Zambia already has many of the ingredients needed to help small firms grow. The missing piece is a system that connects opportunity, capability, finance and markets, then measures whether enterprises actually graduate.
By Steven Mbangu | The Zambian Economist Analyst | Monday, 24 August 2026
Key takeaways
- • Zambia should judge MSME support by firms that formalise, raise productivity, win contracts, create jobs and move into commercial finance.
- • The proposed EGS-UP system would connect existing finance, guarantees, skills support and procurement around enterprise-specific growth plans.
- • Market access should come before lending: viable orders and supply-chain opportunities give finance a productive purpose.
- • A national graduation index would shift accountability from money disbursed to measurable business outcomes.
Zambia has spent years making the case for micro, small and medium-sized enterprises. That case no longer needs much rehearsal. MSMEs provide livelihoods, absorb labour and supply goods and services in almost every district. The harder question is why so few firms move from subsistence and survival into sustained growth.
The central weakness is not a complete absence of policy instruments. Zambia already has development finance institutions, credit guarantees, entrepreneurship programmes, agricultural support, industrial policy, procurement rules and training initiatives. The weakness is that these instruments often operate as separate interventions rather than as stages in one enterprise-growth journey.
What is needed is an Enterprise Graduation and Scale-Up System, or EGS-UP. This is not another fund or agency. It is an operating architecture that would align existing institutions around one test: whether a viable enterprise has moved to the next commercial level.
The shift from support to graduation
Many public programmes count activity. They report the number of people trained, loans approved, grants disbursed or businesses registered. Those figures matter, but they do not show whether a firm became more productive, secured a durable market, hired workers or reduced its dependence on subsidised support.
EGS-UP would change the unit of success. An enterprise entering the system would be assessed, placed on a defined pathway and supported against a time-bound growth plan. Its progress would be measured through turnover, profitability, productivity, employment, formalisation, access to commercial finance, supply-chain participation, domestic value addition and exports.
The practical sequence is straightforward: identify scalable opportunities, select enterprises able to pursue them, diagnose their constraints, build capability, connect them to buyers, unlock appropriate finance, improve productivity and measure graduation. Public support would become a bridge to commercial viability, not a permanent destination.
Start with opportunities, not applicants
The first step should be a National Scalability and Opportunity Assessment. Zambia needs a current map of demand that local firms can realistically serve. That includes procurement by mines, supermarkets, manufacturers, processors, construction companies, utilities, hospitals, schools and tourism operators, as well as opportunities in regional and export markets.
The assessment should identify products and services with credible demand, the standards buyers require, current import dependence, the size of the opportunity and the capabilities local firms would need to compete. Agriculture and agro-processing, building materials, renewable energy services, logistics, digital services, repair and maintenance, tourism inputs, health supplies and light manufacturing are obvious areas to examine, but selection must follow evidence rather than fashion.
This market map would prevent a common policy error: financing an enterprise before establishing who will buy its output. A loan cannot create demand. A credible order, supply contract or route to market gives finance a productive purpose.
Diagnose firms before prescribing support
Not every microenterprise is ready to scale, and policy should not pretend otherwise. EGS-UP would use an Enterprise Growth and Scalability Diagnostic to distinguish among survival enterprises, firms with growth potential and businesses already capable of scaling.
That distinction is not a judgement on the social value of a business. It is a way to match support to need. A survival enterprise may require basic livelihood, social-protection or community-finance interventions. A growth-potential firm may need bookkeeping, standards certification, machinery or a first substantial contract. A scale-up firm may need working capital, professional management, export preparation or investment finance.
Each selected business should then receive an enterprise-specific growth plan. The plan would state the target market, capability gaps, investment required, productivity changes, finance structure, milestones and graduation date. Generic workshops would give way to practical support tied to a commercial objective.
Let markets organise the system
Buyers should sit near the centre of EGS-UP. Large companies and public institutions understand the quality, volume, reliability and compliance standards suppliers must meet. Their procurement pipelines can help identify viable opportunities and give enterprise support agencies a clear specification to work towards.
This requires more than reserving a percentage of procurement for local firms. Supplier-development arrangements should publish opportunities early, break suitable contracts into accessible lots, explain standards, provide transparent feedback and track whether local suppliers progress from one-off orders to repeat business.
For mining, the question is not simply how many local vendors are registered. It is whether Zambian firms move into higher-value activities, improve technical capability and become reliable suppliers across multiple mines. In agriculture, the goal should be movement from irregular spot-market sales to consistent production, aggregation, processing and contracted supply.
Use finance as a progression tool
Credit guarantees can be especially useful when an enterprise has a viable market but lacks collateral or a long borrowing record. Zambia is already expanding this instrument. The 2026 Budget Address allocated K851.7 million to the Zambia Credit Guarantee Scheme, while the International Monetary Fund reported that the scheme issued K1.15 billion in guarantees during 2025.
