DEBT MANAGEMENT BY SMALL SCALE AND

MEDIUM ENTERPRISES – A CASE STUDY OF UNITY

FINANCE ZAMBIA

By

DARREN SHAMUTETE

STUDENT NUMBER:

004 - 443

SUPERVISED BY:

N.M.SERENJE

A dissertation submitted in partial fulfillment of the

requirement for the award of the Bachelors Degree In
Banking and Finance (BBF) by Cavendish University

2
August 2020

Abstract
This was a research on challenges on debt management by Small scale enterprises a case
study of unity finance Zambia.
The research was mainly concerned on the following;
Small Scale Enterprises, Documented policies on debt management, Knowledge and skills on
choice of business by small scale enterprises, Accounting records, Knowledge on debt
management, Debt management and firm performance, Financial investments and business
sustainability. Capital base and Factors financiers consider for granting loans

From responses from the small scale enterprises it was concluded that the small scale
enterprises still face most of the above stated challenges.

Declaration
I ,Darren Shamutete, declare that I am the sole author of this dissertation , that during the
period of the registered study I have not been registered for other academic award or

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qualification , nor has any of the materials been submitted wholly or partially for any other
award .
This dissertation is a result of my own research work, and where other people’s research was
used, they have been dully acknowledged.

Date …………………………….. Signature………………….

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Acknowledgements
First and foremost i am grateful to the Almighty God for giving me the grace and strength to
successfully compete this dissertation. It was a difficult task trying to gather information with
in the midst of a pandemic and trying to be on time with the completion of this document.

I sincerely thank Mr. Nevha M.Serenje, my Supervisor for his exemplary guidance
throughout the research and compilation of this report. Sir, It was a great honor and privilege
to have been supervised by you, may the good Lord bless you with long life and success in all
your endeavors.

I am grateful to my Father Mr C M, Shamutete for the moral support and encouragement he

gave to me during this study. Thank you very much. I will remain indebted to you.

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Dedication

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In loving memory of my late mother Juliet Kapomba and my late grand mother Rosemary
Phiri who made it all worthwhile

To my Father, Without the help of these peers in my life I wouldn’t have been. And lastly to
the Almighty for seeing me through this journey.

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Table of Contents
Abstract…………………………………………………………………………. i

Declaration …………………………………………………………………… ii

Acknowledgements..........................................................................................iii
Dedication…………………………………………………………………… iv
Table of Contents.............................................................................................. v

CHAPTER ONE ........................................................................................................................ 9

1 Introduction and Background ......................................................................................... 9
1.0 Introduction ............................................................................................................. 9
1.1 Background to the study ............................................................................................. 10
1.3 Problem Statement ......................................................................................................... 10
1.4Purpose of the study .................................................................................................... 11
1.1 Objectives of the study ............................................................................................... 11
1.2 Research questions ..................................................................................................... 12
Chapter Two............................................................................................................................. 14
2 Literature Review .............................................................................................................. 14
2.1 Introduction ................................................................................................................ 14
2.2 Theoretical framework ................................................................................................... 14
2.3 Research gaps ............................................................................................................. 22
2.4 Research variables arising from Literature Review ................................................... 22
CHAPTER THREE ................................................................................................................. 23
3 Methodology and Design .................................................................................................. 23
3.1 Research Philosophy and Approach ............................................................................. 23
3.2 Research design ............................................................................................................ 23
3.3 Sources of Data. ............................................................................................................ 24
3.4 Sampling Frame ............................................................................................................ 25
3.5 Data collection techniques ............................................................................................ 26

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 3.6 Data Analysis Techniques ......................................................................................... 27
3.7 Reliability and Validity (triangulation) ......................................................................... 27
3.8 Ethical considerations ................................................................................................... 28
3.9 Limitations of the study ................................................................................................ 28
CHAPTER FOUR .................................................................................................................... 29
4 Data Presentation............................................................................................................... 29
4.1 Introduction ................................................................................................................ 29
CHAPTER FIVE ..................................................................................................................... 45
5 Discussion and interpretation of data ................................................................................ 45
5.1Introduction ................................................................................................................. 45
5.2 Responses from the small and medium enterprises .................................................... 45
CHAPTER SIX ........................................................................................................................ 48
6 Introduction ....................................................................................................................... 48
6.1 Conclusion...................................................................................................................... 48
6.2 Implications ................................................................................................................ 48
6.3 Recommendations ...................................................................................................... 49
References ................................................................................................................................ 50
Appendices ............................................................................................................................... 54
Work Schedule and Resource Requirement ............................................................................ 59

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CHAPTER ONE

1 Introduction and Background

1.0 Introduction
This is a research on debt management by Small scale Enterprises. A case study of Unity
finance Zambia. Unity finance Zambia is a micro finance institution that provides loans and
debt facilities to borrowers most of which are SMEs, it facilitates various credit facilities to
SMEs so as a way of contributing to the improvement of the Zambian economy. This
however may only be attainable provided the SMEs manage the debt they incur efficiently
and effectively. Zambia has articulated its long-term development objectives in the National
Vision 2030. The Vision is to become a prosperous middle-income country by the year 2030.
Vision 2030 identifies a number of development goals, which include (a) reaching middle-
income status, (b) significantly reducing hunger and poverty; and (c) fostering a competitive
and outward-oriented economy. However, to achieve these objectives, there is need to
promote the entrepreneurial spirit among Zambian via the creation of Small and Medium
Enterprises (SMEs). It is an internationally recognized fact that Micro Small and Medium
Enterprises (SMEs) play an important role in the economic development of many countries.
The aggregate contribution of SMEs to national development cannot be over looked.
According to UNDP (2013), SME have the highest capital: employment ratio and are a
source of income for a broader layer of the population. The development of SMEs is viewed
as one sustainable way of reducing the levels of poverty and improving the quality of life of
households through wealth and job creation. The contribution of SMEs to employment,
growth, and sustainable development is a widely acknowledged fact. Despite all these
benefits. Existing SMEs most of them are performing below its expected potential of
reducing poverty, economic growth due to financial constraints , unenabling economic
environment as well as lack of debt management skills.

The role of small scale enterprises in developing countries as engines of growth has long
been recognized. It is estimated that small scale enterprises employ 22 percent of the adult
population in developing countries (Dalberg Global Development Advisors, 2011). Findings
from the Ghana Statistical Service (GSS, 2012) estimate that small scale enterprises makes up

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to seventy percent (70%) of all industrial establishments which contribute about seventy
percent (70%) of Gross Domestic Product (GDP) and account for about ninety-two percent
(92%) of businesses in Ghana. The small scale enterprises sector absorbs more than sixty
percent (60%) of employed labor force with majority in the rural areas (GSS, 2012. This
makes small scale enterprise a very important sector of the economy.

