Assessment of the Economic Effects of Drought and Strategic Adaptation Mechanisms Among Small and Medium Enterprises (SMES) in Lusaka District, Zambia

Drought is a prolonged period of abnormally low precipitation, leading to a significant water deficit that adversely affects the environment, agriculture, and various socio-economic activities. Severe weather phenomena, including droughts, floods, wildfires and hurricanes inflict rapid and significant economic losses among businessmen and women. They interrupt commercial activities, harm critical infrastructure, wipe out agricultural production, and force many communities to relocate. The aim of this study was to assess the economic effects of drought and identify strategic adaptation mechanisms employed by Small and Medium Enterprises (SMEs) in Lusaka District, Zambia. A cross-sectional research design was used in this study. This study used a stratified random sampling method to select 384 participants (owners and managers of SMEs) from SMEs within such targeted sites as Town Centers, Soweto market, City Market, and Buseko Market. Approval was obtained from the University of Zambia Biomedical Research Ethics Committee (UNZABREC) REF. No. 5913-2024 and the Lusaka City Council to ensure ethical compliance for the study. Respondents were informed that participating in this study was completely voluntary and that, they were free to withdraw from the study at any time without any consequence. The participants were informed that taking part in the study would not put them at risk of harm and that they would not gain any immediate personal benefits from their involvement. Respondents were also assured that the collected data would not be disclosed to anyone and that confidentiality and anonymity would be maintained throughout the study. After all aspects of the study had been clearly explained and the participants had demonstrated understanding, written informed consent was obtained from each respondent prior to the commencement of data collection. Primary data was collected using a structured questionnaire with closed-ended questions. The collected primary data was analysed using SPSS version 28, and the analysed data were presented using pie charts and tables. The results from this study demonstrated that, most of the respondents (63.2%) reported that drought lead to reduced operational costs and increased profitability among Small and Medium Enterprises (SMEs) in Lusaka District. The study also found that, few study participants (20%) indicated that, drought decreased revenue, increased operational costs, and caused challenges to the continuity of businesses. The findings from this study found that, most of the respondents (52.1%) diversified their products and services to meet changing demands of their customers during droughts. In contrast, increasing staff wages emerged as the second most significant strategy adopted by 27.1% (104) of SMEs. The study further disclosed that, the majority of respondents (82.1%) reported that limited access to financial resources and credit facilities emerged as a major challenge faced by small and medium enterprises in implementing effective drought adaptation strategies in Lusaka District of Zambia. While the majority of SMEs reported increased profitability and reduced operational costs due to strategic adaptations, a notable minority highlighted challenges such as revenue loss, increased expenses, and operational disruptions. The author recommends that, to enhance resilience, SMEs in Lusaka District should build on adaptive strategies such as product diversification and wage adjustments, while policymakers and financial institutions should work to overcome the critical barriers of limited access to credit and financial resources.