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Assessing the Role of Financial Inclusion in Enhancing Micro, Small, and Medium Enterprise (MSMEs) Resilience Post-COVID-19 in Zambia: A Case of Olympia Market

Author

Listed:
  • Yvonne Mumba

    (Graduate School of Business, The University of Zambia, Lusaka, Zambia)

  • Austin Mwange

    (Graduate School of Business, The University of Zambia, Lusaka, Zambia)

Abstract

The resilience of Micro, Small, and Medium Enterprises (MSMEs) following external economic shocks such as the COVID-19 pandemic is closely linked to their level of financial inclusion. This empirical study examines the extent and effectiveness of financial inclusion among MSMEs operating in Olympia Market, Lusaka, Zambia, in the post-COVID-19 period. Grounded in Financial Inclusion Theory, Resource-Based Theory, and the MSME Sector Development Model, the study adopts a mixed-methods approach, collecting data from 45 formally registered firms through structured questionnaires and semi-structured interviews. The findings reveal significant financial exclusion, with the majority of MSMEs lacking access to formal financial support during and after the pandemic. Informal mechanisms such as village banking emerged as the dominant source of finance, reflecting structural deficiencies within formal financial systems. Key barriers to financial access include limited credit availability, high interest rates, stringent collateral requirements, regulatory constraints, technological barriers, and low financial literacy. Using the DEMATEL technique, credit inaccessibility was identified as the primary driver of financial marginalisation. The study recommends reconfiguring financial services to better accommodate MSMEs by reducing collateral demands, simplifying access procedures, integrating informal financial networks into the formal financial system, enhancing digital infrastructure, and implementing comprehensive financial literacy programs to strengthen MSME resilience.

Suggested Citation

  • Yvonne Mumba & Austin Mwange, 2025. "Assessing the Role of Financial Inclusion in Enhancing Micro, Small, and Medium Enterprise (MSMEs) Resilience Post-COVID-19 in Zambia: A Case of Olympia Market," East African Finance Journal, East African Finance Journal, vol. 4(1).
    • Handle: RePEc:cwk:eafjke:2025-11
    DOI: 10.59413/eafj/v4.i1.11
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    References listed on IDEAS

    as
    1. Kampamba Chibesa & Austin Mwange, 2025. "The Role of Digital Financial Literacy in Enhancing Financial Inclusion Among Informal Entrepreneurs in Zambia," East African Finance Journal, East African Finance Journal, vol. 4(1).
    2. Austin Mwange & Windu Matoka, 2024. "An Empirical Study of the Role of Entrepreneurship in Zambia’s Economic Growth (1990-2023)," East African Finance Journal, East African Finance Journal, vol. 3(2).
    3. Kampamba Chibesa & Austin Mwange, 2025. "Financial Behavior and Entrepreneurial Success: An Empirical Analysis of Informal Markets in Zambia," African Journal of Commercial Studies, African Journal of Commercial Studies, vol. 6(1).
    4. Kampamba Chibesa & Austin Mwange, 2024. "Financial Literacy and Entrepreneurial Decision-Making Among Informal Traders in Zambia," East African Finance Journal, East African Finance Journal, vol. 3(2).
    5. Windu Matoka & Austin Mwange, 2024. "Entrepreneurship Education and Its Impact on Informal Sector Development in Zambia: A Theoretical Perspective," African Journal of Commercial Studies, African Journal of Commercial Studies, vol. 5(4).
    6. Beck, Thorsten & Demirgüç-Kunt, Asli & Maksimovic, Vojislav, 2008. "Financing patterns around the world: Are small firms different?," Journal of Financial Economics, Elsevier, vol. 89(3), pages 467-487, September.
    7. Ms. Ratna Sahay & Mr. Ulric Eriksson von Allmen & Ms. Amina Lahreche & Purva Khera & Ms. Sumiko Ogawa & Majid Bazarbash & Ms. Kimberly Beaton, 2020. "The Promise of Fintech: Financial Inclusion in the Post COVID-19 Era," IMF Departmental Papers / Policy Papers 2020/009, International Monetary Fund.
    8. Clement Mwaanga & James Mulenga & Mary Lubinda & Moulen Siame & Kunda Kaliba-Chishimba & Mulenga Chonzi Mulenga & Chilala Sheila Kafula, 2021. "COVID-19 Pandemic and Its Implications on Small and Medium Enterprises (SMEs) Operations in Zambia," Journal of Business Administration Research, Journal of Business Administration Research, Sciedu Press, vol. 10(1), pages 1-32, April.
    9. 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.
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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