1.1 Background to the study

Coleman and Chon (2001) observe that debt has the ability to cause the nonperformance of
small scale enterprises. Most empirical studies on the impact of debt management on the
performance of businesses have focused basically on large scale businesses in developed
countries (Coleman and Cohn, 2001; Eriotis et al., 2002). Yet, of recent, there has been an
increase in the recognition of the role played by small scale firms in national economies. The
contribution of small scale enterprises to job creation, revenue mobilization and poverty
alleviation has been recognized by many governments in developing countries to the extent
that small scale enterprises are now included in their development plans (Coleman and Cohn,
2001). Through such plans, support structures are provided for the growth of the small scale
firms’ including funding and concessional loans, usually at concessionary rates. Meanwhile,
Abor and Biekpe (2006) questions whether the use of such debt improve businesses’
performance and hence enhancing sustainability (Abor and Biekpe, 2006).

1.3 Problem Statement

Despite the recognition and support given to small scale enterprises by governments, Abanis
et al. (2013) asserts that small scale enterprises face several constraints including lack of
power supply, capacity underutilization, insufficient research and development, poor access
to credit facility, price controls, shortage of foreign currency and fuel. Therefore, servicing
debt has become imperative due to insufficient capital in the running of many small scale
enterprises in any country. Managing the debt of such businesses has become a necessity if
these businesses desire growth. This means that the management of such firms needs to
appreciate the implication of the use of debt in financing their business operations. They need
to deploy appropriate financing strategy to drive better organizational performance (Akorsu
and Agyapong, 2012). The use of debt management becomes imperative in small scale
enterprises in developing countries such as Zambia.

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Small scale enterprises are faced with various challenges when it comes to managing debt,
this is as a result of SMEs not being able to strike a balance on the challenges affecting their
businesses. Some SMEs do not have proper documented policies on debt management;
proper documentation of policies on debt management would enable SMEs to have a
systematic way of managing a particular type of debt based on the policies documented.
Some SMEs do not have adequate knowledge and skills on the choice of business they
engaged , this maybe as a result of circumstances hence they wouldn’t manage debt
efficiently due to lack of knowledge and skill. Some SMEs are not familiar with writing skills
hence it becomes a challenge for them to write maintain book keeping records, hence it
makes it hard for them to manage debt on their end as only the lender may have a record this
might not be the case for the initial borrower if they are not surrounded by competed people.

Another problem faced by Small scale enterprise would arise from a lack of debt
management skill, this means some SMEs would acquire debt and not use it for the intended
purpose. Some SMEs that acquire debt manage it well such that their business grow in the
long run while other SMEs cry foul due to mismanagement of the debt they acquired. Other
Small scale enterprises lack diversity implying they focus on one source of income even as
they acquire debt it would be reinvested in the existing business instead of engaging diversity
, this leads to some SMEs not having adequate financial investments and business sustenance.

A part of SMEs run their businesses on a hand to mouth basis hence this ,makes it hard for
them to adequate capital base, this pushes them to engage more debt. Fanciers make it almost
impossible for SMEs to assess debt when there is absence of debt management skill and
knowledge as well as absence of collateral.

The above problems triggered the desire to engage a research on debt management by small
scale enterprises so as to help provide remedies to the above problems.

1.4Purpose of the study

The persistent challenges of debt management by small scale enterprises needs to be
investigated so as to draw out lessons that could be useful for addressing the financial
challenges faced by these entities

1.1 Objectives of the study

1.1.1 General objectives

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The main objective of this study was to assess how debt is managed by small scale
enterprises.

1.1.2 Specific objectives

 To assess whether there are documented policies on debt management
 To assess adequacy of knowledge and skills on the choice of business
 To assess whether there is proper record keeping by small scale enterprises
 To assess debt management skills by small scale enterprises
 To assess whether debt management improves firm performance
 To determine adequacy of financial investments and business sustenance
 To determine adequacy of capital base of small scale businesses
 To determine factors which fanciers consider for granting loans
 To provide recommendations for improvements

1.2 Research questions

 Are there documented policies on debt management by small scale enterprises?
 Do small scale enterprises have adequate knowledge and skills on the choice of
business?
 Do small scale enterprises keep adequate accounting records?
 Do small scale enterprises have adequate debt management skills?
 Does debt management improve firm performance?
 Do small scale enterprises have adequate financial investments and business
sustenance?
 Do small scale enterprises have adequate capital base?
 What factors do financiers consider for granting loans?

1.2 Research Hypothesis

 Prudent debt management improves firm performance.
 Poor debt management does not improve firm performance.

1.3 Significance of the study

The research findings will:
 Assist small scale enterprises and medium entities to improve their skills on debt
management.

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  Add to the body of knowledge and complement on what other researchers have
studied on the similar topic.
 It would also help other researchers who may intend to take further studies on the
same subject to build on the findings of this study and also to help provide
solutions on emerging issues in this area of study.
 The study is also critical as it forms the partial fulfillment of being awarded a
Bachelor in Banking and Finance (BBF) Degree at Cavendish University

1.4 Methodology brief

This involves methods used to collect and analyze data. The methods are discussed in
Chapter 3.

1.5 Scope of the study

This study intends to cover the following areas
 Small Scale Enterprises.
 Documented policies on debt management.
 Knowledge and skills on choice of business by small scale enterprises.
 Accounting records.
 Knowledge on debt management.
 Debt management and firm performance.
 Financial investments and business sustainability.
 Capital base.
 Factors financiers consider for granting loans.

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CHAPTER TWO

2 Literature Review

2.1 Introduction

Literature review is a text by someone to consider the critical points of current knowledge
including substance findings as well as theoretical mythological contributions to a particular
topic. Literature reviews are secondary sources and such, do not report any new or original
experimental work. The purpose of literature review is to briefly evaluate the state of the art
in the area under review.

This chapter involved the identification of various literature sources related to the problem
being investigated. It is an area where various views from different authors are quoted and
presented.

This chapter looked at researches carried out worldwide on small scale enterprises.

2.2 Theoretical framework

This is a process of identifying a core set of connectors within a topic and showing how they
fit together or are related in some way the subject. Theoretical framework is a foundation for
the parameters, or boundaries of a study. Once these themes are established, researchers can
seek answers to the topical questions, they have developed on broad subjects.

With a framework, researchers can resist getting off topic by digging into information that
has nothing to do with the topic. Often researchers are curious about broad subjects, but with
a theoretical framework they stay within the theme or topic.

