MULUNGUSHI UNIVERSITY
SCHOOL OF BUSINESS STUDIES
ASSESSMENTS OF DEBT MANAGENENT PRACTICES
OF ZAMBIAN SMEs.
SUBMITTED BY:
NAME: TAONGA DAISY MWALES/N:
201801023
A
DISSERTATION
REQUIREMENTS
SUBMITTED
FOR
THE
IN
AWARD
PARTIAL
OF
A
FULFILMENT
BACHELOR
ACCOUNTING AND FINANCE.
SUPERVISED BY: MR
PETER LUNGU2023.
2
OF
DEGREE
THE
IN
May 2023
Abstract
This is research on the Assessments of Debt Management Practices of SMEs in Zambia.
The research was mainly concerned on the following;
Small Medium Enterprises, Documented policies on debt management, Knowledge and skills
on choice of business by small medium enterprises, Accounting records, Knowledge on debt
management, Debt management and firm performance, Financial investments and business
sustainability. Capital base and Factors financiers consider for granting loans.
3
DECLARATION
This work or any part therefor has not previously been presented in any form to the university or to
any other body whether for the purposes of assessment, publication or for any other purpose (unless
otherwise indicated). Save for any express acknowledgements, references and/or bibliographies
cited in the work, we confirm that the intellectual content of this work is the result of our own
efforts and of no other person.
The right of Taonga D Mwale to be identified as the author of this work is asserted in accordance
with ss.2, ss 8(1)(a)(i), ss 10(2)(a) of the Copyright and Performance Rights Act, 1994 of the Laws
of Zambia and the 2010 Amendments thereof at this date copyright is owned by the authors.
Author’s signatures………………………........
Student Identification Numbers ………………
Date…………………………........................…
4
ACKNOWLEDGEMENTS
Firstly, I would like to thank God who has made it possible for me to carry out this research.
Special thanks goes to my Lecturer, Mr. chibangula, as well as my supervisor Mr. Lungu for
sharing their expertise, patience, mentorship and guidance throughout the research.
My heartfelt gratitude goes to my course mates namely John Bwalya and Leah Banda for assisting
and motivating me to complete the project. My gratitude also goes to My family.
I would like to acknowledge the support rendered to me by all who gave me constructive and
insights from the time I commenced this research up to the time I completed it.
5
Table of Contents
Abstract… ............................................................................................................. i
Declaration ........................................................................................................... ii
Acknowledgements. ........................................................................................ iii
Dedication… ........................................................................................................ iv
Table of Contents. ................................................................................................ v
CHAPTER ONE ........................................................................................................................ 9
1
Introduction and Background ......................................................................................... 9
1.0
Introduction ............................................................................................................. 9
1.1 Background to the study ............................................................................................. 10
1.3 Problem Statement ......................................................................................................... 10
1.4Purpose of the study .................................................................................................... 11
1.1 Objectives of the study ............................................................................................... 11
1.2 Research questions ..................................................................................................... 12
Chapter Two............................................................................................................................. 14
2 Literature Review .............................................................................................................. 14
2.1 Introduction ................................................................................................................ 14
2.2 Theoretical framework ................................................................................................... 14
2.3 Research gaps ............................................................................................................. 22
2.4 Research variables arising from Literature Review.................................................... 22
CHAPTER THREE ................................................................................................................. 23
3 Methodology and Design .................................................................................................. 23
3.1
Research Philosophy and Approach ............................................................................. 23
3.2
Research design ............................................................................................................ 23
3.3
Sources of Data. ............................................................................................................ 24
3.4
Sampling Frame ............................................................................................................ 25
3.5
Data collection techniques ............................................................................................ 26
3.6
Data Analysis Techniques ......................................................................................... 27
6
3.7
Reliability and Validity (triangulation)......................................................................... 27
3.8
Ethical considerations ................................................................................................... 28
3.9
Limitations of the study ................................................................................................ 28
CHAPTER FOUR .................................................................................................................... 29
4 Data Presentation............................................................................................................... 29
4.1 Introduction ................................................................................................................ 29
CHAPTER FIVE ..................................................................................................................... 45
5 Discussion and interpretation of data ................................................................................ 45
5.1 Introduction ................................................................................................................. 45
5.2 Responses from the small and medium enterprises .................................................... 45
CHAPTER SIX ........................................................................................................................ 48
6 Introduction ....................................................................................................................... 48
6.1 Conclusion...................................................................................................................... 48
6.2 Implications ................................................................................................................ 48
6.3 Recommendations ...................................................................................................... 49
References ................................................................................................................................ 50
Appendices ............................................................................................................................... 54
Questionaire ............................................................................................................................. 59
7
CHAPTER ONE
1 Introduction and Background
1.0 Introduction
This is research on debt management of Small Medium Enterprises. Small and medium
enterprises (SMEs) make a significant contribution to the economic development, social
uplifting and political stability of every country. The role of small and medium
enterprises in developing countries as engines of growth has long been recognized. It is
estimated that small and medium enterprises employ 22 percent of the adult population
in developing countries (Dalberg Global Development Advisors, 2011). SMEs are
diverse in nature and can be established for any kind of business activity in the urban or
rural area. As early as 1981, the Zambian government recognized the importance of the
SME sector and its contribution to economic development. At the same time, the
government recognized the challenges that the sector was facing and through the
Small Industries Development (SID) Act of 1981 made an attempt to enhance the
effectiveness of the sector’s contribution to the national economy by establishing the
Small Enterprise Development Organization (SIDO).
In support of the SID Act, provisions were made in the Fourth National Development
Plan of 1989 to provide infrastructure for operations of SMEs, promote access to
credit by SMEs with growth potential and to improve production capacities of SMEs
with the view to increase incomes and employment (ZDA Act, 2006). Small and
medium-sized enterprises (SMEs) in Zambia play an important role production,
employment and income. They represent 97% of all businesses in the country,1 70% of
gross domestic product (GDP) and 88% of employment (ITC, 2015).SMEs also fill a
key role in society, as they tend to employ a large share of the most vulnerable segments
of the workforce. Raising the competitiveness of these enterprises would help reduce the
youth unemployment rate and increase the number of women in employment. This
would also contribute to progress towards achieving the United Nations Sustainable
Development Goals of reducing social exclusion and enhancing productive capacities.
