Enhancing SMEs Profitability Through Effective Working Capital Management: A Case Study of Lusaka’s Central Business District, Zambia

Rhodwell Monze and Bwalya Chilolo
Additional contact information
Rhodwell Monze: Graduate School of Business, University of Zambia
Bwalya Chilolo: Graduate School of Business, University of Zambia

African Journal of Commercial Studies, 2025, vol. 6, issue 3

Abstract: The aim of this study was to examine how effective working capital management (WCM) practices can enhance the profitability of SMEs in this region, with a focus on evaluating the role of inventory management, accounts receivable, accounts payable, and cash management in improving financial performance. Given the vital role SMEs play in Zambia’s economic growth and job creation, the study also explores current WCM practices among these businesses and identifies the key challenges they face in managing working capital efficiently. A cross-sectional design and pragmatic mixed-methods approach were adopted, collecting data from 93 SMEs through structured questionnaires and semi-structured interviews. Quantitative results revealed a strong positive correlation (R = 0.740) between WCM components—Inventory Management Practices (IMP), Accounts Receivable Management (ARM), Accounts Payable Management (APM), and Effective Cash Management (ECM)—and SME profitability, with these practices explaining 54.7% of the variance in profitability (R² = 0.547). ECM (β = 0.574, p

Keywords: Working Capital Management; SME Profitability; Cash Flow; Lusaka CBD; Financial Practices (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/274

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:2025-68

DOI: 10.59413/ajocs/v6.i3.14

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 ().