The theories that were used to guide the study were as follows:

The Poverty Alleviation Theory

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The pressing need for rural economy is to create job for large unemployed and under
employed labour force. It is customarily argued that jobs can be created either by generating
wage employment or by promoting self-employment in non-farm activities. Creation of
employment requires investment in small working capital. (Wahid, 1994) unfortunately
income from other sources is so low that they cannot generate investible surplus on their own.
Thus obtaining credit under certain circumstances can help the poor accumulate their own
capital and thus improve their living standard through the income generated from
investments.

The trade – off Model.

Different explanations provide the theoretical basis for the decision taken by firms in the
respective areas on the justification for the choice of financing sources and the appropriate
mix. The trade-off model postulates that the firm will aim at the optimal gearing levels that
will balance the tax benefits of additional debt with the expected costs of financial distress as
the level of indebtedness rises (Brierley, 2001; Bunn, Cunningham, & Drehmann, 2005).
Considering non-tax benefits of debt such as information asymmetries between lenders and
borrowers, managers may raise equity only when company’s shares seem overvalued.
Investors will consequently discount any new and existing shares when a new equity issue is
announced. Cassar & Holmes, (2001) found out that firms’ trade-off several aspects,
including the exposure of the firm to bankruptcy and agency costs against the tax benefits
associated with debt use. Firms are faced with higher cost of capital because of the increased
risk of liquidation and thus they tend to avoid debt. However, firms use debt in order to enjoy
tax benefits as a trade-off with the costs associated with bankruptcy and agency, and this
implies that there is an optimal debt-equity ratio for the firm, which changes as benefits and
costs alter over time (Modigliani &Miller, 1963). This model provides elaborate explanation
for the objectives where there is a need to understand the justifications for a particular mix of
sources of capital due to various benefits and risks embedded in each of these. It is clearly
evident that managers will opt for the mix of sources that minimizes the cost of capital but at
the same time not exposing the entity to the factors that may adversely affect the going
concern of the firm

Importance of SME sector in emerging economies

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There has been a general consensus of researchers on the importance of Small and Medium
Enterprises (SMEs) for the growth of the economy. Asian development bank in their report “SME
Development in Pakistan” emphasize the key role of SMEs for the growth of the country. Moreover
the role of SMEs in generating employment and ensuring equitable distribution of income is also
acknowledged. Furthermore according to the Economic Survey 0f Pakistan 2008-2009, there are 3.2
million SMEs in Pakistan which constitute over 90 percent of all private enterprises in the industrial
sector, employ nearly 78 percent of the non-agricultural labour force, and contribute over 30
percent to gross domestic product (GDP).SMEs are the growth engines of the economy due to their
ability to create jobs, foster entrepreneurship, and provide depth to the industrial base of the
economy (Ahmad, Nenova, & Niang, 2009). Moreover the state banks of Pakistan (SBP) in their
report realize the significance of SMEs for social and economic development. Employment
generation, poverty alleviation, accelerated growth, bridging the gulf of income inequity and
formation of forward and backward linkages are special features of SME sector. That being said
evidence has to come from developing economies worldwide to understand the importance of the
SME sector in emerging economies.

Indicators of assessing Sustainability of SME Sector

The SME sector of the economy is often in the spot light because of being neglected as a
stimulator of economic growth. But often the researchers fail to examine the capacity of
SMEs to sustain the development which is promoted. The growth potential of SMEs has to be
inspected through different indicators, to gauge an understanding on sustainability. The
global economy has witnessed SME entering international trade market on a regular basis
from last few years. Based on an empirical study of trends in 18 industrialized countries, the
Organization for Economic Cooperation and Development (OECD) notes that SMEs now
account for about a quarter of exports in most industrialized nations (OECD, 1997).
Internationally-active SMEs are emerging in notably large numbers throughout the world,
and they tend to be more dynamic and grow faster than strictly domestic firms (Bell, 1995;
Nakamura, 1992; OECD, 1997; Rennie, 1993; United Nations, 1993). This means that as an
indicator of SME sector sustainability we can examine the data on export contribution by
SMEs, the higher their contribution towards export sector the greater their ability to sustain
diverse economic conditions (Gary, 2001).

Credit Information, Credit quality and Institution

The financial institutes around the globe are extremely skeptical about providing credit in a
situation where credit risk is high. The risk is intensified in the case of SMEs, who lack
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collateral, credit history and are unable to keep proper financial records. These demand side
factors have led to, funding gap because SME cannot acquire credit from the formal
institutions (Ahmad, Nenova, & Niang, 2009). Because of high risk and accelerating
transaction cost for financial institutions, lending to SMEs is not a profitable option,
especially when the probability of default is also very high (Thorsten,2007). According to the
survey conducted by ADB in 2005, most of the SMEs are of the view that financing
constraints are most severe hurdle to cross (Bari, Cheema, & Haque, 2005). Along with a
reluctant financial sector the problem is intensified and calls for proper reforms by the policy
makers.

Financial Institution, financial market Structure and SME prospects

SME operate on a narrow capital base, those who have the urge to expand in terms of assets
or sales turnover or aspire to augment quality, have limited options for financing for example,
through retained profits and borrowing from informal sources i.e. friends/relatives etc. SMEs
access to formal credit, from commercial banks and leasing companies over the years has
been insignificant. The case of Pakistan presents an important highlight. According to
SMEDA, in 2006 out of the total credit off take of Rs. 2400.8 billion for private sector,
SMEs’ share was Rs. 408.3 billion or just 17% of the total amount. SME financing
constraints are ranked on the top of the list of obstacles faced by the SMEs for growth
(Thorsten, 2007). The availability of external sources of financing for SMEs has become an
important area of research for policy makers around the globe (Allen & Gregory, 2006).

CONCEPTUAL FRAMEWORK

INDEPENDENT VARIABLES DEPENDENT VARIABLES

KNOWLEDGE AND SKILL Good Performance and Financial distress

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2.2.1 Definition of small scale enterprise

Small scale enterprises (SSBs) are nuanced and hence defy a single definition. Definitions of
small scale enterprises mostly centre around issues such as size of assets, size of employee
requirements, annual turnover, technology and infrastructure requirements, and flexibility of
startup and management structure. This has made the conceptualization of small scale
enterprises vary from country to country. This study therefore synthesizes some of the
various definitions of small scale enterprises. The Australian Bureau of Statistics (2002)
defines small scale businesses (excluding agriculture) as businesses that employ less than or
equal to 200 people. In short, small scale enterprises could be described as any non-farm
business activity that an individual or group deliberately undertake with the intention of
making profit. As such, this study assesses debt financing schemes and their impact on the
performance of small scale enterprises. It therefore examines how debts are managed for
better performance of small scale enterprises and adopts the theory of capital structure
propounded by Franco Modigliani and Merton Miller in 1963.

