Policy and Programme on Small Business Development

A national policy and programme on small business development was launched in September 1997 by HE Dr Sam Nujoma, President of the Republic of Namibia. It sets out the Government's firm commitment to transform the small business sector from its current state of deprivation and under-development into a leading sector of the economy.

Seven years of independence have brought a number of significant socio-economic changes. But issues, such as, poverty and inequity remain largely unresolved. This fact had necessitated continuous review of policy in order to come up with new measures to overcome these unresolved problems. One such measure is a vigorous programme of promotion of small business.

The Government recognises the vital role which the small business sector can play in the country’s socio-economic development and that despite this recognition, our approach to the development and growth of this sector has been haphazard and inadequate. This policy paper, therefore, sets out the Government’s firm commitment to transform the sector, as a priority, from its current state of deprivation and under-development into a lead sector of the economy.

Although the sector is generally known to provide income and employment to approximately one-third of the most disadvantaged section of the Namibian population, its overall contribution to the country’s economic growth, development and poverty alleviation is minimal. In addition, the incomes it provides fail to generate an adequate standard of living for either entrepreneurs or employees. This is so because there has been no concerted and systematic attempt, over the last seven years, to come up with a comprehensive policy framework and programme for the development of the sector.

Yet, as we begin to prepare for the middle term review of the implementation of the first National Development Plan (NDP1), it is apparent that there is an urgent need to show progress regarding the achievement of the noble goals set out in the Plan. Hence the policy guidelines, spelt out in this paper, to improve the business environment for the small enterprises in order to ensure that the sector makes a significant contribution to the successful implementation of the nation’s first five year development plan.

At historical levels, the existing formal sector is expected to create no more than 15,500 jobs over the next three years. However, the EPZ is expected to expand the number of large and medium enterprises in the formal sector and contribute an estimated 25,000 new jobs over that same period. The primary objective of the small enterprise programme is to additionally create gainful employment for 35,000 or so persons in the sector, over the next three years. This will enable the country to create some 75,000 jobs and thus keep pace with the fast growth of the nation’s workforce by the end of the century.

The programme sets a target of helping to raise average sector incomes by at least 10% in real terms, through the injection of additional human and financial resources. This empowerment and job creation effort will provide hope for a better future for a sizeable number of the disadvantaged members of our society.

Specifically, the new policy and programme are being put in place to create opportunities for a significant number of new entrants in the labour market to find productive employment and/or become entrepreneurs. The main thrust of the policy is as follows:

Diversification of activities will focus on increasing the share of manufacturing, trades and crafts in the sector’s business activity, with attention progressively focused on value-added activities. In other words, along with the EPZ programme, the small business sector will take a lead in our drive towards greater beneficiation and value addition to Namibian raw materials. Given the nature of our raw material endowment, the limited size of the domestic market and the structure of our industries, Namibia’s greatest opportunities for growth lie in the small business sector and manufacturing of niche products for export. Manufacturing will thus be supported through access to finance and markets, business advisory services, SME modules, common facility centres and vendor development programmes. Trades and crafts will be encouraged by introducing entrepreneurship training in our vocational training institutes and by enabling them to access consumer and industrial markets.

By the year 2000, the sector should thus increase its contribution to GDP from less than 5% at present to 10%. This will ensure a combination of rapid employment growth and markedly improved average incomes.

The policy framework to guide the Government’s approach to the sector’s development will include a continued effort to improve the enabling environment in which the sector’s businesses can flourish. This calls for initiatives in the following three areas:

The Government has already set in motion the process of de-regulation. Several policy and legislative measures have been taken towards the creation of a more favourable regulatory environment. These include the Close Corporations Amendment Act of 1994, the 1993 moratorium on the use of the highly restrictive Road Transportation Act of 1977, the Trades and Occupational Licenses Repeal Act of 1995, the Married Persons Equality Act of 1996, which has eliminated gender bias against women, and the Sale of Liquor Bill, currently before Parliament. But the need still remains to further reduce the remaining legal and bureaucratic obstacles to establishing and operating small businesses. Among these are the many cumbersome procedures which often result in long delays in processing permits, licenses and approvals. Indeed, processes like those involved in the proclamation and establishment of townships in rural areas still take up to 24 months or more to complete. The small business environment can thus be improved through repeal or simplification of such administrative procedures. It can, furthermore, be improved by ensuring that explicit provision is made by the Ministry of Regional, Local Government and Housing for support to the small businesses in all planning of towns, settlements and villages across the country.

