The Namibia Economist

Making jobs is more than just changing street names

The SME push is not a new concept in development. Small and medium enterprises were instrumental in the rapid development of Hong Kong in the nineteen sixties and seventies. Today, Hong Kong is one of the world’s major financial centres and acts as conduit for a very significant slice of financing that either enters or leaves the upcoming markets in China.
SME development as a theme was later taken up in several South American countries where the determinant links between poverty and crime, ownership and growth, education and development, were analysed and published in several academic papers. From there, it was expounded further by the development agencies resorting under the UN umbrella, and became the policy of force for more than thirty years.
In Namibia, the benefits of grassroots SME development did not go unnoticed. But SME development, despite all the work that has gone into this field, is not a straightforward concept. Neither is it easy to develop clear-cut policies, nor to implement a coherent set of principles to suit all conditions. SME development is a nefarious theoretical terrain with as many policy proposals as there are researchers working on the topic.
The local experience has proven that it is rather difficult to formulate one-size-fits-all strategies. This week saw an impressive SME Expo in Windhoek with many hopefuls in attendance. Marking the event as a priority area in terms of policy and implementation, was the presence of former Anglo  high brass, Clem Sunter, at the official opening. Sunter is famous for his “high road low road” scenarios which he formulated in the early nineties after a career of almost thirty years in the upper echelons of one of the world’s biggest mining conglomerates.
From a policy perspective, not even the definitions to delimit the SME sphere, are clear. In Namibia, the focus was always on micro enterprises to align development expectations with a population that is still mostly rural, and that is growing at a much heftier pace, than the overall economy. The result was that the initial focus was on self-employment until it dawned upon policy makers that not every individual is a born entrepreneur. Then our policies shifted to entrepreneurial support to ensure that those with the ability, actually rise above their immediate limitations, and establish the companies that will grow rapidly, and provide meaningful employment contributions. At that point, roughly 16 years ago, there was much talk about tender procedures favouring SME enterprises but after so many failed toilet paper manufacturers that could not survive supplying the government, all that emerged were a small number of fat cats.
Expropriation of the system became the norm, and the millions the GIPF squandered ended up mostly in the pockets of a handful of individuals, with a stream of bankrupt companies in the wake. SME development was not a huge success, and employment kept going down.
The problem is that from a public perspective, many of the initiatives were simply cosmetic. Similar to changing street names, where the suburb and the residents remain exactly the same, regardless of the name that street goes by. Poor residents in a poor neighbourhood are still in the same position today as they were ten years ago. Changing the street’s name added a nice cosmetic flavour but it did not upgrade the area. I suppose if political collateral in the form of Xs on ballots are important, then the cosmetics become important especially if the voters are still on the lowest rungs of development.
We need to realise that the success of SME development will eventually be determined by a rather complex set of policies with the backing and effort of a rather impressive number of development agencies. I sense the current focus of SME development has shifted to employment, but in reality I do not see this happen. Micro enterprises are still micro enterprises, and they usually employ only the owner and one, may be two, immediate family members. They exist because of need and not because the owner has big dreams of one day becoming the next fat cat.
So where does one find workable solutions between the two extremes of a woman selling apples at the taxi rank, and a connected fellow who uses government money to start up an undertaking that closes its doors at the first sign of adversity. Both claim SME status and both basically provide employment, and/or benefits, only to those in the immediate circle.
I suspect we will be debating the SME concept for a long time still, before we get to a system that actually works.

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