Access to long-term capital remains a persistent challenge for Zambian SMEs, despite their outsized contribution to GDP and employment. Public pension funds, with large capital pools and long-term investment horizons, are well-positioned to address this financing gap. However, their participation in SME investment remains limited. This study investigates the drivers, impediments, and potential implementation strategies for public pension fund investment in SMEs, focusing on the National Pension Scheme Authority (NAPSA) as a case study. The study utilized a mixed-methods study, combining both quantitative and qualitative approaches in information collection. Findings concluded that the key drivers for undertaking NAPSA SME investments were portfolio diversification, economic and social impacts, and scalable SMEs with robust governance structures and financial performance. On the other hand, the main barriers to such investment by NAPSA are poor expected returns, SME governance issues, capacity constraints at NAPSA, and illiquidity risks of such investments. The study contributes to the policy discourse by providing a comprehensive analysis of the dynamics of SME investments and proposing a sustainable framework for leveraging pension fund resources to bridge Zambia’s SME financing gap.
Kaela et al. (Wed,) studied this question.