It is proposed that the Government undertakes to ensure, over the next three years, that:

The Government will launch programmes designed to overcome the main constraints to the development of the sector and to help these businesses to exploit market opportunities. Such programmes will cover the following six areas:

Lack of finance is widely recognised to be the main obstacle to the development of small businesses. The Government will thus expand and consolidate the existing small business loan scheme; and in addition to mobilising funds internally and externally, it will strive to incentivise the commercial banks to lend more to such businesses through a credit guarantee scheme that is being developed. Also provision for seed capital, leasing and support the to development of venture capital will constitute other forms of financial support to the sector. In this way, small businesses will be enabled to have access to instruments of both equity and loan finance. But, while the Government will help provide, in the short term, finance for small businesses, these measures will, in the long term, also ensure that the commercial banks participate more actively in financing small businesses than is the case at present.

After finance, the lack of market access is a major constraint to the growth of small businesses. This constraint will be overcome through the five initiatives:

The knowledge of technology amongst small businesses in the country is poor and the type of technology currently used often inappropriate and expensive. A technology sourcing programme is being launched by the Ministry of Trade and Industry to help establish an international database on technology for small businesses. Also, a technology demonstration centre is soon to be set up with the assistance of the Government of India. The centre will operate a revolving fund for the import of technology and will establish satellite demonstration centres in different parts of the country.

Disadvantage in purchasing inputs - raw materials or goods for sale - hinders the competitiveness of small businesses worldwide. Namibia’s small businesses are particularly disadvantaged, as we do not have a well-developed network of wholesalers. The result of this is that the customers of the informal sector, often the poorest people in the country, end up paying the highest prices.

The building of industrial parks and SME modules, currently being implemented across the country, will not only provide markets for small businesses, but also other types of property for small businesses, such as:

The Ministry of Trade and Industry will serve as the lead ministry within the Government for the small business sector.

The Ministry of Finance, in conjunction with the NPC and NDC, will be largely responsible for the mobilisation of the required financial resources to implement the programme.

A large part of the implementation of this important national programme will be played by the NDC, the IMLT and other NGOs that are meaningfully working with small entrepreneurs. It is further proposed that a credit committee to serve as the first line of screening and evaluation of business ideas and the character of loan applicants will be established in each of the 13 regions of the country. The committee will comprise of representatives of regional and local authorities and local branches of the Namibia National Chamber of Commerce and Industry (NNCCI), regional offices of NDC and the Ministry of Trade and Industry. Its purpose is to minimise risks while, at the same time, maximising opportunities for small entrepreneurs by recommending people with a proven record of good behaviour in the community and a real knack for business. The credit committee will, of course, not be a substitute for the more professional appraisal and evaluation by the commercial banks and the NDC.

The policy framework outlined in this paper assumes that the lead role in the development of the small businesses will be played by the sector’s progressive entrepreneurs. It is on their ability to identify and exploit opportunities that the sector’s future rests.

The Government’s role in the sector’s development will be one of catalyst and enabler. However, to overcome the present constraints to development, imposed by the past, the Government will have to intervene strongly in the initial stages. But this intervention will be in the form of de-regulation and incentives to improve the conditions for businesses to flourish; the Government has no intention of running business activities.

Within the overall policy framework described above, the Government will implement a series of three year action plans, which will be progressively rolled forward.

The solutions to the problems of poverty, unemployment and socio-economic inequity call for a multi-pronged approach. This submission presents a policy framework to guide the Government’s support to the small business sector over the medium term (1997-2000). It sets out objectives for the sector’s development and proposes the means by which the Government can set in motion the development of the small business sector.

It contains details of the regulatory changes and incentives that the Government needs to put in place to create a more favourable environment for the sector’s development. These details include pro-active programmes to overcome constraints and exploit opportunities. Institutional structures that will provide effective business support are also identified. The submission also outlines methods of implementation and the resources required to bring the programme to fruition.

Since independence, the Government has undertaken a series of initiatives to support the small business sector. This has been done through a number of ministries and agencies. This submission takes stock of those initiatives and builds from them a comprehensive policy framework.

It underlines the Government’s firm commitment to help accelerate the development of the small business sector in Namibia. It reaffirms the Government’s view that the sector has a vital role to play in the socio-economic development of our country. It also spells out the sector’s potential to contribute to achieving important social objectives, such as, job creation, poverty alleviation and promotion of a more equitable distribution of wealth.

For the policy framework to succeed, the support it provides must be targeted carefully towards those businesses whose growth would contribute most to the achievement of the Government’s economic goals.

It is recognised that the development of both small and medium enterprises (SMEs) would contribute strongly to the country’s socio-economic development. But since resources are limited, the Government intends to focus support on small business over the medium term. Therefore, both small, formally registered businesses as well as the micro and small businesses which are part of the informal sector, but are not registered with the Receiver of Revenue, are to be supported in order to enhance their productive efficiency.

As set out later in the policy document, it is these businesses which provide employment and incomes to approximately one-third of the country’s workforce. This makes them the country’s largest sector of employment. Assisting such businesses with the identification and exploitation of wealth creating opportunities would, therefore, have a major impact on the country’s socio-economic development. These businesses were the most disadvantaged in the colonial era. Hence the urgent need to support them as part of the government effort to empower the previously disadvantaged sections of the nation.