2.2.1 Debt Management and Performance of Small Scale Enterprises

Small scale enterprises just like other organizations need capital (money and wealth the
means to acquire goods and services especially in a non barter system.) to run their
operations. As earlier alluded to, generating capital through credit systems has become a
necessity for the growth of small scale enterprises. This creates debt for such businesses.
Tantum (2003) advances that debt is the amount of taxes incurred during a tax period which
are payable to some type of governmental jurisdiction. Aspen Law and Business (2004)
defines debt as an amount owed to a person or organization for funds borrowed. For the
purposes of this study, debt is defined as any amount due to any authority for which payment
has not been effected. Debt take many forms and can be represented by a bond, loan note,
mortgage as well as other repayment terms and, when necessary, interest requirements. These
different forms are indications of the intent to pay back the amount owed at an agreed date as
is set forth in the repayment terms.

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Wallitsch (2007) argues that debt management is any approach that is adopted to guide an
individual or business organization to manage its debt. This definition includes debt
settlement, bankruptcy, debt consolidation, personal loans as well as other techniques that
assist businesses to service outstanding debts. Root (2009) contends that, debt management is
an act of trying to get one’s debt under control and become responsible for repaying
associated obligations. It can therefore be inferred that debt management is a conscious
measure taken by a debtor or agents hired on their behalf to reduce the debt burden or
strategize to eliminate the debt through acceptable payment terms. Cecchetti et al. (2011)
observe that a reasonable debt level improves welfare and enhances growth but high level
debts can lead to a decline in growth of a firm. Reinhart et al. (2009) reinforces this assertion
by arguing that debt impacts positively to the growth of a firm only when it is within certain
levels. He opines that a firm becomes vulnerable to financial crisis when the ratio goes
beyond certain levels. Stern Stewart and Company shares a similar view that high level of
debt increases the probability of a firm facing financial distress. Therefore Cecchetti et al.
(2011) contends that over borrowing by a firm can cause bankruptcy and financial ruin.
Accumulating high levels of debt by a small scale enterprise will constrain its ability to
undertake project that are likely to be profitable. This is because it would not be able to
attract new debt from financial institutions.

A study by Yuan and Kazuyuki (2012) using a sample of Chinese listed companies showed
that total debt ratio had a negative impact on fixed investment. This implies that high
proportion of debt in the capital structure of a firm can harm investment using internal funds.
This is because a firm with a high debt ratio can potentially channel most of its income
towards debt servicing thereby forgoing investment through internal funds. Therefore the risk
of a small scale enterprise increases when more debt is employed in its capital structure. It
will become increasingly difficult to attract more debt for investment purposes as creditors
will charge high interest rates to compensate for the high business risk. Yuan and Kazuyuki
(2012) therefore argued that creditors will be reluctant to lend more funds to a highly
indebted firm which resulting in underinvestment. As such, firm operations can be affected if
insufficient investment is undertaken.

A study by Ahmad et al.(2012) in Malaysia which sought to investigate how capital structure
impacts on a firm’s performance by analyzing the relationship between return on assets
(ROA), return on equity (ROE) and short-term debt and total debt established that short-term
debt and long-term debt had significant relationship with ROA. It was also established that

19
ROE had significant relationship with short-term debt, long-term debt and total debt. A
similar study by Ebaid (2009) partially agreed with the findings of Ahmad et al. (2012).In the
study Ebaid sought to establish the nexus between debt level and financial performance of
companies listed on the Egyptian Stock Exchange. The study used return on assets, return on
equity and gross profit margin as dependent variables. It also used short-term debt, long-term
debt and total debt as independent variables. The study found that the relationship between
short-term debt and total debt on return on assets (ROA) is negative. It therefore concluded
that there was no significant relationship between long-term debt financing and ROA.
Soumadi and Hayjajneh (2012) studying the nexus between capital structure and corporate
performance in Jordanian shareholdings firms used multiple regression models by least
squares (OLS) to establish the link between capital structure and corporate performance of
firms over a period of 5 years. The study found that capital structure was negatively and
statistically associated to the performance of the firms. The study concluded that there is a
negative relationship between capital structure and firm performance for both high and low
growth firms.

Maritala (2012) examined the optimal level of capital structure which enables a firm to
increase its financial performance. The study found that there was a negative relationship
between the firm’s debt ratio and financial performance measured by return on assets and
return on equity. Fosu (2013) also conducted a similar study in South Africa to investigate the
relationship between capital structure and corporate performance with focus on the degree of
competition. The study established that there was positive relationship between capital
structure and corporate performance. Ogebe et al. (2013) investigated the impact of capital
structure on corporate performance in Nigeria from

2000 to 2010. The study paid particular attention to macroeconomic variables (Gross
Domestic Product and inflation) on firm performance. The study concluded that there was a
strong relationship between leverage and corporate performance. The negative relationship
was also confirmed by Mumtaz et al. (2013) in their study in Pakistan that sought to establish
the relationship between leverage and firm performance. The study showed that financial
performance of firms is significantly impacted by their capital structure.

Specifically, on the nexus between debt management and performance of small scale
enterprises, the findings from the literature analysis show that debt management plays an
important role in any business particularly small scale enterprises. Thus prudent debt

20
management ensures that small scale enterprises are able to honour their debt obligations.
However, as revealed by Ross et al. (1996) the obligations of businesses are numerous
including purchases, payment of wages and salaries and taxes. Therefore the basic objective
of debt management is to keep the investment in debt as low as possible while still operating
the firm’s activities efficiently and effectively. This is crucial for smooth and reliable
business operations. Ross et al. (1996) further assert that an enterprise can also increase its
net debt flow by slowing down disbursements. The importance of keeping debt balances by
micro and small scale enterprises cannot be taken for granted. Moyer et al.(2001) argue that
effective debt management is particularly important for small scale enterprises.

Two dominant alternative strategies to debt management have been offered by contemporary
theories. These are the conservative and aggressive debt management strategies. Aggressive
working capital strategies are usually associated with higher returns and risk. Conservative
working capital strategies offer both lower risk and returns (Weinraub and Visscher, 1998). A
study conducted by Nyamao et al. (2012) to investigate the effects of debt management
practices on the financial performance of small scale enterprises in the Kisi South District of
Kenya found that debt management practices were low amongst small scale enterprises. It
also discovered that majority of them had not adopted formal debt management strategies.
Similarly, their financial performance was on a low average. The study concluded that debt
management practices influence the financial performance of small scale enterprise.

