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The Role of Investment Appraisal Techniques in Enhancing Financial Sustainability of Small and Medium Enterprises in Solwezi, Zambia

Author

Listed:
  • Michael Kaoma

    (University of Lusaka)

  • Erastus Mwanaumo

    (University of Zambia)

  • Michael Kalumbu Nsefu

    (University of Lusaka)

Abstract

This study investigates the role of investment appraisal techniques in enhancing the financial sustainability of Small and Medium Enterprises (SMEs) in Solwezi, Zambia. Despite their economic importance, SMEs in Zambia face high failure rates, with financial sustainability being a key challenge. The research employs a sequential explanatory mixed-methods approach, combining a quantitative survey of 280 SMEs with qualitative interviews of 20 key informants. Financial literacy of owners/managers, financial sustainability, decision-making processes, and the political environment emerge as critical factors influencing the adoption and application of these techniques. The study finds a significant positive relationship between the frequency of investment appraisal technique usage and SME financial sustainability (β = 0.303, t = 2.367, p

Suggested Citation

  • Michael Kaoma & Erastus Mwanaumo & Michael Kalumbu Nsefu, 2025. "The Role of Investment Appraisal Techniques in Enhancing Financial Sustainability of Small and Medium Enterprises in Solwezi, Zambia," African Journal of Commercial Studies, African Journal of Commercial Studies, vol. 6(6).
    • Handle: RePEc:cwk:ajocsk:2025-16
    DOI: 10.59413/ajocs/v6.i6.17
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    Keywords

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    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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