The employment challenge – creating more jobs and improving the quality of
existing jobs – is one of Zambia’s biggest. Over the past decade Zambia has recorded
unprecedented economic growth rates, but this has not translated into significant job
creation and poverty reduction.
Because of the structure of the Zambian labour market, micro enterprises and the selfemployed
should be a crucial bedrock for job creation and poverty reduction. Micro
Small and Medium Enterprises (MSMEs) account for 99% of all businesses in Zambia
out of which 96% are Micro Enterprises. What is more, 44.2 % of the working population
is in self-employment.1

Unrealized potential: survivalists and job creators
Many self-employed are ‘survivalists’. They have been forced into the sector because
of a lack of employment opportunities elsewhere and do not aspire to grow their
businesses. However, there are still a significant number that are more ambitious and
we argue that the MSME sector provides an avenue for job creation and hence can be
leveraged to create decent jobs.
The key argument in this paper is that current government policy is not effectively exploiting
this potential. One critical reason for this is that policies are not designed for the Zambian
context: they do not respond to the nature and needs of the majority of micro enterprises in
Zambia. Policy has forgotten and is blind to micro-enterprises; it only addresses the needs
of the much bigger enterprises (SMEs).
The vast majority of enterprises in Zambia are sole traders or ‘micro’ enterprises
The official definition of MSMEs covers all firms with up to 100 employees and
annual turnover of up to ZMW800, 000. However, most enterprises are sole traders
or micro enterprises. The Labour Force Survey includes details on what it labels the
“self-employed”, by which it includes both sole traders and entrepreneurs who run a
business with employees. Using this definition:
• 86% of the self-employed have less than 4 employees.
• 12% have between 5 and 25 and only 4% have in excess of 25 employees.
• Over 50% of the self-employed earn below the minimum wage of ZMW1, 200
and their annual turnover does not exceed ZMW7, 200.
• 95% are in the informal sector.
In addition to being important to understand the size of most businesses in Zambia,
policy makers also need to know about the differences that exist within and between
different sectors. For instance the rural distribution of enterprises varies across sectors
with Agriculture having the highest concentration in the rural areas while sectors like
Tourism and Wholesale and Retail are concentrated in the urban areas.