Firm Growth in Zambia

Firm growth in Zambia remains subdued, undermining the country’s potential to create jobs, raise productivity, and drive economic transformation. Formal businesses face persistent barriers—most notably limited access to finance, unreliable electricity supply, and competition from a large informal sector. Using data from the World Bank Enterprise Surveys and cross-country entrepreneurship benchmarks, this paper examines how these constraints affect firm performance and contribute to Zambia’s low rate of new business formation. Empirical analysis indicates that firms with access to credit and stable infrastructure grow significantly faster, while those facing severe constraints underperform. Moreover, Zambia’s rate of new business entry remains low compared to aspirational peers, reflecting deeper regulatory and financial constraints. Removing key barriers to firm growth is essential not only to scale up existing businesses, but also to support structural transformation by facilitating the shift of labor into more productive, formal sector employment.