Lack of definition of SMEs hinders development: Huckman

18 Jul 2014 08:00am
WINDHOEK, 18 JUL (NAMPA) – German Ambassador to Namibia Onno Huckmann says the lack of a mutually-accepted definition for Namibian small and medium enterprises (SMEs) can hinder the implementation of comprehensive interventions, and the development of targeted empowerment legislation.
He said this during the launch of the Procurement Study Report and the Namibian Procurement Fund (NamPro Fund) Stakeholders’ Report in the capital on Thursday.
Huckmann said the ongoing SME Policy revision and drafting of the new Public Procurement Bill are important measures to streamline the public procurement process, and increase transparency and efficiency throughout the public sector.
The Public Procurement Bill is aimed at regulating Government’s procurement of goods and services, the letting or hiring of anything, or the acquisition or granting of rights for or on behalf of and the disposal of property by public bodies.
It also aims to establish the Procurement Policy Office, the Central Procurement Board, the procurement committees and procurement management units as well as provide for their powers and functions.
“Private companies focus their procurement processes on the compliance of good market standards, considering factors such as quality of service, adequate equipment and proposed contract timeframes,” he explained.
The ambassador noted that SMEs are perceived to lack the required skills to meet these standards, or even complete tender documents. As a result, most of the technical and knowledge-intensive contracts of private companies are outsourced to other large private companies.
The World Bank’s most recent ‘Doing Business’ report placed Namibia 55th in the ranking of 189 economies on the ease of getting credit.
However, the 2014 Namibian Business and Investment Climate Survey showed that limited access to and the cost of finance still remained major obstacles to the development of micro, small and medium enterprises.
Huckmann added that financial institutions hesitate to provide financing to SMEs, most often due to a lack of collateral and a low turnover on bank accounts.
He said in turn, SMEs perceive the offered options as inadequate for their needs, adding that viable sources of alternative financing are, therefore, needed to overcome these financial shortcomings.
He thus commended the NamPro Fund for providing such alternative financing by offering bridging finance facilities for SMEs which have successfully secured contracts to supply the value-chains of local authorities, State-owned enterprises, corporates and government departments.
SMEs can be the backbone of economic growth, as the Namibian SME sector currently accounts for 20 per cent of employment and 12 per cent of the country’s Gross Domestic Product (GDP).
“This shows that there is still potential to increase the contribution of SMEs for achieving economic growth and contributing to the goals of Vision 2030, including Namibia’s goal to become an industrialised nation,” Huckmann noted.