Growth dominated by SMEs

WHILE small and medium-sized enterprises are considered key drivers of economic growth and employment creation, the global financial crisis has hit the sector hard since it started unfolding.

This was said by the Minister of Regional and Local Government, Housing and Rural Development, Jerry Ekandjo, at the opening of the third NCCI Annual SME Development Conference at Ongwediva last week. Ekandjo said the financial crisis has compromised government support of the sector. ‘While busy strategising and implementing NDP3 in line with the MDGs and Vision 2030, we have been hit by the global economic crisis forcing us to resort to short-term emergency measures at the expense of some of our long-term goals,’ Ekandjo said.The Minister said SMEs played an important role in poverty alleviation, and that Government intervention to support initiatives of subsidising SMEs needed to be strengthened. He said a recent survey by the Organisation of Economic Co-operation and Development (OECD) countries showed that SMEs accounted for a large share of the private-sector economy, representing between 96 and 99 per cent of the total number of enterprises in these economies.Ekandjo also said the SME sector was very important because it provided rural and urban women opportunities to utilise their vocational skills while staying within their residential areas.In urban areas, he said, most female entrepreneurs have introduced unique product lines that have created a strong demand in the marketplace, while today most big industrial establishments depended on SMEs for value addition.’It is on record in most emerging markets that the fastest growing export industries (cotton weaving, textiles, surgical instruments, carpets and footwear etc) have been dominated by SMEs,’ he said.’It is no surprise therefore that as countries prepare their Poverty Reduction Strategy Papers (PRSP), emphasis has been placed on pro-poor growth led by the private sector, especially through SMEs. Sectors such as agriculture, services, manufacturing with labour-intensive activities have received much support by programme implementers because of their potential for reducing poverty,’ Minister Ekandjo said.However, he said, many SMEs and potential entrepreneurs still struggled to access finances, especially now that global financial markets were in turmoil.According to Minister Ekandjo, Government recognises the need to provide a favourable business environment and was increasingly aware of the role SMEs played in achieving economic and social goals. He said state efforts have focused mostly on the need to provide appropriate competition policies, appropriate taxation regimes, flexible labour markets, and an educational system which promotes entrepreneurship, open capital markets and more liberal access to financing.oswald@namibian.com.na