Small Businesses for Big Growth

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By Prof Monish Gunawardana IT is repeatedly implied in many development debates that small industries can create jobs and lessen the burden of poverty. Actually, the majority of small businesses in developing countries employ five or more people and those jobless stay out of cold and hunger. The Global Entrepreneurship Monitor (GEM), an international research project that South Africa was involved in for the past five years, has revealed how small businesses influence economic growth and redistribute national wealth. Let me give an example of a group of Namibian businesswomen selling Kapana traditional food under the shade of the massive GIPF building. Their simple menu boasts the ‘finger-liking’ spicy meat, meal-porridge and nutritious Oshikundu. These foods are nutritious and affordable to the poor. Construction workers, low-wage earners and job seekers are the regular customers of these open-air cafes where they could get a good lunch for N$3.00. These courageous business-sisters’ daily net profit is around N$50 dollars and is used to feed their children and other family members. These small businesses are not supported by our big banks or any other financial institutions. However, kind-hearted taxi drivers help them transport their utensils from Katutura. These small businesses silently support the survival of many families in Namibia. Small Businesses The large numbers of previously disadvantaged Namibians are currently engaged in this sector. Our readers may be surprised to learn that, even today, the emerging Asian economies like India, China, South Korea, Malaysia and Thailand greatly benefited by small businesses. They also represent an entry point into the economy for new groups who have a few hundreds dollars. Women and youth are the key players in this sector and it is a training school to hone the finer points of the entrepreneurship. Besides that, they are specially suited to fulfil the needs of less affluent customers. The core strength of small businesses is their ability to respond swiftly to changing economic conditions. Even the foundation of the American economy was laid on the small businesses. For example, some computer giants in California’s Silicon Valley began their enterprises in their garages by using primitive machines. It is a well known fact that the world’s richest man Bill Gates started his computer industry as a small business in a garage. Women’s Power The informal businesses help immensely to reduce the unemployment and keep the poor families alive in the development world. The best examples in this regard are Cambodia and Laos. These two underdeveloped Asian countries heavily suffered at the hands of superpowers or lunatic rulers such as Polpot who massacred millions. And, the women of these countries were forced to maintain families. They started small businesses such as cooked noodle-soups, vegetables and daily needs. Some started tailoring, bicycle repairing, hairdressing or collecting used paper for recycling plants in Thailand. As of today, nearly 60% of stalls of the open market in Phnom Penh or Vientiane are operated by former rural businesswomen. When I visited Laos in 2005, I met some women who own nice cafes and cosmetic stalls at the Center Market (Tlath-Sau) in Vientiane. These wonderful small businesswomen are not mere individuals, but “talented free agents’ of the modern economy. Inaccessibility to Capital As I learned from an informal businesswoman who sells fish at the Katima Mulilo open market, at the beginning she invested N$1 500 to start the vegetable business. Her monthly income was not less the N$1000 per month, which keeps food on the table for her five-member family. Her son and daughter assist to run the business. Even though the banks or any other institution did not support her, the capital was built on the loans obtained from relatives and friends. The lesson I learned from this case was that if there is a way to provide small amounts of capital for some small entrepreneurs, they could reduce unemployment and contribute more to the national economy. In the absence of a development-oriented banking system in our country, the government should design a state-supported micro-finance system similar to Grameen Banks in Bangladesh, to provide small loans to our small entrepreneurs. Village Level Training Those who are already engaged in small businesses and others who want to start small businesses or home-based industry, should be supported by short and flexible trade skills training programmes. Presently, many trade skill development centers are located in cities. Unskilled workers, unemployed youth or others looking forward to accrue skills cannot bear the transport costs and daily substance expenses to attend trade skill training centers in cities. Therefore, the regional vocational training centers should organize fast track courses at constituency level. They can use a mobile van to carry the equipment, training aids and instructors to conduct training in trade skills to start the small businesses and to cater for the local needs. For instance, welding, cement brick-making, masonry, carpentry, plumbing, food processing, tailoring, handicraft, small shops and community tourism are some of the trade skills that make the unemployed employable and eliminate the poverty at grass-root level. Khomas Micro Business Project Recently, the Khomas Regional Council introduced 92 small business projects with N$1 092 200. The average capital investment per project is around N$10 000. Sister Ottilie Haufiku who lives in Katutura is a beneficiary of this commendable project. She buys raw peanuts from rural women and uses a small hand-machine to produce peanut butter. And, now she sells her products to Nampol’s inmates. These budding entrepreneurs should be provided with additional skills in packaging, marketing and management skills and other business support to expand their businesses and to help to transform Namibia into a highly industrial nation. And, that is the ultimate goal of our Vision 2030. If our 13 regions could promote and support 100 small businesses per annum by 2010 (e.g. at the end of the current National Development Plan), there will be 65 000 small businesses across the country that provide decent income for nearly 325 000 persons. This is how small businesses can reduce the rate of unemployment and poverty in Namibia. More Than Growth The Asian Development Bank’s (ADB) senior economist Hazal Ali recently reminded that strong economic growth alone would not solve the development problems and governments need to make job creation as a central national objective backed by time-bound policies. Even if our assumptions on economic growth are accurate, the major challenge is to cater for unemployed youths, who are impatiently queuing to enter the job market. As our Khomas Region shows, through a moderate investment and simple trade skills training, we can transform the unemployment youths to small business owners, who will be the cogs and wheels of the Vision 2030 development machine. “Instead of looking for things that have gone wrong and trying to fix them, look for things that went right and try to build on them” (leadership – by Tom Peters). So, let us promote, support and nurture the small businesses across our country.