The Development Bank of Namibia (DBN) has called for the remodelling of the country’s financing system to spur economic growth.
This was after the financial institution had noted that both new and existing enterprises continue to perform badly due to lack of entrepreneurial skills, limited demand for local goods and services, and lack of coordination in the enterprise financing and support ecosystem.
“This inefficiency is characterised by substandard performance of new and existing enterprises, as well as their failure,” DBN CEO Martin Inkumbi said during the signing of an agreement with the Namibia Trade Forum (NTF) to provide funding to export-oriented enterprises and startups, taking advantage of the African Continental Free Trade Area (AfCFTA).
Inkumbi advised Namibian SMEs and manufacturers to become competitive in both local and export markets as AfCFTA will also open the Namibian market to increased competition from imports.
“The MoU should be a model for coordination with the ability to assist finance for manufacturing, food processing, agriculture infrastructure with the goal of local and trade. Although AfCFTA represents a potential boom for Namibian exporters, it also opens Namibia to imports, and so it is important for Namibian SMEs and manufacturers to be competitive in both local and export markets,” he said.
Speaking at the same occasion, Deputy Executive Director for International Trade and Commerce in the Ministry of Industrialisation, Trade and SME Development Ndiitah Nghipondoka-Robiati said the MoU will improve and strengthen the SMEs and allow Namibia to accelerate its industrialisation agenda and diversify its export market.
“SMEs are the backbone of most economies and are a key source of economic growth, dynamism and flexibility, so SMEs must engage in programs that foster entrepreneurial thinking and enhance entrepreneurship. Collaboration such as the NTF-DBN MoU, and commitment and consistency are the three factors which will enable SMEs to become highly independent and increase their survival rate,” she said.
Stacey Pinto, CEO of NTF said the collaboration is geared to strengthen applications for DBN funding by SMEs.
“The NTF should be a first stop for SMEs intending to export goods or services to AfCTFA countries,” she said.
In addition to giving advice to strengthen DNB applications, the NTF will also provide “certain standards that will allow SMEs to compete in AfCFTA, elements such as packaging, labeling, barcodes, production capacity, and quality assurance. These elements are the basis for SMEs to invest in products and services.”
The DBN-NTF agreement comes as Namibia launched the 2022-2027 AfCFT Implementation Strategy and Action Plan aimed at taking advantage of a market of about 1.3 billion people in 55 AU member countries with a combined GDP of US$3.4 trillion.
Namibia signed the AfCFTA Agreement in 2018 and ratified the agreement in February 2019 and is capaciting itself for the huge market.
AfCFTA aims to increase the ease of trade and investment across African borders, as well as eliminating tariffs on intra-African trade, reducing unemployment, increasing infrastructure development and creating a more competitive and sustainable environment for cross-border trade.
AfCFTA is designed to boost intra-African trade by up to 52.3% and expand Africa’s economy to US$29 trillion by 2050.