1. Whereas most large enterprises have connections to infrastructure services, most MSMEs do not 16 June 20101

2. Rural MSMEs spend more time getting their products to market than urban MSMEs Time delivering products for urban and rural firmsAllUrbanRural 0-10 minutes251 11-30 minutes132611 31 minutes to one hour283127 1 hour - 1 day523256 more than one day333 don't know232 16 June 20102

3. MSMES HAVE LIMITED ACCESS TO FINANCE 16 June 20103

4. Very few MSMEs have access to any formal financial services, but Large Enterprises have generally good access 16 June 20104

5. Poor physical access to banking infrastructure and the high cost of banking products are the most important constraints on banking access 16 June 20105

6. THE PRODUCTIVITY OF MSMES IS AFFECTED BY POOR ACCESS TO BOTH HARD AND SOFT INFRASTRUCTURE 16 June 20106

7. MSMEs produce far less output for each worker they employ than large enterprises in the same sectors MSMEs in yellow; Large Enterprises in green 16 June 20107

8. However, MSMEs are not a homogenous group of enterprises There are large differences in their productivity 16 June 20108

9. MSMEs that have access to electricity and water are more productive 16 June 20109

10. The more productive firms use technology, and especially for small retailers and service providers, cell phone use is related to higher enterprise productivity 16 June 201010

11. MSMEs managed by educated owners are more productive 16 June 201011

12. NOT ALL MSMEs ARE THE SAME It is necessary to determine the differences within the populations of MSMEs & large enterprises When segmenting the market, there is a trade-off between size and specificity of the segments Common approaches towards segmentation are not ideal in the context of the Zambian business landscape The Business Facilities Measure (BFM) is an analytical tool that segments the landscape Zambian of enterprises in a unique and useful way 16 June 201012

13. For MSMEs & Large Enterprises, the most defining characteristics are a series of indicators that relate to access and use of business facilities that contribute to enterprise competitiveness – Not all MSMEs are the same, and that not all microenterprises are survivalists. Nor are all Large Enterprises the same. 16 June 201013

14. The lower end BFM groups for MSMEs (segments 1 to 4) tend to be a lot more rural than the top end BFM groups for MSMEs (segments 5 to 8) 16 June 201014

15. The attainment of secondary education appears to be an important factor in moving MSMEs from the lowest two segments 16 June 201015

16. Attainment of vocational & university education seems to align closely with upward BFM mobility 16 June 201016

17. IMPLICATIONS FOR POLICYMAKERS AND PRIVATE SERVICE PROVIDERS This research report can: – Assist GRZ in making it easier to start and grow a business – Help service businesses design new products and market them more effectively – Support policymakers in adopting targeted approaches towards reducing constrains on MSME & Large Enterprise growth Given the breadth of problems that MSMEs face, it is important to be selective when tackling constraints The communication programme arising from this research can be used to develop concrete recommendations that can be applied by GRZ, the private sector, and donors 16 June 201017

18. PRIORITY AREAS TO IMPROVE THE PRODUCTIVITY OF ZAMBIAN BUSINESSES 1.Invest in hard infrastructure so that MSMEs – especially those in rural areas – have better access. – Transportation is a serious constraint, especially in rural areas, that needs to be better understood. – There is more to transportation than improving roads, e.g. Cost of fuel, maintenance, etc. 2.Encourage innovative approaches to providing financial services and improve ICT infrastructure to make access to finance easier for MSMEs. – The greatest constraint to accessing finance is that most MSMEs are not productive enough to be able to afford access to the most basic financial services or loans. – Stimulate mobile banking and other innovative approaches to improve access to financial services and reduce costs. – This approach, however, will only be successful if information and ICT infrastructure is strengthened. 16 June 201018

19. PRIORITY AREAS (cont.) 3.Expand access to basic education – There are strong complementarities between education and other forms of investment 4.Improve the delivery of business services – Better service delivery to MSMEs is essential and can be delivered by the public sector, the private sector, the social sector or some combination of these 16 June 201019

20. Thank You Please refer to the flash disk, as well as the brochure, for all of the full reports & other details join-zambiz@zbf.org.zm join-zambiz@zbf.org.zm 16 June 201020