By Freddy Tyapa
Namibia currently faces certain economic challenges, which are attributed to the country creating an environment where jobs are limited while the population is steady growing.
It has been however noted that we always need to look at alternatives for solutions when faced with adversity.
During conversations relating to the issue of resolving unemployment, together the government with the private sector not able to fully create employment opportunities, the conversation turns to how do we change the mindset of longing to be an employee to becoming an employer?
The small medium enterprises (SME) have overtime since 1997 identified as one of the sectors that may create value to help resolve the issue of unemployment.
The micro, small medium enterprises by the ministry of trade outlines the policy objective as – to create an enabling business environment for the MSMEs, allowing businesses to foster sustainable employment creation and income generation through training, improved access to finance, technology and markets, enhanced capacity to innovate and improved entrepreneurial skills.
The objective of the MSME Policy is thus to provide the requisite policy and implementation frameworks to ensure the development of competitive, dynamic and innovative Namibian MSMEs.
According to a report published in March 2025 by FNB Namibia we have about 40,000 SMEs which employ more than 200,000 Namibians, making them vital to the country’s GDP. Yet, despite their potential, SMEs continue to face significant barriers that limit their growth.
In this article we are going to highlight some of the challenges that the current SMEs are experiencing as challenges for them to fully make an impact towards the economic growth of the state
- Empowerment – can only arise when SME operators perceive that their presence is recognized in the markets within which they operate. This may be in the form of having access to suppliers who offer the same services to big entities with same level of trust like offering credit lines to procure goods to sell to their customers.
This enables the business to take advantage of other opportunities that are normally out of the reach, as they will be greater decision makers knowing well, they are backed well with capacity.
In most cases SME operator does not feel trusted or face too many hurdles of scrutiny when asking for assistance from organisation that are entrusted with giving them a supportive arm.
Lately we have also noticed that SME’s proposals are not received with urgency as they are always considered to lack capacity or skills to deliver their proposals. The market requires a top-down approach in which big established institutes play a focal role in ensuring that the smaller entities work closely with them for empowerment purposes and opportunity diversification.
- Financial inclusivity – enables SME operators to have access to funding when the need arises. SME’s just like any other business have potential to grow and expand but one of the major limiting factors is access to capital.
The financial industry currently limits funding to SME as they are classified as untested or rather high risk to experiencing defaults on funding.
The sector needs a complete overhaul on the funding approach to SME as the current models do not align well with the positions where the SMEs are. Funding models should be including mentorship and financial allocation intervals which will ensure the funds are utilized as per requested needs to help build trust between the two parties. Financing of SME’s should come with favorable interest rates and repayment plans in accordance with their positions. Banks needs to design products tailored with the SME needs such as support centers, low bank charges or bundled pricing packages, financial performance analysis/review and modeling services.
- Inclusive and sustainable marketplace – often times SME produced products are sometimes classified of being of lower quality and are rejected access to the market place, this often leads to the demise of some operators as their products cannot be sold to larger audiences.
In the service space, the skills of SME operators are undermined and often times corporation would prefer to source these services from foreign entities rather than trusting smaller institutes to implement and execute.
This often leads to local capital that could have utilized locally to be shipped out. This behavior also limits local collaboration between foreign companies and the local SMEs. The skills are often transferred out as foreign company’s often to do not hire local for the specialized positions.
Regulating involved in the registration of SMEs should simplify their process to make sure that formalizing a business is not a hurdle and turnaround times need to be short.
- Fair opportunities for SME operators – SME operators are often overlooked when opportunities that require bidding or tendering are availed. This narrative is derived from SMEs not having the financial or skills capacity. We should establish bodies that are able to back SMEs when it comes to major projects funding as this will be able to assist them with collaborations through joint ventures and acquire the necessary skill sets and build capacity with that kind of execution approach.
Lack of a structured and regulated Business Development Services (BDS) market: Business consultants have identified the need for Business Development Services in the country and have made use of this opportunity, offering costly trainings and consultancy services targeting MSMEs, these services are not affordable to most start up and therefore a direct funding for such training need to be fully funded through other forms like tax rebates or the National training authority.
There is a need to regulate this market, in order to ensure quality and value for money to the MSMEs making use of such services.
The Namibian Government is strongly committed to foster economic growth and development in order to overcome poverty and unemployment. Vision 2030 describes “A prosperous and industrialized Namibia developed by her human resources, enjoying peace, harmony and political stability”.
The Micro, small medium enterprise comprises of formal registered institutes with an employee capacity between 1 – 100 and annual turnover of N$300 000 – N$10 000 000.00. The segmentation is in three tiers with the micro, small and medium all within the above ranges.
The major operators in this market are classified as informal traders and this makes it hard to truly weigh their overall contribution to the country’s gross domestic product value. The idea is to have all these traders onboarded and assisted to further grow their business and create value with the communities they operate.
Flourishing business add direct benefits to the nation in the form of employment, poverty reduction, improved quality of life and more revenue for the state through annual tax returns.
*Freddy Tyapa – Seasoned banker, Economic and legal analyst.