1.0 Background
Small and medium enterprises (SMEs) are increasingly seen as playing an important role in
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the economies of many countries. Therefore, governments throughout the world focus on
the development of the SME sector to promote economic growth. Small and medium-sized
enterprises are a centrepiece of the world economy. This includes most developed
economies such as the European economy. This is due to their economies of scale and their
financing operations and, in particular, from access to securitized lending and stock
markets. However, SME limitations in financing their operations may seriously limit their
expansion potential and, in particular when it comes to lack of risk capital and their
innovation (Akhtar, 2005). In such cases where SMEs face limitations in financing their
operations Debt has the ability to cause the non-performance of small and medium
enterprises. Most empirical studies on the impact of debt management on the performance
of businesses have focused basically on large scale businesses in developed countries
(Coleman and Cohn, 2001; Eriotis et al., 2002). Nonetheless, the contribution of small and
medium enterprises to job creation, revenue mobilization and poverty alleviation has been
recognized by many governments in developing countries to the extent that small and
medium enterprises are now included in their development plans (Coleman and Cohn,
2001). Through such plans, support structures are provided for the growth of the smallscale firms’ including funding and concessional loans, usually at concessionary rates. But
does the use of such debt improve businesses’ performance and hence enhance
sustainability?
9
1.1 Problem Statement
The prevalent delinquent encountered by SMEs will arise from lack of debt management
skills. This means that some small businesses take on debt and do not use it for its
intended purpose. Some small businesses that take on debt manage it well to grow their
business over the long term, while others are crying badly because of mismanagement of
debt. Other SMEs lack diversity. That is, even if they remove their debt, it will be
reinvested in their existing business rather than committing to diversity. As a result,
some SMEs will not be able to invest adequately and maintain their business. Some
SMEs do business from hand to mouth, making it difficult to find a suitable capital base,
which causes SMEs to assume more debt. Producers make it nearly impossible to assess
debt if SMEs lack debt management skills and knowledge, and collateral.
1.2 Significance of the study
It is imperative to understand the state of SMEs in Zambia and how they have been
beneficial in the economic development of the country. This drive is what has justified
this research on SMEs debt management issues in the country that is classed as a lower
middle income economy. This is because, even in the developed economies, SMEs play
a bigger role in contributing to social, economic and environment development. In the
European Union for example, SMEs account for 99.9 percent of the 11.6 million
businesses created in the bloc (World Bank, 2007). In the United States of America,
SMEs create over 75 percent of the new jobs contributing 40 percent of GDP and 80
percent of the population get their first employment in the SMEs according to World
Bank (2000). The unemployed youths will find this study useful because it will expose
them to different entrepreneurships in Zambia and make them give more attention to
opportunities that exist in Zambia and how to finance them. The study will also give the
central government of Zambia an impetus to give more support and assistance to
entrepreneurship to foster sustainable social and economic growth in the country.
Additionally, Findings of this study will provide awareness among SME members
10
on the strengths and weaknesses which limit their ability to run successful business and
opportunities available to them.
1.3 Objectives of the Study
1.5.0 Main objective
An assessment of debt management practices of Zambian SMEs.
1.5.1 Specific objectives
➢ To determines the characteristics of the SMEs in regards with the type of business
organization, nature of the business, number of years of operation, number of employees,
estimated capitalization, estimated assets, and average monthly income in Zambia.
➢ To evaluate the impact of the debt management practices of SMEs in terms of recording,
budgeting and reporting in Zambia.
➢ To analyse the challenging experiences confronting the SMEs based on the aspects of
internal control, competitors, and in dealing with the government agencies in Zambia.
1.4 Research questions
➢ What are the characteristics of the SMEs in regards with the type of business organization,
nature of the business, and number of years of operation, number of employees, estimated
assets, and average monthly income in Zambia?
➢ What are the debt management practices of SMEs in terms of recording, budgeting and
reporting in Zambia?
➢ What are the challenging experiences confronting the SMEs based on the aspects of internal
control, competitors, and in dealing with the government agencies in Zambia.
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CHAPTER TWO
2 Literature Review
2.1 Introduction
Literature review is a text by someone to consider the critical points of current knowledge
including substance findings as well as theoretical mythological contributions to a particular
topic. Literature reviews are secondary sources and such, do not report any new or original
experimental work. The purpose of literature review is to briefly evaluate the state of the art
in the area under review.
This chapter involved the identification of various literature sources related to the problem
being investigated. It is an area where various views from different authors are quoted and
presented.
This chapter looked at researches carried out worldwide on small scale enterprises.
2.2 Theoretical framework
This is a process of identifying a core set of connectors within a topic and showing how they
fit together or are related in some way the subject. Theoretical framework is a foundation for
the parameters, or boundaries of a study. Once these themes are established, researchers can
seek answers to the topical questions, they have developed on broad subjects.
With a framework, researchers can resist getting off topic by digging into information that
has nothing to do with the topic. Often researchers are curious about broad subjects, but with
a theoretical framework they stay within the theme or topic.
The theories that were used to guide the study were as follows:
The Poverty Alleviation Theory
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The pressing need for rural economy is to create job for large unemployed and under
employed labour force. It is customarily argued that jobs can be created either by generating
wage employment or by promoting self-employment in non-farm activities. Creation of
employment requires investment in small working capital. (Wahid, 1994) unfortunately
income from other sources is so low that they cannot generate investible surplus on their own.
Thus obtaining credit under certain circumstances can help the poor accumulate their own
capital and thus improve their living standard through the income generated from
investments.
The trade – off Model.
Different explanations provide the theoretical basis for the decision taken by firms in the
respective areas on the justification for the choice of financing sources and the appropriate
mix. The trade-off model postulates that the firm will aim at the optimal gearing levels that
will balance the tax benefits of additional debt with the expected costs of financial distress as
the level of indebtedness rises (Brierley, 2001; Bunn, Cunningham, & Drehmann, 2005).
Considering non-tax benefits of debt such as information asymmetries between lenders and
borrowers, managers may raise equity only when company’s shares seem overvalued.
