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- Nyasha Francis Nyaungwa
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“Everyone in the country from the President to the person in the street is talking about the SME sector as the backbone of the economy, engine of growth, it’s where the job creation is going to come from. We say we need to create 100,000; 200,000, 500,000 jobs; actually what we should be saying is we need to create 100,000 new little enterprisers. That is where the focus should be because those are the ones who are going to create the jobs. Those are the challenges that will have to be addressed.”
A leading business consultant has called on authorities to shift focus away from access to finance for Small to Medium Enterprises (SMEs) to address other urgent problems facing the sector if it is to become the engine of economic growth that everyone wants it to be. SME Compete Director, Danny Meyer told The Economist on Wednesday, at the sidelines of the annual SME Expo which ends this Friday, that the expo provided an opportunity for policy makers to be told to focus on other challenges that are even more debilitating to SMEs.
He said: “It’s an opportunity to talk to policy makers so that they can see that there are other challenges that need to be addressed because I think access to finance has gone a long way.” To emphasise his point Meyer said two of the country’s commercial banks have SME departments, an SME Bank will be launched soon, there is bridging finance while SMEs constitute the largest share, in terms of volume, of the Development Bank of Namibia loan book. “So a lot has been done but the other issues like access to affordable growth space needs to be addressed. For example, where do small businesses go if they are operating from home?”
Meyer said the incubation centres are only so big, adding that SMEs in the incubation centres should theoretically only stay there for a few years and then move out to make room for others to move in. “But where do they actually go to? So there is a definite problem there, - access to affordable work space.”
Another challenge facing SMEs, Meyer said, is attracting skilled staff. He said very often SMEs train their personnel who are then poached by the larger companies. That burden will always fall on the SMEs shoulders since they can’t match remuneration packages paid by large corporates.
Meyer added: “Talking to some of these decision makers one hopes that you can slowly persuade them that there is a need to go beyond just providing access to finance, there is also a need to make certain changes in the environment. Maybe the way business is registered, processed, the way accounts are settled by large customers who make SMEs wait without realising that in a small business, cash flow management is more important than in large enterprises.
“If your bills are not paid on time, they can actually become not only dangerous in terms of the future of the company but extremely demoralising. You work hard to provide goods or services and then you wait for your money because the vendor registration form is not done or filled in correctly or you didn’t give this little piece of paper.”
The SME Director said those involved in providing a service to the SME sector such as government policy makers and tertiary education institutions, should have a brainstorming session again to see what more can be done to fast track the “entrepreneurial wind of change” that is blowing through the country. “But I guess the approach that has been adopted so far is good, nobody can say you cannot access finance; tenders, there is positive procurement programmes in place. Most of the parastatals give preference to the SME sector.
“A lot of these have been addressed but we need now to maybe move at a faster pace and focus on things like registering a business , formalities associated with getting the paperwork done, the bureaucracy whether it is taxation, whether it is business licences, migrating from the informal to the formal sector, and the cost of doing business are other challenges that need to be streamlined.
“Imagine if you are in some smaller towns like Lüderitz or Outjo, the cost of transport, the cost of communication and so on. Its a problem that needs to be addressed and see how maybe there can be sharing of resources where we can get several SMEs to procure together and share the cost of transport.”
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