An Exploration on the Role of Small and Medium Enterprises (SMES) on Poverty Reduction: A Case Study of Kabwe District, Zambia

Abstract

This study sought to explore the role of Small and Medium Enterprises (SMEs) on poverty reduction in Kabwe District, Zambia. SMEs are widely recognised as important drivers of employment, income generation and inclusive economic growth in developing countries, yet the extent to which they translate into reduced poverty at the household level remains under-researched in specific local contexts such as Kabwe District. The study was guided by three specific objectives: to understand the contribution of SMEs to employment creation in Kabwe District; to explore the effect of SMEs on household income and living standards in Kabwe District; and to explore the challenges that constrain SMEs in Kabwe District from contributing more effectively to poverty reduction. The study adopted a qualitative research approach and a descriptive research design. Data were collected through semi-structured, face-to-face interviews with SME owners, managers and employees operating in retail, service and small-scale manufacturing sectors within Kabwe District, selected using purposive sampling. Twelve interviews were conducted, at which point data saturation was reached. Collected data were analysed using thematic analysis, guided by the Sustainable Livelihoods Framework. The findings showed that SMEs contributed to employment creation and household income generation in Kabwe District, while also facing considerable challenges including limited access to finance, the high cost of inputs and equipment, poor and costly infrastructure, high levels of market competition and delayed customer payments, and storage and supply difficulties, which together constrained their full potential as vehicles for poverty reduction. The study recommended interventions relating to access to finance, entrepreneurship training, infrastructure development and supportive policy frameworks to strengthen the contribution of SMEs to poverty reduction in Kabwe District.