Investors will consequently discount any new and existing shares when a new equity issue is
announced. Cassar & Holmes, (2001) found out that firms’ trade-off several aspects,
including the exposure of the firm to bankruptcy and agency costs against the tax benefits
associated with debt use. Firms are faced with higher cost of capital because of the increased
risk of liquidation and thus they tend to avoid debt. However, firms use debt in order to enjoy
tax benefits as a trade-off with the costs associated with bankruptcy and agency, and this
implies that there is an optimal debt-equity ratio for the firm, which changes as benefits and
costs alter over time (Modigliani &Miller, 1963). This model provides elaborate explanation
for the objectives where there is a need to understand the justifications for a particular mix of
sources of capital due to various benefits and risks embedded in each of these. It is clearly
evident that managers will opt for the mix of sources that minimizes the cost of capital but at
the same time not exposing the entity to the factors that may adversely affect the going
concern of the firm
Importance of SME sector in emerging economies
13
There has been a general consensus of researchers on the importance of Small and Medium
Enterprises (SMEs) for the growth of the economy. Asian development bank in their report “SME
Development in Pakistan” emphasize the key role of SMEs for the growth of the country. Moreover
the role of SMEs in generating employment and ensuring equitable distribution of income is also
acknowledged. Furthermore according to the Economic Survey 0f Pakistan 2008-2009, there are 3.2
million SMEs in Pakistan which constitute over 90 percent of all private enterprises in the industrial
sector, employ nearly 78 percent of the non-agricultural labour force, and contribute over 30
percent to gross domestic product (GDP).SMEs are the growth engines of the economy due to their
ability to create jobs, foster entrepreneurship, and provide depth to the industrial base of the
economy (Ahmad, Nenova, & Niang, 2009). Moreover the state banks of Pakistan (SBP) in their
report realize the significance of SMEs for social and economic development. Employment
generation, poverty alleviation, accelerated growth, bridging the gulf of income inequity and
formation of forward and backward linkages are special features of SME sector. That being said
evidence has to come from developing economies worldwide to understand the importance of the
SME sector in emerging economies.
Indicators of assessing Sustainability of SME Sector
The SME sector of the economy is often in the spot light because of being neglected as a
stimulator of economic growth. But often the researchers fail to examine the capacity of
SMEs to sustain the development which is promoted. The growth potential of SMEs has to be
inspected through different indicators, to gauge an understanding on sustainability. The
global economy has witnessed SME entering international trade market on a regular basis
from last few years. Based on an empirical study of trends in 18 industrialized countries, the
Organization for Economic Cooperation and Development (OECD) notes that SMEs now
account for about a quarter of exports in most industrialized nations (OECD, 1997).
Internationally-active SMEs are emerging in notably large numbers throughout the world,
and they tend to be more dynamic and grow faster than strictly domestic firms (Bell, 1995;
Nakamura, 1992; OECD, 1997; Rennie, 1993; United Nations, 1993). This means that as an
indicator of SME sector sustainability we can examine the data on export contribution by
SMEs, the higher their contribution towards export sector the greater their ability to sustain
diverse economic conditions (Gary, 2001).
Credit Information, Credit quality and Institution
The financial institutes around the globe are extremely skeptical about providing credit in a
situation where credit risk is high. The risk is intensified in the case of SMEs, who lack
14
collateral, credit history and are unable to keep proper financial records. These demand side
factors have led to, funding gap because SME cannot acquire credit from the formal
institutions (Ahmad, Nenova, & Niang, 2009). Because of high risk and accelerating
transaction cost for financial institutions, lending to SMEs is not a profitable option,
especially when the probability of default is also very high (Thorsten,2007). According to the
survey conducted by ADB in 2005, most of the SMEs are of the view that financing
constraints are most severe hurdle to cross (Bari, Cheema, & Haque, 2005). Along with a
reluctant financial sector the problem is intensified and calls for proper reforms by the policy
makers.
Financial Institution, financial market Structure and SME prospects
SME operate on a narrow capital base, those who have the urge to expand in terms of assets
or sales turnover or aspire to augment quality, have limited options for financing for example,
through retained profits and borrowing from informal sources i.e. friends/relatives etc. SMEs
access to formal credit, from commercial banks and leasing companies over the years has
been insignificant. The case of Pakistan presents an important highlight. According to
SMEDA, in 2006 out of the total credit off take of Rs. 2400.8 billion for private sector,
SMEs’ share was Rs. 408.3 billion or just 17% of the total amount. SME financing
constraints are ranked on the top of the list of obstacles faced by the SMEs for growth
(Thorsten, 2007). The availability of external sources of financing for SMEs has become an
important area of research for policy makers around the globe (Allen & Gregory, 2006).
CONCEPTUAL FRAMEWORK
INDEPENDENT VARIABLES
DEPENDENT VARIABLES
KNOWLEDGE AND SKILL
Good Performance and Financial distress
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2.2.1 Definition of small meduim enterprise
Small medium enterprises (SSBs) are nuanced and hence defy a single definition. Definitions
of small medium enterprises mostly center around issues such as size of assets, size of
employee requirements, annual turnover, technology and infrastructure requirements, and
flexibility of startup and management structure. This has made the conceptualization of small
medium enterprises vary from country to country. This study therefore synthesizes some of
the various definitions of small medium enterprises. The Australian Bureau of Statistics
(2002) defines small scale businesses (excluding agriculture) as businesses that employ less
than or equal to 200 people. In short, small medium enterprises could be described as any
non-farm business activity that an individual or group deliberately undertake with the
intention of making profit. As such, this study assesses debt financing schemes and their
impact on the performance of small medium enterprises. It therefore examines how debts are
managed for better performance of small medium enterprises and adopts the theory of capital
structurepropounded by Franco Modigliani and Merton Miller in 1963.
2.2.1 Debt Management and Performance of Small medium Enterprises
Small scale enterprises just like other organizations need capital (money and wealth the
means to acquire goods and services especially in a non-barter system.) to run their
operations. As earlier alluded to, generating capital through credit systems has become a
necessity for the growth of small medium enterprises. This creates debt for such businesses.
Tantum (2003) advances that debt is the amount of taxes incurred during a tax period which
are payable to some type of governmental jurisdiction. Aspen Law and Business (2004)
defines debt as an amount owed to a person or organization for funds borrowed. For the
purposes of this study, debt is defined as any amount due to any authority for which payment
has not been affected. Debt takes many forms and can be represented by a bond, loan note,
mortgage as well as other repayment terms and, when necessary, interest requirements. These
different forms are indications of the intent to pay back the amount owed at an agreed date as
is set forth in the repayment terms.