The definitions of small business used in other countries are not appropriate for Namibia. In the European Union, for example, businesses employing less than 50 employees are designated small. Applying this definition to Namibia would mean that the vast majority of businesses would be designated as small, thus defeating the objective of targeting support to priority needs.

The Government, therefore, intends to use a definition which we believe to be more appropriate to Namibia. Henceforth, in Namibia, to be designated small, businesses would need to meet the criteria shown in figure 1. The definition is, however, to be used flexibly. Its main purpose is to specify where priorities for programmes of support would lie and the target group whose progress we intend to monitor.

Sector	Employment	Turnover less than N$ 000	Capital employed less than N$ 000
Manufacturing	Less than 10 persons	1,000	500
All other businesses	Less than 5 persons	250	100

Note: To qualify, businesses must meet the employment criteria and one of the other two.

The definition is intended to cover both the most disadvantaged and those with greatest growth potential. It will cover the vast majority of the informal sector which has been disadvantaged in the past, as well as small, formal manufacturing in which Namibia has major opportunities to increase value addition.

In addition, there are two types of business which play an important role in the development of micro and small businesses which, therefore, should also be eligible to receive the support outlined in this submission:

The priorities and definitions set out above will be subject to change over time. It is the Government’s intention, as and when the needs of small businesses have been addressed adequately, to widen the policy framework to also include medium-sized enterprises.

The policy framework outlined in this paper is designed to unlock the potential of Namibia’s small businesses. It is founded on the knowledge that there is no shortage of enterprising endeavour in the country; and that the present under-development of the sector is a legacy of our past which has left small entrepreneurs poorly placed to take advantage of opportunities for growth and development.

The policy framework assumes that the lead role in development will be played by the sector’s progressive entrepreneurs. It is on their ability to identify and exploit opportunities that the sector’s future rests.

The Government’s role in the sector’s development will be one of catalyst and enabler. It is recognised that in the initial stages, the Government will need to intervene strongly to overcome the constraints to development imposed by the past. However, the Government’s intervention will be in the form of improving conditions for businesses to flourish rather than in direct intervention. All the measures set out in the policy framework are designed to assist entrepreneurs.

Particular attention has been given, however, to avoiding a syndrome of dependency whereby entrepreneurs come to rely on the Government’s assistance for the profitable operation of their businesses. As alluded to above, the policy framework ensures that the Government does not become directly involved in commercial transactions and/or become the owner or manager of the sector’s businesses.

Estimates suggest that small businesses are the major source of employment and incomes in Namibia. They provide some form of employment and incomes to close to 160,000 people, approximately one-third of the nation's workforce.

The majority of these are individuals in the subsistence sector of the economy and the unemployed seeking to supplement incomes by periodically engaging in informal commerce. Nevertheless, it is estimated that the small business sector provides full-time employment for upwards of 60,000 people, ranking it alongside Government as the country’s principal employer.

The profile of the sector in terms of full and part-time employment in the formal and informal sector of the economy is shown below:

Sector	Part or Full-Time	*Approx. No. of Participants (000)**
Informal	Part-time Full-time	100 50
Formal	Full-time	10
Total		160

The size of the sector is growing. Each year, the workforce increases by 16,500 people. Yet, the large, formal sector creates only 3,000-4,000 jobs. The majority of new entrants find themselves with little option but to attempt to earn an income by trading or selling their services, usually in the informal sector. The importance of small businesses to our economy will thus increase.

The activities of small businesses vary between the informal, unregistered sector and formally established businesses. The informal sector includes a large number of people in rural areas who sell agricultural produce they grow or handicrafts they make, on a part-time basis. Their main source of livelihood is agriculture. The incomes they derive from these activities are typically very low.

The activities of those engaged full-time in the informal sector also produce low incomes. Most are engaged in low value-added retailing and catering.

The large majority of retailers are hawkers, selling food and household products. The high proportion of catering establishments is due to the proliferation of cuca shops in the communal areas.

The vast majority of these businesses are one-person operations. The proprietor has very limited working capital with which to purchase trading items. Revenue generation is low. Surveys reveal that over three-quarters of small traders in Windhoek had a turnover below N$50 per day. The low incomes of those to whom they sell and the strong competition among small traders keep margins low and incomes are frequently below N$10 per day.

Trades and other Services include garage owners, plumbers, builders, electricians, welders, carpenters as well as the providers of personal services, such as, tailors, hairdressers, cleaners, laundry and repair services. Incomes are not high, typically N$400-600 a month.

The Manufacturing category consists of businesses utilising many of the skills listed under services above, but they make and sell products on their own account rather than as a service to others. The majority of small manufacturers make and sell handicrafts, but there are a small number also which make consumer and industrial products.

