Project Management Practices and SME Performance in Malawi: Evidence from Blantyre and Lilongwe

Abstract

Small and Medium Enterprises (SMEs) are vital to Malawi’s economy through employment creation, income generation, and economic growth. However, many SMEs face profitability challenges due to managerial, financial, and operational constraints. This study examined the effect of project planning on SME profitability in Blantyre and Lilongwe Districts and assessed the moderating role of access to finance. A mixed-methods cross-sectional design was employed. Questionnaires were distributed to 100 SMEs, of which 85 complete responses were received and included in the quantitative analysis. Qualitative data were obtained through semi-structured interviews with 20 key informants. Quantitative data were analysed using descriptive and inferential statistics, and qualitative data were analysed thematically. The findings indicated moderate adoption of project planning practices among SMEs. Goal setting, budgeting, and scheduling were commonly applied, whereas formal planning tools and risk management techniques were less frequently used. Results showed a positive relationship between project planning and profitability, with better planning contributing to improved cost control, resource utilization, and business performance. Access to finance significantly moderated this relationship, as limited credit access, high borrowing costs, and restrictive lending conditions constrained the implementation of planned activities and reduced the benefits of effective planning. Qualitative findings further identified weak financial literacy, inadequate planning skills, economic instability, and resource limitations as major challenges affecting SME performance. The study concludes that project planning positively influences SME profitability, but its effectiveness depends on access to finance, managerial capacity, and a supportive business environment. The findings offer practical insights for policymakers, financial institutions, and SME managers seeking to enhance SME sustainability and growth in Malawi.