Likewise, rural owners had lower educational levels than those based in small towns or urban areas.

Therefore, education has a significant influence on business performance and this poses a huge challenge to grow the sector especially so among women and the rural areas. The study has established that in both 1996 and 2004, the untrained dominated the micro enterprises category while the trained dominated the medium enterprises category. In particular, the 1996 Baseline Survey revealed that entrepreneurs with no training or free training from friends and family showed the lowest returns in the sector. The higher-than-average returns to owners who undertook paid apprenticeships suggest that such skill development does indeed lead to greater business success. Lower returns to vocational and technical training reflected that the schools focussed on types of activities found in more saturated markets, or provided less specialised or on-the-job training than paid apprenticeships.

In terms of geographical distribution, Luapula province had the largest number of SME owners trained in Technical and Business Management. It was followed by Southern and Copperbelt provinces. However, provinces with the least proportion of trained business owners were Central, Eastern and Northern provinces. Training distribution by sub sector shows that manufacturing had a higher percentage of those trained in Business management courses followed by services sector. Commerce had the least representation. By gender, there was a higher percentage of trained women among SMEs than were men.

3.3.3 Technology Levels among SMEs

There are many definitions of technology. According to Wortzel (1974), technology generally consists of a package of skills, knowledge and process or procedures for making, using and doing things. Hassan and wartensleben (1988) defined technology as the productive asset with commercial value, which are incorporated, contained, related and combined for the production of goods and services and technology itself. According to the above authors, technology is a long term, if not perpetually cumulative asset, requiring commensurate investments to ensure its generation, productive utilization, maintenance and replacement.

Ministry of Commerce, Trade and Industry, Lusaka. 29 The 2003-2004 Zambia Small and Medium Enterprises Survey

Thus technology can be said to include products, materials and devices for achieving given economic, social and environmental ends as well as associated practices (Information, knowledge, and skills for their use). According to UNCTAD/IDB (1986), it is recognized that in the contemporary world, technology is the prime mover of socio-economic development in all its material aspects.

For this study, the definition of technology was restricted to the hardware, which in this case is the equipment and production process in general. Assessing technology levels amongst SMEs focused on the quantity, quality and structure of tangible indicators such as equipment and technology, among others, in the sampled MSEs. Further, technology assessment was largely applicable to manufacturing and certain services SMEs.

(a) Growth in Fixed Capital

Trends in the value of fixed capital is a strong indicator of the level of technology in SMEs. To this effect, the study sought to identify the growth trends in the fixed capital values among SMEs. The results of the study revealed that 14 percent of the SMEs experienced growth in fixed capital since the year 2000. These were all in the small and medium size category and were urban based. This is in addition to the fact that they were all owned by men. This is a significant percentage that reveals that most MSEs have been able to invest without financial assistance which is an indicator of sufficient investment capabilities.

(b) Level of Technology of Fixed Capital

Using the source of power as a criterion to assess the technology level, the study established that most SMEs (39 percent) had very low levels of technology as they relied entirely on manual equipment. Another 39 percent had an average level as they relied on manual power with a component of electricity use. Furthermore, only 20 percent entirely relied on electricity. However, no SME had an automated or semi automated (computerised) or the state-of-the-art technology at the time of the field study.

(c) Age of Tools and Machinery

It is a standard business practice that all heavy equipment should be written off and disposed every five years. The ability to practice such a standard is an indication of the level of technology prevailing in SMEs. To this effect, the results reveal that the age of equipment for most of the SMEs (56 percent) was less than 6 years old while the least number is that with SMEs whose equipment is over 10 years old. However, most of the equipment under 6 years of age was in form of tools whose natural life span is lower than that of machinery.

In summary, the study has revealed that the levels of technology are generally low and would be classified on a scale of 1 to 5 to be at 2 with the micro enterprises dominating the lower end. There was no growth in fixed capital either and most of the tools were obsolete and hand power based. The SMEs however experienced marked growth on all the indicators of technology over the period.

Ministry of Commerce, Trade and Industry, Lusaka. 30 The 2003-2004 Zambia Small and Medium Enterprises Survey

3.3.4 Cooperation and Collaboration amongst SMEs and Service Providers

(a) Collaboration amongst SMEs

The SMEs sector is endemic with market failures largely owning to heir small sizes. Amelioration of these disadvantages is attainable sometimes through collaboration in certain business activities such as marketing, production and procurement. Through such arrangements, the SMEs can benefit through lower prices availed by economies of scale. In line with this, the study sought to establish the level and type of collaboration that SMEs are engaged with each other. To this effect, the results show that 52 percent of the SMEs were closely collaborating in more than one way. The strongest areas of linkages amongst SMEs were in procurement and production processing. The results further show that 77 percent of the SMEs had strong linkages with suppliers of raw materials followed by 46 percent with fellow entrepreneurs for production process hiring. Further, collaboration in procurement and marketing comprised 25 percent and 23 percent of the SMEs, respectively. The weakest linkage was in marketing/sales.

(b) Affiliation to a Membership Organisation

Most of the entrepreneurs have been discovering that business organisations, whether formal or informal, provide indigenous, on-going support to business owners in the form of financing, marketing assistance, market information, and moral support among others. With this recognition, some micro enterprise support institutions such as ZACSMBA were as early as 1996 beginning to actively partner with local business organisations, which served as an important organising platform for SME owners. This was also considered to be a primary form of formal operation of an enterprise.

In this regard, the 2003-2004 survey reveals that 70 percent of the enterprises interviewed were affiliated to one or more enterprises promotional institutions. This is a marked improvement when compared to the 12 percent recorded in 1996. Furthermore, the decision to be affiliated was also based on the size of the business operation as all medium enterprises were affiliated to support institutions compared to 77 percent for the small scale enterprises. The affiliation was even much less for micro enterprises. In fact at the time of interviews, the study reveals that 39 percent of the enterprises had already received or benefited from the incentives provided by the support organisations. These incentives include training, business advice and information, marketing, finance, tax exemption, subsidy, and compensation in the case of loss. A similar pattern was observed in 1996 in which enterprises joined the support organisations primarily to benefit from a number of incentives that were being provided at that time. A summary of incentives and membership is provided in the table 7 below.

Ministry of Commerce, Trade and Industry, Lusaka. 31 The 2003-2004 Zambia Small and Medium Enterprises Survey

Table 7: Enterprise Distribution by Association Services Received by Business Owners

# Type of Service % Reporting Services % Reporting Services from Registered Business from Unregistered Associations Business Associations 1. Association Provides no services 31 40 2. Financial services 24 41 3. Information/Advice Services 20 6 4. Marketing Support 11 2 5. Bulk Purchase of Inputs 7 5 6. Other (Incl. Transport and Advocacy) 7 6 Total 100 100 Source: 1996 Nationalwide Survey on MSEs in Zambia

Distribution of affiliation levels by province shows that North-western, Southern, Eastern and Luapula provinces had the highest percentage levels of enterprises that were affiliated to support organisations. On the other hand, Central province with Copperbelt and Lusaka has the least percentage of enterprises affiliated to support organisations. Registered membership associations were more prevalent rural areas while in urban areas, they took on an informal membership type of associations.

From a gender perspective, the study reveals an even distribution between men and women. This is contrary to the 1996 survey findings that showed that women owners tended to join unregistered business associations. Men, plus owners from multiple-owner businesses, were more likely to join formal business associations.

In summary, this chapter reveals that at least in urban located SMEs, there is a lot of collaboration among SMEs to take advantage of the economies of scale that appear to reduce the cost of purchasing, production and marketing. Furthermore, most of the support institutions among SMEs are membership based. However, while they take a more formal nature in rural areas, urban areas are characterised by semi formal membership based support institutions. In both cases however, SMEs have received assistance in the form of business information and financing.

3.4 Other Factor Determinants to Business Performance of SMEs

Apart from the influence of direct resources on the business performance of SMEs, indirect factors such as accessibility to quality infrastructure, type of economic activity engaged in, gender of entrepreneur, and age of business equally exert significant influence. Therefore, prior to analysing and making conclusions on the business performance of SMEs based on the direct cost, inclusion of external factors and how each contributes to the prevailing state of affairs in SMEs sector had to be examined as explained below.

3.4.1 Public Good Supply (Infrastructural Availability)

Infrastructure by way of roads, railway, telecommunications and water, among other facilities play a key role in the cost structure and productivity of the SMEs and hence how they are distributed in a nation. As such it is necessary for policy makers to be aware of such influence and provide policy measures that will promote balanced development of SMEs in all areas. In the case of Zambia, the country is divided into nine administrative zones called provinces. The level and rate of infrastructural and hence economic development in these provinces has been perceived to

Ministry of Commerce, Trade and Industry, Lusaka. 32 The 2003-2004 Zambia Small and Medium Enterprises Survey

be significantly skewed, which has been a source of concern to policy makers and the country as a whole. Basing on the CSO’s informal sector statistics for 2003 as a proxy for the whole SMEs sector, the table below shows that Copperbelt and Lusaka provinces had the highest percentage of concentration of SMEs while North Western province has the least. The highly developed infrastructure, apart from the readily available huge market was the major determinant.

The skewness of infrastructure development is also responsible for the rural - urban divide among provinces in Zambia. While the survey revealed that 53 percent of enterprises were located in rural areas which finding broke the notion that the SMEs sector in Zambia is an urban phenomenon, the study also revealed that in comparison with the urban located SMEs, the profitability for the former was very low. In fact, hourly profits for rural SMEs constituted on average 20 percent of those located in the urban areas. Inaccessibility of sufficient and high quality infrastructure is a major factor in profitability variations.

Approximately 73 percent SMEs conduct their businesses in unauthorised premises. Inadequate premises for trading and production purposes of SMEs influence business performance. The survey identified that the most common location for conducting their business activities include the homesteads which exhibited the lowest hourly profits. However, even those trading from traditional designated markets experienced low profits while those who traded along the roadsides and mobile vans had the highest profits. Therefore, an absence of sufficient business premises and a lack of enforcement law appear to have affected the business performance of the SMEs sector.

3.4.2 Socio-Cultural Factors (Gender Role Stereotyping)

Gender role stereotyping is also one of the factors that also affect business performance of enterprises. In line with this, the results show that the participation of women entrepreneurs in general in the SMEs sector was 46 percent. Further analysis on the participation of women entrepreneurs among the small and medium scale enterprises declined to 22 percent thereby confirming the notion that “women-run activities tend to be smaller than other business and that over half (57percent) of women-run businesses are one-worker activities”. Further, women-owned enterprises had dramatically lower hourly profits than their men-owned or multiple-owner counterparts.

Sector analysis of the results reveal that a greater proportion of female business owners constituting 46 percent concentrated in commerce while the figure was 58 percent for males. However, while the second most favoured sector for women was services and lastly manufacturing, for the men, it was manufacturing and then services. This also confirms the findings of the 1996 survey which reveal that women owners tended to group in activities such as agriculture-related production (except fish processing), malt and beer production, other beverage production, textile production (except garments), and vending. Men predominated in furniture making, fish processing, charcoal production, garment making, metal products, and the service areas of transport, repair, and construction.

The gender profile of Zambia’s SMEs sector is consistent with that seen in other countries in the region. In all other countries studied, women owned roughly half of enterprises. Without exception however women-run enterprises tended to be smaller than those owned by men and were likely to be grouped in activities with lower returns.

Ministry of Commerce, Trade and Industry, Lusaka. 33 The 2003-2004 Zambia Small and Medium Enterprises Survey

By geographical distribution, Lusaka had the highest proportion of women owned SMEs at 38 percent followed by Southern Province. North Western and Western provinces had the least participation rates averaging 2.1 percent.

This section reveals that indeed the participation of women entrepreneurs is much higher at the level of micro enterprises than at small scale enterprise level. Similarly, it is observed that women entrepreneurs concentrate on activities with low profitability and those in commerce. This is against the fact that 61 percent of females live in poverty compared to 52 percent for males. It is therefore a challenge for policy makers to grow women business from micro scale to small scale and also to diversify into activities which have higher returns.

3.4.3 Macro and Structural Economic Factors

a) General Economic Level of Development

The level of development of an economy determines to a large extent the general size of enterprises in different categories and hence composition among the three sizes. The survey revealed that 99.4 percent of SMEs were micro enterprises. Small scale enterprises constituted less than 0.4 percent. Against such high density in Luapula province poverty was equally high. Meanwhile, with the least density of MSMEs in North-Western province, poverty incidence was lower. The challenge that arises for policy makers from this distribution of enterprises is how to transform the sector from one dominated by MSEs to one dominated by SMEs. That is, how to ensure that Luapula, Central, Western and Copperbelt provinces not only maintain their high rates of SMEs activities but that they also grow in quality terms.

B) Industrial Sector of Sector of a Business Enterprise

It has been commonly perceived at least in the formal economy that with the introduction of a free market economic regime, manufacturing sector share of GDP has declined while trading and services have grown their share. In the case of SMEs sector, the survey results show that enterprises in the trading sector constituted the largest population with 54 percent followed by services sector with 27 percent. Manufacturing sector enterprises population was a distant third with 19 percent.

On a trend basis, results show that the population percentage of the enterprises engaged in manufacturing activities has been declining from 40 percent in 1996. On the other hand, the trading sector has continued to grow over the years although marginally. It still dominates the SMEs sector from 50 percent ten years ago. The highest growth has been registered in the services from 10 percent. As to the optimum composition of the three sectors required for meeting the development objectives of the PRSP and that of growing and developing the Zambian economy, there is currently no macroeconomic model for Zambia that has been developed to provide a guide.

The study however observes that because of its strong and intermediary linkages to the primary sectors of the economy on the one hand and to the tertiary sectors such as trading and services, as well as it being a more labour oriented sector which would advance employment creation, the

Ministry of Commerce, Trade and Industry, Lusaka. 34 The 2003-2004 Zambia Small and Medium Enterprises Survey

PRSP largely identified manufacturing SMEs as the most effective instrument to poverty reduction. Coupled with the high demand for manufactured products against the low productivity and production from the sector, it is justified to increase the share of manufacturing SMEs in the sector. The challenge for policy makers is how to backstop the declining share of manufacturing activities and even increase it against a horde of market failures. This is in addition to the need to develop a macroeconomic model that acts as a guide to optimal levels that SMEs and especially manufacturing activities can contribute to national economic development.

3.4.4 Age Factor

(a) Period of Active Operation of Business Enterprise

Distribution by size reveal a pattern where firms established before 1990 had the lowest composition of micro enterprises at 40 percent. Those established between 1991 and 2000 comprised 53 percent of the micro enterprises. For the post 2000 group, it had the highest composition of micro enterprises at 56 percent. This confirms the notion that age has a strong influence on the size of a business.

Summary

Infrastructural development, socio-cultural factors, level of national economic development and type of sector, as well as age of SMEs determine the performance of SMEs.

3.5 Business Performance

This section examines how a combination directly applied resources such as finance and labour and indirect resources such as infrastructure, social capital, and the economic structure, among others translate into business performance.

3.5.1 Profitability and Turnover

Industrial and Commercial Trade policy has always primarily endeavoured to promote business sectors that have a comparative advantage before creating competitive advantage. Due to their low technology levels, SMEs rely more on the former. A profitability rate and index provides a good measure of the advantage. Based on the foregoing, the CSO study on the micro enterprise sector revealed the following:

Table 8: Enterprise Profitability by Type of Sector

Sector Av. Annual Average Annual Average Annual Profitability Expenditure Revenue Net Income (Percent) Manufacturing 512,541 4,402,180 2,427,184 474 Trading 1,581,012 6,836,591 5,509,915 349 Services 511,853 3,716,072 2,056,006 402 CSO: The Non-Farm Informal sector in Zambia 2002-2003

Ministry of Commerce, Trade and Industry, Lusaka. 35 The 2003-2004 Zambia Small and Medium Enterprises Survey

3.5.2 Capacity Utilisation

The level of capacity utilisation constitutes a major indicator of business performance. When asked the level of operations at which SMEs were operating especially those in manufacturing and services, almost all SMEs (95 percent) stated that they were operating at above 50 percent capacity.

3.5.3 Business Growth

When asked the performance of businesses from 2003 to 2004, a number of enterprises responded by stating that their businesses had registered some growth. In fact, the number of enterprises registering growth in business increased from 29.3 percent in 2003 to 31.5 percent in 2004. This reported growth was largely among small scale enterprises. By sector, more enterprises in trading recorded growth in business while manufacturing firms experienced stagnation. However, a decline was also recorded in the services sector. Furthermore, growth in business was recorded in the following provinces: Central, Eastern, Lusaka, and North – western, Southern and Western provinces. By gender, more businesses owned by men reported growth over the period while that of women declined.

3.5.4 Creation of Quality Employment

As a member of the International Labour Organisation (ILO), Zambia has ratified the ILO Convention 122 on employment policies. The National Employment and Labour Market Policy was established in 2004 and has as its overall objective “To create adequate and quality jobs under conditions that ensure adequate income and protection of workers’ basic rights.” The policy acknowledges that ‘the falling levels of employment in the formal economy leading to many people deriving their livelihood from the informal (SMEs) economy’ is one of the challenges that have emerged on the Zambian labour market. The government has therefore committed itself to improving the working conditions in order to motivate the workers wherever they work by:

ƒ Protecting and improving their wages and salaries, ƒ Access to Social Security (Pension Schemes) ƒ Improving Occupational Health and Safety ƒ Formalising agreements through Contracts of Service

The above three features characterise the minimum standards that all workers must be exposed to including those employed in the SMEs sector. To this effect, the study endeavoured to explore the level of adherence to this policy requirement amongst SMEs.

(a) Workers’ Remuneration

(i) Method of Remuneration

The type of remuneration was also adopted as a proxy for assessing the quality of employment engaged in by workers in SMEs. Several studies show that in value terms, in-kind remuneration is lower than that of cash. The former therefore is an indicator of poor working conditions. The revelation of the study show that cash payment was the most common form of remuneration followed by in-kind remuneration on a distant second. However, this distribution was also

Ministry of Commerce, Trade and Industry, Lusaka. 36 The 2003-2004 Zambia Small and Medium Enterprises Survey

influenced by the size of an enterprise. For instance, the results of the 2003 Study shows that while 71 percent of the micro enterprises were remunerating workers in cash while the figure was 90 percent for small scale enterprises. In the case of medium enterprises, all of them were remunerating their workers in cash.