Manufacturing businesses tend to be larger than retailers or service businesses, usually employing 3-4 people. They also generate higher turnovers and incomes, but are capital intensive. Turnovers of up to N$500,000 have been recorded.

The majority of informal entrepreneurs are ‘pushed’ into business rather than attracted to it. Most entrepreneurs would prefer wage employment. This is in contrast to many other countries where self-employment is preferred to wage employment and entrepreneurs cite the possibility of earning higher incomes as the reason for setting up businesses.

However, the pattern of activities of formal sector businesses differs markedly from the informal sector. Retailing and catering are not as dominant as forms of business activity as they are in the informal sector. Small scale mining is an important business activity.

In the formal sector, retailing covers a much wider range of consumer and industrial products. Small scale mining covers base metals and semi-precious stones. Apart from the activities listed for the informal sector, in the formal sector, the category ‘Trades and Services’ includes also business services, such as, accountancy and legal services.

Formal sector businesses are larger in terms of both employment and turnover. Although there are significant numbers of self-employed individuals, the majority of businesses employ staff. For example, in the manufacturing sector, which has been the subject of considerable study, the average number of employees per establishment among small businesses is seven and the average turnover just over N$500,000. Retailers are, of course, likely to have higher turnovers still.

As is the case in the rest of the world, Namibia’s small formal businesses have a higher labour intensity than their larger counterparts. For every Namibian dollar invested in them, they create more jobs than larger businesses. As employment creation is a national priority in Namibia, it is clear that the higher the proportion of total investment small businesses receive the better for Namibia.

Despite the larger size of businesses, sole proprietorships are the main form of business in the formal sector as they are in the informal. In the formal sector, however, there is a significant proportion of private limited companies.

This review of Namibia’s small business sector confirms that the definition shown in figure 1 would encompass the majority of small businesses. It would help give preference to manufacturing, an activity which is currently very poorly developed among small businesses, but which has the potential to generate the highest value-added and hence better incomes.

It is estimated that a large majority of part-time entrepreneurs and roughly half the number of full-time entrepreneurs are women. The formal sector is particularly poor in providing employment for women. Only 31% of formal sector employees are women and, of these, the majority are in low paid jobs.

It is estimated that 53% of women are ‘own account’ workers in the informal sector, most on a part-time basis. Few manage to earn an adequate livelihood, particularly the 30%-40% who are heads of households. Most are engaged in low profit margin but time-intensive activities, such as, selling cooked food, home brewing, sewing and crafts. Less than 1% of women in Namibia own formal businesses.

Women entrepreneurs are the most disadvantaged type of entrepreneur. In the past, they had no legal title to property and could not enter into financial agreements without the consent of their husbands. As noted under constraints below, while small businesses in Namibia face severe constraints to growth and development, women entrepreneurs are, in most instances, particularly disadvantaged.

Worldwide, small businesses face constraints to their development and growth. The rate of business failure among them is high, particularly among new businesses. In Africa, it is estimated that 85% of small, new businesses fail.

Namibian small businesses are particularly disadvantaged. In the informal sector, most are new, having been established since independence. Further, the colonial past has made them confine their access to resources and spheres of activity to a very narrow part of the economy which is the most underdeveloped.

In the formal sector, they suffer from the structural weakness of the economy that wealth generation is concentrated in a limited number of sectors which do not have strong linkages to the rest of the economy. They have to contend also with entrenched competition from established competitors from South Africa, whose greater size enables them to use predatory business practices to see off competition from small Namibian businesses.

In the sections below, we have set out the main constraints to the growth of small businesses, as revealed by various surveys commissioned since independence.

Small businesses cite the lack of finance as the greatest constraint to their growth and development, whether they are formally registered or not. In the formal sector, the survey of small manufacturers showed that nearly three-quarters of the capital employed was raised through internal generation. In developed countries, it is common to find that 60% of capital employed is raised through external sources, particularly lending from the banks.

In the informal sector, the proportion of businesses with access to external finance other than family and friends, was less than 5%. This is low by any standard.

The causes of this very poor access to finance are partly inherent to the small business sector. In part, they are a result of the way financial institutions have developed in Namibia. Banks do not like to lend to small businesses, as discussed in section V. But, in addition to the way our banks developed, their retail networks and criteria for opening bank accounts and loans disadvantaged small businesses further. Women entrepreneurs were particularly disadvantaged as, until recently, they owned no property to be used as collateral on loans and, in fact, needed their husbands’ permission to enter into financial arrangements. As a result, many of our informal sector entrepreneurs do not even have bank accounts, let alone access to external finance.

Small businesses, particularly the new ones, need access not only to loan finance, but also to seed capital to bring ideas and opportunities to the point that they become businesses and additional equity in the form of venture capital. Neither of these two types of financing is available in Namibia.

