Enhancing Financial Inclusion and Financial Literacy for Small and Medium Enterprises (SMEs) in Zambia: Challenges, Opportunities and Strategies for Growth
DOI:
https://doi.org/10.37680/ijief.v5i1.6908Keywords:
Financial Inclusion; Financial Literacy; Access to finance; SMEs; Economic growthAbstract
The study aims to assess the range of FI among SME managers. Financial Inclusion (FI) ensures that every individual, especially the marginalized, has adequate access to financial services. The main objective of this study is to analyze the extent of SME managers’ access to financial schemes and policies in Zambia, Africa. The study describes the budget provided by the Zambian government for SMEs, which will help in examining the level of financial literacy (FL) of SME managers regarding budgeting. Despite their potential, SMEs face many challenges, including limited access to finance, inadequate financial literacy among entrepreneurs, and a fragmented regulatory environment and identifies opportunities to improve financial inclusion through targeted strategies. The study emphasizes the need to enhance financial literacy programs tailored to the needs of SME owners to empower them. The study also highlights the importance of collaborative efforts between government agencies, financial institutions, and development partners to create an enabling ecosystem. The study proposes actionable strategies that Zambia can implement to improve access to finance and enhance financial literacy. The study findings show that most entrepreneurs agree that financial accessibility is important for SME development and implement inclusive policies to expand the reach of financial services.
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References
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Chatterjee, S., Gupta, S. D., & Upadhyay, P. (2020). Technology adoption and entrepreneurial orientation for rural women: Evidence from India. Technological Forecasting and Social Change, 160, 120236.
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Cicchiello, A. F., Kazemikhasragh, A., Monferrá, S., & Girón, A. (2021). Financial inclusion and development in the least developed countries in Asia and Africa. Journal of Innovation and Entrepreneurship, 10(1), 1-13.
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Hien, P. H., & Tuan, T. T. (2023). Strengthening the link between organizational culture and employee loyalty: Exploring the mediating effects of employee trust and job satisfaction. Global Business & Finance Review (GBFR), 28(3), 68-84.
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Morgan, P. J., & Long, T. Q. (2020). Financial literacy, financial inclusion, and savings behavior in Laos. Journal of Asian Economics, 68, 101197.
Mulenga, J., Mulenga, M. C., Chishimba, K. K., Kafula, S. C., Mwaanga, C., Siame, M., & Lubinda, M. M. (2023). Impacts of Corona Virus Disease on Employment among Small and Medium Enterprises in Zambia. MULUNGUSHI UNIVERSITY MULTIDISCIPLINARY JOURNAL, 4(1), 40-55.
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Oyelami, L. O., Saibu, O. M., & Adekunle, B. S. (2017). Determinants of financial inclusion in sub-Sahara African countries.
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Pedraza, J. M. J. B., & Research, M. (2021). Micro, small, and medium-sized enterprises and their role in the economic development of a country. 10(1), 33.
Prasad, G. R., & John, B. (2021). An Analysis of Financial Knowledge and Financial Behaviour of Teachers Working in Higher Learning Institutions in Hyderabad. Revista Geintec-Gestao Inovacao E Tecnologias, 11(4), 1869-1883.
Prasad, G. R., & John, B. (2022). Financial literacy levels among teachers in higher learning institutions in Hyderabad. Paper presented at the AIP Conference Proceedings.
Rasche, A. (2020). 15. The United Nations Global Compact and the Sustainable Development Goals. Research handbook of responsible management, 228.
Rasheed, R., Siddiqui, S. H., Mahmood, I., & Khan, S. N. (2019). Financial inclusion for SMEs: Role of digital micro-financial services. Review of Economics and Development Studies, 5(3), 571-580.
Raut, R. K. (2020). Past behavior, financial literacy, and investment decision-making process of individual investors. International Journal of Emerging Markets, 15(6), 1243-1263.
Sarker, M., & AL-Muaalemi, M. A. (2022). Sampling techniques for quantitative research. In Principles of social research methodology (pp. 221-234): Springer.
Sishumba, J., & Mulonda, M. (2019). Village Banking: A Feasible Tool for Accelerating Financial Inclusion for the Unbanked Poor Communities in Zambia. Journal of Humanities and Social Sciences Studies, 1(6), 51-62.
Stoica, O., Roman, A., & Rusu, V. D. J. S. (2020). The nexus between entrepreneurship and economic growth: A comparative analysis on groups of countries. 12(3), 1186.
Taherdoost, H. (2022). Different types of data analysis, methods, and research project techniques exist. International Journal of Academic Research in Management, 9(1), 1-9.