A similar study by Dong and Su (2010) concluded that a firm’s profitability and liquidity are
influenced by its debt management strategies. The study used pooled data between 2006 and
2008 to evaluate the companies listed in the Vietnam Stock Exchange focusing on cash
conversion cycle and related elements to measure debt management. It found that the
relationships among these variables were strongly negative. This implies that profit is
negatively influenced by an increase in cash conversion cycle. It further established that
profitability increases as the debtor’s collection and inventory conversion periods reduce. The
study also assessed debt management strategies in terms of aggressive financing and
aggressive investing debt management approaches. Mathuva applied the Pearson and
Spearman’s correlations, the pooled ordinary least squares, and the fixed effects regression
models in analyzing the data. The study found a highly significant negative relationship
between profitability and the time it takes for firms to collect cash from their customers. It

21
also found a highly significant positive relationship between profitability and the period taken
to convert inventories to sales and the time it takes for firms to pay creditors.

“Opportunities for finance should not be an automatic cause for celebration and signatures ,
instead, a careful strategy and improved debt management is required,” said GregorySmith,
world Bank senior Economist. “The debt needs to be managed carefully and the proceeds of
borrowing shrewdly invested.”

“there remains a need to look closely at ways to improve debt management to ensure that
economic growth has sustainable foundations and that borrowed money in invested wisely to
ensure inclusive growth said Marlene Ruthenburg, World Bank Country Manager for
Zambia.

2.3 Research gaps

Little is known about debt management by small scale enterprises in Zambia. Hence there is
need for more research on debt management by small scale enterprises in Zambia.

2.4 Research variables arising from Literature Review

A variable is any observation that can take different values. There are two types of variables,
independent variables and dependent variables. Independent variables involve the actions and
interventions, while dependent variables include results and outcomes (Dr Southard 2006)
.With regard to this study policies, knowledge and skills on debt management are the
independent variables and good firm performance and reduced financial distress are the
dependent variables.

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CHAPTER THREE

3 Methodology and Design

This chapter looks at methods used to collect the data

3.1 Research Philosophy and Approach

There are two types of methodology that can be used by the researcher and these are:

3.1.1 Quantitative Research Methodology

Quantitative research is the systematic scientific investigation used to measure the findings
and thoughts of people, and action of the way and why things are done. Everything that is
measurable can be used to gather quantitative data. Structured questionnaires and interviews,
one on one and telephonic data gathering are some of the common ways of collection data for
quantitative research. This is the methodology which was used by the researcher.

3.1.2 Qualitative Research Methodology

Qualitative Research is used to gain an in-depth insight into matters that affect human
behaviour. it is a study that reflects more on the why and how of decision making, bystudying
peoples culture, values
system,attitude,behaviour,concern,motivation,aspiration,etc.qualitative research is multi-focal
in its reasoning ,exploring, questioning and answering :hence, it is extremely useful in market
research ,constructing business decision and policies, enhancing communication and
fascinating research. Unlike quantitative data collection, methods of qualitative research are
based on unstructured interviews recordings, and feedback.

3.2 Research design

The research design which was used by the researcher was descriptive

23
3.2.1 Research Strategy

Research strategy is the structure or plan of a research-what to do and how to do it. It

involves the structuring of variables in a manner that enables their relationship to be
determined. The research used a case study as a research design during the study. A case
study is defined as an in-depth investigation of an individual, group or institution to
determine the variables and relationship among the variables influencing the current
behaviour or status of the subject of the study. A case study is the development of detailed,
intensive knowledge about a single case or of a small number of related cases. This design is
flexible and hence enables the researcher to use different methods of collecting data and
information i.e. questionnaires and interviews.

3.2.2. Research Choice

The research used mixed methods for data collection.

3.2.3 Time Horizon

There are two approaches to time horizon, namely Cross-sectional and Longitudinal.

Cross-sectional studies involve data collection from a population or a representative subset at

one specific point in time, while longitudinal studies: usually study the change and
development over a period of time.

This study took up the longitudinal approach because as the required information was
sourced from the clients over a period of time, which took months as some SMEs were not
compliant with giving information.

3.3 Sources of Data.

There are two sources of data primary and secondary data. Primary data is data obtained in
the field, while Secondary data is data that is already in existence such as published materials.
The research used both sources of data.

This study used both primary and secondary data. The primary data was that gotten in the
field through questionnaires personal interactions with SMEs while the secondary data was
gotten from the literature done by other researchers and authors.

24
3.4 Sampling Frame
According to the English oxford dictionary a population is defined as the number of people
living in an area. The area of study was small scale enterprises conducting business in
Lusaka Zambia and are clients of unity finance Zambia.

3.4.1 Target Population

The researchers target population was 100 SMEs that are clients of Unity Finance Zambia.
3.4.2 Sample Size
Owing to lack of sufficient funding and time to gather information from the targeted
population, the goal became finding a representative sample of the whole population. The
sample size of the targeted population was 10 SMEs out of the 100 targeted clients unity
finance has. The sample size represented 10% of the targeted population

3.4.3 Sampling Techniques

A sample is a segment of the population selected to represent the population as a whole.
There are various sampling techniques some which are;

i) Simple Random Sampling

The critical attribute of simple random sampling is that each member of the target
population has an equal and independent chance of being included in the sample.
Independence in this sense means that the selection of a member of the population.
ii) Stratified Random Sampling
Stratified sampling aims at ensuring proportionate representation of subgroups in the
sample. The stratified sampling procedure divides the population into homogenous
subgroups containing members who share common characteristics
iii) Cluster Sampling
Cluster sampling is necessitated when simple random sampling poses administrative
problems. The population may be large and widely dispersed.
iv) Stage Sampling
Stage sampling is an extension of cluster sampling. Using the example, given cluster
sampling, stage sampling would involve the random selection in stages, firstly of a

25
 number of schools; secondly, of a number of classes within these schools; of a
number of pupils within these classes.
v) Systematic sampling
Systematic sampling involves the selection of members from a population list in a
systematic fashion. The technique is used when the members of a defined population
are already placed on a list in random order. The selection of members then proceeds
by dividing the population by the required sample size.
vi) Judgment sampling
The researcher uses his/her judgement to select population members who are good
prospects for accurate information. This is the method that was used by the researcher
to select the appropriate sample. It was done in a way such that the respondents were
SMEs that were clients to Unity finance Zambia and were physically visiting the unity
finance branches in Lusaka to service their loans or the clients that went back to apply
for more debt as well as the clients that were making follow ups on deductions they
were not knowledgeable of.

3.5 Data collection techniques

3.5.1 Questionnaires

A questionnaire is a carefully designed instrument for collecting data in accordance with the
specifications of the research questions and hypotheses. It elicits written responses from the
subjects of the research through a series of question/statements put tighter with specific aims
in mind. The questionnaire may be used to ascertain facts, opinions, beliefs, attitudes, and
practices. The researcher distributed questionnaires to the respective sample; this enabled the
respondents to answer the questions at their convenient time.