The Government has recognised the need for finance to stimulate the growth of small businesses. The Namibia Development Corporation (NDC) has been involved in financing small businesses for some time. The Ministry of Youth and Sport has also been active in raising finance for young entrepreneurs. The Ministry of Agriculture has helped businesses and co-operatives to raise finance for agribusiness.

It is acknowledged, however, that our efforts up to now have been piecemeal as we have not put in place a comprehensive framework for the provision of loan and equity finance to small business. This is a shortcoming which this paper addresses in the form of a pro-active programme outlined in section V.

Not only does our small population lead to small markets, but the structure of the economy serves to make access to spending power extremely difficult. Both formal and informal small businesses regarded marketing as the main constraint to business growth, after finance.

The main difficulty for informal sector businesses is how to access the majority of spending power in the economy. At present, the informal sector serves only the black population of our country, 60% of which is estimated to have per capita incomes below N$500 per annum.

Informal sector businesses have very little access to the spending power of the modern sector of the economy, which accounts for nearly three-quarters of GDP and has per capita incomes of over N$70,000. In part, this is because the goods and services the informal sector produces are not up to the standards required by affluent consumers.

However, the main problem is lack of access and exposure to the market provided by the affluent. There have been no sites from which the informal businesses can sell to affluent consumers and no cost-effective ways of marketing their services. This is the problem which the industrial park programme is seeking to address. Women entrepreneurs, working from home in activities such as cooking or sewing, have the least access of all.

For the formal sector small business, the difficulties of marketing access are also substantial. The large businesses which are the main generators of wealth in Namibia, are world class enterprises. They source their goods internationally, making it difficult for small, Namibian businesses to meet their needs competitively.

Small formal businesses complain also of a lack of market information, distribution intermediaries - who are often either South African owned or locked into suppliers in South Africa - and lack of resources with which to market their products and services.

A number of our handicrafts and manufactured goods are suitable for exporting, particularly those based on processing of local raw materials. However, Namibia’s export infrastructure is poorly developed. There is little information on export markets and limited assistance provided to develop new markets.

The Government has made a start in addressing the various marketing constraints faced by small businesses. With help from the Commonwealth Secretariat, the Ministry of Trade and Industry has, since 1995, been piloting a Vendor Development Programme (VDP) which means building relationships between large retailers and small informal sector manufacturers. The purpose of this programme is to provide market access to the small manufacturers.

To date, commercial relationships for small enterprises with large buyers have been developed for 15 vendors. The products in which success has been achieved are as follows:

Vendors are mainly very small manufacturers employing no more than three people. Buyers for vendor products include the major retail outlets, such as, Pupkewitz and Alfa Co-op as well as large industrial corporations like the Namibia Breweries and Shell.

The MTI also has a programme to build alternative markets for small businesses in several regional centres on a fast track. Six of them will be completed in 1997.

Some municipalities, too, have recognised the need to improve market access. A market aimed at small businesses has been constructed by the municipality of Windhoek. Various others are following suit.

The MTI has also launched a major initiative to develop exports, with the help of the European Union. That initiative is addressing both information requirements as well sector-based assistance programmes to exporters.

The need to break the barriers of market access and the duality that exists in our economy at present is quite urgent because those constraints prevent the informal sector from capturing the spending of affluent consumers. We must work to create a single market. This will require addressing access to consumers for retailers, catering establishments and tradesmen and distribution channels for manufacturers. To ensure that small businesses produce goods and services that are up to the standards required by the more affluent consumers and by export markets, we have, in addition, to undertake programmes that will enhance their capabilities.

Fundamental to the ability of small businesses to compete against larger rivals, be they in Namibia or abroad, is the possibility to competitively purchase inputs - merchandise for resale or raw materials for manufacture. Though small businesses often fail to recognise it, this is a major constraint to their development in Namibia.

Informal hawkers and retailers have no access to cash and carry wholesalers. The majority of them purchase household goods for resale from formal sector retailers. This sets up the iniquitous position that their customers, who are some of the poorest people in Namibia, pay the highest prices for household goods.

The informal sector manufacturers also purchase from retailers. The high cost of raw materials negates any advantage their skills, hard work and low overheads may provide them to compete against imports. Even women working at very low rates of pay from home, find it impossible to compete against imports.

In the communal areas, the situation is compounded by the numbers of intermediaries in the distribution chain. Often, the retailer purchases from an agent or distributor in the commercial areas who, in turn, may purchase from a distributor or agent from South Africa. Each intermediary adds a mark-up, making the product very expensive.

Small businesses in the formal sector are better placed than their informal sector counterparts. But still they suffer disadvantage. Because they purchase smaller quantities, they often have to buy from distributors rather than direct from manufacturers and this makes them uncompetitive against larger rivals.

However, with SACU tariffs being progressively reduced, sourcing of raw materials from third countries (non-SACU countries) offers the possibility of substantially reducing costs of merchandise for trading, particularly import of raw materials for manufacturing as these are exempt from duty. However, at present, knowledge of competitive sources of supply from third countries is extremely limited in Namibia.

