Credit challenges faced by female (SMEs) : a case study of Mufumbwe district.
Date
2024
Authors
Kangungu, Euodia
Journal Title
Journal ISSN
Volume Title
Publisher
The University of Zambia
Abstract
The objective of the study on Credit Challenges faced by female Small and Medium Enterprises (SMEs) in Mufumbwe District of Zambia, was to examine the constraints experienced by female SME owners in their quest to access credit facilities from financial institutions, to fund business initiatives such as start-up endeavours, business operations, and business expansion. The study employed a descriptive analytical quantitative and qualitative methodologies. The sample for the quantitative approach for the study comprised 80 female SMEs and 1 Bank while 2 institutions dealing with SMEs were included as key informants for the qualitative approach. Questionnaires were used to collect data which was subsequently analysed using Descriptive analysis. For the qualitative approach, interviews were for data collection while content analysis was used for data analysis. The findings revealed that access to credit facilities has a significant relationship with female SME capabilities of procuring new technology and improving performance for them to survive and attain sustainability and growth, hence the need to resolve the long-standing female SME financing challenges like high interest rates, short term loan product offerings, and rigid requirements of collateral and audited financial statements. On the other hand, the study revealed that female SME survival was not only dependent on accessibility to credit facilities but also proper SME management, which affects operations and profitability and subsequently loan repayment capabilities. The findings also revealed that banks continued to prefer immovable assets as collateral when lending to female SMEs. The study therefore recommends taking measures to resolve the credit challenges in female SME financing through formulation of schemes to lend to groups of female SMEs at relatively low rates while the group members of female SMEs share default risks, implementation of Credit Guarantee Schemes, formulation of collateral registers with guidelines on valuation and
disposal of securities, as well as provision of incentives to banks that lend and effectively monitor the performance of female SMEs to ensure success.
Description
Thesis of Master of Business Administration.