Deputy Minister of Sport, Youth and National Service Emma Kantema says Namibia’s small and medium enterprises (SMEs) face a daunting survival rate, with approximately 90% failing within their first five years.
According to Kantema, Namibia’s SMEs comprise around 40,000 enterprises, supporting more than 200,000 jobs and contributing 12% to the GDP.
However, many SMEs struggle to scale their businesses due to limited financing, market access and resources, making them vulnerable to economic shifts and competition from established firms.
“SMEs are the backbone of our economy, and their success is essential for both urban and rural development. The government is committed to fostering a supportive environment for these enterprises to thrive, particularly for young entrepreneurs who often lack established networks and resources,” she said.
She said this at a recent Economic Association of Namibia (EAN) forum where policymakers, government officials and industry stakeholders highlighted the need to support youth-owned SMEs in overcoming financing limitations, regulatory barriers, and a shortage of managerial resources to improve resilience and foster sustainable growth.
Kantema noted that the Namibian government has introduced several initiatives to help SMEs confront the obstacles limiting their growth.
The Ministry of Trade’s Equipment Aid Scheme provides essential tools and machinery to qualifying SMEs, while the Development Bank of Namibia (DBN) has established a venture capital fund that backs SMEs with substantial growth potential but limited access to conventional funding.
This Fund acts as an equity investor, helping SMEs acquire growth capital by exchanging equity stakes rather than incurring debt.
“The SMEs are impeded by various challenges, including access to finance, limited resources, regulatory and compliance burdens, market competition, and talent acquisition. Our goal is to remove these barriers to unlock the potential of SMEs as engines of economic transformation,” Kantema noted.
She added that to further support eco-friendly and sustainable businesses, the Environmental Investment Fund (EIF) recently launched the Green Credit Facility, focused on green SMEs and youth-led enterprises.
This Fund has already disbursed over N$70 million to 118 SMEs and is planning an additional N$100 million to support Namibia’s green entrepreneurs in building a sustainable economy.
“The financing for SMEs is limited and often misaligned with their needs. Namibian SMEs operate in a high-cost economy where prices for essentials like water, electricity and communication make it challenging for these businesses to remain competitive,” remarked Michael Humavindu, the Executive Director of the National Planning Commission.
He said despite the government’s efforts, challenges persist as one of the primary issues affecting SME growth is the lack of product standardisation, which limits their ability to effectively market Namibian products domestically and internationally.
He said many Namibian products, such as charcoal, are exported in bulk and subsequently rebranded in South Africa, which diminishes the potential for Namibian branding and value addition.
“Another recurring challenge is the lack of product standardisation, which hinders SMEs’ ability to market and sell Namibian goods effectively,” Humavindu said.
He added that Namibia faces challenges in fostering an entrepreneurial culture due to a low entrepreneurial mind-set and limited business innovation, as highlighted by the Global Entrepreneurship Monitor.
Key areas needing improvement include start-up skills and technology adoption. Incubators are crucial to support innovation and competitiveness in this landscape.
“Efforts to enhance financing for MSMEs include refining collateral requirements and legislative updates, like potential revisions to the Credit Agreements Act and the introduction of the Insolvency Bill. Lessons from the SME Bank’s closure have informed policies, including a new equipment aid scheme aimed at supporting informal economy MSMEs,” he said.
Humavindu noted that the Industrial Upgrading and Modernisation Programme (IUMP), launched in 2012, addresses scalability and standards compliance, evident during COVID-19 with support for sanitiser production.
“To foster sustainable growth, the SDG Impact Facility, created in 2018, has provided concessional equity and technical assistance to about 60 MSMEs, promoting green and resource-efficient initiatives,” he added.
Meanwhile, Namibia’s Informal Economic Development Policy prioritises traceability and support infrastructure over mandatory formalisation, enabling access to resources for all.
“The draft Financial Sector Transformation Strategy, due for approval, consolidates these initiatives, including a proposed National Enterprise Development Act to expand collateral options for MSMEs, enhancing access to finance,” he said.