16
Wallitsch (2007) argues that debt management is any approach that is adopted to guide an
individual or business organization to manage its debt. This definition includes debt
settlement, bankruptcy, debt consolidation, personal loans as well as other techniques that
assist businesses to service outstanding debts. Root (2009) contends that, debt management is
an act of trying to get one’s debt under control and become responsible for repaying
associated obligations. It can therefore be inferred that debt management is a conscious
measure taken by a debtor or agents hired on their behalf to reduce the debt burden or
strategize to eliminate the debt through acceptable payment terms. Cicchetti et al. (2011)
observe that a reasonable debt level improves welfare and enhances growth but high-level
debts can lead to a decline in growth of a firm. Reinhart et al. (2009) reinforces this assertion
by arguing that debt impacts positively to the growth of a firm only when it is within certain
levels. He opines that a firm becomes vulnerable to financial crisis when the ratio goes
beyond certain levels. Stern Stewart and Company shares a similar view that high level of
debt increases the probability of a firm facing financial distress. Therefore Cicchetti et al.
(2011) contends that over borrowing by a firm can cause bankruptcy and financial ruin.
Accumulating high levels of debt by a small medium enterprise will constrain its ability to
undertake project that are likely to be profitable. This is because it would not be able to
attract new debt from financial institutions.
A study by Yuan and Kazuyuki (2012) using a sample of Chinese listed companies showed
that total debt ratio had a negative impact on fixed investment. This implies that high
proportion of debt in the capital structure of a firm can harm investment using internal funds.
This is because a firm with a high debt ratio can potentially channel most of its income
towards debt servicing thereby forgoing investment through internal funds. Therefore, the
risk of a small medium enterprise increases when more debt is employed in its capital
structure. It will become increasingly difficult to attract more debt for investment purposes as
creditors will charge high interest rates to compensate for the high business risk. Yuan and
Kazuyuki (2012) therefore argued that creditors will be reluctant to lend more funds to a
highly indebted firm which resulting in underinvestment. As such, firm operations can be
affected if insufficient investment is undertaken.
A study by Ahmad et al. (2012) in Malaysia which sought to investigate how capital structure
impacts on a firm’s performance by analyzing the relationship between return on assets
(ROA), return on equity (ROE) and short-term debt and total debt established that short-term
debt and long-term debt had significant relationship with ROA. It was also established that
17
ROE had significant relationship with short-term debt, long-term debt and total debt. A
similar study by Ebaid (2009) partially agreed with the findings of Ahmad et al. (2012).In the
study Ebaid sought to establish the nexus between debt level and financial performance of
companies listed on the Egyptian Stock Exchange. The study used return on assets, return on
equity and gross profit margin as dependent variables. It also used short-term debt, long-term
debt and total debt as independent variables. The study found that the relationship between
short-term debt and total debt on return on assets (ROA) is negative. It therefore concluded
that there was no significant relationship between long-term debt financing and ROA.
Soumadi and Hayjajneh (2012) studying the nexus between capital structure and corporate
performance in Jordanian shareholdings firms used multiple regression models by least
squares (OLS) to establish the link between capital structure and corporate performance of
firms over a period of 5 years. The study found that capital structure was negatively and
statistically associated to the performance of the firms. The study concluded that there is a
negative relationship between capital structure and firm performance for both high and low
growth firms.
Maritala (2012) examined the optimal level of capital structure which enables a firm to
increase its financial performance. The study found that there was a negative relationship
between the firm’s debt ratio and financial performance measured by return on assets and
return on equity. Fosu (2013) also conducted a similar study in South Africa to investigate the
relationship between capital structure and corporate performance with focus on the degree of
competition. The study established that there was positive relationship between capital
structure and corporate performance. Ogebe et al. (2013) investigated the impact of capital
structure on corporate performance in Nigeria from
2000 to 2010. The study paid particular attention to macroeconomic variables (Gross
Domestic Product and inflation) on firm performance. The study concluded that there was a
strong relationship between leverage and corporate performance. The negative relationship
was also confirmed by Mumtaz et al. (2013) in their study in Pakistan that sought to establish
the relationship between leverage and firm performance. The study showed that financial
performance of firms is significantly impacted by their capital structure.
Specifically, on the nexus between debt management and performance of small medium
enterprises, the findings from the literature analysis show that debt management plays an
important role in any business particularly small-scale enterprises. Thus, prudent debt
18
management ensures that small medium enterprises are able to honor their debt obligations.
However, as revealed by Ross et al. (1996) the obligations of businesses are numerous
including purchases, payment of wages and salaries and taxes. Therefore, the basic objective
of debt management is to keep the investment in debt as low as possible while still operating
the firm’s activities efficiently and effectively. This is crucial for smooth and reliable
business operations. Ross et al. (1996) further assert that an enterprise can also increase its
net debt flow by slowing down disbursements. The importance of keeping debt balances by
micro and small medium enterprises cannot be taken for granted. Moyer et al. (2001) argue
that effective debt management is particularly important for small scale enterprises.
Two dominant alternative strategies to debt management have been offered by contemporary
theories. These are the conservative and aggressive debt management strategies. Aggressive
working capital strategies are usually associated with higher returns and risk. Conservative
working capital strategies offer both lower risk and returns (Weinraub and Visscher, 1998). A
study conducted by Nyamao et al. (2012) to investigate the effects of debt management
practices on the financial performance of small medium enterprises in the Kisi South District
of Kenya found that debt management practices were low amongst small scale enterprises. It
also discovered that majority of them had not adopted formal debt management strategies.
Similarly, their financial performance was on a low average. The study concluded that debt
management practices influence the financial performance of small medium enterprise.
A similar study by Dong and Su (2010) concluded that a firm’s profitability and liquidity are
influenced by its debt management strategies. The study used pooled data between 2006 and
2008 to evaluate the companies listed in the Vietnam Stock Exchange focusing on cash
conversion cycle and related elements to measure debt management. It found that the
relationships among these variables were strongly negative. This implies that profit is
negatively influenced by an increase in cash conversion cycle. It further established that
profitability increases as the debtor’s collection and inventory conversion periods reduce. The
study also assessed debt management strategies in terms of aggressive financing and
aggressive investing debt management approaches. Mathuva applied the Pearson and
Spearman’s correlations, the pooled ordinary least squares, and the fixed effects regression
models in analyzing the data. The study found a highly significant negative relationship
between profitability and the time it takes for firms to collect cash from their customers. It
19
also found a highly significant positive relationship between profitability and the period taken
to convert inventories to sales and the time it takes for firms to pay creditors.
“Opportunities for finance should not be an automatic cause for celebration and signatures,
instead, a careful strategy and improved debt management is required,” said GregorySmith,
world Bank senior Economist. “The debt needs to be managed carefully and the proceeds of
borrowing shrewdly invested.”