Vu, C. T., & Le, H. T. L. (2025). The Path to Corporate Digital Culture in SMEs: Managerial Encouragement, Cross-Departmental Partnerships, and Eagerness for IT Advancements. Global Business & Finance Review, 30(1), 116.
Ye, J., & Kulathunga, K. J. S. (2019). How does financial literacy promote sustainability in SMEs? A developing country perspective. 11(10), 2990.
Adetunji, O. M., & David‐West, O. (2019). The relative impact of income and financial literacy on financial inclusion in Nigeria. Journal of International Development, 31(4), 312-335.
Agelyne, M., & Musau, S. M. (2021). Financial technology and financial inclusion of small and medium enterprises in Kabati Market Kitui County, Kenya. International Journal of Academic Research in Business and Social Sciences, 11(4), 362-377.
Bakhtiari, S., Breunig, R., Magnani, L., & Zhang, J. (2020). Financial constraints and small and medium enterprises: A review. Economic Record, 96(315), 506-523.
Billima-Mulenga, T., Mwenge, F., & Masumbu, G. (2019). State of Financial Cooperatives in Zambia: A viable option for increasing financial inclusion? Policy(30).
Buchdadi, A. D., Sholeha, A., & Ahmad, G. N. (2020). The influence of financial literacy on SMEs performance through access to finance and financial risk attitude as mediation variables. Academy of Accounting and Financial Studies Journal, 24(5), 1-15.
Calabrese, R., Girardone, C., & Sclip, A. J. S. B. E. (2021). Financial fragmentation and SMEs’ access to finance. 57, 2041-2065.
Chatterjee, S., Gupta, S. D., & Upadhyay, P. (2020). Technology adoption and entrepreneurial orientation for rural women: Evidence from India. Technological Forecasting and Social Change, 160, 120236.
Chehayeb, R. J., & Taher, H. (2024). The relationship between financial inclusion and economic growth: Empirical study from MENA countries. Global Business & Finance Review (GBFR), 29(7), 153-167.
Cicchiello, A. F., Kazemikhasragh, A., Monferrá, S., & Girón, A. (2021). Financial inclusion and development in the least developed countries in Asia and Africa. Journal of Innovation and Entrepreneurship, 10(1), 1-13.
Drach, A. (2024). An early form of European champions? Banking clubs between European integration and global banking (1960s–1990s). Business History, 66(1), 287-310.
Dzwigol, H. (2022). Research methodology in management science: Triangulation. Virtual Economics, 5(1), 78-93.
Elias Mubanga, S. K. M. (2023a). REVISED NATIONAL MICRO SMALL AND MEDIUM ENTERPRISE DEVELOPMENT IMPLEMENTATION PLAN 2023-2027.
Elias Mubanga, S. K. M. (2023b). REVISED NATIONAL MICRO SMALL AND MEDIUM ENTERPRISE DEVELOPMENT POLICY.
Eton, M., Mwosi, F., Okello-Obura, C., Turyehebwa, A., Uwonda, G. J. J. O. I., & Entrepreneurship. (2021). Financial inclusion and the growth of small, medium enterprises in Uganda: empirical evidence from selected districts in Lango sub-region. 10, 1-23.
Evans, O. (2016). Determinants of financial inclusion in Africa: A dynamic panel data approach.
Gherghina, Ș. C., Botezatu, M. A., Hosszu, A., & Simionescu, L. N. J. S. (2020). Small and medium-sized enterprises (SMEs): The engine of economic growth through investments and innovation. 12(1), 347.
Hasan, M., Le, T., & Hoque, A. (2021). How does financial literacy impact inclusive finance? Financial Innovation, 7(1), 1-23.
Hien, P. H., & Tuan, T. T. (2023). Strengthening the link between organizational culture and employee loyalty: Exploring the mediating effects of employee trust and job satisfaction. Global Business & Finance Review (GBFR), 28(3), 68-84.
Jung, Y. M. (2019). Data analysis in quantitative research.
Kabala, E., Mapoma, R., Nalutongwe, C., Muyani, D., & Lungu, J. (2021). An ethnological analysis of the influence of mobile money on financial inclusion: The case of urban Zambia. Zambia Social Science Journal, 7(1), 4.
KASUMPA, N. E. (2022). THE IMPACT OF MICROFINANCE INSTITUTIONS ON THE DEVELOPMENT OF SMEs IN LUSAKA DISTRICT. A CASE STUDY OF FINANCIAL INCLUSION IN CHAINDA TOWNSHIP. Cavendish University,
Kawimbe, S. (2020). An Assessment of the Impact of Mobile Financial Services on Financial Inclusion and Economic Development in Zambia.
