Authors : Tresford Kaseka; Chibomba Kilvin

Volume/Issue : Volume 11 - 2026, Issue 1 - January

Google Scholar : https://tinyurl.com/2hht9y6t

Scribd : https://tinyurl.com/mwh99m9a

DOI : https://doi.org/10.38124/ijisrt/26jan941

Note : A published paper may take 4-5 working days from the publication date to appear in PlumX Metrics, Semantic Scholar, and ResearchGate.

Abstract : Effective debt management is an essential component for the growth, stability, and sustainability of businesses, particularly within capital-intensive sectors such as construction. In Lusaka, Zambia's growing urban landscape continues to create demand for infrastructure development, prompting many construction firms to rely on both short-term and longterm debt to finance projects. However, the inability to properly manage debt can expose these firms to significant financial risk, hinder project implementation, and threaten overall business viability. In this context, debt management involves the strategies, processes, and practices that firms use to plan, acquire, utilize, and repay borrowed funds while balancing profitability and risk. The primary objective of this study is to evaluate the effect of debt management on the performance and sustainability of construction firms operating in Lusaka. Specifically, the aim of the study was to assess the current debt management practices employed by these firms, examine the relationship between debt management and financial performance, evaluate the effect of debt management on project completion timelines and operational efficiency, and identify the limitations that construction firms face in managing debt effectively. The study adopted an exploratory case study design, incorporating both qualitative and quantitative research methods. Data was collected from selected construction firms in Lusaka using structured questionnaires. Quantitative data was analyzed using STATA. Chi-square test was used to determine associations between variables like debt levels and business performance indicators. Thematic analysis was be applied to qualitative responses to identify common trends, challenges, and perspectives related to debt management practices. The study of debt management among construction firms in Lusaka reveals that commercial bank loans are the primary financing source, with supplier credit and equipment leasing serving as alternatives for smaller firms. Most firms favor short- to medium-term loans, typically repaying within 1–3 years, and assign debt management duties mainly to finance managers, though some rely on managing directors or external consultants. Collateral is often based on company assets or personal guarantees, and borrowing decisions are driven primarily by interest rates, with repayments prioritized according to cost and due dates. Digital tools are gradually adopted for debt monitoring, but policy updates are infrequent, and borrowing is largely motivated by cash flow needs rather than growth strategies. Debt management significantly influences financial performance, affecting profit margins, liquidity, and retained earnings, while high interest rates and repayment scheduling create operational pressures, including project delays, reduced material procurement, and lower labor productivity. Challenges to effective debt management include high lending rates, strict collateral requirements, weak financial records, limited credit history, economic instability, delayed client payments, and gaps in internal risk management and reporting practices, highlighting the need for stronger financial controls, transparent reporting, and flexible financing solutions tailored to the construction sector. Construction firms in Lusaka should strengthen cash flow forecasting, optimize the use of client advances, and maintain rigorous credit control to ensure timely debt repayment and operational efficiency. Adoption of digital debt management tools, adherence to lender covenants, and staggered debt maturity schedules can reduce financial risks and liquidity shortages. Additionally, staff training and formal debt management policies will enhance decision-making, cost control, and sustainable business growth.

Keywords : Debt Management, Business Growth.

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