“There remains a need to look closely at ways to improve debt management to ensure that
economic growth has sustainable foundations and that borrowed money in invested wisely to
ensure inclusive growth said Marlene Ruthenburg, World Bank Country Manager for
Zambia.
2.3 Research gaps
Little is known about debt management by small medium enterprises in Zambia. Hence there
is need for more research on debt management by small medium enterprises in Zambia.
2.4 Research variables arising from Literature Review
A variable is any observation that can take different values. There are two types of variables,
independent variables and dependent variables. Independent variables involve the actions and
interventions, while dependent variables include results and outcomes (Dr Southard 2006)
. With regard to this study policies, knowledge and skills on debt management are the
independent variables and good firm performance and reduced financial distress are the
dependent variables.
20
CHAPTER THREE
3 Methodology and Design
This chapter looks at methods used to collect the data
3.1
Research Philosophy and Approach
There are two types of methodology that can be used by the researcher and these are:
3.1.1
Quantitative Research Methodology
Quantitative research is the systematic scientific investigation used to measure the findings
and thoughts of people, and action of the way and why things are done. Everything that is
measurable can be used to gather quantitative data. Structured questionnaires and interviews,
one on one and telephonic data gathering are some of the common ways of collection data for
quantitative research. This is the methodology which was used by the researcher.
3.1.2
Qualitative Research Methodology
Qualitative Research is used to gain an in-depth insight into matters that affect human
behaviour. it is a study that reflects more on the why and how of decision making, bystudying
peoples culture, values
system,attitude,behaviour,concern,motivation,aspiration,etc.qualitative research is multi-focal
in its reasoning ,exploring, questioning and answering :hence, it is extremely useful in market
research ,constructing business decision and policies, enhancing communication and
fascinating research. Unlike quantitative data collection, methods of qualitative research are
based on unstructured interviews recordings, and feedback.
3.2
Research design
The research design which was used by the researcher was descriptive
21
3.2.1 Research Strategy
Research strategy is the structure or plan of a research-what to do and how to do it. It
involves the structuring of variables in a manner that enables their relationship to be
determined. The research used a case study as a research design during the study. A case
study is defined as an in-depth investigation of an individual, group or institution to
determine the variables and relationship among the variables influencing the current
behaviour or status of the subject of the study. A case study is the development of detailed,
intensive knowledge about a single case or of a small number of related cases. This design is
flexible and hence enables the researcher to use different methods of collecting data and
information i.e. questionnaires and interviews.
3.2.2. Research Choice
The research used mixed methods for data collection.
3.2.3 Time Horizon
There are two approaches to time horizon, namely Cross-sectional and Longitudinal.
Cross-sectional studies involve data collection from a population or a representative subset at
one specific point in time, while longitudinal studies: usually study the change and
development over a period of time.
This study took up the longitudinal approach because as the required information was
sourced from the clients over a period of time, which took months as some SMEs were not
compliant with giving information.
3.3
Sources of Data.
There are two sources of data primary and secondary data. Primary data is data obtained in
the field, while Secondary data is data that is already in existence such as published materials.
The research used both sources of data.
This study used both primary and secondary data. The primary data was that gotten in the
field through questionnaires personal interactions with SMEs while the secondary data was
gotten from the literature done by other researchers and authors.
22
3.4
Sampling Frame
According to the English oxford dictionary a population is defined as the number of people
living in an area. The area of study was small medium enterprises conducting business in
Zambia.
3.4.1 Target Population
The researchers target population was 100 SMEs from various businesses.
3.4.2 Sample Size
Owing to lack of sufficient funding and time to gather information from the targeted
population, the goal became finding a representative sample of the whole population. The
sample size of the targeted population was 10 SMEs out of the 100 targeted. The sample
size represented 10% of the targeted population
3.4.3 Sampling Techniques
A sample is a segment of the population selected to represent the population as a whole.
There are various sampling techniques some which are;
i) Simple Random Sampling
The critical attribute of simple random sampling is that each member of the target
population has an equal and independent chance of being included in the sample.
Independence in this sense means that the selection of a member of the population.
ii) Stratified Random Sampling
Stratified sampling aims at ensuring proportionate representation of subgroups in the
sample. The stratified sampling procedure divides the population into homogenous
subgroups containing members who share common characteristics
iii) Cluster Sampling
Cluster sampling is necessitated when simple random sampling poses administrative
problems. The population may be large and widely dispersed.
iv) Stage Sampling
Stage sampling is an extension of cluster sampling. Using the example, given cluster
sampling, stage sampling would involve the random selection in stages, firstly of a
23
number of schools; secondly, of a number of classes within these schools; of a
number of pupils within these classes.
v) Systematic sampling
Systematic sampling involves the selection of members from a population list in a
systematic fashion. The technique is used when the members of a defined population
are already placed on a list in random order. The selection of members then proceeds
by dividing the population by the required sample size.
vi) Judgment sampling
The researcher uses his/her judgement to select population members who are good
prospects for accurate information. This is the method that was used by the researcher
to select the appropriate sample. It was done in a way such that the respondents were
SMEs that were clients to Unity finance Zambia and were physically visiting the unity
finance branches in Lusaka to service their loans or the clients that went back to apply
for more debt as well as the clients that were making follow ups on deductions, they
were not knowledgeable of.
3.5
Data collection techniques
3.5.1 Questionnaires
A questionnaire is a carefully designed instrument for collecting data in accordance with the
specifications of the research questions and hypotheses. It elicits written responses from the
subjects of the research through a series of question/statements put tighter with specific aims
in mind. The questionnaire may be used to ascertain facts, opinions, beliefs, attitudes, and
practices. The researcher distributed questionnaires to the respective sample; this enabled the
respondents to answer the questions at their convenient time.
A questionnaire was used for this study because it had questions that were critical to the study
written down. It was also used because it was easier to keep a record of the answers that the
SMEs gave in response to the questions,
3.5.2 Interviews
An interview is a face-to-face interaction in which oral questions are posed by an
interviewerto elicit oral responses from the interviewee. It should be realized that an
interaction takes place among the interview situation, the interviewer, the interviewee and
the interview
24
schedule. For maximum success in an interview, the interview situation should be kept as
flexible as possible.
Interviews were conducted as well for the research for some SMEs that were unable to read
and needed interpretation of the written down information
3.5.3 Observation
It is the gathering of primary data by investigator’s own direct observation of relevant people,
actions and situations without asking from the respondents.
3.6
Data Analysis Techniques
Data gathered from this research was analyzed using tables and pie charts.
