This study examines the effectiveness of microfinance institutions (MFIs) in enhancing economic empowerment, focusing on small and medium enterprises (SMEs) in the food processing industry in the Lusaka district. The research was guided by four key objectives: Identifying the types of microfinance services available to SMEs, evaluating the effects of microfinance credit on SME performance, analyzing the influence of credit terms on SME growth, and assessing the challenges SMEs face in accessing formal financial services. A descriptive study design was adopted, incorporating both qualitative and quantitative approaches. Quantitative data were collected through structured questionnaires distributed to 92 SMEs, while qualitative insights were obtained from interviews with eight MFI representatives, yielding a total sample size of 100 respondents. The findings revealed that MFIs offer a variety of financial products, including microloans, equipment financing, and working capital loans. However, high interest rates, stringent collateral requirements, and rigid repayment terms significantly limit the accessibility and impact of these services. SMEs that accessed microfinance credit reported enhanced production capacity, increased revenue, and market expansion, though barriers such as bureaucratic loan processes and inadequate financial literacy persisted. The study emphasizes the need for more inclusive financial products, flexible credit terms, and comprehensive financial literacy programs. The study recommends introducing subsidized interest rates, adopting alternative collateral models, designing tailored repayment schedules, and increasing government support for SME financing.