Published on Nasikiliza

Navigating a new Zambia: Women-led SMEs and COVID-19

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Justina Opit CEO and Co-Founder, Omega Foods, and her employees. Photo: Musopa Kalenga/World Bank Justina Opit CEO and Co-Founder, Omega Foods, and her employees. Photo: Musopa Kalenga/World Bank

Seafood exports to East Asia were a growing avenue for Muzalema’s seafood processing enterprise in land-locked Zambia. But massive logistics challenges stemming from border delays and regional lockdowns have disrupted supply chains.  the focus has shifted to the domestic market where demand for basic seafood remains fairly steady. Product diversification to focus on crayfish has been a successful endeavor as there is a larger domestic market for the product. Looking ahead towards recovery, Muzalema believes that automation in processing is a priority to position her business to meet regional standards as she seeks to pivot back to the higher value export market, and she continues to explore opportunities to reduce frictions in getting product “from the lake to the table.” The uncertainty and destabilization of supply chains has had a massive impact on small and medium enterprises (SMEs) which have had to scramble for financing to put adaptation processes in place, identify new revenue generation channels and retrain workers.

Zambia recorded its first COVID-19 (coronavirus) case in March and the cumulative impact on the SMEs has been significant. Macroeconomic challenges and government arrears were testing the resilience of the private sector even before COVID-19, with high treasury yields crowding out lending to the private sector from 15.7% of gross domestic product in 2015 to 12.4%  in 2019. These challenges have been exacerbated with women-led SMEs (WSMEs) in particular facing with constrained cash flows and massive reduction in consumer demand. As part of the ongoing Women Entrepreneurs Finance Initiative (We-Fi)-supported project in Zambia, we sat down with some Zambian women entrepreneurs to find out more about how they’re navigating the crisis and what they expect in the future.

In the agribusiness sector, the contraction in consumer demand is by far the biggest shock. Mutale, whose agribusiness includes  the processing, packaging and supply of high-value and traditional crops initially saw an uptick in demand after the border lockdown started. But there’s been a sharp fall in demand from the hospitality sector and reduced consumer spending as the crisis drags on. Firms like hers have pivoted to cultivate basic crops such as maize and onion, which can be dried and stored, as well as poultry. They have also taken the initiative to diversify into integrating digital platforms like Facebook and WhatsApp to launch home delivery services. The use of digital technologies has helped stabilize some of the revenue losses.   

Justina’s agro-processing plant, which produces millet meal, porridge and sorghum meal, was temporarily closed during the initial months of the crisis and then was relocated to a larger facility to meet social distancing guidelines. New workers had to be trained and the cost of sourcing inputs from  farmers who supply crops or livestock also increased. Her focus on enhancing processing standards and marketing at a time when many consumers are looking for cheaper, healthier options has had positive outcomes. Diversification into porridge blends for example, has been a success in responding to changing demand and to stabilize revenues.

For Catherine’s communications and content creation company, integrating technology into field research and in outreach campaigns has been a successful undertaking, particularly as non-governmental organization clients continue to focus on public health campaigns. The costs of adhering to social distancing and health guidelines, however, led to increased price points for new clients, making it harder to grow the business. While the focus on public health sector has mitigated some of the immediate impact of COVID-19, the continued uncertainty makes it difficult to plan for the future.

Women entrepreneurs have validated the findings of the COVID-19 Enterprise Survey where more than 86% of women-led firms reporting decreased sales (a similar proportion of male led firms report the same). Nearly 89% of firms report decreased liquidity and cash flow with nearly 93% of women-led firms reporting the same. The workforce impact is also high on female workers – the share of females among the workforce has fall by nearly 8%. A follow up survey is underway to determine how those firms are faring now.

Though the Bank of Zambia has introduced a liquidity facility, the Targeted Medium-Term Refinancing Facility, only about 4,200 firms have been able to access its support. For most women-led SMEs (WSMEs), microfinance institutions are the preferred source of financing despite the high interest rates. There is a high reliance on mobile money to pay smaller input providers. The Zambia Development Agency is also exploring opportunities to build a digital application to provide real time information to SMEs. Private-sector resilience however extends beyond liquidity support, requiring greater digitalization, stronger data analytics and a more diversified approach towards sourcing inputs and product development.

The We-Fi Zambia project is working with the Bank of Zambia (BoZ) and Ministry of Commerce, Trade and Industry to scale up access to finance for WSMEs, through tailored products and services, and through firm capacity building.  These are crucial aspects of COVID-19 response and of private sector resilience as Zambian firms seek to recover from the crisis. The program is also more focused on fintech and digital delivery of firm training, especially on financial management skills. The focus on financial management serves to enhance credit worthiness of WSMEs during a time when financial institutions are reluctant to lend to SMEs. The key is to prepare viable WSMEs to be better positioned for recovery through a combination of investments and productivity-enhancing tools.


Qursum Qasim

Senior Private Sector Specialist

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