Analyzing the Effectiveness of Subsidized Credit Facilities on Business Operating Capital and Production Growth in Selected Towns (Journal of economics, business and commerce.)

Summary

• The study surveyed 107 agribusiness respondents across Choma, Kalomo, and Lusaka to assess how subsidized credit facilities impact working capital and production growth.p.1
• Small and medium enterprises generate approximately 70% of Zambia's GDP and account for 88% of national employment.p.2
• Subsidized credit significantly strengthened working capital, with 86.9% of respondents reporting an operating capital growth of above 50%.p.1
• While 85% of respondents experienced an increase in supply volumes of over 50%, only 13.1% reported always meeting seasonal demand from farmers.p.1
• Simple linear regression showed that perceived credit contribution to supply volumes did not significantly predict the reliability of meeting demand, F(1, 105)= 1.18, p = 0.280.p.1

Key insights

1. Subsidized credit facilities demonstrated a statistically significant positive effect on agro-dealer operating capital with a t-statistic of -57.07 (p < 0.001).p.1
2. Sub-Saharan Africa faces an estimated unmet financing demand of roughly USD 100 billion specifically for agricultural small and medium enterprises.p.2
3. The majority of surveyed agribusinesses (57.0%) primarily sell veterinary products and animal feed.p.7
4. Seasonal working capital was between ZMW300,001 and ZMW500,000 for 43.0% of the surveyed agribusinesses.p.8
5. All 107 surveyed agribusinesses (100%) were formally registered with the Patents and Companies Registration Agency.p.7
6. Subsidized credit facilities strengthen the working capital of agro-dealers more consistently than they improve the reliability of input supply to farmers.p.1