MICRO, SMALL & MEDIUM ENTERPRISES

Micro, small and medium enterprises (MSMEs) play an important role in various sectors of the Namibian economy. They provide employment to approximately one third of the Namibian workforce and contributed around 16% to the country’s gross domestic product (GDP) in 2022. Despite their important contribution to job creation and generating income that improves the living conditions of several thousand Namibians, they continue to face many challenges.

Close to 56,000 micro enterprises accounted for 91% of the total number of businesses recorded in Namibia by the Namibia Statistics Agency (NSA) during its census of business establishments conducted between October 2019 and April 2021. The census also recorded 3,918 small enterprises (6.4%) and 1,435 medium enterprises (2.3%), while only 345 business were classified as large. Accommodation and food services accounted for 30,217 businesses, followed by wholesale and retail and then manufacturing. Close to 57% of MSMEs were situated in rural areas. Most of the establishments (63%) were found to be operating as sole proprietorships with 53% owned by males and 47% by females.

In the situation analysis in the policy document of the Sixth National Development Plan (NDP6) it points out the following: “The informal economy remains one of the key sectors that is undervalued, unrecognised and invisible within the mainstream of Namibia’s economy and society. The integration of informal businesses into the formal economy is essential for inclusive and sustainable economic growth.”

Challenges faced by MSMEs and the informal sector include accessing finances, cumbersome bureaucratic processes and regulations, the high cost of registering businesses, access to affordable premises and access to technology. The policy document also mentions that MSMEs often struggle to access bigger markets “due to a lack of resources, knowledge and market information or connections, which limits the ability to access a wider customer base necessary for growth”.

Two targets have been set in the NDP6 to create a conducive business ecosystem that enables MSMEs and informal businesses to grow and transform into the formal economy and contribute to improved income and economic growth:

• Increasing the percentage share of the MSME sector’s contribution to GDP from 16% in 2024 to 19.4% in 2030 • Increasing the number of informal enterprises that transitioned into the formal economy from 310 in 2024 to 950 in 2030

A number of strategies will be used to enhance innovative business support and capacity development for MSMEs:

Enhance innovative business support and sustainable capacity development

This strategy intends to establish and expand training, mentorship and other skills development services that connect MSMEs and informal entrepreneurs to experienced business professional service providers who can provide guidance towards accessing available support services.

Develop adequate and conducive MSME and informal business infrastructure

The strategy aims to invest in the development of wellorganised business premises with essential amenities such as utilities, sanitation, telecoms, day-care and security, which should be designed to support the diverse needs of MSMEs and informal businesses.

Enhance financial and non-financial service ecosystem

The focus of the strategy is to address the lack of access to finance. There is a need to develop a flexible financial ecosystem that should include microfinance and flexible credit services tailored to the needs of MSMEs and informal businesses, ensuring lower collateral requirements, a wide range of financial services, flexible repayment terms and easy accessibility. The strategy also focuses on addressing the inadequacy of incentive schemes to support the operation of the MSME and informal economy sector. There is need for development and implementation of tailor-made financial and nonfinancial incentives. As such, this strategy will fast-track the formalisation of the informal economy and enable it to be part of the mainstream economy.

Develop market-access platforms

This strategy intends to develop schemes for market access, including organised marketing groups, e-commerce platforms and exhibitions tailored to MSMEs and informal businesses, thus enabling them to reach a wider customer base and increase sales. These schemes should offer training and guidance on marketing, the use of digital marketing, online sales and customer service. Two flagship programmes will be launched:

  • The entrepreneurship development programme, which aims to “organise efforts designed to support aspiring and existing entrepreneurs with a wide range of development support instruments to enhance their capacities, resources, skills, knowledge and capabilities to successfully launch and manage businesses”.
  • The business formalisation programme, which is designed to “provide businesses with up-scaling support for formalisation and robust operations to enter the formal economy”.

By integrating MSMEs and informal businesses into the formal economy, the country can harness the full potential of its entrepreneurial talent, create more sustainable jobs, ensure production of quality goods and services, encourage adherence to local and international standards and enhance economic resilience.

TRAINING AND SUPPORT

SMEs Compete was founded in March 2006 by business entrepreneurs Danny Meyer and Claudine Mouton. The objective of this Windhoek-based social entrepreneurship entity is to improve entrepreneurial, business management, information technology and other skills. A variety of business support and advisory services, skills development activities, business mentorship and client contact sessions has assisted thousands of small and medium enterprises to grow their businesses during the past 19 years. Training programmes are regularly conducted in Windhoek, as well as most major towns throughout the country. An average of N$2.5 million in business growth grants is disbursed annually.

Support for MSMEs is also provided by the MSME Development, Innovation and Acceleration Department, which is responsible for support in access to finance, enabling market access and capacity building.

“Organise efforts designed to support aspiring and existing entrepreneurs with a wide range of development support instruments to enhance their capacities, resources, skills, knowledge and capabilities to successfully launch and manage businesses.”

MSMES AT A GLANCE

  • There are over 71,000 MSMEs in Namibia.
  • The informal sector contributed 25% to Namibia’s GDP in 2024.
  • MSMEs contributed around 16% to Namibia’s GDP in 2022.
  • The informal sector employed over 370,000 people in Namibia (one third of the Namibian workforce) in 2018.
  • Accommodation and food services, retail and wholesale as well as manufacturing are amongst the most important MSME industries.
  • MSMEs provide seven out of ten jobs in developing countries.