DBN calls for mind shift in SME sector

THE failure rate for small and medium enterprises (SMEs) in Namibia is extremely high compared to the rest of the region, partly because of a lack of skills and access to finance, but also because of the ‘get-rich-quick mentality’ of some entrepreneurs.

These were some of the views aired when the Development Bank of Namibia (DBN) and the Namibia Chamber of Commerce and Industry (NCCI) signed a cooperation agreement on Wednesday.DBN Chief Executive Officer David Nuyoma said the behaviour of many SMEs is very disturbing, and he appealed to them to honour their commitments and to be diligent at all times.He said SMEs are faced with a lot of challenges, which are poor financial management and record-keeping, the purchasing of expensive equipment that most businesses cannot afford, like vehicles that are not directly useful in the venture; improper allocation of funds intended for business operations; commitment to prioritise loan repayments; and poor credit records, resulting from a lack of commitment to honour their obligations.These challenges are as a consequence of a lack of capacity and relevant skills.Nuyoma warned that if they are not addressed appropriately, these challenges could destroy emerging businesses and they will not have access to credit facilities, access to work or even contracts.’We recognise that through the introduction of capacity-building programmes like training and mentorship, some improvements can be achieved, but there must be willingness and a mind shift from the entrepreneur that business is a long-term undertaking that requires hard work, patience and sacrifice, then only comes reward. If we do this, there will be sustainable businesses that can contribute to job-creation and economic development in general,’ he advised.At the same occasion, NCCI CEO Tarah Shaanika reiterated the need for training, as SMEs are limited with skills at their businesses.He pointed out that the failure rate of Namibian businesses is very high, compared to other countries in the Southern African Development Community (SADC) region.’We hope that sooner rather than later, the key issues which are making it difficult to access funding will be sufficiently addressed. These issues, in our view, include low levels of skills, lack of innovative financing products to provide unsecured funding to feasible projects and the development of the capital market,’ he said.Shaanika emphasised that access to affordable funding remains a key ingredient for a successful economy in Namibia.Unfortunately, it remains one of the biggest challenges facing businesses today, although some have made progress in making funding more accessible.According to Shaanika, this challenge will soon be a problem of the past with the implementation of the Namibian Financial Services Charter, which is aimed at achieving better representation of previously disadvantaged Namibians. Through the MoU, parties agreed to share information on operations and policies of their organisations; share information on financing programmes offered by the DBN; create channels to promote understanding of the DBN’s financing criteria among NCCI members; conduct periodic surveys among NCCI members on their financing needs and the quality of DBN’s services; use NCCI platforms to introduce DBN’s products and co-ordinate initiatives around micro- and SME-related activities, specifically due to the overwhelming challenges entailed in the field. – Nampa