Tables were used as visual display of the data collected and Graphs were used for graphical
representation of the data collected.
3.7
Reliability and Validity (triangulation)
Triangulation facilitates validation of data through cross verification from more than two
sources. It tests the consistency of findings obtained through different instruments and
increases the chance to control, or at least assess, some of the threats or multiple causes
influencing our results. There are four basic types of triangulation:
➢ Data triangulation: involves time, space, and persons
➢ Investigator triangulation: involves multiple researchers in an investigation
➢ Theory triangulation: involves using more than one theoretical scheme in the
interpretation of the phenomenon
➢ Methodological triangulation: involves using more than one option to gather data,
such as interviews, observations, questionnaires, and documents.
3.7.1
Triangulation to minimize bias
The problem with relying on just one option is to do with bias. There are several types of bias
encountered in research, and triangulation can help with most of them.
➢ Sampling bias- sampling bias is when you don’t cover all of the population you’re
studying (omission bias) or you cover only some parts because it is more convenient
25
(inclusion bias). The researcher combines the different strengths of these options to
ensure getting sufficient coverage.
➢ Procedural bias- procedural bias occurs when participants are put in some kind of
pressure to provide information.
3.8
Ethical considerations
When we talk about ethics in research, we are referring primarily to the ethical issues
involved in the implementation and execution of a good project. In other words, making
distinctions between what can be considered right and what can be considered wrong. Highly
ethical standards were applied by making information obtained confidential where needed
and procedures of getting data was done in a professional manner in order to avoid plagiarism
and protect intellectual property rights; bias was avoided.
3.9
Limitations of the study
The data collection process was not easy because of the following problems;
➢ The researcher was not given all the required data information from the respective
SMEs contacted.
➢ Resources constraints to some extent hindered the efficiency of the study such as
time, finances, materials and human resources.
➢ The researcher lacked much secondary sources of data like books
➢ The researcher hoped to get responses from the questionnaires in two weeks’ time
but instead, these were received much later than anticipated.
26
CHAPTER FOUR
4 Data Presentation
4.1 Introduction
Data was compiled and analyzed applying computer software with SPSS and presented in
table form and graphs, among the most widely used program for statistical analysis in social
science. It is used by market researchers, health researchers, survey companies, government,
education researchers and others. In addition to statistical analysis, data management (case
selection, file reshaping, creating derived data) and data documentation (a metadata
dictionary is stored with the data) are features of the base software. Microsoft Words and
Microsoft Excel were used to generate and transform the results from the SPSS software.
4.2 Responses from Small and Medium Enterprises
4.2.1 Profile of Respondents
Table 4.2.1 Gender
GENDER
RESPONDENTS
Frequency
Percent
Cumulative
Percent
Male
7
70
70
Female
3
30
100
100.0
Total
10
100.0
Source: SPSS-July 2020
27
Figure 4.2.1 Gender
80%
70%
60%
50%
40%
Gender
30%
20%
10%
0%
MALE
FEMALE
Source: SPSS-July 2020
4.2.2 Profile of Respondents – Indicate age group
Table 4.2.2
Respondents
Indicate age group
frequency Percentage
20-30years
30-40years
40-50years
Above 50years
4
3
3
0
40
30
30
TOTAL
10
100
Source: SPSS
Figure 4.2.2 Age group
28
Cumulative
Percent
40
70
100
Age group
45%
40%
35%
30%
25%
Age group
20%
15%
10%
5%
0%
20-30years
30-40years
40-50years
above 50years
Source: SPSS-July 2020
4.2.3 Profile of Respondents – Educational Qualifications
Table 4.2.3 Educational Qualifications
Respondents
Frequency
Cumulative
Percentage
Percentage
Primary
0
0
0
Secondary
2
20
20
College
6
60
80
University
2
20
100
10
100
TOTAL
Source: SPSS-July 2020
Figure 4.2.3 Educational Qualifications
29
Educational Qualifications
70%
60%
50%
40%
Educational Qualifications
30%
20%
10%
0%
Primary
Secondary
College
University
Source: SPSS-2020
4.2.4 Profile of respondents – Type of business
Table 4.2.4 Type of business
Type of business
Respondents
Frequency
Cumulative
Percentage
Percentage
Trading
6
60
60
Manufacturing
0
0
60
Others
4
40
100
Total
10
100
Source: SPSS-July 2020
30
Figure 4.2.4 Type of business
Type of Business
70%
60%
50%
40%
Type of Business
30%
20%
10%
0%
Trading
Manufacturing
Others
Source: SPSS-July 2020
4.2.5 Profile of respondents – Business Experience
Table 4.2.5 Business Experience
Business Experience
Respondents
Frequency
Cumulative
Percentage
Frequency
1-5years
5
50
50
5-10years
2
20
70
10-15years
2
20
90
16years and above
1
10
100
10
100
TOTAL
Source: SPSS-July 2020
31
Figure 4.2.5 Business Experience
Business Experience
60%
50%
40%
30%
Business Experience
20%
10%
0%
1-5years
5-10years
10-15years
16years and
above
Source: SPSS-July 2020
4.2.6 Profile of respondents – Is business registered with PACRA?
Table 4.2.6 Business registered with Pacra
Business registration with PACRA
Respondents
Frequency
Percentage
Cumulative
Percentage
Yes
9
90
90
No
1
10
100
TOTAL
10
100
32
Source: SPSS-July 2020
Figure 4.2.6 Business Registration
Business registration with PACRA
100%
90%
80%
70%
60%
50%
Business registration with
PACRA
40%
30%
20%
10%
0%
Yes
No
Source: SPSS-July 2020
4.2.7 Profile of respondents – Do you have documented policies on debt
management?
Table 4.2.7 Do you have documented policies on debt management?
