A revision of the country’s now outdated 18-year-old policy for small businesses has brought some hope that going forward small businesses would be able to operate in an environment that foster sustainable employment creation.
This would be in addition to income generation through training, improved access to finance, technology and markets; enhanced capacity to innovate and improved entrepreneurial skills.
A consultation meeting on the new draft policy for micro, small and medium enterprises yesterday in Windhoek found that the old policy was “flawed as it contained very little in terms of implementation, monitoring and evaluation”.
“Our intervention cannot be guided by a 1997 policy. This needs to be revised and nationally agreed upon,” noted Ndangi Katoma, a member of the National Technical Committee established to guide the development of the SME policy and the Director of Communications and Financial Sector Development at the Bank of Namibia.
The small and medium enterprise (SME) policy will hopefully capture the new dynamics of this crucial sector and into more opportunities for small businesses, said the Permanent Secretary in the Ministry of Industrialisation, Trade and SME Development, Dr Michael Humavindu.
Nevertheless, “the previous policy and programme on SME development got the ball rolling,” Himavindu added. “This saw many developments such as the numerous SME parks erected throughout the country.”
The scope of the new policy also lays the groundwork for a sound monitoring and evaluation system, reviews the definition of micro, small and medium enterprises, highlights constraints and challenges faced by small and micro-businesses, and formulates clear development strategies and policy recommendations.
The draft policy states that a comprehensive set of systematic measures in various policy areas such as labour, public procurement, economic incentives, fiscal policy, business regulations, commerce, competition, trade policy, education, monetary policy and quality standards is required.
The draft policy postulates that for optimal and effective implementation of policy measures and the overall framework – government ownership, commitment and monitoring are the underlying requisite critical plank at the highest level. This is something that experts say was lacking in the previous policy.
One of the challenges faced by small and micro businesses in Namibia is access to finance. “Financing is unattractive to traditional financial institutions, as they (SMEs) are perceived to be high risk investments that do not yield commensurate returns. Even if they offer promising, commercially viable investment opportunities, small businesses are often not backed by adequate collateral. Only a few businesses use financial services. The majority relies on their own financial contributions and contributions from family members or friends,” states the draft policy.
The ministry says that as a result, 97 percent of Namibian small businesses are considered non-bankable.
According to a World Bank survey, about 41 percent of small and about 29 percent of medium enterprises identify access to finance as a major constraint, whereas only one percent of large enterprises see access to finance as a challenge for their development.
Other constraints for small businesses include access to land, access to and high costs of utilities and skills; crime, global competition, access to technology and research and development; access to markets as well as cumbersome administrative processes.