So far, only a few forward thinking NGOs have attempted to address the issues of purchasing inputs competitively. But, their activities are limited to a few industries and locations. There is thus a need for a comprehensive, national programme to address this constraint.

The major problems with regard to technology is that the productivity of capital among small businesses in Namibia is lower than large businesses, as evidenced by the manufacturing survey carried out by MTI in 1993. This showed that the ratio of turnover/assets employed in the manufacturing sector as a whole was 1:6. But amongst small manufacturing was only 0:9.

This is the reverse of the situation found worldwide where small businesses, because of their higher labour intensity, have higher capital productivity. The problem of low capital productivity is caused by the following inadequacies in the technology used:

Generally, there is insufficient knowledge in Namibia of the availability of technologies suited to small business and of the sources of competitive suppliers of plant and equipment worldwide. This prevents craftsmen and manufacturers from purchasing competitive technologies.

Moreover, activities which could be undertaken in Namibia using small scale technology are often found unviable, when using the larger scale technologies available in South Africa. An example of this is cotton, where small scale gins could make cotton growing and processing viable in Namibia whereas the large scale gins found in South Africa are almost always found unviable due to lack of sufficient raw material in Namibia.

Though efforts are being made by NGOs and government agencies to improve exposure to technology, there is, nevertheless, a need to widen the technological knowledge base within the country. Further, we aim to set up mechanisms for demonstrating and transferring technologies suited to small businesses and to train entrepreneurs and their employees in the use of such technologies.

Despite adequate levels of literacy, most entrepreneurs receive little training. In the informal sector, surveys show that less than 15% of entrepreneurs have received technical training; and the vast majority received no training at all in business management. In the formal sector, there is a need for practical vocational training.

From the consumer’s perspective, the absence of universally recognised tests of competency makes the use of small, particularly informal sector tradesmen, highly risky. This contributes to the problem the informal sector faces in accessing the spending power of affluent Namibians. There is thus a need to introduce uniform tests of competency and to publicise them to consumers.

Attempts are being made to redress this situation. The National Vocational Training Act, 1994, sets up the framework for providing vocational training. The Act empowers the Vocational Training Board to set standards for vocational training and the content of trade tests. In addition, a number of NGOs have taken up the challenge of providing training in business skills. This training ranges from simple book-keeping through to fully-fledged business planning.

However, it is recognised that in the field of vocational training, it is possible to strengthen the provision of part-time rather than full-time training to cover vocational skills as well as business management. There is also an attempt to alter curricula in secondary schools and vocational training centres to cover business management skills, at least in the way they are applied to the management of small businesses.

It is the nature of small businesses that their managerial resources are limited. Often the proprietor has to play the roles of marketing manager, operations manager, purchasing manager and financial controller as well as taking the key strategic decisions as befits the businesses chief executive officer. The small scale of the business makes it uneconomic to employ specialist managers. This places intolerable burdens on the proprietor and often, it is his/her time which becomes the main constraint to the growth of the business. Women entrepreneurs attempting to constantly balance the demands of business and their families are particularly disadvantaged in this regard.

The practice worldwide is, therefore, for governments, national and/or local, to sponsor the establishment of business support agencies to provide management assistance to small businesses. Such support agencies may also be established by local chambers of commerce and other voluntary bodies.

In Namibia, we are fortunate to have a large number of NGOs who have recognised the importance of the small business sector and are attempting to support its growth and development. Their activities are focused on the provision of loans, business advice and training in skills, such as, book-keeping, costing, pricing and business planning.

But, valuable as this contribution is, all the NGOs recognise that the provision of business support must be strengthened. The powers of those providing support services to influence policy decisions and the business community need to be greater and the competence of those providing business advice needs to be enhanced.

It is clear that the sector plays a vital socio-economic role in Namibia. It plays the role of a social safety net by providing incomes and employment to one-third of the workforce, the majority of whom are under-employed or cannot find jobs in the formal sector.

However, it is clear that the incomes the sector provides to the majority of its participants are low, typically well below wage levels prevailing in the formal sector. It is for this reason that most of the sector’s entrepreneurs are ‘pushed’ into self-employment as a means of survival rather than attracted to its potential rewards.

This is a reflection of the poor opportunities for wealth generation in the sector at present. Most of the sector’s entrepreneurs are engaged in the low value-added activities of hawking, retailing or catering. The excessive numbers engaged in these activities leads to fierce competition and low profit margins, thus depressing incomes. Women, who make up the majority of the sector’s entrepreneurs are the most disadvantaged.

With participation in the sector growing rapidly at close to 10% per annum, the ability of the sector to continue to provide even the low levels of income it does at present is under serious threat. Unless the activities in which they are engaged are diversified or margins maintained despite greater competition, there is a danger that entrepreneur incomes could fall further.

