Determinants of Failure among Newly Created and Financed SMEs: Evidence from the COPA-PADMPME Programme in Kongo Central, Democratic Republic of Congo

This study examines the determinants of failure among newly created and financed small and medium-sized enterprises (SMEs) in Kongo Central, Democratic Republic of Congo. It focuses on firms supported through the Business Plan Competition (COPA) under the Support Project for the Development of Micro, Small and Medium Enterprises (PADMPME). These firms provide an important setting for examining business failure because they received non-repayable financial support at start-up. Despite this initial advantage, 57 of the 59 SMEs surveyed had ceased operations, corresponding to a failure rate of 96.61%. The study adopts a quantitative approach and uses primary data collected from the 59 beneficiary firms. Logit estimations are complemented by Probit models to assess the robustness of the results. The findings show that business failure cannot be explained by the amount of financial support alone. Weak internal governance, poor financial management, shortcomings in programme implementation, limited commercial relational capital and sociocultural pressures significantly increase vulnerability to failure. In contrast, the amount of the grant does not provide significant protection against business failure. These findings suggest that financing is unlikely to sustain young enterprises when managerial capability, market access and post-financing support remain weak. SME support programmes should therefore move beyond capital provision and combine financing with managerial development, structured monitoring and stronger market linkages.