A questionnaire was used for this study because it had questions that were critical to the study
written down. It was also used because it was easier to keep a record of the answers that the
SMEs gave in response to the questions,

3.5.2 Interviews

An interview is a face to face interaction in which oral questions are posed by an interviewer
to elicit oral responses from the interviewee. It should be realised that an interaction takes
place among the interview situation, the interviewer, the interviewee and the interview

26
schedule. For maximum success in an interview, the interview situation should be kept as
flexible as possible.

Interviews were conducted as well for the research for some SMEs that were unable to read
and needed interpretation of the written down information

3.5.3 Observation

It is the gathering of primary data by investigator’s own direct observation of relevant people,
actions and situations without asking from the respondents.

3.6 Data Analysis Techniques

Data gathered from this research was analyzed using tables and pie charts.

Tables were used as visual display of the data collected and Graphs were used for graphical
representation of the data collected.

3.7 Reliability and Validity (triangulation)

Triangulation facilitates validation of data through cross verification from more than two
sources. It tests the consistency of findings obtained through different instruments and
increases the chance to control, or at least assess, some of the threats or multiple causes
influencing our results. There are four basic types of triangulation:

 Data triangulation: involves time, space, and persons

 Investigator triangulation: involves multiple researchers in an investigation
 Theory triangulation: involves using more than one theoretical scheme in the
interpretation of the phenomenon
 Methodological triangulation: involves using more than one option to gather data,
such as interviews, observations, questionnaires, and documents.

3.7.1 Triangulation to minimise bias

The problem with relying on just one option is to do with bias. There are several types of bias
encountered in research, and triangulation can help with most of them.

 Sampling bias- sampling bias is when you don’t cover all of the population you’re
studying (omission bias) or you cover only some parts because it is more convenient

27
 (inclusion bias). The researcher combines the different strengths of these options to
ensure getting sufficient coverage.
 Procedural bias- procedural bias occurs when participants are put in some kind of
pressure to provide information.
3.8 Ethical considerations
When we talk about ethics in research, we are referring primarily to the ethical issues
involved in the implementation and execution of a good project. In other words, making
distinctions between what can be considered right and what can be considered wrong. Highly
ethical standards were applied by making information obtained confidential where needed
and procedures of getting data was done in a professional manner in order to avoid plagiarism
and protect intellectual property rights; bias was avoided.

3.9 Limitations of the study

The data collection process was not easy because of the following problems;

 The researcher was not given all the required data information from the respective
SMEs contacted.
 Resources constraints to some extent hindered the efficiency of the study such as
time, finances, materials and human resources.
 The researcher lacked much secondary sources of data like books
 The researcher hoped to get responses from the questionnaires in two weeks’ time
but instead, these were received much later than anticipated.

28
CHAPTER FOUR

4 Data Presentation

4.1 Introduction

Data was compiled and analyzed applying computer software with SPSS and presented in
table form and graphs, among the most widely used program for statistical analysis in social
science. It is used by market researchers, health researchers, survey companies, government,
education researchers and others. In addition to statistical analysis, data management (case
selection, file reshaping, creating derived data) and data documentation (a metadata
dictionary is stored with the data) are features of the base software. Microsoft Words and
Microsoft Excel were used to generate and transform the results from the SPSS software.

4.2 Responses from Small and Medium Enterprises

4.2.1 Profile of Respondents

Table 4.2.1 Gender

GENDER

Cumulative
RESPONDENTS Frequency Percent Percent
Male 7 70 70
Female 3 30 100
100.0
Total 10 100.0

Source: SPSS-July 2020

29
Figure 4.2.1 Gender
80%

70%

60%

50%

40%

30% Gender

20%

10%

0%
MALE FEMALE

Source: SPSS-July 2020

4.2.2 Profile of Respondents – Indicate age group

Table 4.2.2
Indicate age group
Respondents frequency Percentage Cumulative
Percent
20-30years 4 40 40
30-40years 3 30 70
40-50years 3 30 100
Above 50years 0

TOTAL 10 100
Source: SPSS

Figure 4.2.2 Age group

30
 Age group
45%

40%

35%

30%

25%

20% Age group

15%

10%

5%

0%
20-30years 30-40years 40-50years above 50years

Source: SPSS-July 2020

4.2.3 Profile of Respondents – Educational Qualifications

Table 4.2.3 Educational Qualifications

Respondents Frequency Percentage Cumulative

Percentage
Primary 0 0 0
Secondary 2 20 20
College 6 60 80
University 2 20 100

TOTAL 10 100

Source: SPSS-July 2020

Figure 4.2.3 Educational Qualifications

31
 Educational Qualifications
70%

60%

50%

40%

Educational Qualifications
30%

20%

10%

0%
Primary Secondary College University

Source: SPSS-2020

4.2.4 Profile of respondents – Type of business

Table 4.2.4 Type of business

Type of business

Respondents Frequency Percentage Cumulative

Percentage
Trading 6 60 60
Manufacturing 0 0 60
Others 4 40 100

Total 10 100

Source: SPSS-July 2020

32
Figure 4.2.4 Type of business

Type of Business
70%

60%

50%

40%

Type of Business
30%

20%

10%

0%
Trading Manufacturing Others

Source: SPSS-July 2020

4.2.5 Profile of respondents – Business Experience

Table 4.2.5 Business Experience
Business Experience

Respondents Frequency Percentage Cumulative

Frequency
1-5years 5 50 50
5-10years 2 20 70
10-15years 2 20 90
16years and above 1 10 100

TOTAL 10 100

Source: SPSS-July 2020

33
Figure 4.2.5 Business Experience

Business Experience
60%

50%

40%

30%
Business Experience
20%

10%

0%
1-5years 5-10years 10-15years 16years and
above

Source: SPSS-July 2020

4.2.6 Profile of respondents – Is business registered with PACRA?

Table 4.2.6 Business registered with Pacra

Business registration with PACRA

Respondents Frequency Percentage Cumulative

Percentage
Yes 9 90 90
No 1 10 100

TOTAL 10 100

34
Source: SPSS-July 2020

Figure 4.2.6 Business Registration

Business registration with PACRA

100%
90%
80%
70%
60%
50% Business registration with
PACRA
40%
30%
20%
10%
0%
Yes No

Source: SPSS-July 2020

4.2.7 Profile of respondents – Do you have documented policies on debt

management?

Table 4.2.7 Do you have documented policies on debt management?