The policy question is therefore not only how large the guarantee envelope becomes. It is whether guarantees crowd in additional private lending, reach viable firms, support productive investment and eventually allow borrowers to access commercial finance without public backing.
The World Bank’s principles for public credit guarantee schemes stress sound governance, transparent eligibility, risk-based pricing and effective monitoring. Those disciplines should be built into EGS-UP. Guarantees should be targeted, time-bound and linked to a growth plan, not treated as a substitute for credit assessment.
A graduated financing ladder would combine suitable instruments: savings and informal finance at the earliest stage, microfinance and working capital for established small firms, guaranteed bank credit for viable expansion, and longer-term investment or equity for scale-up businesses. Movement along that ladder should be one of the system’s measurable outcomes.
Productivity is the hinge
Finance and markets will not produce durable growth if a firm cannot meet cost, quality and delivery requirements. Productivity support must therefore be practical and enterprise-specific. Advisers should work with firms on production flow, inventory, maintenance, energy use, quality control, digital systems, worker skills and management accounts.
The International Labour Organization’s Productivity Ecosystems for Decent Work programme offers a useful lesson: productivity constraints often sit across firms, sectors and institutions, so solutions must address the wider ecosystem as well as the individual business.
Zambia should build a network of accredited productivity advisers linked to sector bodies, technical colleges, universities and larger companies. Their performance should be judged by verified improvements in output, waste, quality, delivery time, wages and employment, not by advisory visits completed.
Build pathways for sectors and places
Enterprise graduation will look different across sectors. A small farmer may progress from rain-fed production to irrigation, aggregation and supply contracts. A processor may move from informal packaging to certified production and supermarket distribution. A contractor may advance from minor works to larger tenders after improving equipment, records and project management. A digital business may graduate through recurring contracts, export sales and external investment.
EGS-UP should therefore publish sector graduation pathways showing the capabilities, standards, finance and market milestones required at each stage. The pathways would help enterprises understand what comes next and help institutions coordinate their support.
Access must also extend beyond Lusaka. Provincial enterprise hubs could coordinate diagnostics, advisers, finance providers and buyers, while district and community outreach uses radio, SMS, WhatsApp, print and business associations. A national digital portal would be useful, but it cannot be the whole system where connectivity, language and digital literacy remain uneven.
Create a graduation index
The system needs a public scoreboard. An Enterprise Graduation Index should track movement from micro to small, small to medium and medium to larger enterprise, while also recognising meaningful progress within a category.
The index should include formalisation, productivity, turnover, profitability, employment, wages, access to commercial finance, reduced reliance on public support, repeat supply contracts, domestic value addition, import substitution and exports. Results should be published by sector, province, institution and programme, with independent checks on reported outcomes.
This would change incentives across government. A training provider would care whether participants used the training to meet a buyer’s standard. A finance institution would care whether supported firms survived, invested and graduated. A procurement entity would care whether local suppliers became more competitive. Policymakers would be able to compare the cost of support with the economic value created.
Implementation without another bureaucracy
EGS-UP should be governed as a shared national system, not established as a large new institution. A small coordinating unit could set standards, maintain the opportunity map and graduation index, accredit diagnostics and advisers, and publish performance data. Existing ministries, agencies, financial institutions, business associations and private buyers would deliver the actual services.
The system should begin with a limited number of sectors where buyer demand and institutional partners are identifiable. Pilots should use clear entry criteria, baseline data and graduation targets. Programmes that work can expand. Those that repeatedly fail to move firms should be redesigned or stopped.
International experience supports this emphasis on scale-up conditions. The OECD’s 2025 report, Unleashing SME Potential to Scale Up, argues that firms need coherent access to finance, skills, networks, technology and markets across stages of growth. Zambia’s challenge is to translate that broad lesson into a locally accountable delivery system.
The measure that matters
Zambia does not need to abandon existing MSME initiatives. It needs to connect them. The proposed system would give public finance, guarantees, training, productivity support and procurement a common destination: enterprises capable of standing on stronger commercial foundations.
The most important annual question should no longer be how much money was disbursed. It should be how many firms upgraded their capability, secured repeat contracts, raised output, created decent jobs, entered commercial finance and moved into a higher enterprise category.
When that becomes the measure, MSME policy will stop being a collection of worthy activities and start functioning as an engine of structural transformation.
Related coverage
Read From Economic Stabilisation to a Broad-Based Economy: The Role of MSMEs in the Next Five Years and The SME Credit Gap: Why Zambian Small Businesses Still Can’t Borrow Affordably.
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