Lawmaker Maximalliant Katjimune of the Popular Democratic Movement said around 70% of small and medium enterprises are estimated to fail almost immediately upon commencement of operations.
He noted that this is a worrying statistic which requires swift intervention.
Katjimune made these remarks on Tuesday in the National Assembly while introducing his motion which calls on the House to study the obstacles surrounding SMEs’ financing in Namibia in order to unlock greater access and economic potential for this critical sector of the economy.
Namibia now has about 70 000 registered micro, small and medium-sized businesses in a variety of industries. The sector accounts for about 12% of the gross domestic product (GDP), and employs over 200 000 people.
“What jobs will be created through SMEs by young people if the glaring reality is that the significant majority of SMEs in the country do in fact not succeed and fail to create sustainable jobs? This is the reason why a motion of this nature is fundamental,” he noted.
He emphasised that if Namibia fails to address SME funding and sustainability, there is no reason whatsoever why government should be encouraging young people in general, and graduates in particular, to set up businesses for the purposes of employment-creation.
The lawmaker mentioned that commercial institutions do have some facilities to assist SMEs, but not many benefit from that due to a high demand for collateral.
“Without a sustainable and strong SME sector which can withstand economic and political headwinds, our economy will not be able to grow in an upward trajectory nor produce the requisite amount of jobs needed to defeat the scourge of youth unemployment in particular and youth unemployment in general,” added the youthful lawmaker.
In his motivation, he further recommended the House to deliver a modest company tax cut, reduction of red tape which makes it hard to establish a business in Namibia, reforming the procurement policy to lower the cost of bidding and make the process more accessible, while dividing tenders into smaller contracts to allow small companies to compete and allow greater participation and benefit in the tendering processes of government.
Small and medium enterprises remain the lifeblood of many countries, as they continue to play a crucial role in stimulating economic activity.
The World Bank said SMEs account for the majority of businesses worldwide, and are important contributors to job creation and global economic development. They represent about 90% of businesses, and more than 50% of employment worldwide. Formal SMEs contribute up to 40% of national income (GDP) in emerging economies.