Documented policies on debt management

35
Respondents Frequency Percentage Cumulative
Percentage
Yes 5 50 50
No 5 50 100

Total 10 100

Source: SPSS-July 2020

Figure 4.2.7 Documented policies on debt management

Documented policies on debt management

60%

50%

40%

30% Documented policies on debt

management
20%

10%

0%
Yes NO

Source: SPSS-July 2020

36
4.2.8 Profile of Respondents – Adequate knowledge and skills on the choice
of business
Table 4.2.8 Adequate knowledge and skills on the choice of business

Adequate knowledge and skills on the choice of business

Respondents Frequency Percentage Cumulative

percentage
Yes 10 100 100
No 0

TOTAL 10 100
Source: SPSS-July 2020

Figure 4.2.8 Adequate knowledge and skills on the choice of business

Adequate Knowledge and skills on the choice

of business
120%

100%

80%

60% Adequate Knowledge and skills

on the choice of business
40%

20%

0%
Yes No

Source: SPSS-July 2020

4.2.9 Profile of Respondents – Do you keep records for the business

Table 4.2.9 Do you keep records for the business

Do you keep records for the business

Respondents Frequency Percentage Cumulative

37
 percentage
Yes 10 100 100
No 0 0

TOTAL 10 100

Source: SPSS-July 2020

Figure 4.2.9 Do you keep records for the business

Do you keep records for the business

120%

100%

80%

60% Do you keep records for the

business
40%

20%

0%
Yes No

Source: SPSS-July 2020

Table 4.2.10 Profile of respondents – Do you have adequate knowledge on debt

management.
Do you have adequate knowledge on debt management

Respondents Frequency Percentage Cumulative

38
 percentage
Yes 9 90 90
No 1 10 100

Total 10 100

Source: SPSS-July 2020

Figure 4.2.10 Profile of respondents – Do you have adequate knowledge on debt

management

Do you have adequate knowledge on debt

management
100%
90%
80%
70%
60%
Do you have adequate
50%
knowledge on debt
40% management
30%
20%
10%
0%
Yes No

Source: SPSS-July 2020

4.2.11 Profile of respondents – Does debt management affect the performance

of your business?

Table 4.2.11 Does debt management affect the performance of your business?

Does debt management affect the performance of your

business

Respondents Frequency Percentage Cumulative

percentage

39
 Yes 9 90 90
No 1 10 100

TOTAL 10 100

Source: SPSS-July 2020

Figure 4.2.11 Does debt management affect the performance of your business

Does debt management affect the

performance of your business
100%
90%
80%
70%
60%
Does debt management affect
50%
the performance of your
40% business
30%
20%
10%
0%
Yes No

Source: SPSS-July 2020

4.2.12 Profile of respondents – Do you have adequate financial investment

to sustain your business?

Table 4.2.12 Do you have adequate financial investment to sustain your business
Do you have adequate financial investment to sustain
your business
Respondents Frequency Percentage Cumulative
percentage
Yes 3 30 30
No 7 70 100

TOTAL 10 100
Source: SPSS-July 2020

40
Figure 4.2.12 Do you have adequate financial investment to sustain your business

Do you have adequate financial investment

to sustain your business
80%

70%

60%

50%
Do you have adequate financial
40%
investment to sustain your
30% business

20%

10%

0%
Yes No

Source: SPSS-July 2020

4.2.13 Profile of respondents – Do you have adequate capital for your

business?
Table 4.2.13 Do you have adequate capital for your business
Do you have adequate capital for your business
Respondents Frequency Percentage Cumulative
percentage
Yes 5 50 50
No 5 50 100

TOTAL 10 100
Source: SPSS-July 2020

Figure 4.2.13 Do you have adequate capital for your business

41
 Do you have adequate capital for your
business
60%

50%

40%

30% Do you have adequate capital

for your business
20%

10%

0%
Yes No

Source: SPS-July 2020

4.2.14 Profile of respondents – What are your main sources of finance?

Table 4.2.14 What are your main sources of finance
What are your main sources of finance
Respondents Frequency Percentage Cumulative
percentage
Loans from banks and other institutions 5 50 50
Self Financing 4 40 40
Family and friends 1 10 100

TOTAL 10 100

Figure 4.2.14 What are your main sources of finance

42
 What are your main sources of finance
60%

50%

40%

30%
What are your main sources of
20% finance

10%

0%
Loans from banks Self financing Family and friends
and other
institutions

Source: SPSS-2020
4.2.15 Profile of respondents – Which factors do financiers consider for
granting loans?
Table 4.2.15 Which factors do financiers consider for granting loans
Which factors do financiers consider for granting loans

Respondents Frequency Percentage Cumulative

Percentage
Record Keeping 2 20 20
Technical Management skills 1 10 30
Professionalism 1 10 40
Collateral 6 60 100

TOTAL 10 100

Source: SPSS-July 2020

Figure 4.2.15 Which factors do financiers consider for granting loans

43
 Which factors do financiers consider for
granting loans
70%
60%
50%
40%
30%
20%
10% Which factors do financiers
0% consider for granting loans

Source: SPSS-July 2020

44
CHAPTER FIVE

5 Discussion and interpretation of data

5.1Introduction
This chapter discusses and interprets the data presented in Chapter four

5.2 Responses from the small and medium enterprises

5.2.1 Profile of Respondents – What is your gender

70% of the respondents were Male and 30% of the respondents were female.

5.2.2 Indicate age group

40% of the respondents were between 20 – 30 years of age, 30% of the respondents were
between 30 – 40 years of age, 30% of the respondents were between 40 -50 years of age and
0% of the respondents were above the age of 50.

5.2.3 Educational qualifications

0% of the respondents were primary drop outs, 20% of the respondents were grade 12
certificate holders, 60% of the respondents were college graduates, 20% of the respondents
were degree holders.

5.2.4 Type of business

60% of the respondents were into the trading business, 0% of the respondents were into
manufacturing business, 40% of the respondents were into other types of business,

5.2.5 Business Experience

50% of the respondents had 1- 5 years of experience in business, 20% of the respondents had
5 – 10years of experience in business, 20% of the respondents had 10 – 15 years business
experience while only 10% of the respondents had business experience of 16years and above.

5.2.6 Businesses registered with PACRA

90 % of the respondents had their businesses registered with PACRA while 10% of the
respondents had their business NOT registered with PACRA

45
5.2.7 Do you have documented policies on debt management?
50% of the respondents had documented policies on debt management and 50% percent of
the respondents had no documented policies on debt management.

5.2 8 Do you have adequate knowledge and skills on the choice of business?
100% of the respondents were well knowledgeable and skilled on their choice of business.

5.2.9 Record keeping for the business

100% of the respondents kept records for their businesses.

5.2.10 Profile of respondents –Do you have adequate knowledge on debt

management.
90% of the respondents had knowledge on debt management while 10% of respondents
didn’t have knowledge on debt management.

5.2.11 Does debt management affect the performance of your business?

90% of the respondents businesses are affected by debt management while 10% of the
respondents are not affected by debt management.

