Challenges faced by small and medium scale entrepreneurs in accessing credit facilities from Zambia National Commercial Bank (PLC) headquarters in Lusaka.

The study sought to establish the factors influencing access to credit among small and
medium enterprises at Zanaco Head office. The aim of the study was to investigate the
challenges faced by SMEs in accessing credit facilities from Zambia National Commercial
Bank PLC headquarters in Lusaka. A cross sectional study design was employed. Data was
collected by the use of questionnaires and interviews. Data analysis included the use of
descriptive and inferential statistics. Descriptive statistics involved the use of frequency
tables, pie charts, graphs and percentages. ZANACO offers the following as credit facilities;
Over Drafts, a long term loan, a bridge loan and a Letter Of Credit. Though the bank offers
these credit facilities, it hardly offers a start-up loan and packing credit facility. ZANACO
does not offer a wider range or credit facilities because agricultural lending is both risky and
expensive. The NPL on agricultural sector currently exceed 37% against 13% across all other
sectors of the economy and this is considered to be very high. It is not possible to provide
start-up loans and this is compounded by the fact that there is no history of the business or
how the farmer will perform if availed a facility. It is also not possible for the bank to
guarantee quality. Lack of collateral by some SMEs was also a factor in most instances. This
was complicated by a high default risk. Risks could be mitigated by taking collateral,
considering applications for SMEs who have invested a sufficient amount of their own capital
into the business and by considering only those SMEs who have experience. The key
recommendation was that information symmetry should be enhanced between CRBs and
financial institutions on one hand and SMEs on the other hand.