IDEAS home Printed from https://ideas.repec.org/a/cwk/ajocsk/2025-68.html

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
    as

    Download full text from publisher

    File URL: https://ijcsacademia.com/index.php/journal/article/view/274
    Download Restriction: no
    File URL: https://libkey.io/10.59413/ajocs/v6.i3.14?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Abhijit Banerjee & Dean Karlan & Jonathan Zinman, 2015. "Six Randomized Evaluations of Microcredit: Introduction and Further Steps," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 1-21, January.
    2. Allen, Franklin & Demirguc-Kunt, Asli & Klapper, Leora & Martinez Peria, Maria Soledad, 2016. "The foundations of financial inclusion: Understanding ownership and use of formal accounts," Journal of Financial Intermediation, Elsevier, vol. 27(C), pages 1-30.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Deng, Jiapin & Li, Xiaoxia & Liu, Yanchu, 2025. "Does broadband infrastructure promote households’ welfare in wealth management? Evidence from the construction of cell towers and the purchase of Yu’E Bao in China," Journal of Banking & Finance, Elsevier, vol. 181(C).
    2. Giulia Bettin & Claudia Pigini & Alberto Zazzaro, 2023. "Lifting You up or Dragging You Down? The Role of Financial Inclusion in Poverty Transitions Among Italian Households," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 69(3), pages 606-639, September.
    3. repec:rza:wpaper:893 is not listed on IDEAS
    4. Saniya Ansar & Leora Klapper & Dorothe Singer, 2025. "Financial Inclusion and Economic Development : A Review of the Data and Evidence," Policy Research Working Paper Series 11021, The World Bank.
    5. Zeqiraj, Veton & Sohag, Kazi & Hammoudeh, Shawkat, 2022. "Financial inclusion in developing countries: Do quality institutions matter?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 81(C).
    6. Cull, Robert J. & Foster, Vivien & Jolliffe, Dean Mitchell & Lederman, Daniel & Mare, Davide Salvatore & Veerappan, Malarvizhi, 2023. "Digital Payments and the COVID-19 Shock : The Role of Preexisting Conditions in Banking, Infrastructure, Human Capabilities, and Digital Regulation," Policy Research Working Paper Series 10603, The World Bank.
    7. Giulia Bettin & Claudia Pigini & Alberto Zazzaro, 2020. "Financial inclusion and poverty transitions: an empirical analysis for Italy," Mo.Fi.R. Working Papers 164, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
    8. Lody M. Bueri & Diana E. Schvarztein & Ignacio E. Carballo, 2019. "Retos de las microfinanzas en Argentina: nueva evidencia empírica en base a encuestas al sector nacional," Ensayos de Política Económica, Departamento de Investigación Francisco Valsecchi, Facultad de Ciencias Económicas, Pontificia Universidad Católica Argentina., vol. 3(1), pages 131-169, Octubre.
    9. Kodongo, Odongo, 2024. "Financial inclusion effects of engaging with the fintech ecosystem," International Review of Economics & Finance, Elsevier, vol. 96(PB).
    10. Marcelin, Isaac & Sun, Wei, 2025. "Financial inclusion, inequality, and retirement trends among older workers," Global Finance Journal, Elsevier, vol. 66(C).
    11. Shahriar, Abu Zafar M. & Chase, Sarah R. & Shepherd, Dean, 2025. "Financial inclusion and low-income women's new venture initiation: A Field experiment," Journal of Business Venturing, Elsevier, vol. 40(5).
    12. Antonia Grohmann & Lukas Menkhoff, 2020. "The Relationship between Financial Literacy and Financial Inclusion," Discussion Papers of DIW Berlin 1914, DIW Berlin, German Institute for Economic Research.
    13. Vanesa Pesqué‐Cela & Lihui Tian & Deming Luo & Damian Tobin & Gerhard Kling, 2021. "Defining and measuring financial inclusion: A systematic review and confirmatory factor analysis," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(2), pages 316-341, March.
    14. Gutiérrez-Romero, Roxana & Ahamed, Mostak, 2021. "COVID-19 response needs to broaden financial inclusion to curb the rise in poverty," World Development, Elsevier, vol. 138(C).
    15. Lant Pritchett, 2024. "“Rely (only) on the rigorous evidence” is bad advice," Review of Development Economics, Wiley Blackwell, vol. 28(4), pages 2034-2058, November.
    16. Franklin Allen & Meijun Qian, 2025. "Alternative finance in the international business context: a review and future research," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 56(1), pages 43-61, February.
    17. Afrika Onguko Okello, 2025. "Gender Gaps, Financial Inclusion and Social Integration in Kakuma Refugee Camp, Kenya," Economies, MDPI, vol. 13(3), pages 1-20, March.
    18. Bhuiyan, Muhammad Faress & Ivlevs, Artjoms, 2019. "Micro-entrepreneurship and subjective well-being: Evidence from rural Bangladesh," Journal of Business Venturing, Elsevier, vol. 34(4), pages 625-645.
    19. Fall, François Seck & Tchakoute Tchuigoua, Hubert & Vanhems, Anne & Simar, Léopold, 2022. "Investigating the unobserved heterogeneity effect on microfinance social efficiency," LIDAM Discussion Papers ISBA 2022010, Université catholique de Louvain, Institute of Statistics, Biostatistics and Actuarial Sciences (ISBA).
    20. N'dri, Lasme Mathieu & Kakinaka, Makoto, 2020. "Financial inclusion, mobile money, and individual welfare: The case of Burkina Faso," Telecommunications Policy, Elsevier, vol. 44(3).
    21. Hartarska, Valentina M. & Zhang, Jingfang & Nadolnyak, Denis A., 2023. "Scope Economies from Rural and Urban Microfinance Services," 2023 Annual Meeting, July 23-25, Washington D.C. 335439, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cwk:ajocsk:2025-68. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Charles G. Kamau (email available below). General contact details of provider: https://ijcsacademia.com/index.php/journal .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.