Microenterprise sector assessment and development strategy for AID in Zambia

Although the country"s deteriorating macroeconomic situation creates a difficult environment for business, it also creates opportunities for the emergence of microenterprises, as parastatals start to lose their protected status and subsidies. The current credit crunch and shortage of foreign exchange may have less of an adverse effect on microenterprises because they are usually better able to respond to changes in market demand and the availability of imported capital equipment, spare parts, and raw materials than large companies using technologies from developed countries. In many cases, microenterprises also produce lower-cost products that are more appropriate for low- income consumers. Key policy issues affecting microenterprises include registration and licensing, land controls and land tenure, access to foreign exchange, problems of the economic environment, institutions (governmental and nongovernment organizations and financial institutions), the availability of credit, training and technical assistance, and common site facilities/business incubators. Short-, medium-, and long-term recommendations for A.I.D. support to microenterprises are presented.