The issue of remuneration arrangements among the SMEs in Zambia was also examined in the 1996 Baseline Survey on MSMEs. To this effect, results show that 31 percent were unpaid workers, most of who (86 percent) were family members of the owner, typically working pan-time in the business. Another “unpaid workers” were trainees, and they made up an additional 7 percent of the SME workforce. These workers were paid in the form of skills development.

By locality, the study reveals that Copperbelt province dominated in Cash based remuneration while North western was the least in this area.

(ii) Amount of Remuneration (Based on 2006 Market Price)

Over half of the workers in the SMEs sector were owners of enterprises, comprising 59 percent of the workforce. These owners earned income in form of business profit at a monthly average of K130,000. Another 10 percent were salaried workers / wage-earners. The average monthly wage for 80 percent of workers was K190,000. Paid workers were most common in larger SMEs, those owned by men, and those operating in urban areas. By and large, paid workers tended to be male. One other significant finding was that the level of remuneration was related to the educational level of the worker, with more educated workers commanding a higher salary.

The government has set as the minimum wage for workers in Zambia K268,000 while the food basket has been revised to Ki,200,000 for a household of 6 people. This therefore implies that most of the workers in the SMEs sector are living in poverty.

(b) Workers’ Occupational Health and Safety

Occupational health and safety is defined as:

(i) The proportion and maintenance of the highest degree of physical, mental and social wellbeing of workers in all occupations; (ii) The prevention among workers of adverse effects on health caused by their working conditions; (iii) The protection of workers in their employment from risks resulting from factors adverse to health; (iv) The placing and maintenance of workers in an occupational environment adapted to physical and mental needs; (v) The adaptation of work to humans.

In other words, occupational health and safety encompasses the social, mental and physical wellbeing of workers – that is, the ‘whole person’.2

2 Occupational Health and Safety Consulting, (2004), A Study on Occupational Health and Safety in the Roads Sector, p.viii

Ministry of Commerce, Trade and Industry, Lusaka. 37 The 2003-2004 Zambia Small and Medium Enterprises Survey

Occupational accidents, diseases and dangerous occurrences have a negative impact on national economic development in that they lead to loss of skilled human resources who may be very costly to replace. They also lead to loss of man-hours and loss of property. For example, in the 2004 – 2005 period, Zambia experienced one of the worst dangerous occurrences in its history at Bigrim (Z) Limited where an explosion claimed 54 lives. Furthermore, in 2005, a total of 35 occupational accidents were reported out of which 7 were fatal. These fatalities were reported by formal sector establishments. In spite of there being no reports from the informal sector which constitutes majority of the SMEs, it is not unreasonable to assume that such incidents do occur. Therefore, in order to assess the level of occupational health and safety in the SMEs sector, questions were asked to indicate membership to the Workers Compensation Fund Control Board.

Results on the assessment of membership to the Workers Compensation revealed that only 24 percent of the SMEs had registered and made contributions for their workers to the Workers Compensation Board of Zambia. By enterprise size, compliance was 10 percent among micro enterprises, 32 percent and small enterprises and 66 percent among medium enterprises. By sub sector, the manufacturing sector firm had a higher number of enterprises that were registered with the Workers Compensation. Geographically, Copperbelt, Luapula, Lusaka and North-western provinces were the least compliant.

In a related finding, the results for 1996 Baseline Survey reveal that one fourth of paid workers received benefits such as paid leave or pension. These workers tended to be concentrated in larger, commercial, urban businesses. However, while not counted as part of the regular workforce, casual workers had been employed by 15 percent of enterprises at some point in time. Such practices were common across strata, sectors, and activities. Men-owned businesses, and particularly those businesses with regular paid workers, were the most likely to hire casual labour.

Considering that 98 percent of the SMEs are micro enterprises whose compliance to health and safety standards stand at 10 percent, it would be reasonable to conclude that workers’ occupational and safety standards in the SMEs sector are critically low.

(c) Accessibility to Pension Schemes

The National Employment and Labour Market Policy defines social security as the protection which society provides for its members through a series of public measures against economic and social contingencies or any kind of collective measures on activities designed to ensure that members of society meet their basic needs as well as being protected from contingencies such as old age, illness, disability and others to enable them maintain a standard of living consistent with social norms.

The policy acknowledges the focus and domination of pension schemes by the formal enterprises to the exclusion of the informal sector or SMEs and has stated as its objective “To improve the level of benefits, coverage and delivery of the social security system”. Among the strategies include ‘mobilising informal sector workers to form mutual aid societies that would collect contributions from members, which can be used to meet needs arising from contingencies such as sickness, injury and death’.

Prior to the field survey, it was established that the compulsory scheme of National Pension Scheme Authority:

Ministry of Commerce, Trade and Industry, Lusaka. 38 The 2003-2004 Zambia Small and Medium Enterprises Survey

(i) Caters mainly for workers in the formal sector although there is a provision in the law for coverage of the informal sector as well. (ii) Membership in 2005 stood at about 450,000 registered employees drawn from about 15,000 registered employers. (iii) Benefits offered by NAPSA included retirement pensions, lump sum payments, survivor’s benefits and a funeral grant. (iv) The level of retirement pension earnings is adjusted annually by an index based on the movement in the National Average Earnings (NAE). (NAPSA Wesite, 2006).

Based on the foregoing, the study attempted to establish participation of SMEs in the national scheme. To this effect, results revealed that there were no micro enterprises that were making contributions to NAPSA. On the other hand, less than five percent of the SMEs were doing so. As in the case of OHS, enterprise size, gender of owner, geographical locality and sector were factors in the compliance.

(d) Employment Contracts (Contracts of Service)

The labour laws in particular the Employment Act CAP 268 provides for two types of contracts of service – the oral and written contract.

(i) Oral Contract of Service

All contracts of service may be made orally and shall be deemed to be a contract for the period to which wages are calculated. Every employer is required to prepare and maintain at his expense a record of contract for every employee employed by him under oral contract of service. Where any dispute arises as to the terms and conditions of an oral contract and the employer fails to produce a record of such contract, then the statement of the employee as to the nature of the terms and conditions shall be received as evidence unless the employer satisfies the Court to the contrary.

(ii) Written Contract of Service

Characteristics of written contracts include the following:

ƒ A contract made for a period exceeding six months or the equivalent in number of working days; ƒ A contract of Foreign Service ƒ A contract to perform personally some specific work, which could not be completed within six months from the start of work.

The study findings on the foregoing subject show that written contracts of service are almost non existent among SMEs especially the micro enterprises. The whole sector relies on oral contracts in spite of some workers having been employed for more than two years. Even where there are written contracts such as the medium enterprises, the conditions do rarely meet the prescribed minimum working conditions of a living wage and human rights. The situation is exacerbated by the expensive and inefficient legal process for redress in a case of infringement.

Ministry of Commerce, Trade and Industry, Lusaka. 39 The 2003-2004 Zambia Small and Medium Enterprises Survey

Summary on Creation of Quality Employment

The study has revealed that SMEs sector has hitherto attained the expectations of being an engine for employment creation at it currently employs more that 700,000 of the workforce. However, the sector has also been a haven for the worst form of working conditions that have ranged from non payment of wages to payment in-kind, and payment of wages below the minimum wage. Very few workers get a living wage. This has had also a multiplier effect on the productivity of workers and that of SMEs that has also translated into low profit margins for the entrepreneurs.

Workers’ occupational health and safety standards did not meet even the minimum prescribed by the law while the contracts of service were usually oral and did not guarantee minimum security for job tenure. Less than one percent of the SMEs had registered their workers to NAPSA for a pension security.

The working conditions were at their worst among micro enterprises, rural based enterprises and enterprises owned by women. On the part of workers, the least educated exhibited the worst form of working conditions.

3.5.5 Local Resource Utilisation

The ability to localise the raw materials apart from labour and equipment is a necessary indicator of technological capabilities. To this effect, the results have revealed that most of the entrepreneurs (48 percent) rely entirely on indigenous raw material supplies while only 2 percent of the MSEs rely on exclusively imported raw materials. The number of MSEs increases as more and more of them continue to rely on indigenous raw materials.

3.5.6 SMEs Sector Product Competitiveness

(a) Product Differentiation

The size of the list of products in a country is an indicator of its development. In the manufacturing sector for example, Zambia has the potential to produce more than 250 different types of products out of which less than 30 percent are produced. In the case of this survey, the list of goods and services produced by the SMEs sector has 53 products. Participation is the highest in the provision of foodstuffs followed by groceries, clothing, beverages and accommodation constituted the major items while paint, milk, public library and transport services constituted the least goods and services provided by the sector. For instance, while the manufacturer of paint is only one, there were over a hundred SMEs engaged in foodstuff provision. These details are shown in the Table 11 below.

Ministry of Commerce, Trade and Industry, Lusaka. 40 The 2003-2004 Zambia Small and Medium Enterprises Survey

Table 9: Enterprise Distribution by Goods and Services Provided

Number of Number of Name of Product Providers Name of Product Providers Paint 1 Cosmetic 5 Milk 1 Footwear 7 Public library 1 Stationery 8 Transport service 1 Medical services 8 Kitchen ware 1 Liquor 8 Stock feed 1 School uniforms 8 Coffee 1 Timber 8 Precious stones 1 Equipment/machinery 9 Packaging 1 Building material 9 Bicycles 1 Furniture 9 System 1 Agriculture inputs 9 N/A 2 Education service 11 Photographs 2 Spare parts 14 Laundry service 2 Repairer of equipment 19 Estate agency 2 Bakery products 19 Catering service 2 Medical drugs 21 Ceramic 2 Metal Products 21 Handicrafts 2 Computer services 21 Electrical appliances 2 Wood products 22 Carpentry service 3 Hardware 24 Tailoring 3 Hairdressing 26 Fuels & Lubricants 3 Accommodation 28 Prints 3 Beverages 30 Milling service 3 Clothes 31 Telephone services 4 Not stated 32 Construction services 4 Groceries 81 Wearing apparel 4 Foodstuffs 101 Transport 4 Source: Researchers’ Field Work, 2004

(b) Export Performance

In terms of exports, the survey reveals that only 2 percent of the SMEs had exported their products consistently or at one particular time of the year. Furthermore, out of all the exporters, 64 percent were engaged in manufacturing activities while the rest were in commerce. Exported products are outlined in the table 12 below.

Ministry of Commerce, Trade and Industry, Lusaka. 41 The 2003-2004 Zambia Small and Medium Enterprises Survey

Table 10: Distribution of Exports by Number of Exporters

Export Product Number of Exporting Enterprises Building material 7 Liquor 7 Bakery products 7 Medical kits 7 Coffee 7 Prints 7 Handicrafts 7 Other 14 Telecommunication services 14 Timber 21 Total 100 Source: Researchers’ Field Work, 2004

Among the countries exported to include Malawi, Mozambique, South Africa, Namibia, Tanzania, and Zimbabwe.

(c) Product and Packaging Quality

Compliance to stipulated standards of products is a strong indicator of development and competitiveness of the enterprises. To this effect, the study used awareness levels on the existence and functions of the Zambia Bureau of Standards to as a proxy for product standards in the sector. Enterprises were asked if they were aware of what the Zambia Bureau of Standards stand for and what the organisation does. Against these questions, results reveal that only 44 percent of the enterprises were aware of what ZABS stands for and its functions. Disaggregation of responses by size of enterprises shows that the level of awareness was increasing with the size of the enterprise. To this effect, medium enterprises exhibited a much higher awareness compared to micro enterprises. Details are shown in the table 13 below.

Table 10: Enterprise Distribution by size and Awareness on ZABS

State on ZABS Size of Enterprise Total awareness Micro Small Medium Aware 31 45 67 38 Not Aware 68 53 33 60 Not Stated 1 3 0 2 Total 100 100 100 100 Source: Researchers’ Field Work, 2004

The type of sector that an enterprise was engaged in had little bearing on the awareness level. However, geographical distribution appears to have had a slight bearing as Lusaka, Copperbelt, Southern and Central provinces which are urban provinces had a higher awareness than those located in North-western, Northern and Eastern provinces. Further, on the basis of gender, there were more men who were aware of the existence of ZABS and its functions than women.

Ministry of Commerce, Trade and Industry, Lusaka. 42 The 2003-2004 Zambia Small and Medium Enterprises Survey

3.6 SMEs Contribution to the Economy

Among the expectations of the survey was to establish the contribution of SMEs sector to the Zambian economy by way of capital formation, value addition, and employment. In this respect, the study has made an attempt to make logical estimates largely based on a combination of primary and secondary information sources. The CSO Informal Sector Study for 2003 and the 1996 MSEs national Baseline Survey formed the major secondary sources.

(a) Employment Contribution

In 1996, there were a total of 336,600 households in Zambia that were engaged in 403,920 SME activities. Out of this number, micro enterprises comprised 99.4 percent or 401,497 of the establishments and provided 95.3 percent of employment amounting to 802,994. On the other hand, small scale and medium scale enterprises were 2,424 and employed a total of 38,784. This resulted in a total SMEs sector employment of 841,778 in 1996.

Translated further, the study reveals that the average number of workers for micro enterprises was two (2) while that of small and medium scale enterprises (combined) was sixteen (16).

By 2003, the number of households engaged in micro enterprise activities had grown by 57 percent from 401,497 in 1996 to 630,260 in 2003 resulting in a total workforce creation of 1,260,520. On the other hand, the small scale and medium scale sub-sector population also continued to grow from 2,424 in 1996 to 3,806 in 2003 thereby providing employment to 83,732 workers. In total, the micro, small and medium scale enterprises sector provided employment to 1,344,252 workers in 2003 or 27 percent of the 4,903,000 strong labour force. This marked very drastic increases especially that it grew from 18 percent of labour force 7 years earlier. However, in both cases, the results are highly consistent with results found in other African countries whose SMEs sector employ between 16 percent to 29 percent of the labour force.

Therefore, while annual employment growth among micro enterprises was 65,360 between 1996 and 2003, that of small and medium scale sector grew at an average of 6,423 per annum during the same period. This means that, in spite of it constituting a paltry 0.6 percent of the sector population, small scale and medium scale enterprises continued to create 9 percent of all employment generated by the SMEs sector. Based on the linear growth assumption, the SMEs sector contributed a total workforce of 1,488,818 in 2006.

(b) Contribution to the Gross Domestic Product

In the national accounts estimates before 1994, the informal sector was largely excluded in official estimates, except for informal agricultural activities. When the GDP estimates were re- based the informal sector activities were incorporated. In the benchmark, informal sector estimates were derived based on the assumptions about the relationships between the formal and informal sectors and using data derived from the 1993/94 Household Budget Survey (HBS). Additional data sources were the 1991 and 1993 Priority Surveys, the 1996 Labour Force Survey (LFS), the annual agricultural surveys and the 1990 Census of Population. The commodity flow balances account provided insight into the informal sector activities from which the estimates were made (CSO,2006).

Ministry of Commerce, Trade and Industry, Lusaka. 43 The 2003-2004 Zambia Small and Medium Enterprises Survey

Implicitly, the current estimates of GDP contain estimates of the informal sector. Over the last decade, the economic structure in the country has undergone some transformation, making the estimates of the informal sector’s contribution to the total economy difficult to ascertain due to limited data. However, in 1996, the SMEs sector produced value added amounting to K85.7 billion (Constant 1994 Prices) out of the total GDP of K2,328.1 billion representing 3.7 percent. With a 57 percent growth in the number of SMEs over the 7 year period, and holding real sales volume average variable constant, it is estimated that the sector contributed K135 billion towards the total GDP of K2,846.5 billion (Constant 1994 prices) representing 4.7 percent. Out of this figure, K109.2 was from SMEs with less that 5 five workers or the informal sector.

(c) Contribution to Gross Capital Formation (Physical Assets)

The results of the survey reveal that none of the respondents attempted to provide information on the monetary value of physical assets of their enterprises. The survey was therefore unable to provide the mean and aggregate distribution of fixed assets of enterprises for 2004. In the 1996 study however, SMEs were asked to estimate the market value of raw materials, inventory, tools, furniture, fittings, machinery, buildings and land. Thus the survey provides a rough measure of the stock of assets at the time of the interview rather than a flow (or average level) over time. The study established then that the sector held gross capital assets valued at K89.6 billion. In relation to the overall Gross Capital Formation for the year which stood at 25.6 percent of the GDP, it shows that SMEs contributed 8 percent of the national Gross Capital Formation.

Average assets per enterprise were K318,606. The largest percentage of assets was held in the form of buildings. For the largest number of businesses in the sector, assets were held in the form of stock or inventory, which experience frequent turnover and which cannot be used as a form of collateral. Table 41 below provides a profile of asset holdings for the entire sector. T

Assets were greatest for businesses in the 10 largest urban areas, than for those operating in rural areas. Asset holdings of women entrepreneurs were far smaller than for men entrepreneurs or multiple-proprietor businesses. On average, women reported assets of K222,651 (K1.5 million), while men report K1,095,684 (K7.4 million), and multiple-owner businesses reported K.2,356,089 (K16 million). Asset holdings also differed by sector. Businesses in production activities reported the lowest average assets, at K405,462 (K2.8 million), compared to K681,158 (K4.6 million) for trade activities, and K.1,403,088 (K9.5 million) for services. Highest asset holdings were found in wholesale, retail; lodging, hotel and restaurant, construction; transport; and agriculture-related enterprises. Table 14 illustrates the major forms in which these assets were held for each of these asset-intensive industry groups.

Ministry of Commerce, Trade and Industry, Lusaka. 44 The 2003-2004 Zambia Small and Medium Enterprises Survey

Table 12: Types and Size of Assets: Enterprises Average and Sector Estimate

Current Average Percent of Average Current Sector Type of Asset Value of Asset Asset Estimate (K’ million) (Kwacha) Value 3,105 Raw materials 8,960 1.5 44.293 Stock / Inventory 131,557 21.4 10,763 Hand tools 32,250 5.2 7,451 Furniture / Fittings 22,284 3.6 34,565 Machinery / Equipment 102,552 16.7 81,757 Buildings 242,727 39.5 25,044 Land 74.550 12.1 — Total 614,910 100,0% K206,979 Source: 1996 Nationalwide Survey on MSEs in Zambia

Table 13: Composition of Assets: Six Most Asset Intensive Industry Groups

Agriculture- Wholesale Retail Lodging/ Construction Transport Related Hotels/ Products Restaurants 1. Buildings 1. Stock 1. Buildings 1. Buildings 1. Stock 1. Equipment 2. Land 2. Buildings 2. Stock 2. Equipment 2. Hand Tools 2. Fittings 3. Equipment 3. Land 3. Land & Equip 3. Land 3. Equipment 4. Hand Tools 4. Furniture Source: 1996 Nationalwide Survey on MSEs in Zambia

How did entrepreneurs with such low incomes accumulate physical assets? In 60 percent of cases, owners reported that they funded their own asset accumulation primarily through savings or profits from business. Reinvestment was most common for the largest enterprises. Another 30 percent reported that their assets were either given to them or received through inheritance. Only infrequently (7%) did entrepreneurs use debt (loans) to fund asset accumulation. Of note is that the largest enterprises (those with 11 or more workers) never reported taking loans to fund asset accumulation.

