By: Josef Sheehama
The Namibian government relies heavily on Micro, Small, and Medium Enterprises (MSMEs) to drive competitiveness and inclusive growth. Closing the finance gap for MSMEs is crucial for improving productivity, fostering long-term growth, and creating better jobs.
The potential of MSMEs to create a livelihood constitutes them as vital for improving household quality of life and reducing poverty. In order to alleviate some of the problems related to disparities in income distribution, MSMEs need to be promoted to foster economic growth, competitiveness, and equitable distribution of economic growth opportunities. For the country to reach its immense potential, more needs to be done to encourage the expansion of MSMEs and increase intra-African trade. One of the reasons underpinning optimism is the growth rate predicted for Namibia’s population, as seen on Namibia’s 2023 Labour Force Survey highlights unemployment challenges and income disparities exacerbated by the country’s growing population, which reached 3,022,401 in 2023, translating that government should think differently by not only being a job provider but also fostering entrepreneurial culture, as well as the fact that a sizable portion of Namibia’s population is young, who will support strong and equitable growth.
Namibia needs to develop a framework for young Namibians to set up their own businesses. With an expanding number of entrepreneurs and a supporting ecosystem, the country is building an environment that fosters creativity and entrepreneurial aptitude. This move is more than just a response to economic needs; it displays the persistence and adaptability of a new generation eager to embrace opportunities. This agility is demonstrated by the population’s increasing urbanization and demographic shift toward younger people. Namibia’s youth must get active to avoid a situation like Kenya, where a growing youth movement formed and the country’s parliament withdrew due to young voters’ opposition to a disputed tax bill. This clearly indicates the embodiment of the spirit of a generation poised to redefine the economic future of their nation. The rise of entrepreneurship in Namibia will be driven by a unique blend of historical context and demographic factors, setting the stage for a diverse range of industries and ideas. As government initiatives and support programs take shape, aspiring entrepreneurs will find the resources they need to turn their visions into reality. From funding opportunities to incubators and accelerators, the landscape is ripe for innovation, encouraging collaboration and community engagement.
Furthermore, there is no reason why Namibia cannot become a global economic hub as China and others did. Another reason to be positive about Namibia’s future is its untapped energy potential, which includes both fossil resources and renewable energy sources like solar, wind, and hydro power. Economic growth is impossible without energy, that’s why Namibia should focus on energy and sustainability as growth drivers. In addition to reducing trade obstacles and investing in energy initiatives, Namibia should prioritize infrastructure spending within the country. This indicates that the country should spend funds to improve infrastructure, such as roads, ports, airports, and railways. This is another key growth driver.
Namibia should prioritize gaining its share of the global economy, overcoming its most pressing obstacle, and creating jobs above figuring out how to convey commodities across borders. The government should enable local suppliers to evolve from raw material exports to value-added manufacturing. Despite severe hurdles, Namibia’s MSMEs remain the backbone of the economy and play an important role in community development. Entrepreneurs must play a role in identifying gaps, connecting the dots, and venturing where others are afraid to go in order to unlock potential and transform it into reality. The bureaucratic process of establishing and running a business can be overwhelming, resulting in delays and frustration. Recent government initiatives, such as those targeted at streamlining registration processes and increasing business, are encouraging. These initiatives seek to improve the climate for entrepreneurs, hence boosting innovation and economic growth. It is critical for the government to work with MSMEs to address challenges such as low diversification and industrialization caused by inadequate infrastructure in key economic sectors such as logistics, agriculture, and energy, poor market access, particularly for rural MSMEs, and poor product standards, which have rendered MSMEs’ products uncompetitive in domestic markets.
Moreover, according to the World Bank’s MSME Finance Report 2022, Small and Medium Enterprises account for a considerable proportion of all businesses worldwide. They make up approximately 90% of enterprises and more than 50% of all jobs worldwide. In emerging economies, formal MSMEs account for up to 40% of total national income. The report found that including informal MSMEs leads to a large increase in percentages. Micro, Small and Medium Enterprises create a large number of formal jobs in emerging economies. Despite the contribution of MSMEs to Namibia’s economic development, its full potential has yet to be realized due to an array of obstacles hindering their expansion. These barriers include limited access to affordable financing, limited access to both domestic and international markets, poor penetration of technology, a lack of innovation, a weak entrepreneurial culture, insufficient decentralization of MSMEs’ support services, a lack of cooperation among companies, and fragmented MSME development interventions due to conflicting institutional mandates. Inadequate business infrastructure, an unfavorable business climate, and a sizable informal sector are additional obstacles.
The National Youth Fund (NYF), an N$257 million initiative that supports new startups and emerging youth-led businesses, is crucial to Namibia’s job creation and economic stimulation. For the past 17 years, SMEs in Namibia have employed around 70% of the workforce, contributed 12% of the country’s GDP, and contributed to in attaining the nation’s 2030 ambitions. To make decisions based on information the government must research and investigate MSME failures, as 75% of them fail during the first five years of operation. The continuation of MSME support will result in businesses transitioning from small to corporate, increasing competitiveness and contributing to economic growth and diversification, which can be enabled by the African Continental Free Trade Area (AfCFTA), which has a market of 1.4 billion people and a combined GDP of approximately US$3.4 trillion. Furthermore, the World Bank Group anticipates that 600 million jobs will be created in 2030 to meet the growing global workforce, making MSME growth a primary priority for countries around the world.
In conclusion, the fundamental objective of this strategy is to create income and jobs by encouraging the development of new MSMEs and enhancing the performance and competitiveness of the ones that already exist in order enhance the participation and contribution to the Namibian economy.
Therefore, MSMEs contribute to income disparity reduction by offering diversified work opportunities, fostering small-scale entrepreneurship, and encouraging economic inclusion.
