Republic Of Zambia

United Nations Development Programme Zambia

Ministry for Foreign Affairs of Finland

Financial Literacy (MSMEs)

In most countries, lack of financial literacy is one of the biggest impediments that Micro, Small and Medium Enterprises (MSMEs) in the housing value chain face in their quest to access to finance and grow their businesses. In simple terms, financial literacy means the knowledge, mastery and understanding of money, business, investments and funding. If one does not understand how business is supposed to be run and how to get funding and repay, it becomes difficult to know if one is growing. Financial institutions give reasons such as lack of proper book keeping; lack of cash flow management; bankable business plan; lack of understanding of loan applications requirements; lack of credible and traceable credit history and collateral for not extending credit to such MSMEs.

Financial illiteracy, coupled with managerial inadequacies can be very harmful to business growth and access to finance. Issues such as corporate governance, weak institutional capacity, long term vision of the company, technical expertise related to their businesses and lack of a unique selling proposition make it difficult to convince a financier to fund or invest in most MSME companies.

Other than financial and management illiteracy, there are external reasons why MSMEs find it difficult to access finance such as stiff industry completion, unsupportive policy regulations, inadequate financial infrastructure and understanding of the unique nature of the construction sector, trade regulations, tax regulations, government policy, labor regulations, cost of capital and lack of understanding by the financial institutions of the uniqueness of the construction sector and Governments tendency to crowd out private sector through the attractiveness of risk free Treasury Bills as opposed to risky perceived MSMEs.

Financial Literacy Training

The Zambia Green Jobs Programme (ZGJP) aims to assist targeted MSMEs with financial literacy training through the International Trade Center (ITC). This is done through the engagement of Financial Management Counsellors (FMCs) who are Zambian Business Development Services (BDS) providers. There are currently 18 of them undergoing a 6 months certification process. They initially underwent a Trainer of Trainers (ToT) workshop in July 2014 in Siavonga. Before December 31st 2014, they are all scheduled to conduct 2 day pilot training in Financial Literacy for targeted MSMEs through the various associations under the programme. The pilot training will continue until each FMC conducts three trainings under supervision of their assigned Master Trainers. Upon completing the 3 trainings, successful FMCs will be certified as ITC trainers in Financial Literacy. Thereafter, the trainings will be rolled out to MSMEs in need of such training. ILO under the ZGJP is also offering Business Management Training while UNCTAD is offering EMPRETEC [INSERT LINK TO EMPRETEC]training that enhances entrepreneurship behaviors, skills and attitudes.

Financial Literacy Training Modules

The broad modules for the financial literacy and management training offered by ITC are as outlined below:

  • Business planning
  • Support documentation
  • Statutory obligations
  • Record keeping
  • Financial statements
  • Working capital management
  • Risk management
  • Corporate governance
  • Alternative sources of finance
  • Bidding and contract management

Business Development Services (BDS) Provision:

The FMCs also provide coaching and mentoring services to MSMEs who are in need for services such as:

  1. Accounts and book keeping
  2. Tax compliance issues
  3. Business plan preparation and implementation
  4. Advise on alternative and appropriate sources of finance
  5. Market analysis and marketing
  6. Risk analysis and management
  7. Corporate government issue


The challenge in this regard has been the inability and/or unwillingness to pay for these services. This has stifled the growth of the BDS market in Zambia. The situation is not so different in other developing countries as well. Most often such initiatives to stimulate the BDS market has been led by donor projects, reverting back to the norm once the project ends. BDS consultants have been frustrated with the unwillingness to pay leading to fragmented and uncoordinated BDS supply.

ITC will work with its partners and stakeholders to try and reorganise the BDS Association in order to institutionalise the FMCs in an appropriate and sustainable delivery mechanism. Issues of how best MSMEs can pay for BDS services need to be further explored with the various stakeholders to ensure long term sustainability of both the demand and supply side of the market.