Koudalo, Y. M., Toure, M. J. C. E., & Finance. (2023). Does financial inclusion promote financial stability? Evidence from Africa. 11(2), 2225327.
Lakens, D. (2022). Sample size justification. Collabra: Psychology, 8(1), 33267.
Lusardi, A., Hasler, A., & Yakoboski, P. J. (2021). Building up financial literacy and financial resilience. Mind & Society, 20, 181-187.
Lyons, A. C., & Kass‐Hanna, J. (2021). A methodological overview to defining and measuring “digital” financial literacy. Financial Planning Review, 4(2), e1113.
Makoetje, R. N. (2018). Determinants of Financial Inclusion in Zambia. University of the Witwatersrand, Faculty of Commerce, Law and Management,
Morelli, J. M., Ottonello, P., & Perez, D. J. (2022). Global banks and systemic debt crises. Econometrica, 90(2), 749-798.
Morgan, P. J., & Long, T. Q. (2020). Financial literacy, financial inclusion, and savings behavior in Laos. Journal of Asian Economics, 68, 101197.
Mulenga, J., Mulenga, M. C., Chishimba, K. K., Kafula, S. C., Mwaanga, C., Siame, M., & Lubinda, M. M. (2023). Impacts of Corona Virus Disease on Employment among Small and Medium Enterprises in Zambia. MULUNGUSHI UNIVERSITY MULTIDISCIPLINARY JOURNAL, 4(1), 40-55.
Oshora, B., Desalegn, G., Gorgenyi-Hegyes, E., Fekete-Farkas, M., & Zeman, Z. (2021). Determinants of financial inclusion in small and medium enterprises: Evidence from Ethiopia. Journal of Risk and Financial Management, 14(7), 286.
Oyelami, L. O., Saibu, O. M., & Adekunle, B. S. (2017). Determinants of financial inclusion in sub-Sahara African countries.
Paliwal, K. (2024). Financial Inclusion and Access to Finance for Small and Medium Enterprises (SMEs) - A Literature Review. International Journal For Multidisciplinary Research, 6(1). doi:https://doi.org/10.36948/ijfmr.2024.v06i01.13503
Pedraza, J. M. J. B., & Research, M. (2021). Micro, small, and medium-sized enterprises and their role in the economic development of a country. 10(1), 33.
Prasad, G. R., & John, B. (2021). An Analysis of Financial Knowledge and Financial Behaviour of Teachers Working in Higher Learning Institutions in Hyderabad. Revista Geintec-Gestao Inovacao E Tecnologias, 11(4), 1869-1883.
Prasad, G. R., & John, B. (2022). Financial literacy levels among teachers in higher learning institutions in Hyderabad. Paper presented at the AIP Conference Proceedings.
Rasche, A. (2020). 15. The United Nations Global Compact and the Sustainable Development Goals. Research handbook of responsible management, 228.
Rasheed, R., Siddiqui, S. H., Mahmood, I., & Khan, S. N. (2019). Financial inclusion for SMEs: Role of digital micro-financial services. Review of Economics and Development Studies, 5(3), 571-580.
Raut, R. K. (2020). Past behavior, financial literacy, and investment decision-making process of individual investors. International Journal of Emerging Markets, 15(6), 1243-1263.
Sarker, M., & AL-Muaalemi, M. A. (2022). Sampling techniques for quantitative research. In Principles of social research methodology (pp. 221-234): Springer.
Sishumba, J., & Mulonda, M. (2019). Village Banking: A Feasible Tool for Accelerating Financial Inclusion for the Unbanked Poor Communities in Zambia. Journal of Humanities and Social Sciences Studies, 1(6), 51-62.
Stoica, O., Roman, A., & Rusu, V. D. J. S. (2020). The nexus between entrepreneurship and economic growth: A comparative analysis on groups of countries. 12(3), 1186.
Taherdoost, H. (2022). Different types of data analysis, methods, and research project techniques exist. International Journal of Academic Research in Management, 9(1), 1-9.
Vu, C. T., & Le, H. T. L. (2025). The Path to Corporate Digital Culture in SMEs: Managerial Encouragement, Cross-Departmental Partnerships, and Eagerness for IT Advancements. Global Business & Finance Review, 30(1), 116.
Ye, J., & Kulathunga, K. J. S. (2019). How does financial literacy promote sustainability in SMEs? A developing country perspective. 11(10), 2990.
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Published
2025-03-19
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Paliwal, K. (2025). Enhancing Financial Inclusion and Financial Literacy for Small and Medium Enterprises (SMEs) in Zambia: Challenges, Opportunities and Strategies for Growth. Indonesian Journal of Islamic Economics and Finance, 5(1), 29–50. https://doi.org/10.37680/ijief.v5i1.6908
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