MP tables motion on SME financing

Popular Democratic Movement parliamentarian Maximalliant Katjimune brought the plight of small and medium enterprises (SME) to the fore on Tuesday in the National Assembly when he moved a motion to investigate bottlenecks around SME financing.

He said this is an effort to unleash greater access and economic potential for the sector, which plays a crucial role in the growth of the economy.

Quoting the International Finance Corporation, Katjimune said there are 70 000 micro, small and medium enterprises registered in Namibia in various industries, accounting for around 12% of the gross domestic product.

These SMEs employ 200 000 people, according to the Namibia Statistics Agency, he said.

Katjimune said about 70% of the SMEs in Namibia are estimated to fail almost upon commencement of operations, compared to 50% of SMEs worldwide.

“This is a worrying statistic that requires swift intervention,” he said.

Katjimune said one of the greatest impediments the SME sector faces is lack of finances and access to capital, especially in the light of the collapse of the SME Bank in 2017 and capital interventions by other financial institutions and the government are still not enough to offer the cushion needed by SMEs to survive the tough economic headwinds.

“In order to address those funding bottlenecks, we would first need to address the factors that inform the failure of more than 70% of our start-up SMEs in the first place.”

He said the motion recommends that the house and the relevant parliamentary standing committee, if the motion is adopted as a starting block for the investigations, deliver a modest company tax cut funded by savings for SMEs in the national budget.

“We must reduce the red tape that makes it hard to establish a business in Namibia with specific focus on a streamlined small business regulatory system for registration as well as labour registration,” he said.

Katjimune called for reforming the procurement policy to lower the cost of bidding and make the process more accessible and said tenders should be divided into smaller contracts to allow small companies to compete and allow greater participation and benefit in the tendering process of the government.

“We must transform the Ramatex Industrial Complex into an SME hub to serve as a low-cost industrial area for SMEs in efforts of reducing their overhead costs and boost business activity and develop a comprehensive data and tracking system to evaluate the performance of SMEs through a methodical approach,” said Katjimune.

Namibia Informal Business organisation executive director Tangeni Shindondola agreed with the motion to investigate the bottlenecks but said the committee must comprise experts who understand the problems faced by the SME sector.

She said SMEs are not catered for under the Procurement Act and they compete with multinational companies for the same services.

“The government should level the playing field and relax tax brackets, as well as reduce red tape to make SMEs who import goods for sale like ‘Order Through Me’ ventures viable,” she said, adding that there should be a threshold for SMEs under the Procurement Act.

Johannes Shiwombolo, the director of Absolute Cleaning Solutions, an SME that manufactures cleaning materials, said he supports the motion which should be taken seriously.

He urged the Ministry of Industrialisation and Trade to draw up a list of SMEs that manufacture products in Namibia so that they can be awarded tenders instead of middlemen who buy from company A to supply to customer B.

“This leaves local manufacturers with stock while middlemen import from say, South Africa,” he said, adding that the only way to boost the economy is by boosting the manufacturing sector.

Tour operator David James said he supports the motion on one hand because it is important but does not support it on the other because no amount of borrowed money can make a business successful, but ideas do.

“I started small and because I believed in the business idea I have seen the business grow over the years, without loans to lean on,” he said.

“When you give money to people with wrong priorities, they forget that it is a loan that needs to be paid back and they spend it on luxuries like fancy cars instead of the business,” he said, adding that the idea, the sacrifice and hard work make a successful business.

“Those boys who sell eggs on the streets have better business sense because they know how to sacrifice and do not spend the profit recklessly,” David said, adding that banks have rules by which they function.

He said institutions like the Faculty of Tourism at the University of Namibia should work with tour operators to train youths on how to make a success of the sector. – email: [email protected]