Now more than ever, supporting small and medium enterprises (SMEs) is crucial, given their significant role in the Namibian economy.

Major global companies such as DHL, Nike, Apple and Google were once SMEs.

Through the support they received, they are now among the largest companies in the world.

To highlight the importance of SMEs in Namibia, it is estimated that there are over 40 000 SMEs in the country, which are believed to employ and generate incomes for roughly one-third of Namibia’s workforce and contribute approximately 12% to the nation’s Grass Domestic Products.

Yet, on a daily basis, this backbone remains fragile, as they lack a sustainable financial strategy and direction.

Namibia’s SME sector remains caught in a paradox. On one side, government policy recognises SMEs as drivers of employment and innovation.

On the other, the same sector faces steep collateral requirements, inflexible banking models and limited specialised financial tools.

Institutions such as the Development Bank of Namibia, the SME Bank (before its collapse) and commercial banks have attempted to innovate.

Still, their approaches often reflect traditional corporate lending methods that exclude rather than empower.

Clearly, the promise of inclusion seems to have been lost in translation between policy intentions and financial realities.

Drawing from international experiences, Namibia can bolster SME finances and growth through a comprehensive strategy.

Lessons from Kenya’s M-Pesa demonstrate the powerful impact of expanding digital financial services.

Similarly, promoting public-private partnerships, encouraging venture capital, reforming collateral laws and incorporating alternative data sources as seen in Ghana, would collectively establish a more dynamic, inclusive and technology-driven SME financing ecosystem.

Studies show about 75% of SMEs close within two years, often before growing, in both developed and developing countries.

Namibia faces similar issues: many small businesses are informal, new and lack access to advisory services and finance.

Businesses that aim to grow need external advice, not just financial support.

These two factors should work together.

It is not about how fast you progress, but whether you are heading in the right direction with purpose.

Visibility is very important for investors, as most do not attend seminars or startup events.

For some registered SMEs in Namibia, their business credentials are only with BIPA.

Unfortunately, after registering with BIPA, they often do not take further substantial actions related to marketing, branding, networking and seizing new opportunities to build a strong reputation.

The creation of NIPDB acts as a bridge to help SMEs remain relevant, but its main focus for SMEs is limited to coordinating their activities and policies.

However, professional advisory services can assist SMEs operating in competitive environments by incorporating operational considerations and strategies.

This may include guidance on websites, branding, marketing and business communication strategies that can help international investors discover SMEs with great potential.

From the perspective of advisory services experience, financial literacy initiatives implemented in Indonesia and South Korea can empower entrepreneurs through focused education in credit management, investment and financial planning.

Credit guarantee schemes modelled after Korea’s KODIT and Malaysia’s CGC could lower lender risk and improve SME access to credit in Namibia.

Meanwhile, regulatory reforms inspired by Rwanda and Singapore would simplify business registration and financing processes, while innovative fintech-driven financing models, such as peer-to-peer lending and crowdfunding, as seen in countries like Colombia, could diversify funding sources.

As a matter of sustainable necessity, these two factors are crucial and, if ignored, will continue to pressure SME owners and hinder the growth and expansion of SMEs.

Ultimately, this decline will have consequences, as it will negatively impact employment opportunities, which are already scarce in Namibia.

The decline in efforts to promote financial inclusion and advisory services is often superficial and misplaced, risking a two-tier economy where capital concentrates upward while most entrepreneurs suffer from neglect. 

*Tio Nakasole, analyst at Monasa Advisory and Associates, holds a honours degree in Economics and an MBA. His insights draw from his experience in economic and policy analysis. The views expressed do not represent those of his employer.

-theoerastus@gmail.com