Factors Affecting the Participation of Small and Medium Enterprises (SMEs) in Foreign Trade: Empirical Evidence From SMEs in Lusaka, Zambia

The purpose of this study was to investigate the factors affecting the participation of Small and Medium Enterprises (SMEs) in foreign trade in Lusaka, Zambia. The objective was to establish how access to finance, regulatory and trade policy, and entrepreneurial knowledge affect the SMEs' trade participation. A quantitative research design was adopted, and 65 SMEs were selected using simple random sampling. Data were collected through structured questionnaires and analyzed using Megastat. The findings disclosed that SMEs' involvement in foreign trade was impacted by access to financing, with 32.3% reporting that 26%-50% of foreign transactions required external financing and 40% relying primarily on personal savings and family assistance. The SME category and reliance on outside funding were found to be significantly associated by chi-square test (X2=40.29, p-value <0.001). Participation was also found to be influenced by regulatory trade policy, especially through taxation, licensing requirements, certification standards, customs procedures, and compliance costs. The observed mean and the predicted value differed statistically significantly, according to a one-sample t-test (mean =2.600, t= -17.35). Although 41.5% reported that 1%-25% of management teams had received formal international trade training, entrepreneurial knowledge has a positive impact on participation in foreign trade. Knowledge of foreign market entry strategies and restrictions pertaining to international payment methods was significantly improved, according to a chi-square test (X2= 145.69,df=16, p <0.001). The findings imply that policy and practice should address financing barriers, regulatory complexity, and trade-related knowledge gaps to strengthen SMEs' international participation. The study comes to the conclusion that SMEs' participation in international trade can be increased by strengthening international trade, streamlining trade regulations, and expanding access to financing.