13 Things I Learned About Small & Medium Enterprises in Zambia

I spent last week in Zambia’s capital, Lusaka, carrying out research for a magazine piece I’m writing on the state of SME (Small and Medium Enterprises) funding in the country – the challenges, opportunities, and subtleties. I conducted a series of interviews, and enjoyed numerous off-the-cuff conversations. Here are 13 things I learned:

1. The opportunity for strong returns on investment in Zambia is huge. As one interviewee said: “Where aren’t there opportunities?”

2. The potential to have a strong social impact is also massive. Whatever industry you choose to enter, you’ll quickly spot ways in which business can uplift people’s lives.

3. If one is building a business for growth/scale, the opportunity to establish and/or drive a whole industry forward is significant.

4. The emerging tech industry needs to solve local problems and not get sucked into Silicon Valley’s “an app for everything” culture, which often tries to solve problems people aren’t really facing.

5. For venture capital (VC) and private equity (PE) investors, it’s not actually that easy to identify solid local businesses to invest in. 

6. Type of SME funding is just as important as the funding itself. No one-size-fits-all.

7. Mindsets need to change. Zambians need to start creating businesses that look beyond survival. The country needs homegrown businesses that last and have scale.

8. Upcoming businessmen and women are in desperate need of mentors. On the other hand, a lot of mentors need to be guided on how to mentor.

9. The country needs people of goodwill (Zambians and non-Zambians, but especially Zambians) to return with their global training and expertise.

10. If a company is seeking VC/PE investment, Zambia probably won’t be a big enough market. Such investors seek aggressive growth so these businesses will need to look out to regional markets like SADC and COMESA. However, such growth will take time. (see point 7)

11. Government policymaking needs to look beyond the election cycle and the country’s current over-reliance on multinationals. Neither are sustainable in the long-run. One interviewee told me that currently, 240 multinationals generate 80% of the country’s GDP. That’s staggering. Zambians don’t own their economy. 

12. SMEs (especially in the manufacturing sector) are not being given the space to breathe. They need similar benefits to multinationals (e.g. tax holidays, etc) to begin to grow.

13. The informal sector problem (“How do we formalise the informal sector and generate tax revenues from it?”) is unlikely to be resolved anytime soon because it’s primarily a political issue. Those in the informal sector are many and they are voters.

I had formal interviews with:

• Mafipe Chunga, Senior Manager, Deal Advisory, KPMG Zambia
• Lukonga Lindunda and Simunza Muyangana, Co-Directors, Bongo Hive (tech hub)
• Kayula Siame, Permanent Secretary, Ministry of Commerce Trade and Industry
• Tembwe Mutungu, Partner, Oakfield Holdings (majority shareholder in Yalelo Fisheries)
• Noel Nkoma, CEO and Founder, Betternow Finance Company 
• Monica Musonda, CEO and Founder, Java Foods