Summary on Contribution of SMEs to the Economy

The number workers in the SMEs sector in 2006 were estimated to be 1.5 million and this constituted 30 percent of the labour force. In 1996, the sector workforce stood at 841,778 or 18 percent of the labour force. Between 1996 and 2003, the sector employment increased to 1,314,252 workers. The Micro enterprises, which constituted 99.4 percent of the establishments, provided 95.3 percent of sector employment. Further, the average employment size for the micro enterprises has remained constant at two from 1996 to 2003 while that of the small scale enterprises grew from 16 workers to 22 in 1996 and 24 in 2006. The average workforce for the medium scale enterprises was 42. Annual employment growth among micro enterprises was 65,360 while that of small and medium scale sector grew at an average of 6,423 per annum during the same period.

Ministry of Commerce, Trade and Industry, Lusaka. 45 The 2003-2004 Zambia Small and Medium Enterprises Survey

In terms of GDP contribution, results shows that SMEs’ value added has been growing quite significantly between 1996 and 2003. However, the rate of growth has been lower than that of the rest of the economy resulting a decline if sector contribution from 4.7 percent in 1996 to 3.7 percent.

In terms of capital formation, the survey reveals that the sector has a very high propensity for asset acquisition 60 percent of which is not related directly to production. In spite of the sector constituting less than 5 percent of GDP, it contributes 8 percent to the national gross capital formation. The urban located and men owned enterprises had the highest accumulation of fixed assets have the highest values of assets. Sectorwise, manufacturing enterprises had the lowest assets compared to other sectors.

3.7 Trends in Living Conditions of Business Owners

The performance level of SMEs is naturally expected to be translated into the standard of living of the workers who in this case include the owners. Variables considered for measurement in this case include clothing, transport, meals, health and shelter. To this effect, results reveal that 84 percent of the owners of enterprises were able to attain the minimum required levels of accessibility to these basic necessities of life. These in other words mean that poverty level among the SMEs was at a bare 16 percent level. This is in contrast to findings of other studies that put poverty levels among SMEs at more than 50 percent.

3.8 Business Constraints

Business owners were asked as to identify the most pressing problems confronting their business at the time of the survey. To this effect, 71 percent reported at least one major problem. Details of the problems in order of the number of enterprises experiencing them are as outlined in the table 16 below.

Ministry of Commerce, Trade and Industry, Lusaka. 46 The 2003-2004 Zambia Small and Medium Enterprises Survey

Table 14: Enterprise Distribution by Type of Business Constraint

# General Problem Category % of SMEs Citing Most common Problem within Category Reason 1. Financial Constraints 21.8 ƒ Pre-Start Capital ƒ Working Capital ƒ Investment Capital. ƒ Poor Customer Repayment ƒ High and Multiple Interest Rates ƒ Unstable Foreign Currency

2. Market Constraints 20.5 ƒ Unfair Market Competition due to Subsidised and Smuggled Imports ƒ Inaccessible Government Tenders ƒ Too few Customers ƒ Too many Competitors

3. Tools/Machinery 1.8 ƒ Availability of Tools & Machinery ƒ Cost of Spare parts

4. Input Constraints 10.2 ƒ Cost of Inputs ƒ Availability of Inputs

5. Transport Constraints 4.1 ƒ Unstable and High Fuel Cost ƒ Cost of Public Transport ƒ Availability of Public Transport

6. Miscellaneous Problems 28.1 ƒ Inaccessible Business Premises and land ƒ Personal Health Problems ƒ Household Responsibilities ƒ Theft/ Vandalism

Total 100.0 Source: Researchers’ Field Work, 2004

Segmentation of problems on the basis of size of enterprise for all identified constraints was however not established due to methodological limitations.

Ministry of Commerce, Trade and Industry, Lusaka. 47 The 2003-2004 Zambia Small and Medium Enterprises Survey

CHAPTER FIVE: SUMMARY AND POLICY CONCLUSIONS

This survey is the first ever attempt by MCTI to focus solely on the MSMEs in Zambia. Thus, for the first time, the Ministry and other policymakers, service institutions, and would-be cooperating partners have a view of the breadth of the sector, its role in the national economy, and the types of support the MSME sector needs to flourish.

The findings of the survey provide ample evidence of why this sector is an important target for government’s development agenda:

ƒ The MSMEs sector employs 30 percent of the 4.9 million strong labour force, 58 percent of whom are entrepreneurs thus forming a seedbed for entrepreneurship growth essential for sustainable national economic growth. ƒ The MSMEs sector contributes 5 percent towards the national Gross Domestic Product. ƒ The MSMEs sector constitutes 8 percent of the national Gross Capital Formation. ƒ The MSMEs contribute income to more than 25 percent of the approximately two million households in Zambia thereby contributing towards poverty reduction and promoting the much needed social cohesion and stability. ƒ Women are deeply involved especially in the micro enterprise sector. ƒ The MSMEs’ focus on provision of cheaper goods and services to the less affluent segment of the households thereby assisting in poverty reduction efforts. ƒ The MSMEs focus in traditional economic sectors characterised by use of local natural and human resources, and low and indigenously developed technology thereby developing the technological capabilities.

The MSMEs survey also illustrate why the sector GDP has stagnated. The enabling environment has been absent as the sector has lacked a comprehensively supportive macro policy framework strategically aimed at addressing the constraint factors. The sector has therefore been left to the wrath of broader policy framework which works to the disadvantage of the MSMEs due to their lack of economies of scale. Apart from the PRSP that explicitly developed a 9 point plan to develop MSMEs in the manufacturing sector, the macroeconomic framework, the FNDP and the Vision 2030 have all been unable to recognise the contribution of the MSMEs sector to the broader economy. This is in addition to the fact that as yet, there is neither a National Policy on MSMEs nor a National Strategic Framework for the sector. Equally, there is a complete absence of an explicit import and export policy which should offer conducive monetary and fiscal terms such as investment allowance for importation of the necessary capital equipment, and tax rebates for exporting MSMEs. The infrastructural policy which should deal with MSMEs’ access to business premises, utilities such as electricity and water, roads, and telecommunications, among others is non existent for MSMEs. The various Human Resource Development related national policies such as on Education and TEVET focus on formal education and traditional curricula which has little impact on skills necessary in MSMEs. Among the measures under the National Policy on Science and Technology is to provide incentives for promotion, diffusion, and commercialisation of indigenously developed technologies to which no implementation mechanism has been devised. The standards and quality legislation (ZABS Act) exists but is not focused on MSMEs. The Banking and Financial Services Act of 1994 has failed to not only address the astronomical interest rates charged to MSMEs but has also facilitated the increase in such services. Further, government

Ministry of Commerce, Trade and Industry, Lusaka. 48 The 2003-2004 Zambia Small and Medium Enterprises Survey

provides the largest market to Zambian producers. In spite of its position, the Zambia National Tender Board Act has no specific procurement provisions from MSMEs. In short, a number of MSMEs related policies and regulations do exist but are not only disjointed but are also not focused on MSMEs. Policies like micro finance which do not recognise the market failures of MSMEs, which stifles establishment of MFIs and whose services focuses on less risky salaried employees than entrepreneurs, multiplicity of licences, taxation rules and sheer harassment, lack of incentives, and lack of a supportive market framework have all contributed to the absence of an enabling environment which has also inhibited MSMEs development and growth in many ways. The absence of categorisation or definitions of what constitutes MSMEs has also added to the dilemma as it makes it difficult for government to institute policy measures when the target is not known.

Low entrepreneurship levels among owners of enterprises which has manifested itself in having 80 percent of them into being ‘pushed entrepreneurs’ and only 20 percent being ‘pulled entrepreneurs’ has resulted in low ambition and lack of innovation as well as short operation lifespan of business undertakings. In fact in majority of cases, people have engaged in such activities as a livelihood strategy and not for purposes of creating wealth. The low entrepreneurship levels are so widespread especially among the high school and tertiary educated segments of the population as formal employment has been made a virtue. The challenge for policy makers is rather on how to increase the motivation and determination in the populace to undertake business enterprises as a virtue and not merely as a livelihood strategy. The MSTVT through TEVETA has come out in full force to incorporate entrepreneurship training in affiliated colleges. However, its impact is marginal as most of the entrepreneurs are those that have not exceeded primary education. Its entrepreneurship programmes targeting those already in business has limited outreach. The survey also reveals that unlike the micro enterprises whose capital requirements are generally small, access to start-up capital constitutes one of the major challenges of small scale and medium scale enterprises as only 9.3 percent are able to access bank loans. The situation is worse with micro enterprises as only 1 percent is able to access bank loans. Major source of start-up capital is personal savings and in the form of gift from friends. Similarly, for working and expansion capital, only 1 percent of MSMEs access it from banks while 90 percent do not borrow at all. The challenge for policy makers is how to improve accessibility of SMEs to start-up capital especially the small scale and medium scale enterprises whose aggregate growth has been marginal. In the case of credit (working and investment capital), the policy challenge is on how to improve accessibility to appropriate credit especially to the micro enterprises whose per capita growth has been elusive. Government, through the SED Act of 1996 attempted to facilitate the flow of financial resources to the MSMEs by committing itself either on its own or through other financial institutions, to establishing Venture Capital Funds, and also committed itself to securing incentives…for any financial institution which undertakes to finance or develop a small enterprise. There is no evidence that the proposed initiatives were actually implemented. The Banking and Financial Services (Microfinance) Regulations of 2006 have been enacted. However, owing to the operational definition ambiguity, most of the so called MFIs have tended to focus loans provision to salaried workers at the expense of entrepreneurs. Arising from a lack of an enabling environment, most of the MSMEs continue to operate as informal enterprises as only 2 percent are registered with the Patents and Companies Registration Office (PACRO) which constitutes the main criteria for formality. Regulatory and administrative barriers, fees and financial requirements, corruption and criminality constitute the main reasons for low formality. The policy challenge is therefore how to reduce informality among MSMEs. The

Ministry of Commerce, Trade and Industry, Lusaka. 49 The 2003-2004 Zambia Small and Medium Enterprises Survey

government, through PACRO has attempted to reduce the cost of formalisation for small businesses such as through decentralisation of its offices to selected provincial centres thereby reducing transport costs, streamlining the paper work for registration which has also omitted the need for consent from legal practitioners which has resulted into the registration process taking place within a day rather than one week. The streamlining process has also resulted in reduction in fees related to registration. Increasing the formality of MSMEs however requires more than the initiatives by PACRO. It requires not only the incentives of by way of market contracts but also educational campaigns that shows that the tax that entrepreneurs begin to pay as they enter the formal sector is used for the benefit of the population. About 73 percent of the MSMEs conduct their businesses from undesignated premises such as homesteads and along the roadsides where their turnover and profit is higher than those operating from designated places such as market places set up by the local authorities. On the other hand, the MSMEs sector is faced with severe shortage of business premises, and also weakness in the enforcement of the law to ensure MSMEs operate from designated areas. Therefore, the challenge lies not so much in the enforcement of the law, but adequate provision of business premises. Government has through the local authorities and SEDB directly provided industrial parks and market structures for all segments of MSMEs. The government has gone further by even providing incentives to the private sector to construct business premises for MSMEs which are reported not to have been implemented. The period of active operation among MSMEs has generally been short with 32.4 percent of manufacturing enterprises not surviving beyond 2 years. The percentage was 47 percent for trading and 37 percent for services. Further, manufacturing enterprises dominate the percentage of enterprises that survive beyond 10 years with 27 percent followed by 22 percent for services, and 11 percent for those in trading. Geographically, central province is dominated by MSMEs with the shortest period of active operation while North-western province is dominated by MSMEs with the longest period of operation. The gender analysis also reveals that the period of active participation for MSMEs owned by women is shorter than those owned by men. The challenge for policy makers is how to ensure that businesses increase their operating lifespan .Lack of accessibility to working and investment capital as well as low entrepreneurship, more than any other factor such as geographical, sectoral and gender, is largely responsible for the short operation periods of MSMEs. Apart from entrepreneurship training by TEVETA, government has not yet effectively addressed capital accessibility constraints. The almost absolute domination by micro enterprises who constitute 99.4 percent of all sector establishments compared to the regional average of 96 percent has crowded out small and medium enterprises who are the primary contributors to wealth and quality employment creation and hence GDP growth. The challenge at hand for policy makers is how to improve the share of small and medium scale enterprises population to the regional average of 5 percent. Efforts to increase working capital accessibility to micro enterprises on which basis per capita growth can be feasible as well as start up capital for small and medium enterprises have been elusive. Among the startling revelations of the survey is the fact that Luapula province has the highest population density of MSMEs at 13 establishments per 100 persons more than Lusaka and Copperbelt provinces while North-western province has a density of 1 establishment per 100 persons. Ideally, such a scenario would also imply a much lower poverty index for Luapula than North-western province. However, statistics from CSO shows a poverty index of 81 percent for Luapula and 76 percent for North-western province. In fact with a density of 6 establishments per 100 persons Lusaka had the lowest poverty index at 52 percent. This is against the notion that MSMEs sector is a major instrument to poverty reduction. More than increasing the population

Ministry of Commerce, Trade and Industry, Lusaka. 50 The 2003-2004 Zambia Small and Medium Enterprises Survey

density of MSMEs in Zambia, the policy challenge is rather how to increase the qualitative size by way of labour productivity amongst MSMEs. Increasing the population of establishments especially the micro enterprises should be secondary. The rural areas constitute 53 percent of the MSMEs breaking the notion the MSMEs is an urban phenomenon. In spite of being in the majority, the hourly profits generated by the rural-based MSMEs are a paltry 20 percent of that generated by urban-based MSMEs. The challenge lies in not distribution of MSMEs activities between rural and urban areas but rather in improving the volume of profits or indeed productivity of rural based enterprises. The manufacturing MSMEs share has markedly declined by more than half from 40 percent in 1996 to the current levels of 19 percent. This is against the growth of 8 percent for MSMEs engaged in trading and 170 percent for those engaged in services. Most of the manufacturing MSMEs are located in rural areas with Northern and North-western province dominating the sector while Lusaka, Central and Copperbelt provinces dominate trading and services sectors. The challenge for policy makers lies in how to improve the manufacturing sector share in the whole MSMEs sector owing to its strategic importance. The PRSP outlined a 9 point plan to resuscitate the sector to which none of them were implemented. Poverty has a strong gender dimension and so is the MSMEs sector. In general terms, the participation of women in the ownership of MSMEs is fairly high at 46 percent. However, their participation at the level of small scale and medium scale enterprises is low at 22 percent thereby confirming the notion that “women-run activities tend to be smaller than those owned by men. Further, women dominate commerce while men dominate manufacturing. Lusaka has the highest participation of women in the sector at 38 percent compared to North-western province with 2.1 percent. The challenge for policy is therefore on how to improve women ownership of small scale and medium scale businesses, and especially in the manufacturing and services sectors and rural areas. Much as the engenderisation in all national policies has occurred, the SED Act of 1996 did not provide for specific incentives to promote participation of women in MSMEs especially at small scale and medium scale. Education is critical to enterprise performance and yet the levels among entrepreneurs are generally low as12 percent of them have never had formal education while 50 percent have attained primary education. Those with secondary education constitute 34 percent. Only 3 percent of the owners of MSMEs have attained tertiary education. Furthermore, while women dominate the entrepreneurs with no formal education, men dominate the category of entrepreneurs with secondary and tertiary education. Profitability is determined by the educational level of an entrepreneur’s with profits generated by a tertiary educated entrepreneur being 55 times more than those without formal education, 23 times more than those with basic education, and 3.5 times more than entrepreneurs with high school education. The challenge for policymakers is twofold: the first is how to ensure high levels of entrepreneurship for those who only attained basic education levels, and secondly, how to ensure that the MSMEs sector is dominated by the high school and tertiary educated entrepreneurs which group most shuns self employment for formal sector employment. The National Policy on Education hardly promotes entrepreneurship curricula at basic and high levels of education. The generally low academic attainment among entrepreneurs and workers is also reflected in the low skills levels among entrepreneurs in investment, production, innovation, and linkages capabilities. Owing to this low education, most of the entrepreneurs lack the ability to learn from problem they experience which – upon reflection – should come up with new and improved solutions that increase productivity. Manifestations include lack of sufficient skills in business planning and management, entrepreneurship, market creation, market search and marketing,

