Abstract
The global value chain approach has become a useful strategy to reduce poverty in the mining area by forming linkages among various players. This approach gives an opportunity to all stakeholders to participate in any suitable activity along the value chain. Once small and medium enterprises (SMEs) enter the value chain, they supply and earn sustainable income. Unfortunately, geographical location of the mines acts as a barrier for SMEs to supply their goods and services. The geographical location comes with a challenge for both urban and rural based SMEs to access the mines due to poor roads and expensive electricity infrastructure. The main objective was to examine the impact of geographical location on inclusion of SMEs in the mining global value chain. The global value chain literature focusing on challenges that SME face to supply to the mines was reviewed to give insight on how these barriers affect SMEs participation. A random sampling was conducted among the SMEs whose age ranges from below 20 to above 40 from the mining area to determine the extent to which geographical location affects their inclusion to supply to the mines. Findings show that SMEs below the age of 30 are greatly affected to supply to the mines. In addition, rural based SMEs who are the majority had greater challenges to supply to the mines due to poor road and expensive electricity infrastructure. The female genders were also affected with the geographical factors. The study recommends that the government through Road Development Agency as well as the Ministry of Energy constantly repair the roads and improve energy sources, respectively so that SMEs can afford to access the mines services. Key words: Electricity and road infrastructure barriers, small and medium enterprises, mining global value chain
Highlights
The mining sector has become lucrative in engaging local small and medium enterprises (SMEs) to participate in the mining global value chain
The cost-benefit analysis of participating in the mining global value chain has become crucial for researchers and policy makers, and it has become apparent that most governments promote the engagement of SMEs in the chains (IFC, 2002; Hoermann et al, 2010)
Geographical barriers focus on the distance of the mines in relation to the SME accessibility and the lack of electricity for households around the mines which is a common factor for most mines in Zambia
Summary
The mining sector has become lucrative in engaging local small and medium enterprises (SMEs) to participate in the mining global value chain. The cost-benefit analysis of participating in the mining global value chain has become crucial for researchers and policy makers, and it has become apparent that most governments promote the engagement of SMEs in the chains (IFC, 2002; Hoermann et al, 2010). The study for Chibwe (2008) recommended setting up a one stop shop to overcome registration and process barriers, and offering tax incentives to local SMEs; the study did not discuss geographical location barriers and how to overcome them. OECD (2009) discusses top barriers for SMEs internationalization but never mentioned of geographical location barriers that SMEs face to supply to the mines. Most mines in Zambia are located far away from the central districts and some SMEs have made some settlement closer to mines in a bid to access the high grade markets
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