At present, the sector also fails to fulfil its potential economic role adequately. Given the small size of our markets, the small business sector should play the lead role in economic development. It should lead the economy in spearheading job creation through higher labour intensity and efficiency in the use of scarce capital.

However, it is clear that as a result of serious constraints to the growth of small businesses, the sector is, for now, unable to play its potential role. This is perhaps best exemplified by its very low contribution to GDP. Though accurate estimates are not available, it would appear that the sector's contribution to GDP is less than 5%.

Additional evidence for this inability to fulfil its potential comes from the manufacturing sector. In most countries, the overwhelming majority of manufacturing businesses are small employing less than 10 people. In Namibia, there are less than one hundred formally registered small manufactures and larger businesses outnumber them by 3 to 1.

The constraints to business development must be removed, if the sector is to fulfil its potential economic role. It is clear that the Government has been aware of the need to act and has made a start in providing the means for small businesses to overcome constraints. This paper acknowledges, however, that much more needs to be done in support of small business.

In recognition of the socio-economic role of the sector and its potential contribution to the country’s economic development, the development of the small business sector is hereby declared a subject of national importance. Small business is to be designated a priority sector for the Government, in terms of policy formulation, direct support from its own resources and in the mobilisation of resources from the donor community.

It should be the aim of the Government to ensure that the sector is able to play its role of social safety net by effectively bringing about a substantial improvement in incomes provided by small business activities. This will enable the sector’s participants to no longer regard their activities as a measure of last resort to survive, but as a means for self-advancement and fulfilment. To this end, our main aims are to increase the opportunities available for adequate wealth creation in the small business sector and to empower entrepreneurs to exploit them effectively.

Over the medium to long-term, our aim is to ensure that small business takes the lead role in economic development and spearheads the drive to create jobs and increase productive efficiency. We should aim to address, in turn, the major constraints which have made it difficult for small businesses to out-compete imports, increase exports and to sustain business growth.

In our determination to make a decisive impact on the development of the sector, the Government must adopt ambitious, objectives. Though ambitious, these objectives are achievable, provided the measures outlined in the remainder of this submission can be implemented expeditiously and effectively.

Over the medium-term, (four to seven years), our objectives would be primarily economic, as follows:

These are highly demanding objectives which will only be achieved by adopting a determined approach to the sector’s development. In practice, the Policy Framework which will guide our approach to the sector’s development over the next three years, will be to create a favourable, enabling environment for the sector through:

The Government should undertake to create a favourable environment in which small business are able to flourish. The regulatory regime will have to be amended continuously to minimise bureaucratic obstacles to the establishment and expansion of small businesses. We should also aim to protect small businesses from possible predatory practices of the large businesses from across the Orange River; and, as appropriate, we should provide infant industry protection for activities in which small businesses are prominent.

Experience shows, however, that while macro measures of the type described above can make an enormous difference to the dynamism of the small business sector, on their own they are insufficient to achieve the rapid results required by our objectives.

Active assistance by the Government is required to help small businesses overcome the many constraints to their development. These businesses need to be equipped with the business tools with which to build their commercial futures. Therefore, in addition to creating a favourable environment for the sector, the Government will have to launch a series of active business development programmes to help these businesses to overcome the specific commercial obstacles they face and exploit their opportunities effectively.

Based on the diagnostic of the small business sector, presented above, there are six priority areas for programmes to be developed, namely:

If the sector is to benefit fully from the measures described above, it will need access to effective business advice and support. It will also need a focal point of co-ordination.

The Minister of Trade and Industry should be charged to take responsibility for the sector, in particular, to put into practice the measures spelt out in this document.

By launching a combined programme to develop policies, programmes and give institutional support, the Government will be in a position to take decisive action to stimulate the development of the small business sector.

To help create an environment in which small business can flourish, the Government will, through amendments to a number of statutes and rules and regulations, implement three types of measures:

Prior to independence, the regulatory environment for establishing and operating small businesses was generally considered hostile. The procedures for registering businesses were lengthy and the criteria for obtaining the necessary licenses extremely difficult to satisfy.

Major regulatory obstacles were experienced in obtaining licenses for retail trade in general and particularly for liquor retailing, the transport of freight and passengers and the operation of hotels and catering establishments. These obstacles served as effective barriers to entry. They shut out all but those few entrepreneurs with the time, resources and contacts to overcome them.

But perhaps the most onerous of the restrictions imposed on business by the old regime was the Roman-Dutch law which prevented married women from exercising their rights over property and finance. In the small business sector, as noted earlier, the majority of part-time entrepreneurs are women. Such restrictions on the sector’s entrepreneurs constituted major impediments to its growth.

It is a pleasure, however, to note that, since independence, the Government has made it a priority to remove these obstacles to business. Specifically, the following changes have been made:

In the hotels and tourism sector, a new Act is being drafted with the aim of reducing the restrictions on minimum numbers of rooms required to operate licensed accommodation.