Ministry of Commerce, Trade and Industry, Lusaka. 51 The 2003-2004 Zambia Small and Medium Enterprises Survey

efficient procurement practices, competence-based rather than kinship based recruitment processes, as well as poor record keeping, financial analysis and investment appraisal. Other manifestations include lack knowledge and skills that require an enterprise to have the know-how but also the know-why which is the ability to master the engineering and technology embodied in the production equipment as well as adapting new technologies to local conditions, improve and diffuse them within the enterprise and exploit them efficiently with the ultimate aim of attaining competitive edge over others and thereby attaining market dominance. In addition, entrepreneurs lack skills to enable them to improve and adapt continuously their product and processes. This includes adaptive engineering and organisational adjustments required for incremental up grading of product design and process technology that it leads to modification of products, processes and equipment, which often leads to creation of new technology or knowledge leading to future improvements. The challenge for policy makers is how induce entrepreneurs to improve the skills levels from mere know-how to mastery in investment, production, innovation, and linkages capabilities. The efforts of TEVETA in this respect are too small to create any significant impact. As in the case of skills, the level of technology in the production processes of MSMEs is generally very low. The average value of fixed capital assets per enterprise is fairly low at K919,000. In addition, 39 percent of the MSMEs entirely rely on hand power while another 39 percent rely on semi electrical manual power. Only 20 percent of MSMEs have their fixed assets rely entirely on electrical power. Computerised production systems are absent apart from use of computers for word processing. Moreover, against a standard fixed capital turnover of four years, most of the fixed capital among MSMEs is older than four years implying obsoleteness. Putting in measures that will induce SMEs to continuously upgrade their technology in skills and production equipment is a policy challenge that should be addressed. Adherence to the standards and quality policy implemented by ZABS was fairly high especially among the medium scale enterprises. Further, enterprises located in the urban provinces produced better quality products than enterprises located in the rural areas. This shows that enforcement and awareness campaigns on the part of ZABS have not yet penetrated the micro enterprises and the rural areas. This is apart from the fact that ZABS appears only relevance to manufacturers and not services and trading enterprises. Cooperation and Collaboration is strong among urban based MSMEs that are in designated markets or industrial parks especially in areas such as procurement of raw materials and common production facilities. Marketing or sales and capital mobilisation, the two major constraints constitute the weakest link in collaboration amongst MSMEs. Linkages for collaboration with the large-scale enterprises were fairly weak as well. Collaboration between MSMEs and business associations and other support institutions is sufficiently strong especially at the level of small scale enterprises. Micro scale and medium scale enterprises rarely collaborate with support institutions. Most of the collaboration or help is in the form of financing facilitation and market information. The challenge before policymakers how to encourage linkages and collaborate amongst SMEs, and between SMEs and large scale enterprises and with support institutions. There currently exists no policy on institutional support and collaboration. The survey data clearly points to a clear relationship between the challenges discussed above and the performance of the MSMEs. In the first place, the Quality of Employment in the MSMEs sector is generally poor as most of them are remunerated in kind, and even those who earn in cash are paid an average of K180,000 which is less than the current K268,000 minimum wage. Further, they have no membership to the National Pensions Scheme, and most of the MSMEs are not registered with, and do not make contributions to the Workers Compensation Fund Control Board to safeguard the workers’ health and safety. Workers’ employment tenure is also not

Ministry of Commerce, Trade and Industry, Lusaka. 52 The 2003-2004 Zambia Small and Medium Enterprises Survey

secure as most of them have oral employment contracts. The challenge for policy is therefore how to increase enterprises formality, labour productivity while improving the working conditions of the workers. Currently, there are no specific measures to address such needs of the MSMEs sector. Competitiveness in this case defined as an environment in which MSMEs are able to produce better or cheaper products, processes and services, and hence able to defend or gain market share, does not entirely exist for MSMEs as they usually lack the resources of the large firms. The traditional market which used to be occupied by MSMEs before economic liberalisation such as for cooking oil, shoes, food preparation and clothing, among others, was taken over by large scale enterprises and imports. The MSMEs responded by withdrawing from such markets to focus on new areas that were less competitive. This has made them to continue to enjoy higher mark-ups and hence super profits. Therefore, rather than defend their traditional markets, the MSMEs have identified new market niches. Their export performance still has to be improved as only 2 percent are intermittently engaged in exports largely in semi processed products. Furthermore, product and packaging quality has continued to be a challenge for the sector especially among micro enterprises. The need for MSMEs to defend their market and also to create new ones is a policy challenge that should be addressed by the government. To date, there is no marketing support system directed at MSMEs by policy makers. The study also reveals the dichotomy of the Zambian economy in which the SMEs operate in as far as the goods and services provided by the sector are concerned. Micro enterprises constitute a notable proportion especially in manufacturing and services sector of enterprises that specialise in the provision of traditional products such as grass and wood products, hair plaiting, traditional healing, and sale of traditional products such as honey and pounded groundnuts. On the other hand, most of the small and medium enterprises provide the modern products such as computer services, bakery products, cosmetics, and machinery. This also confirms findings of other studies that reveal that micro enterprises concentrate in providing products which large firms cannot venture into. While the micro enterprises sub sector has grown exponentially in number of establishments, the small and medium scale enterprises have only marginally grown. However, the growth area for the latter has been qualitative through increased number of employees and production per establishment. Micro enterprises have stagnated in terms of employment and production per establishment. Further, capacity utilisation has been fairly good at more than 60 percent among the MSMEs owning to the small levels of fixed capital intensity. Labour productivity has been increasing among the small and medium scale enterprises while it has stagnated among micro scale enterprises. The annual profitability has been generally high especially in the manufacturing sector at 474 percent. However, against the high profitability, the production scale appear too small providing an average annual net income of K3 million. Alternative livelihoods are also highly practised especially among the micro enterprises. Most common ones in the order of magnitude are trading, farming, formal employment and rental income. The challenge for the policy makers lies in generating per capita growth among micro enterprises while increasing the population of small scale and medium scale enterprises. Business constraints constituted financial constraints in the form of inaccessible pre-start capital, working capital, and investment capital, high interest rates, unstable foreign exchange rates, and poor customer repayments,. This was followed by market constraints by way of unfair competition due to subsidised and smuggled imports, inaccessible government tenders, having too few customers and having too many competitors. Other constraints included lack of appropriate production tools and machinery, high cost of spares, high cost and unavailability of production inputs or materials, lack of affordable business premises and land, and health problems related

Ministry of Commerce, Trade and Industry, Lusaka. 53 The 2003-2004 Zambia Small and Medium Enterprises Survey

to HIV/AIDS. The challenge for policy makers lies in creating an enabling environment that takes into account the sector specific natural constraints while promoting optimisation of MSMEs potentialities and comparative strengths. The living conditions for owners of small and medium enterprises were fairly good. However, the policy challenge lies in improving the conditions for micro entrepreneurs and those of employees of MSMEs most of whom generate a monthly income which is less than the prescribed minimum wage.

Ministry of Commerce, Trade and Industry, Lusaka. 54 The 2003-2004 Zambia Small and Medium Enterprises Survey

CHAPTER SIX: RECOMMENDATIONS

In order for the MSMEs sector to attain a position of self sustaining growth and development and thereby make significant contributions to GDP and quality employment creation, the following are the recommendations.

General Recommendations

(1) Government should recognise the role and contribution of the MSMEs sector to the national economy and puts in a mechanism for capturing such information into national accounts annually. (2) Government should accept and adopt the principle that because of their lack of economies of scale, MSMEs suffer from a number of market failures that hinder them from competing effectively with the large-scale enterprises and imports in a liberalised economy and therefore require a selective but facilitatory and proactive policy to enable the enterprises to compete. (3) Government should review the 2007-2009 Medium Term Expenditure Framework, the FNDP 2006-2010, the Vision 2030 and all the other national policies and align them towards development of MSMEs.

Specific Recommendations

(4) A National Policy on Micro, Small, and Medium Enterprises Policy should be established as a matter of urgency. Considering the low levels in entrepreneurship, technological capabilities, qualitative growth of the MSMEs especially the micro enterprises, coupled with their inability to compete with large-scale enterprises and with imports, passive government support and sheer exclusion of sector activities in the national economic accounts, the MSMEs Policy philosophy should be as follows: Vision: ‘To be globally competitive through an entrepreneurial culture committed to sustainable growth’ Mission ‘Facilitate and proactively support the development, growth and international competitiveness of the MSMEs sector as an integral part of the national economy’ Key Objectives

ƒ Creation of an enabling environment for MSMEs to meet the challenges of an internationally competitive economy. ƒ Stimulate sustainable economic growth of the sector ƒ Facilitate competition, cooperation and collaboration among MSMEs ƒ Minimise the imbalance between large-scale enterprises and the MSMEs and strengthening the linkages. ƒ Foster long term quality employment. ƒ Improve income and wealth generating opportunities for low income groups through the micro enterprises.

Ministry of Commerce, Trade and Industry, Lusaka. 55 The 2003-2004 Zambia Small and Medium Enterprises Survey

ƒ Rural Industrialisation

(5) An enabling environment should be created through the following measures:

(a) Access to Finance

The lack of adequate and appropriate financial credit facilities at affordable terms can be overcome in a number of ways.

Macro Level Initiatives

(i) Government should endeavour to maintenance of single digit inflation which would result in reduced lending rates for MSMEs. This is a domain that MCTI should collaborate with MoFNP and the Bank of Zambia.

(ii) Government should facilitate and proactively support the establishment of a credit reference system that emphasises focuses on character-based collateral than the traditionally used fixed assets-based collateral that has hitherto excluded many MSMEs from accessing finance from commercial banks. It is recommended that the MCTI in collaboration with the Bank of Zambia which is the regulator of such services, institute measures that would encourage owners of SMEs to register with the credit reference firms in order to enhance their chances of accessing finance from the commercial banks.

Meso Level Initiatives

(iii) The government should establish a revolving fund on apex basis specifically for the SMEs from which various intermediaries can draw from for onward lending to SMEs. The fund should allow for diverse approaches of financing MSMEs other than loans. (i) The Banking and Financial Services (Microfinance) Regulations of 2006 provides for a number of financial services that include equity, leasing, hire purchase, input accessibility on credit terms, and trade finance, among others, in order to improve accessibility to pre- start capital, working capital and investment capital which has hitherto eluded most of the SMEs. However, it does not provide for a mechanism that ensures that MFIs extend finance only for business investment, a weakness that has resulted in most MFIs focusing on less risky consumption loans to salaried workers to the exclusion of MSMEs. The regulations should therefore be tightened further to benefit the MSMEs. (ii) While the commercial banks have been able to cater for the loan requirements of large scale enterprises, the micro enterprises have been receiving help albeit small, from MFIs. Financial services to small scale and medium scale enterprises have been lacking. It is therefore recommended that measures are put in place to increase accessibility of this segment of enterprises to finance capital. (iii) Financial intermediation between surplus and deficit areas through equity participation has been very low generally. It is therefore recommended that the Securities and Exchange Commission opens a window on the Lusaka Stock Exchange for small investors.

Ministry of Commerce, Trade and Industry, Lusaka. 56 The 2003-2004 Zambia Small and Medium Enterprises Survey

Micro Level Initiative

(iv) Most MSMEs lack the necessary knowledge and understanding on what type of bank finance is available, how it can be accessed and how it can be managed. The goal is to ensure that an entrepreneur accesses the right type of finance of the right amount at the right time for the right type of investment. It is recommended that government puts in measures that will assist Business Development Services providers to provide such awareness to MSMEs.

(b) Access to Markets and Information Needs

The lack of abilities to identify and take advantage of market opportunities, to meet market needs, and to reach the market more effectively among MSMEs can be addressed as follows:

(i) Government should establish a mechanism to monitor profitability trends of firms in the various sub sectors and districts which information can be used to advise the SMEs where necessary about the niche areas of the market. Such information can be obtained from a number of institutions including the financial institutions, PACRO and ZRA. This would be a shift from the current supply based investment promotion strategy in use. (ii) Government should put in place stringent measures that would minimize the inflow of smuggled imported goods; continue to institute countervailing measures in proven cases of subsidized imports, and invoke infant industry time bound protection measures. (iii) Government should encourage its departments especially in the health and education sectors to procure a certain amount of goods and services from SMEs. In the same vain, it is recommended that measures are put in place to facilitate the establishment of strong two pronged market linkage between MSMEs and Traders Association on the one hand, and large scale manufacturers on the other for intermediate input supply. (iv) Government should put in place measures that would enable more MSMEs to access suitable business premises for production and selling purposes. (v) Government should facilitate and proactively support the Business Development Services providers to organize participation of MSMEs in local and international trade fairs and also host promotional activities. (vi) Government should facilitate and proactively support the Business Development Services providers to organize networking events that involves producers, and input suppliers and traders in so far as the networking facilitates shared experiences, information exchange and presentation of opportunities for joint projects and development of new products and services. (vii) Government should, through ZABS institute measures by way of media campaigns and enforcement promote adherence to prescribed product standards as a means to enhancing MSMEs’ competitiveness. (viii) Government should, through specialised agencies such as TEVETA institute measures that will result in business owners or workers undergoing marketing skills training. Fiscal incentives are also recommended for such training.

Ministry of Commerce, Trade and Industry, Lusaka. 57 The 2003-2004 Zambia Small and Medium Enterprises Survey

(c) Improving Skills and Technology

(i) The goal of the education system in Zambia is to produce learners capable of developing an analytical, innovative, creative and constructive mind. It also aims to produce an individual capable of appreciating the relationship between scientific thought, action and technology on the one hand, and sustenance of the quality of life on the other. This capability takes root largely when one attains secondary education. This is attested by the high profitability generated by entrepreneurs with secondary and tertiary education in comparison to those with non-formal and primary education, who form the majority of owners of MSMEs. Therefore, this study argues that for the sector to improve productivity and achieve sustainable qualitative growth, the demographic composition of the business owners should be in favour of secondary and tertiary educated entrepreneurs. As a recommendation, Government should devise measures that will increase the number of entrepreneurs with high school and tertiary education. (ii) Government should put in place measures that will encourage basic and high schools to incorporate entrepreneurship and business management concepts in the curricula. (iii) Government should reduce the retirement age from the current 55 years to 45 years to encourage self employment among the educated and skilled population. (iv) Government should continue to provide demand driven technical and vocational training based on the TEVET concept. Further, the TEVET concept should develop courses in technical entrepreneurship and management of technology for technical students as well as expose them to the dynamics and power of science and technology in business profitability. (v) MCTI should put in place measures that ensure availability of the needed skilled labour into the SMEs sector and especially those located in rural areas and owned by women. (vi) Government should put in place measures that will produce firm level know-why (mastery) in production management, production engineering, and repair and maintenance of physical capital as well as continuous adaptation of products and processes that would ultimately lead to creation of new technology. (vii) Government should establish a mechanism for promotion, diffusion and commercialisation of indigenously developed and other technologies for the small and medium scale industries through the provision of fiscal and other regulatory measures. Specifically, incentives should be provided for promotion of inventions and innovations. (viii) Government should put in place measures that ensure that public sector research institutes conduct predominantly MSMEs’ demand driven research and development work geared towards ensuring competitiveness, efficiency and innovation of commercial products. (ix) Government should ensure interaction of the National Technology Business Centre (NTBC) with existing small and medium scale industries to assist with process technology selection, sourcing and product design. Full realisation of this measure is anchored on widespread installation of electricity services. (x) Government should strengthen institutions responsible for standardisation and quality assurance such as the ZABS and Food and Drug Board with human and financial resources to enable them formulate and enforce standards and to set up infrastructure needed for quality control testing of industrial products from technologies and processes from local sources and abroad.

Ministry of Commerce, Trade and Industry, Lusaka. 58 The 2003-2004 Zambia Small and Medium Enterprises Survey

(d) Legal and Regulatory Issues

(i) Government should take a holistic audit of all pieces of legislation necessary to effectively regulate the MSMEs sector and synchronise and streamline them with the Zambia Development Agency Act of 2006. (ii) Government should put in place measures that guarantee immediate implementation of all pieces of legislation including incentives prescribed in the various pieces of legislation rather than effecting them on piecemeal basis. (iii) Government should provide more incentives to encourage entrepreneurs to formalise their enterprises.

(e) Infrastructural Constraints

(i) Government should facilitate the provision of industrial estates by the private sector for leasing to MSMEs, construction and upgrading of the road, railway and water transportation system, increasing the outreach of telecommunications network and electricity. Included also is the need to improve storage capacity and quality of facilities.

Recommending the above policy measures is very important but not the end in itself. Problems can surface at the implementation phase and there could be several factors for this. The critical one is that as expected, there are quite a number of policy measures recommended for the development of the SMEs sector but the challenge is how these should be implemented or which of those measures should come first and for what reason. It is a challenge of ranking and prioritizing and getting this right is as important as putting up the policy itself. Where ranking is not well- organized, there is a great risk of failed implementation. It is therefore recommended that the following ranking or prioritization criteria be adopted to ensure effectiveness of the recommend policy measures: i) Level of resource investments required to implement; ii) Potential for greater linkages with other existing policy measures; iii) Level of fiscal distortion to be created; iv) Duration that the policy measure will require, v) Extent of dependencies of the specific policy measure on others; and vi) implication of the policy on regional and international protocols. In this case, implementing the policy measure on market support system by way of apportioning part of Government tenders to SMEs would require minimum implementation cost and as such should be the first to be implemented.

(6) Improving the targeting mechanism of the policy measures at the right sizes of enterprises by adopting the following enterprise categories:

1. “Micro enterprises” means any business enterprises -

(a) Whose amount of total investment, excluding land and buildings, does not exceed seventy million Kwacha (b) Employing up to ten persons. (c) Whose annual turnover does not exceed One Hundred and Forty million Kwacha; and

Ministry of Commerce, Trade and Industry, Lusaka. 59 The 2003-2004 Zambia Small and Medium Enterprises Survey

2. “Small Enterprise” means any business enterprise –

(a) Whose amount of total investment, excluding land and building does not exceed –

(i) In the case of manufacturing and processing enterprises, five hundred million Kwacha in plant and machinery; and (ii) In the case of trading and service providing enterprises; one hundred million Kwacha (b) Whose annual turnover does not exceed eight hundred million Kwacha; and (c) Employing up to forty five persons.

3. “Medium Enterprise” means any business enterprise –

(a) Whose amount of total investment, excluding land and building does not exceed – (i) In the case of manufacturing and processing enterprises, one billion and eight hundred million Kwacha in plant and machinery; and (ii) In the case of trading and service providing enterprises; six hundred million Kwacha (a) Whose annual turnover does not exceed five billion Kwacha; and, (b) Employing up to one hundred persons.

As in the case of small enterprises definition, medium enterprises used the same approach. However, the upper limit for employment was also adopted from the regional perspective.

2. “Large Enterprise” means any business enterprise –

(a) Whose amount of total investment, excluding land and building exceeds – (i) In the case of manufacturing and processing enterprises, one billion and eight hundred million Kwacha in plant and machinery; and (ii) In the case of trading and service providing enterprises; six hundred million Kwacha (b) Whose annual turnover exceeds five billion million Kwacha; and (c) Employing more than one hundred persons.

(b) Establishing a dynamic database system upon which MSMEs sector performance can be monitored and evaluated. (7) The primary role of government in this whole sector is that of a challenger, developer, coordinator, catalyst and creator of an enabling environment. Therefore, to effectively carry out these responsibilities, undertaking a comprehensive baseline survey on the MSMEs using a census approach in collaboration with the CSO is recommended. This would also form the basis on which MCTI would be enabled to maintain a database that will be used for monitoring and evaluation of the SMEs sector as well as encourage effective planning and development of the SMEs policy. A census approach is recommended every five years while a sample based survey is needed every year.

