By Annas Salom Nangombe
Small and Medium Enterprises (SMEs) play a critical role in Namibia’s socio-economic development. According to the Namibian Statistic Agency, SMEs contribute a significant portionto Namibia’s Gross Domestic Product (GDP) and account for nearly one-third of total employment.
These enterprises are the lifeblood of the economy, serving as catalysts for innovation, poverty reduction, and local economic diversification.
Despite their economic contribution, SMEs in Namibia face persistent challenges that limit their growth potential.
These include limited access to finance, high tax rates, lack of adequate business management skills, weak market linkages, and lack of policies and legislation to support them. A recent study by Cirrus Capital has indicated a loss of approximately 30,000 business, majority are SMEs.
The Government, through the Department of SME may strongly advocate for SMEs by creating an enabling ecosystem that fosters growth and sustainability.
This includes the formulation and implementation of SME-friendly policies, efforts to formalize informal business, other SME financing schemes, blended finance, implementation of SME tax incentives to allow small enterprises to reinvest profits into expansion and innovation as well as strengthen financial support structures in addition to the newly established National Youth Fund.
For meaningful transformation, the urgency of transforming the current National Equitable Economic Empowerment Framework (NEEEF-Bill) into an official Act of law to accelerate the promotion of inclusive economic participation is essential.
One of the recommended elements of this Legislation will be the mandatory of Enterprise and Supplier Development (ESD) Program. A binding strategic initiative to integrate SMEs into the supply chains of large corporations. ESD encourage large enterprise to source goods and services from local SMEs, thereby creating sustainable market opportunities and stimulating local production.
The second leg of ESD program is commitment contribution to ESD Fund. A regulation for corporate entities in addition to their corporate social responsibility to contribute a certain percentage of their Net profit after tax (NPAT) to finance and support SMEs, which include mentorship, training and capacity developmentprograms and formalizing informal business among others.
For the successful implementation, this Act will drive socio-economic transformation and broaden participation in the economy through the broad based black economic empowerment (BEE) scorecard. Corporate entities will be evaluated on their contributions to local empowerment, enterprise development, and inclusive procurement practices in addition to ownership, management, skill developments and other elements. Failing to achieve a minimum score in this area may results in penalty and effectively dropping the company’s overall BEE recognition level. The scorecard will also play a vital role for large entities in obtaining contracts, licenses and rights to trade in Namibia. This makes compliance a business imperative for large entities.
Effective implementation and enforcement of these initiatives can help create a fairer and more inclusive economy, ensuring that SMEs receive tangible benefits from corporate ecosystem to enable planting back resources, knowledge, and market access into the SME sector.
This will boost SME operations, enhance productivity, and create more employment opportunities. Over time, successful SMEs grow to become large corporate entities themselves, contributing even more to GDP and preserving a cycle of inclusive economic growth.
The BEE Act, when properly enforced, ensures that transformation is measurable and large corporations play their role in economic inclusivity. Strong enforcement and transparent monitoring of scorecards will help Namibia realize a self-sustaining and equitable business environment.
With these initiatives, Namibia can cultivate a thriving SME sector that fuels innovation, drives employment, contributes significantly to GDP, and ensures that economic prosperity is shared across all sectors of society.
*Annas Salom Nangombe is a highly skilled finance, audit, and governance professional with a strong academic background and diverse industry experience spanning lending, corporate governance, accounting, finance, internal auditing and financial reporting. He currently serves as a Lead Consultant at Excel Consulting Group, where he advises clients on Tax, strategic financial management, risk, and financial reporting.
