Guest Contributor | Feb 27, 2024 | 0
Empowering Namibia’s growth: Crucial role of SMEs and economic resilience
By Josef Kefas Sheehama.
Micro, Small and Medium (MSM) enterprises stand at the forefront of Namibia’s economic growth, offering a solution to the pressing issue of unemployment that looms large across the nation. The SME sector in Namibia not only sustains livelihoods for a significant portion of the population but also serves as a key driver of economic transformation and job creation.
Unlocking the Potential of SMEs:
Recognizing the critical role of SMEs, the government must prioritize supporting these businesses to contribute effectively to the structural transformation of the economy. A well-drafted policy framework is imperative to ensure the smooth functioning of businesses, particularly as more than half of Namibia’s self-employed individuals are women engaged in various sectors.
Contribution to Employment and Economy:
Research indicates that SMEs provide employment and income to approximately 160,000 people, constituting about one-third of the nation’s workforce. However, the majority of SMEs are concentrated in retailing, focusing on basic goods without significant value addition. Acknowledging their potential contribution to the national economy, policymakers must recognize the need for a simplified business registration process to encourage more businesses to register in Namibia.
SMEs as Drivers of Economic Growth:
Beyond employment creation, SMEs play a pivotal role in economic growth and social development, contributing over 12% to GDP, with some estimates reaching as high as 70%. The service industry, in particular, sees SMEs accounting for a substantial 60%. These businesses are the backbone of the local economy, fostering growth, employment, and income.
Government Initiatives for Economic Recovery:
Amidst the challenges posed by the COVID-19 pandemic and geopolitical uncertainties, Namibia has responded with strategic initiatives to support SMEs. The SME Economic Recovery Loan Scheme, launched by the Bank of Namibia and the Ministry of Finance and Public Enterprises, is a commendable effort. With a share capital of N$500 million, this scheme provides government-guaranteed loans to SMEs, aiding their recovery from the impacts of the pandemic.
Digital Innovation for Resilience:
Promoting digital innovation is crucial for building a resilient digital infrastructure supported by inclusive regulatory frameworks. This approach can create conditions conducive to serving vulnerable and underserved groups while mitigating potential risks arising from digital technologies. A focus on digitization can empower SMEs, providing them with the tools to overcome challenges and contribute to a sustainable and inclusive economic recovery.
Partnerships for Growth:
Acknowledging that SMEs are the lifeblood of the country, fostering partnerships between SMEs and supportive lenders is essential. These collaborations can fuel the growth of this crucial sector, contributing to Namibia’s economic prosperity and offering a solution to unemployment.
In conclusion, the success of SMEs is intertwined with Namibia’s economic growth. With the right policies, financial support, and a conducive business environment, SMEs will not only weather challenges but also emerge as powerful engines of innovation, employment, and economic transformation.
As the government and stakeholders continue to support and invest in SMEs, Namibia’s future holds the promise of a vibrant, resilient, and thriving economy.