Evaluating the Impact of Government Subsidies and Grants on SME Growth and Financial Sustainability in Zambia

Ketty Phiri and Lee Caleb Mahlangu
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Ketty Phiri: Cavendish University Zambia
Lee Caleb Mahlangu: Cavendish University Zambia

East African Finance Journal, 2025, vol. 4, issue 3

Abstract: Small and Medium Enterprises (SMEs) are widely recognised as crucial to Zambia’s economic development due to their roles in job creation, poverty reduction, and innovation. The Zambian government provides subsidies and grants aimed at enhancing financial stability and competitiveness of SMEs. However, SMEs continue to face challenges in accessing and effectively utilising financial support, which limits broader impact. This study evaluates the long-term impact of government subsidies on SME growth and financial sustainability across agriculture, construction, and energy sectors in urban and rural Zambia. A mixed-methods concurrent embedded design was adopted, combining qualitative interviews with quantitative surveys of SMEs in Lusaka and Chipata. Findings indicate subsidized SMEs experienced higher revenue and employment growth than non-subsidized SMEs, but challenges such as bureaucratic delays, complex procedures, and inadequate mentorship limited full benefits. The study recommends simplifying access processes and strengthening post-funding support.

Keywords: Government Subsidies; SMEs growth; Financial sustainability (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:cwk:eafjke:2025-22

DOI: 10.59413/eafj/v4.i3.2

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