An Assessment of How Business Management Skills and Financial Performance of Small and Medium Enterprises (SMEs) Impact on Farmers and Suppliers in Zambia: Case of the Agro Industry
Authors: Joshua Munkombwe 
Published: February 2022

Abstract: Small and medium enterprises (SMEs) are a critical component to economical and National development of any given country. In this regards, agro-dealers are part of SMEs that are helping to grow and develop the agricultural sector in the country. Unfortunately, agro-dealers in Zambia are reported to be inconsistent in stocking of the products and taking long time to pay back the suppliers. This ultimately affects the suppliers and farmers in the agriculture industry. This study assessed how business management skills and financial performance of small and Medium enterprises (SMEs) impact on farmers and suppliers in Southern, Central and Lusaka Provinces of Zambia. Therefore, 120 SMEs agro dealers were randomly selected from the list of Government approved agro dealers in the chosen districts. 120 smallholder farmers were selected in the three provinces in the chosen districts and 13 large-scale suppliers were purposively selected. The study administered questionnaires to critical stakeholders. Primary data collection Was used in structured questionnaires that were administered to accountants and executive managers of the 120 SME firms in the 3 provinces Lusaka, southern and central. A mixed approach of qualitative and quantitative was used to bridge the gaps that exist between qualitative and quantitative data. Other questionnaires were administered to the farmers and also the suppliers of products to the SME agro-dealers. Semi structured interviews were done to 120 farmers. Secondary data was collected through review of literature on financial management, competencies, skills training and capacity, financial management systems and variables leading to firm’s profitability. To understand the extent and implications between the SME management skills, management systems and their performance, and failure to meet the expectations of farmers and suppliers, regression and correlation analysis together with descriptive statistics were used using SPSS. The study focused on: determining whether SME agro-dealers meet farmers and suppliers expectations, determining the business skills that SME agro dealers need to possess and the effects they have on meeting farmers and suppliers expectations, determining the business management systems and financial performance of SME agro-dealers impact on farmers and suppliers businesses. The results showed that SME agro dealers do not have necessary skill sets that are required to run the enterprises properly and profitably and hence fail to meet the famers’ and suppliers’ expectations. 81.7%% of the SME agro dealers indicated poor strategic planning and only 18.3% indicated had valid and robust strategic plans, ………budget analysis respectively. Regarding the SME agro dealers financial management systems affecting them not to meet the expectations of farmers and suppliers, the results showed that the SME agro dealers do not have necessary financial management systems in place. The results indicated 69.2% had poor financial management systems and 100% of the suppliers agreed that SME agro dealers had poor stock management systems that affected their business performance. International Journal for Research in Applied Science & Engineering Technology (IJRASET) ISSN: 2321-9653; IC Value: 45.98; SJ Impact Factor: 7.538 Volume 10 Issue I Jan 2022- Available at www.ijraset.com ©IJRASET: All Rights are Reserved | SJ Impact Factor 7.538 | ISRA Journal Impact Factor 7.894 | 1848 This in turn affected the availability of products and services to farmers. This implied a negative relationship existed between the suppliers/farmers and the SME agro dealers in terms of the nature of their commercial relationships .The study concluded that the SME agro dealers do not meet the expectations of the farmers’ and the suppliers’. It was therefore recommended that firms should help build internal financial and business management systems to equip SMEs with technical knowledge and skills. SME agro-dealers require capacity building programs that should include mentorship programs that allow or gives chance to practice the skills. The problem of financial management can be resolved by introducing financial institutions that can quickly pay for all transactions instantly, and then it start waiting for the money, which will ensure consistent stocking of products by agro-dealers. E-payments innovations that secure the suppliers’ finances and makes available the SME agro dealers’ mark-ups are a secured system.