MSMEs and Their Economic Impact

In 2017, THE United Nations General Assembly designated 27 June as an annual observance recognising the crucial economic role of micro, small and medium enterprises (MSMEs).

This raises an important question: does the MSME sector receive sufficient recognition in Namibia, and what does the future hold for it?
To explore this, we will examine the sector’s role and its significance to the country.

The entrepreneurial journey typically begins with identifying a need within the local community and drawing on available resources – often with support from family, friends and other early backers – to address that need.

Aspiring entrepreneurs take on significant risk with the expectation of future rewards. However, many quickly realise that entrepreneurship is a continuous learning process.

Those new to business often learn, sometimes the hard way, that success requires consistent hard work, strategic thinking and adaptability.

Namibia’s business environment, like that of many African countries, can at times be challenging and insufficiently supportive of enterprises, particularly MSMEs.

Given the country’s vast geography, the absence of MSMEs operating extended hours to meet customer needs would have severe consequences.

Across Namibia, it is owner-managed micro and small enterprises in urban townships, as well as in towns, villages and rural settlements, that service needs in local communities.

While income generated by home-based businesses sometimes supplements household earnings, for many Namibians these enterprises serve as their primary source of income. Consequently, early-stage entrepreneurs have little choice but to work diligently, consistently and with strong focus from the outset to ensure the success of their ventures.

Measured by job creation, the MSME sector makes the largest contribution to employment in Namibia. Evidence shows that seven out of every 10 income-earning jobs are created by MSMEs.

This raises an important question: why is there such strong emphasis on attracting foreign direct investment (FDI), and how can resources be allocated more equitably to support and develop grassroots entrepreneurship?

While FDI offers meaningful benefits, Namibia’s long-term economic sustainability depends on MSMEs’ role in generating wealth and employment, but also on a balanced mix of other critical factors.

Most of Namibia’s major conglomerates did not emerge overnight as large corporations with extensive branch networks and a multitude of business divisions. Many began as small owner-managed enterprises.

This underscores the importance of supporting the MSME sector, as it is from these enterprises that the large firms of the future will develop.

Entrepreneurship is widely understood to be a long-term journey rather than a single event.

Most entrepreneurs begin with micro enterprises or home-based businesses operating in the informal sector. Over time, these emerging enterprises transition into the formal sector and grow into small, then medium and potentially large businesses.

The MSME sector has long served as Namibia’s primary incubator for entrepreneurship and enterprise development and continues to play this essential role.

For many Namibians, small local enterprises provide their first paid work experience. Employment in these businesses enables new entrants to the job market to develop fundamental skills.

Over time, this foundation better positions individuals to access higher-paying opportunities with larger firms. Unfortunately, the critical developmental contribution of the MSME sector remains under-recognised.

Next week’s column will continue this discussion by examining how to create a more supportive and business-friendly environment for MSMEs.

– Danny Meyer is reachable at danny@smecompete.com

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