An Empirical Analysis of Microfinance Accessibility and its Effect on the Growth of Women Entrepreneurs in Lusaka, Zambia

Abstract

This study examined the effect of microfinance accessibility on the growth of women-owned enterprises in the Lusaka District, Zambia.  The objectives of the study were to determine the role of financial literacy in influencing the effective utilization of microfinance services among women entrepreneurs in Lusaka District, to examine the impact of microfinance inaccessibility on the business performance of women entrepreneurs in Lusaka District, and to devise strategies for enhancing microfinance accessibility for entrepreneurial growth among women entrepreneurs in Lusaka District. Quantitative data was collected using structured questionnaires, while qualitative data were gathered through semi-structured interviews. Of the 384 questionnaires distributed, 319 were successfully returned, representing an 83.1 % response rate. Quantitative results demonstrate that microfinance inaccessibility significantly predicts business performance decline (r = 0.612, p < 0.001), explaining 37.4% of the variance in business stagnation. The research revealed that while financial capital is necessary, its great potential is only realised when combined with the intangible resource of financial literacy. Quantitative results further show that financial literacy is the strongest driver for growth, explaining 55.4% of the variance in effective loan utilization (R²=0.554, p<0.001) with results indicating that limited budgeting, record-keeping skills, and financial confidence constrain optimal loan utilization.  The findings emphasize that improving financial literacy while strengthening internal capabilities is essential to unlock the untapped growth potential of women entrepreneurs and transition them from subsistence-level enterprises to transformative growth. Based on these findings, the study recommends the implementation of gender-inclusive financial policies that reduce collateral requirements and expand digital financial access, alongside the redesign of microfinance products to include flexible lending terms and embedded financial literacy training. Furthermore, strengthening institutional support through partnerships and integrating capacity-building initiatives into microfinance services are essential for improving utilization and business performance.