Namibia: The new SME Policy Paper and the Process of its Formulation
Arnold Tjihuiko

• Introduction
• Goals and Objectives
• Target Groups
• Economic Impacts on the National Scene
• Sector Priorities
• Role of Government
• Role of Parastatals and Non-governmental organizations
• Institutional Framework
• Subsidies and Incentives
• Regulatory Environment
• Market-oriented Support Measures

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Namibia: The new SME Policy Paper and the Process of its Formulation
Arnold Tjihuiko

Introduction

In Namibia, there is now an obvious economic, social and political willingness to promote the emergence of a strong sector of small and micro enterprises with the twin objective of fostering the development of indigenous entrepreneurship and reinforcing employment creation in the modern sector.

In order to fight poverty and unemployment, the Government of the Republic of Namibia adopted a Policy and Program on Small Business Development in February, 1997.

The policy framework outlined in this paper is designed to unlock the potential of Namibia's small businesses. It is founded on the knowledge that there is no shortage of enterprising endeavour in the country; and that the present development of the sector is a legacy of our past which has left small entrepreneurs poorly placed to take advantage of opportunities for growth and development.

The policy framework assumes that the lead role in development will be played by the SME sector's progressive entrepreneurs. It is on their ability to identify and explore opportunities on which the sector's future rests.

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The Government's role in the development of the SME sector will be one of catalyst and enabler. It is recognized that in the initial stages, the government will need to intervene strongly to overcome the constraints to developments imposed by the past. However, the government's intervention will be in the form of improving conditions for business to flourish rather than in direct intervention.

The document "Policy and Programmes for Small Business Development" was formally approved by the Government and adopted as the structure around which all developmental action with regard to the SME sector would be focused alongside an approved action plan and budget.

The document was the result of a thorough survey, a study of different role models and repeated consultations with all role players. Our effort in arriving at a consensus was assisted by the Commonwealth Secretariat. The consultation process, involving regional and central workshops, was facilitated and financed by the FES office in Windhoek.

Since the document was prepared after extensive nation-wide consultations, nation-wide, it has been hailed by all concerned and complimented upon by international agencies.

Goals and Objectives

The policy basically focuses on three aspects, namely, the facilitating environment, pro-active programmes and the institutional support. It specifies goals in terms of numbers and percentages, outlines the programmes most appropriate for Namibia and then gives approximate costs. Some of these programs are new and need to be operationalised by availing the services of experts in each field. We are already on the path. For instance, the Credit Guarantee Scheme, which is proposed in the policy, has already been studied and a report giving the proposed structure, the formats, the accounting systems, the details of staff required all duly costed, is available to the Government now.

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Target Groups

The policy document identifies as the core target groups of SME policy:-

• hitherto deprived sections of society, with special emphasis on women,
• unemployed rural poor, as well as
• existing micro and small entrepreneurs.

Economic Impacts on the National Scene

The SME policy is formulated as an integral part, and supportive tool, of the broader national economic and social policy. Hence, the development of the SME sector is envisaged to positively impact on the following key economic objectives in Namibia: -

• productive employment and income creation;
• import substitution and possible exports;
• geographical and social redistribution of wealth;
• self-reliance of the people;
• economic growth which is both sustainable and environmentally friendly.

Sector Priorities

The following sectors were identified as the priority areas:

In manufacturing, -

• metal fabrications,
• textiles,
• woodwork,
• leather work, and
• agro-industries.

In the services sector, focus will be put on -

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• technical skills oriented services, and
• those who have the capacity to graduate to manufacture.

In the trade sector, the core emphasis is to be laid on wholesaling in rural areas which is to be encouraged to get closer to the point of consumption. This will exclude the many intermediaries. It was also emphasized that illegal trades and retailing of alcoholic drinks will not be considered for any support.

Role of Government

The Government, firstly, formulates policies on the basis of information picked up through regional offices and regional committees, draws up programmes and deputes the parastatal National Development Corporation (NDC) and NGOs to implement. It is also responsible for monitoring and controlling the implementation process.

Secondly, the government is supposed to act as facilitator, by creating a supportive environment for SMEs to develop, by providing incentives and ensuring deregulation, as well as by providing the necessary information through its regional offices.

It is important that Government plays its role in a pro-active manner. Immediate action is envisaged in the following key areas:-

• Finance: micro credit, revolving fund, credit guarantee scheme, venture capital, seed capital.
• Markets: sites and premises, Vendor Development Programme (VDP), marketing intermediaries, export market promotion.
• Training: for officials, NGOs, entrepreneurs, skills training, entrepreneurship and management training.
• Technology Transfer: appropriate technology demonstration centre, clarification of legal aspects of technology transfer, data base of technologies.

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• Purchasing: data base (regional and international), procurement mechanisms, group purchasing, Cash & Carry's in rural areas to be incentivised.
• Sites and Premises: industrial parks, common facility centres.

Role of Parastatals and Non-governmental organizations

In support of government, parastatal bodies and NGOs have clearly defined roles to play. Most importantly:

• The National Development Corporation (NDC) functions as the implementing arm of the Ministry. Furthermore, is will co-ordinate the action of NGOs and report to the Ministry on all aspects. When asked, it will prepare operationalization plans and develop programmes.
• The Institute for Management and Leadership Training (IMLT) is to perform a key role in the area of training: it will organize and co-ordinate training, as well as co-ordinate syllabi, duration and other details of training programs.
• Other NGOs will have to perform specific roles as prescribed by the Ministry.

Institutional Framework

The institutional framework for implementing the policy as well as co-ordinating the various actors and stakeholders still needs to be improved or established. In particular, the need has been identified to:-

• strengthen the Small Scale and Informal Industry Division (SSIID) and the NDC,
• set up regional credit committees,
• develop effective instruments at the grass roots level, and

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• develop effective instruments for communication between all the arms of the triangle.

Subsidies and Incentives

To support the growth and development of the SME sector in Namibia, the already existing system of subsidies and incentives for small and micro businesses will be extended. Main focus will be laid on:-

• threshold for registration at N$ 50,000 turnover,
• incentivising the setting up of Cash & Carry's in rural areas,
• preference in Government purchases,
• special rate of interest, below market rate for loans,
• subsidized training,
• free information, market linkages, and purchase assistance.

Regulatory Environment

The existing regulatory environment needs to be improved. It is acknowledged that, in particular, the land issue (Permission To Occupy) and the question of licensing has to be addressed as a matter of urgency.

Market-oriented Support Measures

Finally, the following activities are planned as market-oriented support measures:-

• a Vendor Development Program, or Partnership Purchasing,
• the support of marketing intermediaries,
• development of sites and premises, i.e. the provision of market stalls,
• export market investigation.