Ministry of Commerce, Trade and Industry, Lusaka. 60 The 2003-2004 Zambia Small and Medium Enterprises Survey

REFERENCES

Behrens, W., and Hawranek, P.M (1991). Manual for the Preparation of Industrial feasibility Studies, United Nations Industrial Development Organisation, Vienna.

CSO, (2000) The 2000 Census Report, Lusaka.

CSO, (2000) Zambia 2000 Census Report, Housing and Household Characteristics, Lusaka.

CSO, (2000) Zambia 2000 Census Report, Zambia Analytical Report Volume 10, Lusaka.

CSO, (2006) The Non Farm Informal Sector in Zambia 2002 – 2003, Lusaka.

CSO, (2006) Selected Socio-Economic Indicators 2003 – 2004, Lusaka.

Kim,L., Nugent, J.B, (1994) The Republic of Korea’s Small and Medium-Size Enterprises and Their Support Systems, Washington, World Bank Policy Dissemination Centre.

Manning, R., Melin, A. and Sander, C. (2006) Promoting Pro Poor Growth - Private sector Development, Paris, France. OECD Publishing

Manning, R. and Shoji, H. (2006) Promoting Pro Poor Growth - Infrastructure, Paris, France. OECD Publishing

MoFNP, (2002), ZAMBIA-Poverty Reduction Strategy paper 2002 – 2004, MoFNP, Lusaka.

MoFNP, (2006) Fifth National Development Plan 2006 – 2010: Broad Based Wealth and Job Creation through Citizenry Participation and Technological Advancement, Lusaka: MoFNP

Ngesa, F.U., Ombati, J.M., Mutuku, M. (2003), Extension Services and Enterprise Development: Study of Technology Extension Services to Small and Medium Size Manufacturing firms in Nairobi, Kenya,, Nairobi: African Technology Policy Studies Network.

Parker, J.C. (1996) Micro and Small Scale Enterprises in Zambia: Results of the 1996 Nationalwide Survey, London: Graham, Bannock and Partners Ltd.

Wesselink, B., (1996) Poverty - Oriented Banking: Monitoring Guidelines for semi formal financial institutions active in scale Enterprise Finance, Geneva: International Labour Office

White, S. and Reinecke, G. (2004) Policies for Small Enterprises: creating the Right Environment for Good Jobs, Geneva: International Labour Office.

UNIDO, (2004), Industrialisation, Environment and the Millennium Development Goals in Sub Saharan Africa: The New Frontier in the Fight Against Poverty, Vienna: UNIDO

Republic of Zambia, (1996) National Policy on Science and Technology, Lusaka.

Republic of Zambia, (1996) National Employment and Labour Market Policy, Lusaka.

Ministry of Commerce, Trade and Industry, Lusaka. 61 The 2003-2004 Zambia Small and Medium Enterprises Survey

Republic of Zambia, (1996) National Policy on Science and Technology, Lusaka.

Republic of Zambia, (1996) Technical Education, Vocational and Entrepreneurship Training (TEVET) Policy, Lusaka.

Republic of Zambia, (2005) National Energy Policy, Lusaka.

Republic of Zambia, (2000) National Gender Policy , Lusaka.

Republic of Zambia, (2002) Transport Policy, Lusaka.

Republic of Zambia, The Banking and Financial Services (Microfinance) regulations, 2006 Lusaka

Republic of Zambia, (2004) Financial Sector Development Plan for Zambia 2004-2009, Lusaka.

Republic of Zambia, (2004) 2005-2007 Medium Term Expenditure Framework and the 2005 Budget, Lusaka.

Republic of Zambia, (2006) 2007-2009 Medium Term Expenditure Framework and the 2007 Budget, Lusaka.

Republic of Zambia, (1996) The Small Enterprises Development Act, 1996, Lusaka.

Richardson, P., Howarth, R. and Finnegan, G. (2004) The Challenges of Growing Small Businesses: Insights from Women Entrepreneurs in Africa, International Labour Office, Geneva, Switzerland.

Ministry of Commerce, Trade and Industry, Lusaka. 62 The 2003-2004 Zambia Small and Medium Enterprises Survey

APPENDIX ONE: LIST OF ENTERPRISES INTERVIEWED

DISTRICT NAME OF ENTERPRISE MAIN ECONOMIC ACTIVITY PHYSICAL ADDRESS CONTACT PERSON

Kabwe Edinea Enterprises Trading - Agric Inputs Plot 629 Freedom way Idith N'gandu Kabwe Motives General Trading Motor Vehicle Repair Plot 485 Industrial Road Whanscaw Mubanga Kabwe Rhitz Electrical & Hardware Trading - Hardware Kabwe Med - Mate Drug Store Trading - Medical Drugs Kabwe Tony's Bargain Centre Trading - Flowers Plot 6 Northriding Elizabeth Jones Kabwe Reformed Tailoring Tailoring/Clothing Manufacture Independence Avenue Adam Piyasi Kabwe Interpak(Z) Manufacture of Satches Plot 700 Independence Avenue Hayden Dingwail Kapiri-Mposhi Mwabi Knitting Knitting Town Centre Mrs. Mapulanga Kapiri-Mposhi Maaz Agricultural & Industries Ltd Bakery Products Plot 786 Town Centre Y.E.Daladco Kapiri-Mposhi Muchinchi Furnishers Wood Products Chibande Bar - Town Centre Mvula Agrippa Mkushi Faith Hardware Trading - Hardware Plot 84 Independence Avenue Beatrice Msichili Mkushi Alpha Enterprises Trading - Household Goods Plot 34/35 Town Centre Kwibisa Ndumba Mkushi Pamulambe Suppliers & General Dealers Trading - Stationery _ Beatrice Msichili Mkushi Katota General Dealers Trading - Groceries Along Independence Avenue Alionort Katota Mkushi Muchima General Dealers Bar & Restaurant Plot 1386 Town Centre J.K.Chekwe Mkushi Convinient Food Café Restaurant Plot 55 Town Centre Stephenson Alfa Mkushi Landserve Agric Limited Trading - Agro Chemicals Plot 12/13 Town Centre Marc Bragge Mkushi Natwange Bar & Restaurant Bar & Restaurant Plot 505 Buntungwa Road Bernard Tondo Mkushi Vallbhbhai & Co. Limited Filling Station Plot 11A Town Centre A.V.Patel Mumbwa Osman Dodia Milling Town Centre Osman Dodia Mumbwa Necch Business Centre Telephone Services Town Centre Carina Monga Mumbwa Pandor General Dealers Trading - Medical Drugs Town Centre Mohamed Pando Mumbwa Tonks Investments Trading - Household Goods Plot 336 Town Centre Kavaza Tongowa Mumbwa Don's Rite Shop Trading - Groceries Town Centre Musukuma Donald Mumbwa Wallet Enterprises Trading - Hardware Town Centre Samson T. Chanda Mumbwa Max Bargain Centre Trading - Hardware Town Centre Maqsood Ahmed Mumbwa Mumbwa Medical Centre Clinic Medical Services/Surgery Town Centre Mohamed Pando Mumbwa Oscars Shopping Centre Trading - Groceries Market Square Frank Wabei Ministry of Commerce, Trade and Industry, Lusaka. 1 The 2003-2004 Zambia Small and Medium Enterprises Survey Mumbwa Tinalo Kavaza Carpentry & Joinnery Wood Products Plot 336 Centre Tinalo Kavaza Mumbwa Luchi Bakery Bakery Products Plot 32 Site & Service Lawrence Lubinga Mumbwa Comino Butchery & General Dealers Butchery Plot 2 Town Centre Angelo Cimino Mumbwa Millennium Trading & Butchery Butchery Plot 5 Town Centre Nayunda Ben Mumbwa High Class Hair Salon Hair Dressing Town Centre Mr Tatila Mumbwa Kavaza & Sons Enterprise Wood/Timber Processing Plot 336 Town Centre Dennis Kavaza Mumbwa Nora Hair Salon Hair Dressing Natsave Premises Nora Habasonda Mumbwa Eden Motel Lodging Plot 331/333 Off Mumbwa Main Rd T. Mitti Mumbwa Mulla Shopping Centre Trading - Groceries Plot 7 Towncentre I. Mulla Serenje Discover Printers & Stationers Printing Plot 110 Chililabombwe Compound Chisanga Clement Serenje Help Ministries Project Community Servises Plot 514 Nganswa Road Abeauty Chibuye Serenje Macklan General Dealers Trading - Stationery Plot 14 Ngaswa Rd K.M.Sichilima Serenje Tusheni Hrand Bazaar Limited Trading - Groceries Plot 10 Main Street N. Hamir Serenje Jemarh Hair Salon Hair Dressing _ Z. Joseph Serenje Mapondela Investments Ltd Restaurant Plot 516 Ngaswa Rd Steve Luka Serenje Amazing Stop Over Trading - Soft Drinks Serenje Turn Off Albetina In'utu Sendoi Cha Serenje J.K Carpentry Wood Products Serenje Main Market Mr. Mtonga & Mr Mubang Serenje Tom's Hair Saloon Hair Dressing Council Guest House Tomson Sichula Serenje Serenje Enterprises Filling Station Plot 158 Ngwaswa Road Abdi Mohammed Serenje Kabuluma Small Holder Enterprise Trading - Hardware Plot 290 New Kamwala Edward Kalunga Serenje Halaal Butchery Butchery Ngaswa Road Abdikafi Mohamed Serenje Travellers Tailoring Tailoring/Clothing Manufacture New Travellers Shopping Complex Beatrice P. Malama Chingola Romuka General Dealers Tailoring/Clothing Manufacture Chingola Industrial Properties Robbie Simuwelu Chingola Mabvu Motor Vehicle Repair _ Davies Kausa Chingola Nakafwaya General Building Enterprise Ltd Construction SEDB Workshop - Room 6 Kanyembo Mungo John Chingola Pama Panel Beaters Ltd Motor Vehicle Repair Plot 1409 Senama Road Richard Mwamba Chingola BKT Motors Limited Motor Vehicle Repair Plot 1409 Senama Road Joseph Tembo Chingola Kettherma Engineering & General Contractors Motor Vehicle Repair Plot 389 David Kaunda Road Hamoomba Fanwell K Chingola Chiwempala Carpentry & Joinery Wood Products Plot 1409 Senama Road Mucheleka John Kitwe Alcotech Zambia Limited Office Equipment Repair Room 2 2nd Floor - London House Alfred Sinyangwe Kitwe Frachi Pottery Pottery/Ceramic Products _ Majory Chama Kitwe Universal Spares Limited Motor Vehicle Repair B462 Old Airport Road A. Tembo

Ministry of Commerce, Trade and Industry, Lusaka. 2 The 2003-2004 Zambia Small and Medium Enterprises Survey Kitwe Mwito Printers Limited Printing Former Youth Scheme- Old Airport Rd J. Mwanza Kitwe High Trades Investment Wood Products Plot 830 Luangwe T/Ship Harrison Chisanga Kitwe B.C Enterprises Milling _ Mr. Chisanga Kitwe Jakan Enterprises Wood Products Former Youth Scheme- Old Airport Rd Simon Mulenga Kitwe Kitwe Pottery Pottery/Ceramic Products Former Youth Scheme- Old Airport Rd Musonda Sabbas Kitwe S.N.C Block Making Concret Blocks Show Grounds Cosmas Musonda Kitwe Liyas Investments (Garment) Ltd Tailoring/Clothing Manufacture Plot 3672 Lilongwe Road Beatrice N. Simwanda Luanshya House of Luanshya Trading - Hardware 129 Bombeny Street - 2nd Class A.Z.Mwape Luanshya Paka's Butchery Butchery Plot 3234A Mikomfwa 2nd Class Patrick Kamwasha Luanshya Kana Import & Export Wood/Timber Processing Hse number 8/26 Mpatamato Katemena Felix Luanshya Celsan General Contractors & Supplies Supplier 198 Section 25 Mpatamato Sannie Kunda Ndola Gojepa Gemstone & General Dealers Trading - Groceries 5007 Ndeke Township Chendela D. James Ndola Shekam Centre Secretarial Services Shop 2 Bwafwano House Janet K. Chondoka Ndola Kambwali Winfred Carpentry Wood Products Masala Market - Kapalala Kambwali Winfred Ndola Shibuya Enterprises Limited Motor Vehicle Spare Parts Chimwemwe Road Mr. Kakundu Ndola Darling Buds Trading - Groceries 9 Kope Road Marble Sinkala Ndola PC Engineering Metal Fabrication Chakanga Inn Masala - Dambo Lubuto Rd Patson Chibuye Chikasa Ndola Inter-City Furnishers Wood Products Independence Avenue Chilufya A. Abraham Chadiza Chadiza Bargain Centre Trading - Household Goods Town Centre S. Munshi Chadiza Nyimba Supper Market Trading - Hardware Town Centre Yunas Master Chadiza Skad Enterprise Trading - Medical Drugs Plot 11 New Market Rosemary M. Tembo Chadiza Super Garage Motor Vehicle Repair Along Main Road Rabson Zulu Chadiza Super Millers Milling Along Main Road Rabson Zulu Chadiza Sabina Oil Millers Trading - Groceries Market Square Esau Ngoma Chadiza Chuma Nimphepo Butchery Butchery Market Square Alistaliko Phiri Chadiza D.D.Ndhlovu's Mining & Ox-Carts Gemstone Mining Hse Num 2 Kasongo Road Damiano Dani Ndhlovu Chadiza Eatrite Bakery Products Kamwala Compound Kennedy Banda Chipata Kasak Take Away Bakery Products Plot 2341 Lunkwakwa Street Elyas Patel Chipata Kasagul Shop Trading - Cosmetics Plot 2341 Lunkwakwa Street Gulam H. Patel Chipata Citizen's Delight Take Away Trading - Soft Drinks Plot 2761 Nasser Street Ismail Vally Umanji Chipata Motaza Drug Store Trading - Medical Drugs Plot 529 Nasser Street Dr, M.A. Motala Chipata Citizen's Commercial Centre Trading - Hardware Plot 542 Nasser Street Aslam Umarji

Ministry of Commerce, Trade and Industry, Lusaka. 3 The 2003-2004 Zambia Small and Medium Enterprises Survey Chipata G. M. Enterprise Metal Fabrication ESCO Building Gideon Moyo Chipata Chipata Cycle Centre Trading - Bicycles Plot 2341 Lunkwakwa Street Gulam H. Patel Chipata Producer Owned Trading Co-operative (P.O.T.C) Manufacture of C/Oil Parirenyatwa Road General Manager Chipata Tina Financial Services Secretarial Services Town Centre T.K.Nyirenda Chipata Jasat Store Limited Trading - Hardware Plot 533/34 Nasser Street M.I.Jasat Chipata I.C.Drug Stores Trading - Medical Drugs Kapata Market Loveness Chongo Chipata Rodoz Enterprises Metal Fabrication Umodzi Highway R.Zulu/Z.Zulu Chipata Mosali Cold Storage Meat Processing Parirenyatwa Road Ismail Ugradar Chipata M. Daka Food & Vegetables Trading - Vegetables Down Shops Area William Daka Chipata Chipata Bakers Bakery Products Plot 946 Umodzi Highway Yusuf Ahmed Chipata Takbeer Enterprise Trading - Groceries Nasser Street Ahmed A.Patel Chipata Stallion Contractors & Suppliers Trading - Stationery Plot 1529 Kamina Street Sullen Nyondo Chipata Chilumwa Enterprise Trading - Computer Accessories Plot 33 Church Rd Benjamin Chishala Chilufya Chipata Sheni Agric Supplies Ltd Trading - Agric Inputs Plot 542 Mosque Road Y.M.Patel Chipata Kanjala Restaurant Restaurant SSP 23 Kamini Road L. Mitti Chipata Frontier Wholesalers Trading - Household Goods Plot 528 Nasser Street Farook Daya Chipata Chitenge Stores Trading - Household Goods Plot 1179 Kamina Rd Jameel Chipata U - Save Supplies Trading - Stationery Plot 1535 Nasser Street Faizel Alldo Chipata Jasat Store Limited Trading - Groceries Plot 533/34 Nasser Street M.I.Jasat Chipata Jasat Store Limited Trading - Building Material Plot 533/34 Nasser Street M.I.Jasat Chipata Adams General Supplies Trading - Hardware Plot 1879 Faruk Adam Chipata Chipata Health Care Medical Services/Surgery Town Centre Loveness Chongo Chipata Food Garden Rest Restaurant Umodzi Highway Alice Njovu Katete Kali's Hair Salon Hair Dressing Boma Market Victoria Kalilombe Katete San Enterprises Restaurant Boma Market J. Nyirenda Katete Mageledwe Grocery Trading - Groceries Boma Market Lucas Phiri Katete MJ'S Mini Mart Trading - Groceries Stand 127 Mozambique Mike Nawere .J Katete Mbep Enterprise Trading - Groceries _ Anne Mutyambe Katete C.J. Investments Trading - Vegetables Chibolya Compound Chiwaka John Katete H. Kings Bar & Restaurant Restaurant Plot 90 Along Great East Road Harris Mkanda Katete Romet Enterprise Bar & Restaurant Plot 53 Monzambique Road Enock Mbewe Katete Manyanzi Groceries Trading - Groceries Boma Market Harrison A. Ngoma