Documented policies on debt management
33
Respondents
Frequency
Percentage
Cumulative
Percentage
Yes
5
50
50
No
5
50
100
Total
10
100
Source: SPSS-July 2020
Figure 4.2.7 Documented policies on debt management
Documented policies on debt management
60%
50%
40%
30%
Documented policies on debt
management
20%
10%
0%
Yes
NO
Source: SPSS-July 2020
34
4.2.8 Profile of Respondents – Adequate knowledge and skills on the choice
of business
Table 4.2.8 Adequate knowledge and skills on the choice of business
Adequate knowledge and skills on the choice of business
Respondents
Frequency
Percentage
Yes
No
10
0
100
TOTAL
10
100
Cumulative
percentage
100
Source: SPSS-July 2020
Figure 4.2.8 Adequate knowledge and skills on the choice of business
Adequate Knowledge and skills on the choice
of business
120%
100%
80%
60%
Adequate Knowledge and skills
on the choice of business
40%
20%
0%
Yes
No
Source: SPSS-July 2020
4.2.9 Profile of Respondents – Do you keep records for the business
Table 4.2.9 Do you keep records for the business
Do you keep records for the business
Respondents Frequency
Percentage
Cumulative
35
Yes
No
10
0
100
0
TOTAL
10
100
percentage
100
Source: SPSS-July 2020
Figure 4.2.9 Do you keep records for the business
Do you keep records for the business
120%
100%
80%
60%
Do you keep records for the
business
40%
20%
0%
Yes
No
Source: SPSS-July 2020
Table 4.2.10 Profile of respondents – Do you have adequate knowledge on debt
management.
Do you have adequate knowledge on debt management
Respondents
Frequency
Percentage
36
Cumulative
Yes
No
9
1
90
10
Total
10
100
percentage
90
100
Source: SPSS-July 2020
Figure 4.2.10 Profile of respondents – Do you have adequate knowledge on debt
management
Do you have adequate knowledge on debt
management
100%
90%
80%
70%
60%
Do you have adequate
knowledge on debt
management
50%
40%
30%
20%
10%
0%
Yes
No
Source: SPSS-July 2020
4.2.11 Profile of respondents – Does debt management affect the performance
of your business?
Table 4.2.11 Does debt management affect the performance of your business?
Does debt management affect the performance of your
business
Respondents
Frequency
Percentage
37
Cumulative
percentage
Yes
No
9
1
90
10
TOTAL
10
100
90
100
Source: SPSS-July 2020
Figure 4.2.11 Does debt management affect the performance of your business
Does debt management affect the
performance of your business
100%
90%
80%
70%
60%
Does debt management affect
the performance of your
business
50%
40%
30%
20%
10%
0%
Yes
No
Source: SPSS-July 2020
4.2.12 Profile of respondents – Do you have adequate financial investment
to sustain your business?
Table 4.2.12 Do you have adequate financial investment to sustain your business
Do you have adequate financial investment to sustain
your business
Respondents Frequency
Percentage
Cumulative
percentage
Yes
3
30
30
7
70
100
No
TOTAL
10
100
Source: SPSS-July 2020
38
Figure 4.2.12 Do you have adequate financial investment to sustain your business
Do you have adequate financial investment
to sustain your business
80%
70%
60%
50%
Do you have adequate financial
investment to sustain your
business
40%
30%
20%
10%
0%
Yes
No
Source: SPSS-July 2020
4.2.13 Profile of respondents – Do you have adequate capital for your
business?
Table 4.2.13 Do you have adequate capital for your business
Do you have adequate capital for your business
Cumulative
Respondents Frequency
Percentage
percentage
Yes
5
50
50
No
5
50
100
TOTAL
10
100
Source: SPSS-July 2020
Figure 4.2.13 Do you have adequate capital for your business
39
Do you have adequate capital for your
business
60%
50%
40%
30%
Do you have adequate capital
for your business
20%
10%
0%
Yes
No
Source: SPS-July 2020
4.2.14 Profile of respondents – What are your main sources of finance?
Table 4.2.14 What are your main sources of finance
What are your main sources of finance
Respondents
Frequency
Percentage
Loans from banks and other institutions
Self Financing
Family and friends
5
4
1
50
40
10
TOTAL
10
100
Figure 4.2.14 What are your main sources of finance
40
Cumulative
percentage
50
40
100
What are your main sources of finance
60%
50%
40%
30%
What are your main sources of
finance
20%
10%
0%
Loans from banks
and other
institutions
Self financing
Family and friends
Source: SPSS-2020
4.2.15 Profile of respondents – Which factors do financiers consider for
granting loans?
Table 4.2.15 Which factors do financiers consider for granting loans
Which factors do financiers consider for granting loans
Respondents
Frequency
Percentage
Cumulative
Percentage
Record Keeping
2
20
20
Technical Management skills
1
10
30
Professionalism
1
10
40
Collateral
6
60
100
TOTAL
10
100
Source: SPSS-July 2020
Figure 4.2.15 Which factors do financiers consider for granting loans
41
Which factors do financiers consider for
granting loans
70%
60%
50%
40%
30%
20%
10%
0%
Which factors do financiers
consider for granting loans
Source: SPSS-July 2020
42
CHAPTER FIVE
5 Discussion and interpretation of data
5.1Introduction
This chapter discusses and interprets the data presented in Chapter four
5.2 Responses from the small and medium enterprises
5.2.1 Profile of Respondents – What is your gender
70% of the respondents were Male and 30% of the respondents were female.
5.2.2 Indicate age group
40% of the respondents were between 20 – 30 years of age, 30% of the respondents were
between 30 – 40 years of age, 30% of the respondents were between 40 -50 years of age and
0% of the respondents were above the age of 50.
5.2.3 Educational qualifications
0% of the respondents were primary drop outs, 20% of the respondents were grade 12
certificate holders, 60% of the respondents were college graduates, 20% of the respondents
were degree holders.
5.2.4 Type of business
60% of the respondents were into the trading business, 0% of the respondents were into
manufacturing business, 40% of the respondents were into other types of business,
5.2.5 Business Experience
50% of the respondents had 1- 5 years of experience in business, 20% of the respondents had
5 – 10years of experience in business, 20% of the respondents had 10 – 15 years business
experience while only 10% of the respondents had business experience of 16years and above.
5.2.6 Businesses registered with PACRA
90 % of the respondents had their businesses registered with PACRA while 10% of the
respondents had their business NOT registered with PACRA
43
5.2.7 Do you have documented policies on debt management?
50% of the respondents had documented policies on debt management and 50% percent of
the respondents had no documented policies on debt management.
5.2 8 Do you have adequate knowledge and skills on the choice of business?
100% of the respondents were well knowledgeable and skilled on their choice of business.
5.2.9 Record keeping for the business
100% of the respondents kept records for their businesses.
5.2.10 Profile of respondents –Do you have adequate knowledge on debt
management.
90% of the respondents had knowledge on debt management while 10% of respondents
didn’t have knowledge on debt management.
5.2.11 Does debt management affect the performance of your business?
90% of the respondents businesses are affected by debt management while 10% of the
respondents are not affected by debt management.
