The public and private sectors are aware of how much the country would stand to gain, both economically and socially, if the SME segment was propelled onto a growth trajectory akin to that of larger corporates.

Economists across Africa agree that the future of sustainable growth belongs to SMEs, and Zambia is no exception: micro, small, and medium enterprises in Zambia are estimated to provide 90% of jobs (informal and formal) for the working population, 30% of the country's total formal employment, and 50% of overall GDP.

And yet there are still several challenges facing Zambia's SMEs. In his 2017 national budget speech, Finance Minister Honorable Felix Mutati stated that “a significant number of our SMEs in Zambia demonstrate good commercial viability; however, they have limited access to conventional bank credit facilities." Indeed, during the recession of 2015-2016, liquidity across all industries was squeezed and banks were reluctant to put their money in perceived “high-risk areas." In addition, Zambia's SMEs, as is the case for SMEs the world over, possess collateral considered inadequate by normal lending norms.

A third hindrance to SME growth in Zambia is narrow understanding among creditors about the segment: its characteristics, its needs, and its potential. Further complications arise due to SMEs' own lack of knowledge, as well as limited access to skills, technology, and markets. Finally, given that the vast majority of Zambia's smaller companies operate within an informal market, it is extremely difficult for the authorities to monitor, regulate, harness, and boost the productivity of this segment.

However, the government has brought in several policies over the past couple of years designed to provide support to small businesses, entrepreneurs, and marketeers. The first of these was the Movable Property Act, a legal framework introduced in 2016 designed to unlock capital stock tied up in small, moveable assets, usually the items produced by the company itself. More recently the government has reiterated its determination to ensure reduced rates from commercial banks, earmarked some USD50 million for on-lending to SMEs, revealed plans to scale up its Women's Development Program, especially the microcredit component, and created an Agricultural and Industrial Credit Guarantee Fund for SMEs. This last policy speaks to broader targets set by the government to grow SMEs in agriculture and industry, since the ever-widening gap emerging between micro businesses and the large corporates is especially evident in these two areas.

Regulatory bodies have also jumped on board with tailored solutions for SMEs. In 2015, the Lusaka Stock Exchange launched its alternative market, which enables SMEs to issue equity and debt securities, encouraging higher standards of corporate governance and accountability, raising SME profiles and making them more attractive to potential investors. Furthermore, the LuSE has recently announced collaborations with the government to make available additional instruments more appropriate for these businesses. Elsewhere, the Banker's Association of Zambia is launching its SME Relationship Management Course, specifically aimed at educating banks on the importance of understanding the psychology and mindset of an SME. Foreign partners are also showing their commitment to the sector, with the Commonwealth Development Corporation (CDC) to stage an investment forum for SMEs mid-way through 2017 and the European Investment Bank (EIB) poised to channel EUR56 million into loans to small Zambian companies.

However, as Armando Sirolla of AB Bank put it in an interview with TBY this year, “unfortunately, there is no silver bullet to ease access to financing. If we want to have an impact in terms of financial inclusion, we need have to have a strong enabling environment, with everyone committed to the same ideals: the government, the Bank of Zambia, the major players in the market, and banks. This is not yet the case in Zambia. Obviously, the government and the Bank of Zambia are making efforts to go in this direction, but banks are not." While there may not be any silver bullet, there is a silver lining. More banks are working hard to improve their SME lending portfolio. Finally, it appears that the key to unlocking the potential of Zambia's SMEs is ICTs, which many ISPs and telecoms companies in Zambia have quickly cottoned on to, starting the ball rolling with competitive solutions customized for this market.