Ministry of Commerce, Trade and Industry, Lusaka. 4 The 2003-2004 Zambia Small and Medium Enterprises Survey Katete Wazanga Investments Trading - Groceries Boma Market Simenda Brian Katete Madaliso M. Furnitures Wood Products Boma Market Mwenya Mbewe Katete Sai Investments Limited Trading - Groceries Boma Market Sailot J. Mwanza Katete Thole Investment Trading - Groceries Boma Market Astone Thole Katete Chilumbu & Sons Shopping Centre Trading - Soft Drinks Old Market Richard Chilumbu Katete Goic Investment Tailoring/Clothing Manufacture Along Monzambique Road Godwin Muchosa Katete Isatilani Mwanbo Craft Work Plot 44 Along Monzabique Road Peter Daka Katete Libean Contractors Limited Contractor Plot 68 Along Great East Road Gilbert Phiri Katete M.U.L Enterprise Trading - Groceries Boma Market Martha Njovu Katete Chabvuka Garden Gardening Off Great East Road Joseph Phiri Katete Pingu Farmers Day Trading - Agric Inputs Along Great East Road - Sinda Beatrice Zulu Katete Tivane Trading Peace Investments Trading - Garment Chawama Compound - Sinda Banda Yalani Katete Sims & Sons General Dealers Trading - Soft Drinks Chawama Compound - Sinda Simbani Zulu Katete Eastern Bells Fast Foods & Bar Bar & Restaurant Plot 56 - Sinda Blackson Phiri Katete Farid Paradise Trading - Garment Sinda Town Centre Mwayamba Sakala Katete Longwe Investment Trading - Hardware Sinda Town Centre Phillimone Longowe Lundazi Elias Fair Deal Trading - Groceries Market Square Naputali G. Phiri Lundazi Mpunda Kafulamchenga Hardware Trading - Hardware Market Square Isaac Banda Lundazi Chadatte Trading Trading - Groceries Plot 286 Market Square Jackson Chitsanga Lundazi Dymon & Sons Investments Manufacture of C/Oil Plot 371 Industrial Area Wellingtone Mtonga Lundazi Ma Crowd Inn Trading - Groceries Market Square Macrowd Mutambo Lundazi Jumbo & Sons Investment Metal Fabrication Industrial Area Francis Ndhlovu Lundazi Chi-Na-Siku Guest House Lodging Plot 18 Richard Road James C.M.Nyirongo Lundazi Mako Ni Mako Wood Products Market Square Godfrey Phiri Lundazi Chikutano Auto Electrical Metal Fabrication Chikutano Auto Premises Epraim Phiri Lundazi Lundazi Village Industry Service Metal Fabrication Village Industry Complex Botha Fanson Lundazi Kazonga Enterprise Trading - Hardware Market Square Evans N'goma Lundazi Mukhuto General Contractors Metal Fabrication Jurako House Japhet C Banda Lundazi Chikutano Auto Electrical Milling Chikutano Auto Premises Epraim Phiri Nyimba D. Banda Grocery Trading - Groceries Chipembe Shopping Centre D.Banda Nyimba Kacholola Trading Trading - Groceries Kacholola Chilowe Lungu Nyimba Kacholola Hotel Lodging Kacholola George Katwamba

Ministry of Commerce, Trade and Industry, Lusaka. 5 The 2003-2004 Zambia Small and Medium Enterprises Survey Nyimba Farmers Nest Restaurant & Bar Restaurant Town Centre Joe Lungu Nyimba George Zulu Grocery Trading - Soft Drinks Chipembe Shopping Centre George Zulu Nyimba K. P. Lungu Guest House & Restaurant Lodging Chipembe Shopping Centre K.P.Lungu Nyimba Chipazyo Millers Milling Chipembe Shopping Centre Brown Mumba Nyimba M & C Takeaway Restaurant Chipembe Shopping Centre N.J.Ngulube/P.Tembo Nyimba P.M.Investment Trading - Groceries Chipembe Shopping Centre Anna Ngulebe Nyimba Mukolik Enterprise Trading - Groceries Chipembe Shopping Centre Mwawala Phiri Nyimba Farmers Nest Guest House Lodging Town Centre Joe Lungu Petauke Elizavit.Net Business Centre Secretarial Services Room 4 NAPSA Building Avitto Tembo Petauke Ibrahim Bargain Centre Trading - Household Goods Town Centre S.Tembo Petauke Rasheed Enterprise Trading - Household Goods Town Centre T.T.Munshi Petauke Munshi Medical Centre Medical Services/Surgery Town Centre T.T.Munshi Petauke Petauke Brewery Brewery - Opaque Beer Plot 785 Off Boma Road Simon Kapili Petauke Sabina Oil Millers Manufacture of C/Oil Plot 409 New Market B. Mushipi Petauke Kemwa Big Bite Restaurant Plot 2623 Town Centre Kennedy Mwansa Petauke Nyankuwa Brewery Brewery - Opaque Beer Plot 777 Industrial Area M.K.Tembo Petauke Sunshine Restaurant Restaurant Town Centre Martin J. Mwanza Petauke Kamwaire Enterprise Trading - Hardware Hse Num 6 Ngwee Road Kamanga Kawalika Petauke Pascareen Motor Spares & Gen Dealers Trading - Vehicle Spare Parts Town Centre - Near ZANACO Oscar Bwalya Petauke Gemas Restaurant Restaurant New Market Threasa Banda Petauke Halels Farmers Shop Trading - Agric Inputs Town Centre Robert Phiri Petauke Nachel Distributors Trading - Hardware Town Centre Justine Zulu Petauke Chikombe Oil Millers Manufacture of C/Oil Plot 387 Omel Road James Mwale Kawambwa St. Mary's Development Centre Wood Products St. Mary's Secondary School Christopher Mwewa Kawambwa St. Mary's Development Centre Tailoring/Clothing Manufacture St. Mary's Secondary School Mary Katulwende Kawambwa Eastern Trading Trading - General President Avenue Sanjay Patel Kawambwa Low Prices Stores Trading - General Plot 277 Chimfwembe Market Mwape Musantu Wilson Kawambwa Cicom Marketing & Distributors Trading - Hardware Plot 736 Chifwembe Market Mwango C. Geofrey Kawambwa The Venue Bar & Restaurant President Avenue Felix Zimba Kawambwa Tusekane Milling Milling Kawambwa - Mbereshi Rd Dawson Bunda Kawambwa Kapachi Investment Milling President Avenue Chiwele K.Herbert Kawambwa Tourism Venture Trading - Groceries Plot 2 President Avenue Kasapo Chola

Ministry of Commerce, Trade and Industry, Lusaka. 6 The 2003-2004 Zambia Small and Medium Enterprises Survey Kawambwa Down Town Restaurant Restaurant Matero - Mbereshi Rd Agness Kape Kawambwa Namushaba Enterprises Trading - Groceries Plot 2 President Avenue Peter Chola Kawambwa Queens Bakery Bakery Products Plot 572 Noahj Chumbe Kawambwa Top Tech Trading - Groceries Matero - Mbereshi Rd Patrick Musonda Kawambwa New Junior's Inn Lodging Matero - Mbereshi Rd Patrick Musonda Mansa Ptopster Brewery Brewery - Opaque Beer Former National Brewery Ganister Mwemena Mansa Amazing Hair Salon Hair Dressing Town Centre Mwenya Sunday Mansa M. N. & D Investment Trading - Groceries Town Centre - Chipampwe Road M.W.Zulu Mansa Spark Battery Guest House Lodging Plot 765 - Low Density Area Mpundu Nora Mansa Kakis Shop Trading - Groceries Plot 3006 Chitimukulu Area Kapya Bornface Mansa Hengo Clinic Medical Services/Surgery Former UBZ Station - Along Chembe Rd Ngosa Henry Mansa C & C World Trade Bakery Products & Hardware Plot 1 President Road Frank Chola Mansa C.K Hammer Mill Milling Senama - Kawambwa Road Kapansa Charles Mansa Katerina Tailor Tailoring/Clothing Manufacture Senama - Kawambwa Road Catherine Chembe Mansa Cindani General Dealers Trading - Hardware Mulenshi Road Chitambala Mwansa Mansa Crocodile Milling Milling Mwape Village- Mansa -Mwense Rd Bruno Mwewa Mansa Fikashala Fyachalo Milling Milling Mansa - Kawambwa Rd Joseph Kapansa Mansa Kayo Medical Services Medical Services/Surgery Mansa - Kawambwa Rd Mungole Mwenya Mansa R.P.S Star International School Education Services Mansa - Kawambwa Rd Fanny Phiri Mansa Mbabubo General Dealers Trading - Stationery Town Centre - Chimpampwe Rd Musukwa Frihton Mansa Nseka Food Centre Restaurant Plot 165 Muzela Chisala Mansa J. Kalambo Trading - Groceries Plot 1052 Medium Density Area Robert Sichama Mansa B.P. Hair Saloon Hair Dressing Plot 1597 Chembe Road M. Mwansa Mansa Tumaini Boutique Trading - Boutique Mulenshi Road Mrs. Magayane Mansa Sansamukeni Rest House Lodging Plot 815 Off Mansa - Chembe Rd S. Mwandila Mansa Luka Mumba & Son Rest House Lodging Plot 311 Chitimukulu Rd B. Mumba Mansa Kimula General Dealers Trading - Hardware Plot 223 Town Centre R. B. Musukwa Mansa Tumassil Cassava Foods Manufacture of Cassava Products Plot 178 Chimpampwe Rd Joseph Armo Assilidjoeh Manufacture of Shoe & Leather Mansa Jacks Shoe Parlour Products Village Industry Complex Jacob Yotamu Mwape Mansa Khatikafwe Private Surgery Medical Services/Surgery Plot 1 President Road Silondwa G.M Manufacture of Shoe & Leather Mansa Sigu Shoe Manufacturing Products Chembe Road Gustav Sinyangwe Mansa Queens Bar & Restaurant Bar & Restaurant Plot 336 Cecilia Mumbolo Ministry of Commerce, Trade and Industry, Lusaka. 7 The 2003-2004 Zambia Small and Medium Enterprises Survey Mansa Moonlight Hardware Trading - Hardware Plot 5 Chimpampwe Building Kenneth L. Kambobe Mansa Big Mountain Trading - Cell Phone Spider Machisa Building Elijah Phiri Mansa Jaswe Trading - Hardware Chimpampwe Rd Elijah Chaswe Mponda Mansa Chimo Wood Star Wood Products Old Cold Storage Building Mordegai Chisala Mansa Liwelyawa Wood Products _ Chenda Stephene Mansa Rapid Stores Trading - Groceries Makumba Rd - Low Density Dillian Mambwe Mansa King Builders Trading - Hardware Hse number SR 39 Kingstone Kapotwe Mansa Choice Trading - Groceries Main Market Boston Mulenga Mansa Elise Bar & Restaurant Chimpampwe Rd Joel Chama Mansa Fwatuma Investment Trading - Stationery President Avenue Joseph Yombwe Mansa Ndashi Surgery Medical Services/Surgery Town Centre behind BP Station Stephen Mwape Mansa Kaswaya Enterprises Tailoring/Clothing Manufacture Shop 1 Chimpampwe Rd Town Centre Overson P. Ndhlovu Mansa Mansa Hotel Limited Lodging Plot 113 President Road Mrs. Muyaba Mansa C.J.Mulenga Wood Products _ C.J. Mulenga Mansa Chichi's General Contractor Filling Station Town Centre R.C. Chibwe Mansa Peco Limited Poultry Farming Plot 334 Former LCU Hatchery Magula Humphrey Mansa Ifisuma Fileisa Restaurant Plot 236 Mulenshi Rd Edwin Chisulo Mansa Lupupa Grocery Trading - Groceries Main Market R. Lupupa Mwense Lembros Trading - Groceries Mwense Market John Fulanga Chabala Mwense Riendly Barber Shop Hair Dressing Mwense Market Richard Mwape Mwense Niza Milling Milling Shingwe Village - Mwense Mansa Rd Elvis Kaoma Mwense Romantic Investments Trading - Groceries Mwense Market Baron Bwalya Mwense Kababa Store Trading - Groceries Shingwe Village - Mwense Mansa Rd Chilambwe Kababa Mwense J.C.Koshapo Trading Store Trading - Groceries Shingwe Village - Mwense Mansa Rd John Chisala Mwense Stanivic Restaurant Restaurant Shingwe Village - Mwense Mansa Rd Victoria Liyoba Samfya Bwana Mukubwa Breweries Brewery - Opaque Beer Mwamfuli Village John Mwansa Chali Samfya Cloudy Restaurant Restaurant Malila N'goma - Mwamfuli C. Kasawa Samfya Francis Nkandu Garage Motor Vehicle Repair Mwamfuli Francis Nkandu Samfya Kalumba Music Parlour Trading - General Plot 595 Mwamfuli Aaro Kalumba Samfya Ndashi Surgery Medical Services/Surgery LJN Near Mwamfuli Market Stephen Mwape Chongwe Chibi Kubantu Trading - Groceries Town Centre _ Chongwe Vyalo Enterprises Trading - Agric Inputs Town Centre C.Chankota

Ministry of Commerce, Trade and Industry, Lusaka. 8 The 2003-2004 Zambia Small and Medium Enterprises Survey Chongwe Chata Holdings Trading - Groceries Town Centre Shirica Phiri Chongwe Classical Corner Trading - Groceries Town Centre James Kaumba Chongwe Chulo Restaurant Restaurant Plot 326 - Town Centre Rose Chulo Chongwe Mwaiseni Investment Limited Bar Plot 550 - Town Centre Lazarous Mwape Chongwe Musadabwe General Dealers Trading - Groceries Town Centre Mary Ndhlovu Chongwe Tulatatala Tailors Tailoring/Clothing Manufacture Town Centre Mary Chibango Chongwe Cheap World Trading - Groceries Town Centre L. Malambo Chongwe F. N. Pay Phone Telephone Services Town Centre Fred Simbeye Chongwe Kanonibo Milling Enterprises Milling Town Centre Whyson Mvula Chongwe Ellys Drug Store Trading - Medical Drugs Town Centre Lissy Phiri Chongwe Ladies Hair Salon Hair Dressing Town Centre Setiya Zulu Chongwe King Store Trading - Groceries Town Centre S.Banda Chongwe Blessed Diasis Grocery Trading - Groceries Town Centre F. Walobele Chongwe Blessed Oasis Butchery Butchery Town Centre F. Walobele Chongwe Chingaipe Enterprise Trading - Foodstuff Town Centre William L. Phiri Chongwe Mulapwa Enterprises Trading - Foodstuff Town Centre Mrs. Lwamba Chongwe KCZ Grocery & Take Away Trading - Groceries Town Centre Christine Zulu Chongwe Worthline Trading Centre Trading - Groceries Town Centre _ Chongwe Chuka Enterprise Restaurant Town Centre Chuyo Chombo Nkomesha Chongwe Makola G. Lodging Town Centre Gibson Nkausu Chongwe Changaipe World Trade Centre Lodging Town Centre William Phiri Chongwe Elshadal Hair Salon Hair Dressing Town Centre Geofrey Chombwe Chongwe Prime Agriciltural Services Trading - Agric Inputs Town Centre Condry Katai Chongwe Home Store Trading - Foodstuff Town Centre Obby Hampuu Chongwe Machona Stores Trading - Foodstuff Town Centre Silopa Zulu Chongwe S S Makumbiro Bar & Restaurant Town Centre S.S. Makumbiro Chongwe Kuliswe Minimart Trading - Foodstuff Town Centre Mc Donald Shaavwa Kafue Agape Trust School Education Services Community 6. Peter Kiwala Kafue Icalo Bantu Bar & Restaurant Bar & Restaurant Chawama Compound Ackim Ngala Kafue Katina's Flower Centre Trading - Flowers _ Catherine Chileshe Chand Kafue Zambika Bakery Bakery Products Luangwa Drive - Kafue House Ahmed Pandor Kafue Try Again Shop Trading - Groceries Town Centre Benson Nchinda

Ministry of Commerce, Trade and Industry, Lusaka. 9 The 2003-2004 Zambia Small and Medium Enterprises Survey Kafue Joe Masingira Enterprises Bar Chikoswe Site & Service Joseph Javan Masingira Kafue High Rest House Leisure Lodging Chawama Compound Shakombo Chris Kafue Faducos Corner Trading - Hardware Along Main Road Luis Faduco/Jean Faduco Kafue Fens Frailer Wood Products House No. 549/12 West Silungwe Kafue Ndeke II Club Bar Chawama Compound Mwetwa Darius Kafue Zingi Take Away Restaurant Town Centre Festus Njovu Kafue M.K.Vision Carpentry Wood Products Along Main Road Kelvin Mwiinga Kafue Rako Agencies Trading - Hardware Buyantanshi Road Mohammed Omar Kafue Vegetable Shop Trading - Groceries Town Centre Mr Mabepa Kafue Shah Emporium Trading - Garment Town Centre Hargovind Shah Kafue A.C.Butchery Butchery Plot 1 Buyantanshi Road A.C.Du Plooy Kafue Damwe Wholesale Enterprise Trading - Groceries Town Centre Jason Mweemba Kafue Kafue Minimart Trading - Groceries Kafue House - Kafue Estate Edwin Mukupe Kafue Fuducos Hardware Trading - Hardware Off Lumumba Road Priscilla Choongo Kafue Danafa Trading - Vehicle Spare Parts Town Centre Bilal Lulat Kafue J.M.Butchery Butchery Kafue House - Shop 5 Enerst Kafunda Kafue Uncle Vinne Trading - Groceries Shop KH7 Zambika Building N. Banda Kafue Bayi Motel Lodging Plot 1146 Main Road Matina Mupali Kafue Nkhosi Breweries Limited Brewery - Opaque Beer Along Main Road Justin Chabamba Luangwa Nkhanizaniche Shopping Centre Trading - Groceries Luangwa Boma Market Harry Longwe Luangwa Kashikishi Trading Trading -Groceries Luangwa Boma Market Henry Musonda Luangwa A.J. and Sons Trading - Groceries Luangwa Boma Market Maybin Chalwe Luangwa M.S.General Dealers Milling Luangwa Boma Market Most Sikasote Luangwa Chifundo Extra Shopping Centre Trading - Groceries Luangwa Boma Market Benjamin Mutwale Luangwa M.S.General Dealers Trading - Groceries Luangwa Boma Market Most Sikasote Luangwa Nyambe Trading Trading - Groceries Luangwa Boma Market Florence Mundia Luangwa Papa & Sons Limited Bar Luangwa Boma Market Moses Chabala Luangwa Chawa Chaima Trading - Groceries Luangwa Boma Market Tam Nyirongo Luangwa Malambo Shop Trading - Groceries Great East Rd - Luangwa Turn Off Ben Lungu Luangwa Henry Tapseni Trading - Groceries Luangwa Boma Market Innocent Phiri Luangwa Agrip L.A.Mwanza Trading - Groceries Great East Rd - Luangwa Turn Off Agrip L.A.Mwanza Luangwa Imyala Lodge Lodging Kambolozo Area Kasonde Katongo