5.2.12 Do you have adequate financial investment to sustain your business?
30% of the respondents have adequate financial investment to sustain their
businesses while 70% do not have adequate financial investment to sustain their
businesses.
5.2.13 Do you have adequate capital for your business?
From the total respondents , 50% had adequate capital for their business and 50% of the
respondents did not have adequate capital for their businesses.
5.2.14 What are your main sources of finance?
50% of the respondents have their main source of finance from loans from
banks and other institutions, 40% of the respondents are self financed and 10%
of the respondents source their finance from family and friends.
44
5.2.15 Which factors do financiers consider for granting loans?
20% of the respondents stated that financiers consider record keeping . 10% of
the respondents stated that financiers consider Technical management skills,
10% of the respondents stated that financiers consider professionalism and 60%
of the financiers consider collateral when granting loans.
45
CHAPTER SIX
6 Introduction
This chapter presents conclusion, implications and recommendations on debt management by
SMEs in Zambia a case study of unity finance.
6.1 Conclusion
The main findings of this research rendered that debt management practices have an impact
on the performance of small and medium scale enterprises, with performance being measured
by profitability and the analysis established that a strong positive relationship exists between
practices of debt management and profitability of a business. Therefore, this implies that debt
within SMEs has to be effectively managed as it has an impact on how the business performs
in the long-run. The major cause of poor debt management as found by this study is the lack
of knowledge about debt management practices affected by the failure to hire skilled and
experienced personnel.
Further findings to this research included
•
Lack of education on debt management
•
Lack of proper documentation of financial records of some
•
Lack of easy access to debt
•
Lack of gender balance in the SME sector
•
Lack of interest for those 50years and above in the SME sector
•
Lack of degree holders’ interest in the SME sector
•
Lack of SMEs interest in the manufacturing industry
•
Lack of adequate financial investment to sustain SMEs business
•
Lack of adequate capital to sustain SMEs business
6.2 Implications
Failure to address the above challenges impact negatively on the small scale and medium
entities thereby reducing productivity of the economic sector which will eventually go from
bad to worse.
46
6.3 Recommendations
a) The government should:
•
Put in place mechanisms to improve support to small scale and medium enterprises
•
Sensitize the public on the benefits of being and SME
b) Small scale and medium entities should:
•
Make efforts to obtain debt management training
•
Maintain proper accounting records
•
Prepare strategic plans
•
Make efforts to get more women and those above 50 o board
•
Engage more degree holders in this sector as they are more knowledgeable
•
Diversify to enable adequate financial investment and raise enough capital.
47
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Sage.
Zambia Development Agency (2014) Annual report 2014; Lusaka Zambia
Zambia development agency (2015) 2016 -2020 strategic plan Transforming business for the
benefit of Zambians: Lusaka Zambia.
51
DEBT MANAGEMENT PRACTICES OF ZAMBIAN SMEs QUESTIONAIRE
SECTION A
Table 1. Characteristics of the SMEs (n = 100)
Characteristics
YES
52
NO
A. Type of Business Organisation
Sole Proprietorship
Partnership
Corporation
B. Nature of Business
Trading/Buy & Sell
Food & Beverage
Service-Oriented
Accommodations
C. Number of Years of Operations
1-3
4-6
7-10
More than 10
D. Estimated Assets Owned(ZMK)
Less than 5000
5001-10000
10001-50000
50000-100000
More than 100000
E. Number of Employees
Less than 10
10-99
100-199
F. Average Monthly Income(ZMK)
Less than 3000
3001-7000
70001-15000
15001-30000
More than 30000
SECTION B
Table 2: Debt management practices of SMEs as to recording
Indicators
YES
I keep track and record my daily sales every day
I record all my inventory/or stock purchases in the
ledger
I record all my expenses incurred in the operation of
the business.
I record all taxes, registration charges, fees, and other
payables in the book
I keep track of all my collectibles/receivables in the
book of accounts.
53
NO
Table 3: Debt management practices of SMEs as to budgeting
Indicators
➢ I make forecasts on the future demand and
supply of the goods that I produced or sell.
54
YES
NO
➢ I make projections on the future operating
expenses of my businesses.
➢ I make a budgetary allocation on all the
expenses that I incurred in running the
business.
➢ I make a budget schedule of all the goods that I
produced or sell.
➢ I do not spend more than my income/revenue.
Table 4: Debt management practices of SMEs as to reporting
Indicators
YES
➢ I report all my revenues or sales to the
government
➢ I do or prepare all the recording and
reportorial requirements from the government
➢ I claim input tax from all my inventory
purchases.
➢ I hire an external bookkeeper/ accountant to
prepare the reports and returns to be submitted
to the government agencies
➢ I comply and submit on time all the reportorial
requirements required by the government
agencies like income tax returns and financial
statements like income statement, cash flow,
and balance sheet, and many others.
NO
SECTION C
Table 5: Challenges of SMEs as to internal management
Indicators
YES
➢ The management of employees/people is a
hassle to the manager of the business
➢ Internal theft or pilferage causes some threats
towards financial losses to the business
➢ The required regular maintenance of the
machines, tools, and equipment of the business
establishment is costly to the management or
owner
55
NO
➢ The changes in the market trend cause some
future risks to the survival of the business
➢ Natural calamities cause some damages to the
assets of the business and
increase
maintenance and repair costs
56
Table 6: Challenges of SMEs in dealing with the competitors
Indicators
YES
➢ The absence of barriers to entry makes the
competition in the market very stiff.
➢ The practice of other businesses in selling or
producing substandard products or of low
quality but cheap that causes some threats to
the survival of the company.
➢ Cut-throat competition practices of the
competitors cause some problems for the
business.
➢ The absence of strict implementation of laws
to avoid too much competition is a headache to
business management
➢ The entry of competitors during high season
causes market distortion.
NO
Table 7: Challenges of SMEs in dealing with government agencies
Indicators
YES
➢ The micro, small and medium-sized enterprises
experience problems in securing a business
permit from the local government Unit
➢ The management experiences complexity in
complying with the general building
requirements because it causes high costs in
building the required facilities and amenities
like elevators for tall rise buildings, fire exit,
and many others.
➢ The establishment experienced some problems
in complying with the proper management of
wastes (solid and wastewater) produced by the
business.
➢ The establishment experienced some problems
with the imposition of many tax payables from
different government agencies.
➢ Complying the Environmental Compliance
Certificate (ECC) is tedious and complicated
57
NO