Chamwe Kaira
Micro, small and medium enterprises (MSMEs) continue to face structural challenges despite their role in creating jobs and supporting incomes.
A study by the African Development Bank (AfDB) says the sector is affected by limited skills, weak market penetration, high financing costs, restricted access to land and low levels of technology use.
The report says MSMEs also face infrastructure gaps, limited business support services and relatively low levels of entrepreneurship. These factors continue to slow the sector’s growth.
More than 70 000 MSMEs operate in Namibia. The sector contributes about 12% to the country’s gross domestic product and provides income and employment to more than 200 000 people.
The study says Namibia’s private sector has a dual structure.
The formal sector is dominated by medium and large firms that rely on capital-intensive production and foreign investment linked to commodity exports.
The informal sector is mainly made up of microenterprises that often depend on demand from the public sector.
In response to these challenges, the government has introduced a private sector-led growth initiative under the sixth National Development Plan (NDP6) aimed at strengthening enterprise development and improving the business environment.
Namibia has also adopted several policy frameworks to support industrial development.
These include the industrial policy of 2012, the mineral beneficiation strategy launched in 2021 and the SACU strategic plan on regional value chains.
The government also approved a national policy on special economic zones in August 2022 to attract large-scale industrial investment.
Despite these policies, manufacturing and industrial development in the private sector remains limited.
Industries such as the beef value chain, metal fabrication, chemical and salt products, and semi-precious stones and jewellery continue to face challenges.
These include limited access to finance, skills shortages, lack of technology, weak market access and restricted land availability.
Businesses also face disruptions in electricity and water supply, a small domestic market and transport constraints.
The study says MSMEs could expand by linking to regional value chains.
The Southern African Development Community (SADC) industrialisation strategy identifies sectors such as agro-processing, mineral beneficiation, manufacturing and service industries as priority areas.
The strategy promotes stronger links between small businesses and larger firms across regional markets.
These links include upstream activities, such as the production of inputs and intermediate goods, and downstream activities, such as processing and distribution.
AfDB is supporting MSME development in Namibia through a sovereign-guaranteed line of credit provided to the Development Bank of Namibia.
The programme aims to improve access to financing for small businesses and support their participation in regional value chains.