Ministry of Commerce, Trade and Industry, Lusaka. 10 The 2003-2004 Zambia Small and Medium Enterprises Survey Luangwa Fipela Nalesa Shop Trading - Groceries Shop 19 Luangwa Boma Market Loveness Mukuka Lusaka Shimz Business Centre Internet Services Stand 2139 Kaunda SQ Stage 1 Jean Shimz Lusaka Cosab Bakery Ltd Bakery Products Plot 38 Katimamulilo Rd - Garden N.B.Banda Lusaka Sambalayas Lodge & Farm Lodging Plot 14120 Great North Rd Sara Chimwemwe Tembo Lusaka Musandile Tele - Business Centre Secretarial Services Kundo Trading Centre - Kaunda SQ Stage 1 Sharon Mwanza Lusaka Katale Pharmacy Trading - Medical Drugs _ Dokezya M K Lusaka Obeas Boutique Trading - Boutique Chainama Shopping Complex Beatrice Mukuka Lusaka Samala Enterprises Internet Services Katimamulilo Road Rev, A. Malama Lusaka Sepiso Surgery Medical Services/Surgery Plot 47 Katima Mulilo Road Matsauso M.Phiri Lusaka Health Ling General Trading -Drugs Matero Centre Jocob Zulu Lusaka Mafeli Hair Salon Hair Dressing Matero Centre Joy Zulu Mutale Lusaka Classic General Dealers Trading - Cosmetics House No. 76 Matero Township Bronson P. Solo Lusaka Pretty and Cute Enterprise Trading - Hair Extensions Plot 248 Vubu Road Emasdale Cynthia Mwanza Lusaka Carlton Auto Spares Motor Vehicle Repair Along Katima Mulilo Road Frbisher Phiri Lusaka Remmy Banda Trading - Groceries Buyantanshi Market Remmy Banda Lusaka Elimu Bottle Store & Grocery Trading - Beer & Groceries Matero Centre G.K.Kaoma Lusaka J.S.Butchery Butchery Cresent - Nsafu Road Emmannuel Road Lusaka G12 Intergrated Women Tailoring/Clothing Manufacture BJs Complex Sunday Fungaliso Lusaka Sanjose Community School Education Services BJs Complex Sunday Fungaliso Lusaka Sbuhi Fashions Tailoring/Clothing Manufacture Buyantanshi Market Geofrey Zulu Lusaka Lilembe Furnitures Wood Products Mandevu Market Ben Matanda Lusaka GBM Tailoring Tailoring/Clothing Manufacture House No. 12/159 Chipata Overspill Godwin Banda Lusaka A.M.Carpentry & Joinnery Wood Products House No. 155/24 Garden Compound Ackson Mwansa Lusaka Matero Pharmacy Trading - Medical Drugs Plot 52 Nsefu Road - Matero Centre Anthony Chisanga Lusaka Bait Works Internet Café Internet Services Plot 164 - BI Shopping Complex Mrs Chanda Lusaka Simson Enterprise Limited Building Rentals Simoson Building - Lumumba Road Dr. Simon Mwewa Lusaka ND Panel Beaters Motor Vehicle Repair Los Angeles Road N. Daka Lusaka Lama Trading Lodging Los Angeles Road Mrs Lama Lusaka B.M.K Enterprises Bar Los Angeles Road Brian Munsaka Lusaka Amaka Kyoma Guest House Lodging Los Angeles Road Mr K. Mwakyoma Lusaka Thea Nursery & Primary School Education Services No.6 Nalikawanda Road-W/lands Mwenya Chipwalamuka Lusaka Estone Carpentry & Joinnery Wood Products Shop 32B Buseko Market Estone Chinyimba

Ministry of Commerce, Trade and Industry, Lusaka. 11 The 2003-2004 Zambia Small and Medium Enterprises Survey Lusaka Prestige Pharmarcy Trading - Medical Drugs Plot 51 Cha Cha Cha Road Suthar Kumud Lusaka Zambia - Sudan Furnishers Wood Products Shop 008 Buseko Market George Chitula Lusaka Muphies Electrical Services Electronic Repairs Old Fred Joe Premise - Cairo Rd Henry Nuswalo Lusaka Gigatech Internet Internet Services Matero - By Building K.Malumba Lusaka Tankless Water Heater Enterprises Manufacture of Water Heaters EW Tarrys Court Yard Booker Kapapula Lusaka Agmos Business Centre Publishing Services Suite 208 B - 2nd Flr K.K Hse Cairo Rd Agness Chikubula Lusaka Mwachacho Enterprises Tailoring/Clothing Manufacture Former Fred Joe Premises Chama Mwamba Lusaka Francis Chumbaika Key Cutting Fisher's Building - Cairo Rd Francis Muluti Chumbaika Lusaka New Advanced Pharmacy Trading - Medical Drugs 23/24 Maunda Road Mambo George Lusaka Chilenje Filling Station Shop Trading - Fish Chilenje Bus Stop Lilian Mtonga Lusaka Chiloenje Trades Education Services Near Chilenje Bus Stop Tembo Micheal Lusaka Chimpakasa Enterprise Shoe Repair Central Arcade - Cha Cha Cha Rd J. Gondwe Lusaka Kandiana Mini Market & Tailoring Tailoring/Clothing Manufacture Katungu Shopping Complex - Libala Morris Mukololo Lusaka New Quality Bakers Bakery Products Stand 12011 Kabwata Elias Vantra Lusaka Joy Salon Hair Dressing Shop 22 Central Arcade Lawrence Mate Lusaka Algra (Z) Limited Printing E.W Tarry's Building Court Yard Alex Zimba Lusaka Mubanga Trading Trading - Groceries Kabwata Market Fred Mubanga Lusaka Diamond Dry Cleaners Laundry Service Plot 106/7 Corner of Cairo Rd S. Mulenga Lusaka Grace Hair Salon & Barber Shop Hair Dressing Plot 3106 Baluwe Rd - Wlands Bwalya Mumbi Lusaka Alamars Enterprises Metal Fabrication Chelston Market Alan Saidi Lusaka Madndalo General Dealers Tailoring/Clothing Manufacture Taz Hse 1st Flr Room 6 Cha Cha Cha Rd Mary Mwanchindalo Lusaka Musomwa Enterprises Tailoring/Clothing Manufacture Room 21 Small Central Arcade Ireen Lukote Lusaka Autotunet Electrical Engineering Limited Electronic Repairs Plot 17104 Los Angeles Rd O. Haloonde Lusaka Perfect Milling Milling Plot 7956, Nampundwe Rd R.L.H.Musenge Lusaka Goodman Block Concrete Concret Blocks Avondale - Chainda Rd O. Goodman Manufacture of Shoe & Leather Lusaka Reformers P.C Products Std 495/496 Dark Yellow City Mrkt Paul Kaoma Lusaka VCC General Dealers Trading - Groceries Plot A58 Bauleni Market Borniface Mulimbika Lusaka Divine Roses Restaurant & Bombastic Bar Bar & Restaurant Plot B33 Near Bauleni Market Charity Kayuni Lusaka Adnil Home Video Library Video Library Insaka Shopping Mall - Pemba Rd Muzandu Esther Lusaka Lupekema Hair Salon Hair Dressing Plot 1998 Chris Corner L. Lifuna Lusaka Bupe Natasha School Education Services Plot 127 Godfrey Chitalu Rd - Nyumbayanga P.M.Mwansa Lusaka Sipo & Purity Electronics Electronic Repairs Shop S41 Simoson Building Sipola Shebele K Ministry of Commerce, Trade and Industry, Lusaka. 12 The 2003-2004 Zambia Small and Medium Enterprises Survey Lusaka Cabbot Holdings Trading - Foodstuff Std 8 , Chris Corner Chilenje South Anthony Mainza Lusaka Kwazulu Kraal Lodging Plot 60 New Chilenje Edgar Ngima Lusaka Insaka Salon Hair Dressing Insaka Business Centre - Pemba Rd Margaret Kasanzale Lusaka Fish Basket & Butchery Butchery Behind Insaka Business Centre J. Banda Lusaka His and Her Fashion House Hair Dressing Woodlands Shopping Complex K.M.Bushe Lusaka Woodlands Pharmacy Trading - Medical Drugs Woodlands Shopping Complex Colins Mwale Lusaka Karibu Bakery Bakery Products Plot 13/4586 Chilimbulu Rd Mr. Pandor Lusaka C and B Enterprises Wood Products Corner Kangwa -Chilimbulu Rd Osward Chanda Lusaka Daisy Hair Salon Hair Dressing Kangwa Shopping Centre Charity Robertson Lusaka Webtech Limited Internet Services Plot 1038 Mosi-o-Tunya Rd W/Lands Fred Mungandi Lusaka Yapochi Enterprises Limited Bar Plot 6272 Chilimbulu Rd Henry Chipoya Lusaka Emmanuel Business Centre Internet Services Shop 11 Katungu Shopping Complex Karen Muyanje Chafwa Lusaka Home Timber Wood/Timber Processing Plot 6398 Corner Chilimbulu - Sandula Rd Numero Phiri Lusaka T-SADC Bakery Bakery Products Shelen Building Andrew Sungula Lusaka Pearl Havens Inn Lodging Plot 5 Twikatane Road Edgar Nuyaywa Lusaka Hemline Enterprise Secretarial Services Motaxis Building N Ndebele Lusaka Fajema Catering Enterprises Ltd Restaurant Plot 128A Freedom way Kameta Mwale Lusaka Zambia Council For Social Development Lodging Lusaka West - Off Mumbwa Rd Jesse Zulu Lusaka E.M.L Software & Computer Supplies Internet Services Plot 20 Kabwata -Chilimbulu Rd Emmanuel M.Lunga Lusaka Lamain Bennie Enterprises Tailoring/Clothing Manufacture Motaxis Building Evelyn Lungu Lusaka Super Saver Bakery Products Plot 12505 Chozi Rd Ray Kaluwa Lusaka Natural Beauty Salon Hair Dressing _ Ezabel Nambela Kwani Lusaka 7070 Lounge Lodging Lusaka West - Off Mumbwa Rd Simfukwe Lusaka Vinelly Business Centre Restaurant Katimamulilo Road - Garden Chris Mwiinga Lusaka Beance Enterprise Telephone Services Plot 1117 Garden Over Spill Joe Kunda Lusaka Maldini Hardware Trading - Hardware Millenium Road Paul Soko Lusaka Jopacri Furniture and Gen Carpentry Main Wood Products Matero Market John Tembo Lusaka Borniface B. Banda Metal Fabrication Matero Market B.B.Banda Lusaka Lamej Motor Spares Trading - Vehicle Spare Parts D 238 Marapodi Jim A. Zimba Lusaka Musama Butchery Butchery House No. 1623 Matero Saul Kureba Lusaka Nelson & Tailoring Tailoring/Clothing Manufacture Chelston Market Nelson Chibona M. Lusaka Kireen Shop Trading - Groceries Chelston Market Gilbert Sikalumba

Ministry of Commerce, Trade and Industry, Lusaka. 13 The 2003-2004 Zambia Small and Medium Enterprises Survey Lusaka Skills Development Centre Internet Services Chelston Market Dora Kasongo Lusaka Back Stage Hair Salon Hair Dressing Kweshako Shopping Complex - Avondale Chiti Mwansa Lusaka Leisely Howards Institute Limited Education Services Plot 11883 Palm Drive -Chelstone A. Nkole Lusaka Yanda Praise Tailoring/Clothing Manufacture Plot 2502 Chelstone Tinashe Mainga Lusaka Screen Scene Enterprises Electronic Repairs Shop 6B Chelstone Market Musaka M. Shamabobo Lusaka Nadusi Hair Fantacy Salon & Barber Hair Dressing Plot 11883 Palm Drive -Chelstone Mrs. Mukelebai Std 2414 Kweshako Shopping Complex - Lusaka Feliche General Store Trading - Medical Drugs Avondale Mathews Mbewe Lusaka New Look Designing & Tailoring Tailoring/Clothing Manufacture Kweshako Shopping Complex - Avondale Mrs. Kalinda Lusaka Tangent Ventures Business Centre Internet Services Kweshako Shopping Complex - Avondale Major Innocent Chileshe Lusaka B.N.Engineering Metal Fabrication Plot B78 Chelston Benard Ngwenya Kasama Cooperate Medical Clinics Medical Services/Surgery Plot 1375 Milungu Rd Cosmas Moonga Chilongo Kasama Sahel Enterprises Poultry Farming Plot 868A Cecilia Chishimba Nyanga Kasama Steel Vision Metal Fabricator Metal Fabrication Plot 4044 Behind Findeco Hse Joseph Mwansa Kasama KATS Meat Processing Meat Processing Along Mpulungu Rd Gabriel Kaunda Kasama Nenanji Bakery Bakery Products Town Centre - Along Independence David Sinyinza Kasama D.M.S Mwaume Enterprises Metal Fabrication Behind Kasembo Building Danny Mwengo Kasama Chalata Milling Milling Tazara Market Chalata Leonard Kasama Lesa Wamaka Butchery Butchery Chambeshi Market Evans Machona Kasama Justine Changufu Carpentry Shop Wood Products Plot E186 Justine Changufu Mubang Kasama T.S. Njovu Carpentry Shop Wood Products Tazara Camp 2 T.S.Njovu Kasama Sky Shop Trading - Garment Tazara Market Christopher Chilufya Kasama Mini Mart Trading - Groceries Tazara Market Chrispine Sichangala Kasama Geomi Shoe Trading Centre Trading - Salaula Chambeshi Rd - 457 41 Kasama Geomi Simukonda Kasama Evil Grinding Mill Milling Tazara Market Evil Katongo Kasama Kanongaeba Trading - Groceries Stand 57 Tazara Jenifer Mwenya Kasama Dabwes General Dealer & Construction Real Estate Std 2271 Mubanga Chipoya Rd Joseph Mulenga Kasama Village Industry Service Milling Chambeshi Market Ben Kabwela Kasama Bupe Bwamfumu Drug Store Trading - Medical Drugs Std 2271 Mubanga Chipoya Rd Luke Musonda Kasama Edma Enterprise Trading - Medical Drugs Std 2217 Kasama - Luwingu Rd Edwin Simuyemba Kasama Delight Bakery Bakery Products Kasama /339 H.B.Chomba Kasama Leif School Education Services Plot 2122 Central Town - Off Mwamba Rd Mpundu Mwila Shapi Kasama Hasi General Trading Hardware Trading - Hardware Plot 2704 Mubanga Chipoya Rd Tresford Mwenga Ministry of Commerce, Trade and Industry, Lusaka. 14 The 2003-2004 Zambia Small and Medium Enterprises Survey Kasama Good Fox General Hardware Trading - Hardware Town Centre - Along Mukulumpe Rd James M. Chomba Kasama J & M Restaurant Restaurant Town Centre - Along Mubanga Chipoya Rd Joyce Chibesa Mwamba Kasama Arch Diocese Of Kasama - Ipusukilo Restaurant Restaurant Town Centre Father Clavel Mulenga Kasama Kapembwa General Dealer Trading - Groceries Town Centre - Along Mukulumpe Rd Kapembwa Charles Kasama Frasim Enterprise Trading - Hardware Near Celtel Tower - Mukulumpe Rd Frank Simute Kasama Psalm 23 Restaurant Enterprise Restaurant Town Centre Chileshe Mumbi Chrispine Kasama Bit by Bit Enterprises Restaurant Tazara Market Stephen Musonda Kasama R & Z General Traders Trading - Groceries Town Centre - Along Mukulumpe Rd Yousuf Umar Kasama Fratinda General Dealers & Hardware Trading - Hardware Along Luwingu Road Lackson Kapembwa Kasama Adventure Palace Bar & Restaurant Tazara Market Abel Kaluba Kasama B & D Carpentry Wood Products Town Centre - SMICO Building Samuel N'gandu Kasama Elabam Enterprise Metal Fabrication Town Centre - Craft Centre Building Christopher Sinyangwe Kasama Fanazi Restaurant Restaurant Town Centre Plot 10 Independence Rd Elizabeth Nyirenda Luamb Kasama Cheweko Ciee Supplier Town Centre - SMICO Building Francis Mutale Kasama Kwesha Joinery Wood Products Former NCU Premises Along Mukulumpe Rd Justine Mulenga Kasama Kasama Timber Wood/Timber Processing Plot 1702 Mbala Road - Chikumanino Karl Jepsen Kasama Stepato General Welders and Fabricators Metal Fabrication Kasama - Mpika Rd Chilambule Complex Stephen Kapato Kasama Elabam Enterprises Metal Fabrication Town Centre - Opp Crafts Centre Christopher S. Sinyangwe Kasama The Best Harvest Millers Milling Kasama - Mpika Rd Abdul Garrese Kasama Neri Brothers Enterprises Trading - Groceries Kas/339 Jacob Simpokolwe Town Centre Next to Kapembwa General Kasama Kapamo Engineering & Contractors Metal Fabrication Dealers A.T.Banda Kasama Astridah Hair Saloon Hair Dressing Kwacha Relax Hotel Astridah Chishimba Kasama Benjalas Electical Engineering Service Electrical Repairs Plot 1700 Mungwi Road M.K.Benjala Kasama Blessing Hair Saloon & Botique Hair Dressing New Town - NPCMU Guest House Mugala C.K Kasama Tehila General Dealers Tailoring/Clothing Manufacture Std 339 Shop 16 Independence Avn Ireen Kasongo Chintu Kasama Chisha Enock Metal Fabrication Town Centre - Behind Hse Of Kasama Chisha Enock Kasama Beverly Lodge Lodging Berverly Lodge Off Mwamba Rd Charles Chilombo Kasama Elizabeth Guest House Lodging Tazara Lydia Nkhowani Kasama Chambeshi Mill Milling Chambeshi Market Godfrey Mutete Mbala Makungo Guest House Lodging President Avenue Teddy Makungo Mbala Makungo Transport Transport Services President Avenue Teddy Makungo Mbala Katenge Trading Trading -Groceries Plot T70 President Avenue M.O.Mulenga Ministry of Commerce, Trade and Industry, Lusaka. 15 The 2003-2004 Zambia Small and Medium Enterprises Survey Mbala Born To Care General Dealers Trading -Groceries Plot 186A President Avenue Bridon Sinyangwe Mbala Sansin Milling Limited Milling Plot 469 Isanya Rd Justine Simuchimba Secretarial Services/Computer Mbala BLV Business Centre Ltd services Room 5 Chitongwa Rd Victoria C. Pamba Mbala Kalambo Dairy General Farming Farm 4672 B. Nielsen Mbala Chitongwa Ten Kwacha Trading -Groceries T73 President Avenue Meleby Chitongwa Mbala Makungo Milling Milling Lungu Rd Makungu Building Rabecca Kasidi Mbala Charlie Joe Tailoring/Clothing Manufacture Makungo Road Charity Mumba Mbala CMN Hair Salon & Botique Hair Dressing Plot 5000 Allan Chelemu Rd Geofrey Simpemba Mbala Mwatampako Trading Trading -Groceries Plot 5000 Allan Chelemu Rd Geofrey Simpemba Mpika Kalolo Bakery Bakery Products Plot 109 Great North Road Stan Kalolo Mpika Songolo Motors Motor Vehicle Repair Plot 81 Musakanya Kombe Musanje Songolo Mpika Twins Guest House Lodging Great North Road Moses Chansa Mpika Lwambazi Investment Restaurant Kasama Turn Off Vincent Kapembwa Mpika Wilmo Investment Restaurant Great North Road Wilfred Mulenga Mpika Quick Service Restaurant Restaurant Kasama Turn Off Bernard Musunka Mpika Pamulambe Milling Company Milling Self Help Coperative Society Building David Musawa Mpika Lewison Auto Trading Trading - Vehicle Spare Parts Great North Road Lovis Clement M. Mpika Pep Stores Trading -Groceries Great North Road Obert Muka Mpika Wapendwe Surgery Medical Services/Surgery Shopping Centre G. Mwape Mpika GM Trading Trading - Hardware Shopping Centre G. Mwape Mpika GM Trading Internet Services Shopping Centre G. Mwape Mpulungu Mwaba Tele Centre Telephone Services Town Centre Charles Nyirongo Mpulungu Mpulungu Service Station Filling Station Plot 475 Mpulungu B Nielsen Mpulungu Sikazwe Enterprise Trading - Hardware Main Market Christopher Sikazwe Mpulungu G.K. Drug Store Trading - Medical Drugs Main Market Geofrey Kandokwe Phiri Mpulungu Kalambo Store Trading - Groceries Plot 81 Mpulungu Harbour Road Nelson Mpempo Mpulungu Mwaesa Enterprises Trading - Fish Plot 368 Col. Cuthbert Sakala Mpulungu Buuh's Milling 1994 Milling Plot 12 President Avenue Emmanue C.Siyangwe Mpulungu Hopes Kitchen Restaurant Plot 791 Main Rd Annie M . Chileshe Mpulungu Kelvin Silupya Enterprises Trading - Groceries Main Market Kelvin Silupya Mpulungu Mapson Enterprises Trading - Hardware Main Market Alexandre Sinyangwe Mpulungu Roadside Night Club Bar & Restaurant Plot 627 Micheal Sikazwe Ministry of Commerce, Trade and Industry, Lusaka. 16 The 2003-2004 Zambia Small and Medium Enterprises Survey Mpulungu Lakeside Lodge Lodging Plot 627 Micheal Sikazwe Kasempa Go-Better Shop Trading - Groceries Along Main Road Cephas Kitomombo Kasempa God's Mercy Shop Trading - Groceries Nselauke Basic School S.B. Nkole Kasempa Tuck Shop Trading - Groceries Along Main Road Ben Koyi Kasempa Poshrite Enterprise Trading - Soft Drinks Kasempa Turn Off Violet Chizela Kasempa Just Imagine Trading - Groceries Kasempa Turn Off Kelvin Mwasamba Mwinilunga Chairbas Enterprise Craft Work Salujinga 23 Bithius Kayuka Mwinilunga Kafunyi Chikanda Group Honey Processing Salujinga 23 Kafunyi Chikanda Group Mwinilunga Shammah Poultry Poultry Farming Low Density Sande Rodgers Mwinilunga Wisdom General Trading Shop Trading - Garment Hse Num RC 41 Rental Compound Bornwell Chipupa Mwinilunga Emmajoka Enterprise Bakery Products Plot 10 New Market Kapepa Jackson Mwinilunga C.G. and L Growing Enterprise Trading - Garment Kabanda Township Gladson N. Nkumba Mwinilunga Soka's Shop Trading - Groceries _ Edward Sokauta Mwinilunga Kabunji Investment Trading - Hardware New Market Josia Muhandu Mwinilunga Chikabu Bakery Bakery Products New Market Litambu Ian Mwinilunga Masto Centre Trading - Hardware New Market Astone Masumba Mwinilunga Eiddeon Wasehele Honey Processing Ikelenge Gideon Wasehele Mwinilunga Davis Ikayi Crop Growing Ikelenga Davis Ikayi Solwezi Tukiya Building Contractors Trading - Garment Bus Station Elvis Kangozhi Solwezi Kilimanjaro Fast Food Restaurant Independence Avenue Brenda Kunda Solwezi Mwabu Investment Limited Trading - Hardware Freedom Square Slavin M.Bulaya Solwezi Lunga Bee Products Honey Processing Town Centre Sylavety Selekanya Choma Eugene Hampunji Trading - Vehicle Spare Parts Makalanguzi Market Eugene Hampunji Choma Rverside Lodge Lodging Plot 1028 Hambulu Sternford Choma Clach Auto Spares Trading - Vehicle Spare Parts Plot 3613 Livingstone Main Rd Clark Chilala Choma Central Auto Services Motor Vehicle Repair Plot 775 Livingstone Rd Samson Tembo Choma Manila Clothing Factory Tailoring/Clothing Manufacture 14th Jacaranda Street M.C. Patel Choma Highway Surgery Medical Services/Surgery SPCMU Building Complex D.Z.Moono Choma Choma Breweries Ltd Brewery - Opaque Beer Plot 271 Singani Rd Light Ind. Area D. Sichula Choma A.M.Welding Services & Hardware Metal Fabrication Along Livingstone Rd Alex Muloongo Choma Zhodort Training Centre Training Services Plot 395 Kapondo Street Reverend David Nixon Choma Hassan Tailors Tailoring/Clothing Manufacture _ Hassan Phiri

