SMEs should take the lead to access markets

Windhoek � There is currently not enough innovation in the approaches employed by Namibian small and medium enterprises (SMEs) to access international markets because of the heavy reliance on the government to promote and find international markets for local products. This is the observation of Nelson Simasiku, the Head: SME Business at Nedbank Namibia.

My recommendation is that there is a need for SMEs to be proactive in taking the lead to access international markets for their products and services, as opposed to relying on the government alone to assist them, he said.

The SME sector is recognised universally as a key force in driving forward economic development. In Namibia, SMEs contribute approximately 12% to the country's GDP and are key contributors to employment creation. SMEs also account for approximately one third of the country's workforce and contribute to income generation and poverty reduction.

Simasiku notes that while Namibia provides a conducive environment for SMEs to thrive from both a policy and operational perspective, access to finance remains one of the recurring challenges.

The National Policy on Micro, Small and Medium Enterprises demonstrates the government's commitment to transform the SME sector into a leading sector of the economy. The policy addresses challenges facing SMEs in the areas of finance, marketing, technology, infrastructure, skills development and institutional support. The various initiatives such as the Namibia Retail Charter which targets to increase the shelving of Namibian products to 20 percent on the retail shelves is a clear sign of the private sector's commitment to uplift SMEs. In addition, most if not all commercial banks either have SME divisions or SME specific products designed to increase access to financial services for SMEs, which is a clear sign of their commitment to uplift and grow the SME sector, he said.

Some of the recurring barriers that hinder the success of SMEs, according to Simasiku, include the process of business regulation which involves the registration of businesses and obtaining the necessary

operating permits and licences, lack of business management capacity, the inability to provide bankable business plans, as well as access to finances as a result of the inability to provide collateral.

Access to finance is especially a barrier for youth entrepreneurship but there are programs in place to support youths with winning ideas. The Credit for Youth in Business by the National Youth Council (NYS) and youth ministry is a loan guarantee program aimed at supporting youths who are involved in business activities but do not have adequate collateral, so as to encourage them in their efforts to access loans of less than N$100,000 from the mainstream banking sector in order to start or expand their businesses, said Nelson.

He adds that government, with the participation of all commercial banks, is working on initiatives for start-up businesses to overcome the challenge of collateralized lending which is a big obstacle for broader growth-oriented SMEs and youths. The Ministry of Finance as the custodian of the Financial Sector Strategy aims to establish a Venture Capital Fund, a Credit Guarantee Scheme and the Challenge Fund to improve access to SME finance, he said.

In addition, both government and the private sector are amending procurement policies while the Procurement Bill is being designed to provide preference to SMEs and local products.

Government, through the Ministry of Industrialisation, Trade and SME Development also provides support to Namibian SMEs through the financing of feasibility studies and business plans, the provision of business mentorship services and entrepreneurial skills training, as well as a Premises Development Program which provides the construction and leasing of affordable business outlets and industrial workshops.

The Equipment Aid Scheme provides financial assistance towards procurement of production equipment and inputs for SMEs, said Simasiku.

With 2017 forecasted to be an economically tough year, Simasiku adds that the adverse economic condition will indeed affect a number of sectors and eventually SMEs, especially those that heavily depend on government procurement.

For SMEs to survive the tough year, I recommend that they engage financial institutions to make alternative repayment arrangements or restructure facilities, evaluate and eliminate excessive debts and to only borrow if necessary.

At Nedbank we are flexible in our approach to SMEs and have policies and support services in place to assist our clients during adverse economic conditions. We have enhanced client experience through our client relationship model and have embarked on a segmentation exercise and classified all SMEs to ensure that they are not left out and benefit from our value proposition for small businesses, he said.

Source: New Era Newspaper Namibia