Exploring Determinants of Financial Access for SMEs in Zambia's Construction Sector

Prof. Erastus Mwanaumo, Kabemba Steve Ngoy and Victor Kunda
Additional contact information
Prof. Erastus Mwanaumo: The University of Zambia
Kabemba Steve Ngoy: The University of Zambia
Victor Kunda: The University of Zambia

African Journal of Commercial Studies, 2025, vol. 6, issue 1

Abstract: This study explores determinants in accessing finance for Small and Medium Enterprises (SMEs) in the Zambian construction industry, with a specific focus on the impact of financial literacy, collateral requirements, and credit history. The research adopted a survey approach to collect data from 78 SMEs operating in the construction sector. The findings highlight key determinants, including stringent collateral requirements, high interest rates, and short repayment periods associated with bank loans. The study also reveals a significant positive correlation between financial literacy and access to finance, suggesting that SMEs with a higher level of financial knowledge are more likely to secure financing. Moreover, the research identifies collateral requirements and credit history as critical factors influencing access to finance for SMEs in the construction industry. SMEs struggle to provide adequate collateral, leading to challenges in accessing credit from financial institutions. Engaging with financial institutions to reduce lending rates or establishing a construction bank to provide specialized financing and guarantees to financial institutions on behalf of SME entrepreneurs can positively impact the Zambian construction sector.

Keywords: Construction SMEs; Access to Finance; Financial Literacy; Collateral Requirements; Credit History (search for similar items in EconPapers)
JEL-codes: G21 L26 L74 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ijcsacademia.com/index.php/journal/article/view/133

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cwk:ajocsk:2025-20

DOI: 10.59413/ajocs/v6.i.1.3

Access Statistics for this article

More articles in African Journal of Commercial Studies from African Journal of Commercial Studies
Bibliographic data for series maintained by Dr. Charles G. Kamau ().