The recently launched national youth fund (NYF) is the government’s N$257-million initiative aimed at supporting start-ups and providing business growth funding to youth-led enterprises already in business.
According to media reports, initial funding will be in the form of loans for operational enterprises owned by fledgling entrepreneurs, with concessionary interest rates of between 2% and 4%.
Based on media reports, it seems that for now, loan applications and disbursements will be channelled through public sector entities.
The NYF is expected to be broadened to include loans for equipment and early-stage working capital for emerging entrepreneurs, who often find it challenging to generate sufficient cash flow to repay loans during their enterprise’s start-up phase.
Additionally, bridging finance should be provided to youth-led enterprises at concessionary interest rates to help them cover material and stock costs when they secure large orders and tenders, as well as provision for venture capital investments in rapidly growing enterprises with export potential or an ability to scale and do business in neighbouring countries by establishing a branch or a production facility in a foreign country.
It is important for those steering the NYF to incorporate business support services into their funding, providing vocational and business skills training and routine mentorship.
As the NYF derives its funding from taxpayers, young Namibians already in business and those with a yearning to venture into the business arena must shun an entitlement notion.
They are advised to rather view the NYF as an opportunity to access funding support that is generally not available in a security- or collateral-based lending environment.
It is an opportunity that comes with compliance and fiduciary responsibilities that will be regulated by an agreement that can be legally enforced in the event of default.
Young Namibians who use taxpayers’ money from the NYF to upgrade their lifestyle will be letting down their peers and other youngsters who plan to access funding in the future.
As for funding disbursement, it is also beholden upon those entrusted to manage the NYF to ensure that disbursement is processed in a manner that underscores optimal transparency and accountability.
Working in Namibia’s enterprise and entrepreneurial development space for two decades now, it will break one’s heart if reports of favouritism and shenanigans start appearing on the front pages of local newspapers.
Entrepreneurs across Namibia who started businesses with minimal, if any, funding support but managed to slowly and methodically grow their enterprises over the years must not be ignored.
Bear in mind that they too face similar challenges, such as accessing loans from traditional lenders in a collateral focused banking environment. With some help they can scale their businesses, thereby creating wealth and jobs at a faster pace.
It is factual that Namibia’s micro, small and medium enterprise (MSME) sector provides the most paid jobs in the country.
Empirical evidence suggests seven out of every 10 income-paying jobs in Namibia are created by MSMEs.
Surely it is high time a funding support mechanism be crafted to support Namibians in business who cannot be classified as youth.
– Danny Meyer is reachable at danny@smecompete.com
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