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JCC study urges closer engagement between FDIs and SME sector

JCC study urges closer engagement between FDIs and SME sector

THE Joint Consultative Committee (JCC), a national umbrella body for small and medium enterprises (SMEs) service providers has called for stronger engagement between Foreign Direct Investment (FDI) specific companies and their sister entrepreneurs in the SME sector.

This comes in the wake and quest for enhanced economic development and participation of the general public in the broader framework. The JCC launched a comprehensive research based paper titled: “Foreign Direct Investment in Namibia; benefits for Small and Medium Enterprises,” at the ongoing Ongwediva Annual Trade Fair.The report noted that since independence in 1990, FDI and SMEs remained critical tools for spearheading development hence the need for closer linkages between the two.The study, authored by an independent researcher, Colleen Gwari, revealed that though local SMEs in one way or the other benefited from outsourcing, subcontracting and through retailing and distribution of finished products by bigger FDI companies, more needed to be done.Thus closer engagement between FDIs and SMEs was essential for meaningful development.”Such co-operation is in the long run meant not only to create synergies and linkages on the local front, but more-so, in the interest of bringing on board Namibians in their numbers towards participation in the world trade system,” read the report.The report also took into account the fact that of the existence of a global village hence the birth of trade initiatives as the African Growth and Opportunities Act (AGOA), Cotonou Agreement and Economic Partnership Agreements (EPAs) which encourage that smaller entities participate and benefit from international trade.Peik Bruhns, who is JCC national coordinator, and Andrew Harris, editors of the research book said, “Small businesses are regarded as a major answer to poverty and unemployment hence they are a backbone of any given economy hence they are here to stay whilst the bigger investor comes and goes.It is thus JCC’s conviction that only broad based and full commitment to our local SME sector will eventually lead to an empowered nation inhabited by empowered citizens.”This discussion paper is part of a process challenging all who are concerned to see a prosperous Namibia to consider what more can be done to bring together two important policy initiatives towards economic growth.Presently, the two themes of FDI and SME seem to stand too far apart.”As part of the recommendations, the study noted that SME development was viewed as a form of BEE hence the need to look at a workable broader policy and regulatory approach guiding FDI and SME engagement.Government and civil society needed to work together towards changes in policy and laws thus creating an enabling environment.”Government, SME representatives and the private sector should put their heads together and craft workable, sustainable policies that can be translated into a legislative framework providing clear guidelines on SME engagement with FDI.This will include reviewing basic assumptions such as the current national definitions of SME given the scaling up of activity that is required to fully maximise SME involvement in FDI.”It also emerged from the research that most SMEs lacked capacity and the much needed skills to benefit meaningfully from subcontracting and outsourcing of bigger projects by FDI companies hence the need for capacity building through training and opening up of the financial markets to allow for flexible and yet sensitive borrowing terms for emerging entrepreneurs.The research also looked at existing legislation pertaining to FDI notably the Foreign Investment Act with an attempt to redefine and reclassify FDI in Namibia which for a long time meant wholly owned foreign investment.Gwari called upon SMEs to pool resources with the view to tapping in lucrative opportunities from bigger FDI entities.The JCC launched a comprehensive research based paper titled: “Foreign Direct Investment in Namibia; benefits for Small and Medium Enterprises,” at the ongoing Ongwediva Annual Trade Fair.The report noted that since independence in 1990, FDI and SMEs remained critical tools for spearheading development hence the need for closer linkages between the two.The study, authored by an independent researcher, Colleen Gwari, revealed that though local SMEs in one way or the other benefited from outsourcing, subcontracting and through retailing and distribution of finished products by bigger FDI companies, more needed to be done.Thus closer engagement between FDIs and SMEs was essential for meaningful development.”Such co-operation is in the long run meant not only to create synergies and linkages on the local front, but more-so, in the interest of bringing on board Namibians in their numbers towards participation in the world trade system,” read the report.The report also took into account the fact that of the existence of a global village hence the birth of trade initiatives as the African Growth and Opportunities Act (AGOA), Cotonou Agreement and Economic Partnership Agreements (EPAs) which encourage that smaller entities participate and benefit from international trade.Peik Bruhns, who is JCC national coordinator, and Andrew Harris, editors of the research book said, “Small businesses are regarded as a major answer to poverty and unemployment hence they are a backbone of any given economy hence they are here to stay whilst the bigger investor comes and goes.It is thus JCC’s conviction that only broad based and full commitment to our local SME sector will eventually lead to an empowered nation inhabited by empowered citizens.”This discussion paper is part of a process challenging all who are concerned to see a prosperous Namibia to consider what more can be done to bring together two important policy initiatives towards economic growth.Presently, the two themes of FDI and SME seem to stand too far apart.”As part of the recommendations, the study noted that SME development was viewed as a form of BEE hence the need to look at a workable broader policy and regulatory approach guiding FDI and SME engagement.Government and civil society needed to work together towards changes in policy and laws thus creating an enabling environment.”Government, SME representatives and the private sector should put their heads together and craft workable, sustainable policies that can be translated into a legislative framework providing clear guidelines on SME engagement with FDI.This will include reviewing basic assumptions such as the current national definitions of SME given the scaling up of activity that is required to fully maximise SME involvement in FDI.”It also emerged from the research that most SMEs lacked capacity and the much needed skills to benefit meaningfully from subcontracting and outsourcing of bigger projects by FDI companies hence the need for capacity building through training and opening up of the financial markets to allow for flexible and yet sensitive borrowing terms for emerging entrepreneurs.The research also looked at existing legislation pertaining to FDI notably the Foreign Investment Act with an attempt to redefine and reclassify FDI in Namibia which for a long time meant wholly owned foreign investment.Gwari called upon SMEs to pool resources with the view to tapping in lucrative opportunities from bigger FDI entities.

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