Ministry of Commerce, Trade and Industry, Lusaka. 17 The 2003-2004 Zambia Small and Medium Enterprises Survey Choma Choma Emporium Ltd Trading -Groceries Shop 4 Livingstone Rd Drip Naylee Kalomo Veflo Enterprises Trading - Hardware Plot 311 V. Phiri Livingstone RT.S. Extreme and Designers Tailoring/Clothing Manufacture DB 248 Dambwa Central Compound Rose C. Banda Livingstone Veronet Internet Services Kute Way 2nd Class Alexis Kapanga Livingstone Ngweni Knitting Knitting Kute Way 2nd Class Ngwengwe Ireen Livingstone Food Mary Ltd Bakery Products 141 Zambezi Street B. Patel Livingstone Murdoch's Model Bakery Ltd Bakery Products 485 Mwandi Lane Harshad Patel Blessings Boutique& Tailoring/Clothing Livingstone Manufacture Tailoring/Clothing Manufacture Liso House Room 202 Musioyunya Rd Rev. Janet Mwinilamba Ha Livingstone S.P.K & CM Enterprise Lodging Plot 2670 Senanga Rd Sammy Simango Livingstone Chaka's Tailoring/Clothing Manufacture Tailoring/Clothing Manufacture Shop 13 Mwandi Lane Nthola Hse Charity S. Kashinka Livingstone Rite Pub & Grill Restaurant Mosiotunya Rd Keith Florey Livingstone Lemiro Bakery & Restaurant Bakery Products 45 C Likute Way Mike Rignanese Livingstone No-Dimensions Studio Services Mosiotunya Rd Sanjy Tiku Livingstone Farai Gardens Ltd Lodging Plot 4424/150 Highlands - Off Lsk Rd Michelo Chibane Livingstone Nashe Saloon Hair Dressing Mosiotunya Rd L. Tasker Livingstone D. R.T Project Yard Enterprise Construction Plot 2644.7867 Dyson Muyaba Livingstone Musamu Chemist Trading - Medical Drugs Mosiotunya Rd Stephen A. Zulu Livingstone Sunrise Restaurant Restaurant Kute Way 2nd Class Aaron Daka Livingstone Vision Pre-Primary School Education Services Plot 1790/2613 Lenda Rd Dambwa North Abraham J.Fikoloma Livingstone Wood Pecker Woodworks Wood Products 27 Chimwemwe Way Remmy Moonga Livingstone Mosiotunya Dairy Dairy Products 1546 Mosiotunya Rd J,T Bassn Livingstone Mo-Business Bureau Internet Services Stand 2188 Heritage Hse Mosiotunya Livingstone Ashley Company Ltd T/A Savannah Ltd Lodging Plot 2644/194 Simuyobe Street/ Elaine Brittel Stephen Salima Livingstone G.C. Automobile & General Engineering Ltd Motor Vehicle Repair Plot 2753 Chishimba Falls Rd Grandwell Chibamba Livingstone Full Capacity Engineering Motor Vehicle Repair Plot 2752 Chishimba Falls Rd Job Kaunda Livingstone White Water Guest House Lodging Plot 2644/84 Mwellean Brittel Junior Mukosha Livingstone Likute Guest House Ltd Lodging Plot 62 Likute Way Betty Farrelly Livingstone Beensu Bangu Electrical Sales & Gen Contractor Construction Hse CSC 55, Balewa Rd Cold Storage Cedrick W.Shamabanse Livingstone CTP General Dealers & Contractor Construction Plot 406 Sinde Rd Nottie Broad Major E.M.Kalufyanya Livingstone Shap - Net Business Centre Internet Services Plot 416 Mosiotunya Rd Charles Shapi Livingstone Off The Rails Trading Ltd Trading -Groceries Plot 67B Stainley Hse Mosiotunya Rd Moore Sililo Livingstone Parins Primary School Education Services _ Celine Nair Ministry of Commerce, Trade and Industry, Lusaka. 18 The 2003-2004 Zambia Small and Medium Enterprises Survey Livingstone Livingstone Holiday Home Lodging Plot 2644/121 Elain Brittel Sepiso Anne. M. Katanelw Livingstone Highlands Property Development Ltd Transport Plot 205/206 Along Lusaka Rd Kingsley Lilamono Mazabuka Mazabuka Photo Palace Photographing Services Room 17 NAPSA House Mainde Geofrey Mazabuka Pats Enterprise Tailoring/Clothing Manufacture GRZ 27 ZIAH Mazabuka Patricia Hangoma Mazabuka Lika Smart Garment Manufacturing Ent. Tailoring/Clothing Manufacture Plot 62 NAPSA House Bonaventure Mweemba C Mazabuka Rosell PTY Ltd Medical Services/Surgery Room F8 Gazaba House Sydney Mulenga Mazabuka Elector K.Liboma [Individual] Trading -Groceries Hse. 287 Mulonga Compund Mazabuka Elector K. Liboma Mazabuka Bimbe General Dealers Trading -Groceries Plot 64 NAPSA House Dominic C. Bimbe Mazabuka El-Shaddai Contractors & General Dealers Construction Room 1 - Behind Yaweh Pharmacy John Kasonde Mazabuka Zeda Enterprises Construction Behind Yaweh Pharmacy George Daka Mazabuka Mpeto Knitting & General Dealers Tailoring/Clothing Manufacture Belfrey Business Centre P.M. Noole Mazabuka Beauty Spot Hair Saloon Hair Dressing NAPSA House Judith Mwiinga Mazabuka Ifintu Kwesha Grocery Trading -Groceries Kasol CDC Group 1 _ Mazabuka Lawremu Enterprise & Boutique Trading -Groceries Belffrey House Lawrencia Malamula Mazabuka Roses Hair Saloon Hair Dressing Hse 3 St. Edmunds College Compound Rose Musonda Mazabuka Munchip WoodPeckers Enterprise Wood Products Plot 551, Town Centre Munyemba Evans K. Mazabuka Rirhai Photographics & General Dealers Photographing Services Plot 362, Mulonga Extension Rickie Roy Hamuzembo Mazabuka Hill Top Laundry Laundry Service Town Centre Bune Dimba Mazabuka Uthabe Enterprises Computer & Estate Agency Service Belffrey House Rachel Kalenga Samson Mazabuka Kaufela Household Centre Trading - Hardware & Agro Inputs Pepannex - NAPSA Building Patrick Musweu Mazabuka Chomwa Professional Tailors Tailoring/Clothing Manufacture Behind Yaweh Pharmacy Mrs. Simutowe Mazabuka Supreme Hair Salon Hair Dressing Town Centre M. Mwale Monze Healthway Trading - Medical Drugs Along Livingstone Rd Osward Mwaba Monze Monze Agriculture Hardware Trading - Hardware Along Livingstone Rd John Manengu Monze Vulcan Enterprise Metal Fabrication Shop 6 Independence Avenue Peter Vlahaxis Monze My Prayer Guest House Lodging Town Centre Danny Mwendeneyi Monze Yocha Welding Service Metal Fabrication Plot 451 Town Centre A.Y. Chirwa Secretarial Services/Computer Monze MX Business Centre services Post Odffice Road Max Mwiinga Monze Blue Bird Guest House Lodging Along Livingstone Rd John Manengu Pemba Leonard Chilala General Dealers Metal Fabrication Plot 130 Great North Rd Leonard Chilala Pemba Ever Joy Restaurant Bakery Products Town Centre Eva Hasimuna Hikaumba Pemba Koontile Hot Pot Restaurant & Grocery Restaurant Pemba Basic Sch Keziya Munsanje Mwiinga Ministry of Commerce, Trade and Industry, Lusaka. 19 The 2003-2004 Zambia Small and Medium Enterprises Survey Pemba V.M Agencies Trading - Grocery Plot 3 Voiddy M Mbozi Pemba Lusumpuko Restaurant and Rest House Restaurant & Lodging Plot 115, 126, 127 Livingstone Rd Gerge Muleya Mukuni Pemba Hikapenda Enterprise Trading - Grocery City Hope Restaurant Bbindikila D. Mwiinga Mongu Cross Roads Guest House Lodging Plot 1563 Along Mongu - Lusaka Rd Boas Mufundi Mongu Rotom General Dealers Metal Fabrication SEDB Premises Tom Msiska Mongu Dunmill Enterprise Wood Products SEDB Premises Duncan Milambo Mongu Nasioma Enterprises Wood Products SEDB Premises Mutukwa Sinvula Mongu Naliunga Enterprise Wood Products SEDB Premises Mwangala Joseph Mulope Mongu Nelshi Wood Products SEDB Premises Nelson Shingongo Mwinda Liswani/Muletamb Mongu Mabmot Wood Products SEDB Premises Imutulo Mongu B. K. Metal Workshop Metal Fabrication SEDB Premises B.K. Lipunda Mongu N. Lufwendo General Dealer Wood Products SEDB Premises Nalumino Lufwendo Mongu Meg Association Consultancy Services Ist Floor Room 11 NAPSA Building Wamulume Mumbuna Mongu Muchande Metal Fabrication SEDB Premises B.Mukosiku/S. Lubinda Mongu Country Bakers Bakery Products Plot 256 Along Independence Avenue Charles Mututwa Mongu Namaboma Holdings Limited Cashnut Processing Along Independence Avenue N. Wina Mongu Marcha Enterprise Tailoring/Clothing Manufacture Room 26 NAPSA Building Rosemary Mweenda Mongu TDY Proffession Driving School Driving School Room 124 NAPSA Building Tommy D. Yungana Mongu Dolphin Constraction & Transport Construction Plot 176 Indepedence Avenue Mutiimba Mukumbuta Mongu Emperor Drug Store Trading - Medical Drugs Plot 2144 Muyambo Hewett Mongu Emmanuel Kids Alive Centre Wood Products Kawangelelo Village - Senanga Rd Manuel Chinoya Mongu Dolphin Constraction & Transport Transport Plot 176 Indepedence Avenue Mutiimba Mukumbuta Mongu Gift Shop Trading - Groceries Independence Avenue Charles Nalumango Mongu Fisons Drug Store Trading - Medical Drugs Plot 239 Independence Avenue Martin Mwanan'gombe Mongu Kadalo Restaurant Restaurant Plot 1820 Lewanika Road Mr. Yasir Muhamad Senanga Nyoka Milling Milling Main Market Mr. Nyoka Senanga Sea - Frog Enterprise Lodging Plot 833 Senanga - Mongu Rd Simbotwe Mwiya Senanga Chadozi Hair Salon Hair Dressing BP Filling Station Charles Mututwa Senanga ZANGO Guest House Lodging Mulamba Comppund Ignatius Bisenga Luneta Senanga Riverside Investment Bar & Restaurant Independence Avenue Ng'enda Wamulima Senanga Senanga Safari Lodge Lodging _ C.M. Mututwa Senanga Libota Business Centre Internet Services Room 2 NAPSA Building H. Malumo Ministry of Commerce, Trade and Industry, Lusaka. 20 The 2003-2004 Zambia Small and Medium Enterprises Survey Senanga Minove Nimunu Polishing & Milling Milling _ Mr. Kabika Senanga Modern Shop, Butchery & Bar Trading - Groceries Mulamba Comppund Brian Kamwanga Sesheke Sisheke Lodge Lodging Nakatindi Road Matengu Mubita Sesheke L. M. Timbers Wood/Timber Processing Chief Silumbu, Manombe Libekuma Musole Sesheke Sesheke Hardwood Ltd Wood/Timber Processing _ G.M. Sikopo Sesheke Wachitanga Timber Supplier & Agric Services Wood/Timber Processing Upper MC Killop Chipango Wachitanga Sesheke Inner Wheel Nursery School Education Services Hse Num GRZ 4 Junior Compound E.H.Mudenda Sesheke Mulatiwa Guest House Lodging Lusu Farms Patrick M. Nyambe Sesheke Sesheke Bakery Bakery Products 96 Nakatindi Road - Markilop Compound Charles Mulenga Sesheke Tanga Investment Limited Trading - Garment Nakatindi Road Margaret Namusokwe Sesheke Vaduma Limited Trading - Hardware Nakatindi Road Mr. Javaka Sesheke Stake Holders Development Project Wood/Timber Processing Mwandi Village Lubinda Nyaywa Sesheke Mbale Tailoring Tailoring/Clothing Manufacture RHD 13 Rentals Compound Agness Mbale Ngwira Sesheke Masibi Timbert Suppliers Wood/Timber Processing Tukongote Grocery - Katima Mulilo Dr. C.S.Mwitumwa

Ministry of Commerce, Trade and Industry, Lusaka. 21