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Enhancing SMEs Profitability Through Effective Working Capital Management: A Case Study of Lusaka’s Central Business District, Zambia

Author

Listed:
  • Rhodwell Monze

    (Graduate School of Business, University of Zambia)

  • Bwalya Chilolo

    (Graduate School of Business, University of Zambia)

Abstract

The aim of this study was to examine how effective working capital management (WCM) practices can enhance the profitability of SMEs in this region, with a focus on evaluating the role of inventory management, accounts receivable, accounts payable, and cash management in improving financial performance. Given the vital role SMEs play in Zambia’s economic growth and job creation, the study also explores current WCM practices among these businesses and identifies the key challenges they face in managing working capital efficiently. A cross-sectional design and pragmatic mixed-methods approach were adopted, collecting data from 93 SMEs through structured questionnaires and semi-structured interviews. Quantitative results revealed a strong positive correlation (R = 0.740) between WCM components—Inventory Management Practices (IMP), Accounts Receivable Management (ARM), Accounts Payable Management (APM), and Effective Cash Management (ECM)—and SME profitability, with these practices explaining 54.7% of the variance in profitability (R² = 0.547). ECM (β = 0.574, p

Suggested Citation

  • Rhodwell Monze & Bwalya Chilolo, 2025. "Enhancing SMEs Profitability Through Effective Working Capital Management: A Case Study of Lusaka’s Central Business District, Zambia," African Journal of Commercial Studies, African Journal of Commercial Studies, vol. 6(3).
    • Handle: RePEc:cwk:ajocsk:2025-68
    DOI: 10.59413/ajocs/v6.i3.14
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