The business decline in the mining sector should challenge government to redirect efforts towards the growth of the Small and Medium Enterprises (SMEs) as they hold the key to economic stabilisation. As at now, an estimated 20,000 formal jobs have been lost in Zambia in the past few months, most of them from the mining sector owing to the global recession.

Because of the strong industrial and business linkages between the mining sector and large enterprises, the large scale industry as a whole is preparing itself for further downsizing that may lead to more job losses. The Copperbelt in particular has traditionally taken up about 37 percent of the total output of services and goods in consumption. This figure has significantly reduced in recent months leading to reduced revenue for many large companies.

On the upside of things, the SMEs and informal sector appear to have the resilience and have the potential to stabilize the economy as consumers redirect resources from high value products to those offered by the small businesses. For example, while the large hotels are experiencing a drop in business volume, the smaller lodges have consolidated revenue as up-market consumers begin to cost-save.

SMEs are important to the economy of Zambia as they currently contribute well over 13 percent of the GDP and employ nearly two-thirds of all employees in the private sector. They also hold the potential for the effective and efficient diversification of the economy in sectors like textiles, construction, agriculture, food processing as well as furniture.

To ensure the SMES become the cornerstone for the growth of the economy during the period of economic recession and beyond, there is need to restructure the access to finance processes and also develop legislation targeted at them. This will mean improving the environment for their businesses and simplifying legal acts impeding on efficiency and other costs associated with paperwork and consultations.

The commercial banks, micro-financial institutions as well as the Citizens Economic Empowerment Fund will need to harmonise their financing structures so that the SMEs find them meaningful and less confusing. This will help build a standard financing system for SMEs peculiar to Zambia based on common experiences.