Pathways To Poverty Reduction Among MSMEs: From Challenges to Upgrading and Inclusion in Mining Value Chains in Zambia

Zambia’s mining sector generates substantial export earnings and public revenue, yet poverty remains high in major mining regions. A persistent concern is the limited participation of local micro, small, and medium enterprises (MSMEs) in mining value chains. This study examined the barriers, upgrading mechanisms, and inclusion pathways through which MSME participation in mining value chains is associated with poverty-related outcomes in Zambia’s Copperbelt and Northwestern Provinces. A convergent mixed-methods design combined a quantitative survey of 1,020 MSMEs with 30 key-informant interviews and document analysis. Quantitative data were analyzed using descriptive statistics, Confirmatory Factor Analysis (CFA), Structural Equation Modeling (SEM), and Regression Analysis. Qualitative data were analyzed thematically and integrated with quantitative findings during interpretation. Only 14% of surveyed MSMEs reported access to formal credit, more than 60% lacked required technical certifications, and fewer than 10% reported securing mining procurement contracts. Process upgrading was positively associated with mining-value-chain inclusion (β = 0.626, p < 0.001), while product upgrading also showed a significant association (β = 0.162, p < 0.001); together, the reported regression model explained 54.6% of the variance in inclusion (R² = 0.546). The study also reports a strong association between mining-value-chain inclusion and poverty-related outcomes (β = 0.982, R² = 0.965, p < 0.001). Qualitative evidence linked successful inclusion with employment creation, higher household income, and local economic development. The findings support a sequential framework in which barriers constrain MSME upgrading, upgrading facilitates value-chain inclusion, and inclusion is associated with improved poverty-related outcomes. Policy priorities include inclusive finance, supplier-development and certification support, transparent procurement, stronger institutional coordination, and deliberate inclusion of women, youth, and rural enterprises. Because the study is cross-sectional and relies partly on self-reported outcomes, the reported relationships should be interpreted as associations rather than definitive causal effects.