5.2.12 Do you have adequate financial investment to sustain your business?

30% of the respondents have adequate financial investment to sustain their
businesses while 70% do not have adequate financial investment to sustain their
businesses.

5.2.13 Do you have adequate capital for your business?

From the total respondents , 50% had adequate capital for their business and 50% of the
respondents did not have adequate capital for their businesses.

5.2.14 What are your main sources of finance?

50% of the respondents have their main source of finance from loans from
banks and other institutions, 40% of the respondents are self financed and 10%
of the respondents source their finance from family and friends.

46
5.2.15 Which factors do financiers consider for granting loans?
20% of the respondents stated that financiers consider record keeping . 10% of
the respondents stated that financiers consider Technical management skills,
10% of the respondents stated that financiers consider professionalism and 60%
of the financiers consider collateral when granting loans.

47
CHAPTER SIX

6 Introduction

This chapter presents conclusion, implications and recommendations on debt management by

SMEs in Zambia a case study of unity finance.

6.1 Conclusion
The main findings of this research rendered that debt management practices have an impact
on the performance of small and medium scale enterprises, with performance being measured
by profitability and the analysis established that a strong positive relationship exists between
practices of debt management and profitability of a business. Therefore, this implies that debt
within SMEs has to be effectively managed as it has an impact on how the business performs
in the long-run. The major cause of poor debt management as found by this study is the lack
of knowledge about debt management practices affected by the failure to hire skilled and
experienced personnel.

Further findings to this research included

 Lack of education on debt management

 Lack of proper documentation of financial records of some
 Lack of easy access to debt
 Lack of gender balance in the SME sector
 Lack of interest for those 50years and above in the SME sector
 Lack of degree holders’ interest in the SME sector
 Lack of SMEs interest in the manufacturing industry
 Lack of adequate financial investment to sustain SMEs business

 Lack of adequate capital to sustain SMEs business

6.2 Implications

Failure to address the above challenges impact negatively on the small scale and medium
entities thereby reducing productivity of the economic sector which will eventually go from
bad to worse.

48
6.3 Recommendations
a) The government should:
 Put in place mechanisms to improve support to small scale and medium enterprises
 Sensitize the public on the benefits of being and SME
b) Small scale and medium entities should:
 Make efforts to obtain debt management training
 Maintain proper accounting records
 Prepare strategic plans
 Make efforts to get more women and those above 50 o board
 Engage more degree holders in this sector as they are more knowledgeable
 Diversify to enable adequate financial investment and raise enough capital
c) Unity Finance should:
 Restructure their loans to small scale and medium enterprises with longer repayment
periods to enable them invest in activities that will generate reasonable incomes
 Reduce interest rates on loans to small scale and medium enterprises.
 Provide clear and transparent guidelines on acquiring debt
 Provide multiple debt facilities to SMEs

49
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financial institutions active in scale Enterprise Finance, Geneva: International Labour Office

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White, S. and Reinecke, G. (2004) Policies for Small Enterprises: creating the Right
Environment for Good Jobs, Geneva: International Labour Office.

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Sage.

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INTERVIEW GUIDE ON DEBT MANAGEMENT BY SMALL SCALE
ENTERPRISES
Appendices

ANNEXURES
ANNEXURE 1
COVERING LETTER TO QUESTIONNAIRE
Date: …………………….
Dear Sir/Madam
Research Questionnaire
I am currently registered for the Bachelor In Banking and Finance (BBF) Degree at Cavendish
University Zambia. My research topic isto assess the management of debt by small scale
enterprises in Zambia.

I humbly appeal to you for your co-operation in this research study. I would appreciate it very much
if you would kindly complete the attached questionnaire. I will be available to clarify any unclear
questions that you may experience whilst completing the questionnaire.
The information that will be collected is purely for academic purpose and as such whatever
information you give will be kept confidential. The information can help to guide future planning and
management of debt by small scale enterprises.
Yours sincerely
................................

Darren Shamutete
Cell: 0975729490

DEMOGRAHIC DATA

1. Indicate gender

Male □ Female □

2. Indicate age group

20- 30 years □ 30- 40years □

54
40-50years □ Above 50years □

EDUACATIONAL QUALIFICATIONS

3. Indicate

Primary □Secondary □

College □ University □

BUSINESSEXPERIENCE

4. Number of years in business

1-5 years □ 5-10 years □

10-15years □ 16 and above □

5. What is your business

Name…………………………………………………………………………………………………………………………………………………
…………………………………………

6. Type of business

a) Trading. □ b) Manufacturing □ c) Others □

7. Is your business registered with PACRA?

Yes □ No □

If no please specify…………………………………………………………………………….

…………………………………………………………………………………………………..

EFFECTS OF DEBT ON THE SMALL SCALE ENTERPRISES

8. Do you have documented policies on debt management?

Yes □ No □

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If no explain…………………………………………………………….

9. Do you have adequate knowledge and skills on the choice of business?

Yes □ No □

If no explain………………………………………………………………

10. Do you keep records for the business?

Yes □ No□

If no explain………………………………………………………………….

11. Do you have adequate knowledge on debt management?

Yes □ No □

If no, please explain……………………………………………………………………………………………………………………….

12.Does debt management affect the performance of your business?

Yes □ No □

If no, please explain………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………………………………..

13.Do you have adequate financial investment to sustain your business?

Yes □ No □

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If no, explain……………………………………………………………………………………………………………………………………….

14. Do you have adequate capital for your business?

Yes □ No □

If no explain…………………………………………………………………………………

15. What are your main sources of finance?

a) Loans from Banks and other institutions

b) Self financing

c) Family and friends

16. Which factors do financiers consider for granting loans?

a) Record keeping

b) Technical management skills

c) Professionalism

d) Collateral

17) Any other challenges on debt management?

……………………………………………………………………………………………………………………………………………….

…………………………………………………………………………………………………………………………………………………..

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……………………………………………………………………………………………………………………………………………………

THE END!
THANK YOU FOR YOUR PARTICIPATION.

Appendix B
58
Work Schedule and Resource Requirement
Work Schedule

Task Proposed Period

1. Background of the problem of study 1st june - 14th March
2. Literature review & Theoretical framework 15th June - 30th June
3. Sampling plan 1st July - 15th July
4. Data collection (issuing & collection of questionnaires) 16th July-15th July
16th
5. Sorting and Coding of Responses July- 1st August
6. Data analysis & Final Report 6th Aug-12th Aug.

Budget
ACTIVITY/ ITEM AMOUNT (ZMW)
Transport cost 3000.00
Paper 500.00
Airtime 600.00
Printing & Binding 400.00
Dissertation covers 200.00
Internet costs 500.00
TOTAL EXPENDITURE 5,200.00

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