The Government’s attention, in this regard, should be to ensure that the existing bureaucratic obstacles to establishing businesses are eliminated. The emphasis should be on streamlining the process and procedures. Infrastructure for small business development should be made an integral part of the local planning process.

Over the next two years, the Ministry of Regional, Local Government and Housing, with support from MTI, should endeavour to speed up the process of proclamation of rural towns, villages and settlements and the spread of best practice with regard to procedures and planning to all local authorities.

The main forms of best practice which the Ministry will ensure that local authorities adopt are:

In addition, the Government should take the following administrative reform measures:

The Ministry of Trade and Industry has begun work to establish the principles of a Competition Act suited to Namibia. We undertake to ensure that these efforts are accelerated so that a new Competition Act reaches the statute book by the end of 1999.

There are no incentives specific to small businesses, although in the manufacturing sector, which enjoys incentives, small businesses are eligible for incentives at the same level as larger businesses.

To further extend the available incentives to the sector, the Government will ensure that:

The timing of when these measures will be introduced will be at the discretion of the Minister of Finance and they may not be incorporated in a single Finance Act.

The measures will, no doubt, act as a powerful stimulus to small businesses. Yet, they will have only marginal impact on Government revenues. The corporate tax collected from businesses with turnovers below N$50,000 is limited. Therefore, the impact on revenues will be small, as such businesses represent a small portion of total direct taxation and their expenditure on these items is small.

While the impact of these measures will not be significant on the State Revenue, they would represent strong and positive signals from the Government to small businesses of its commitment to the sector. They are aimed at improving the competitiveness of small businesses by reducing the cost of inputs and making their outputs more competitive in price. They should, therefore, substantially accelerate small business development.

Despite the very many NGOs and government ministries and agencies involved, as described in section II, the availability of finance to small businesses remains poor. This is the major obstacle to the sector’s inability to realise its potential social and economic role.

The Government’s strategy for ensuring that small businesses have adequate access to finance should be as follows:

Over the medium term, however, the Government’s financial assistance will be of four types:

Between them, the four schemes should be able to meet the main needs of the sector, that is, access to seed capital; equity and loan finance; and, hopefully, lending by commercial banks.

The Micro Loan Scheme is to be based on the Revolving Loan Scheme, currently being run by the Ministry of Trade and Industry. Lending to entrepreneurs will be done through a number of agencies, such as, the NDC, approved commercial banks and selected NGOs at the informal sector level.

These agencies have established fairly sound lending criteria for the scheme over the last four years of its existence. They are thus familiar with the sector’s entrepreneurs and their business. They, for instance, do not demand the pledging of assets as collateral.

However, in the first instance, screening of applicants for loans will be done locally. A regional credit committee will be set up for each of the 13 regions. It will comprise of representatives of regional and local authorities as well as local branches of the Namibia National Chamber of Commerce and Industry (NNCCI), and the regional offices of NDC and the Ministry of Trade and Industry. The proposed committees will serve as the first line of screening and evaluation of business ideas and the character of loan applicants. Its purpose is to minimise lending risks, while, at the same time, maximising opportunities for small entrepreneurs to have access to credit by recommending people with a proven record of good behaviour in the community and a real knack for business. The credit committee will, of course, not be a substitute for the more professional appraisal and evaluation of projects proposals by the commercial banks and the NDC.

The scheme will be divided into two types of loan - working capital and capital expenditure. Loans for working capital will have a ceiling of N$10,000 and will be for a maximum duration of three years, with one year the norm. The grace period will be no more than three months. Interest rates will be equivalent to the prime rate charged by commercial banks.

Loans for capital expenditure will have a higher ceiling of N$20,000, with a duration of up to five years and the grace period of up to one year. Interest rates would be 2% below prime, in recognition of the developmental role of capital expenditure.

In line with practice in the Revolving Loan Scheme, all potential borrowers will have to undergo training in the preparation of a business plan to be submitted as part of the loan application. They will also undergo training in book-keeping and cash management. In particular, they will be required to understand the effects of interest charges and loan repayments on cash flow and, hence, on costs and prices.

The Ministry of Trade and Industry has been working for some time now with the commercial banks to formulate a credit guarantee scheme in which the Government will indemnify the banks on a proportion of any default of loans by small businesses. A consultant is being appointed to tie up details of the scheme. The credit guarantee scheme will be launched in 1997.

As an example, N$25 million should be sufficient to enable the banks to lend over N$100 million to small businesses. It will be used to cover only the default on loans. A good credit guarantee scheme should be able to keep the default rate below 30%. Currently, the commercial banks are proposing a scheme in which 80% of the loan is covered by the guarantee scheme. So, with a default rate of 30% and 80% loan cover, loans of N$100 million will require N$24 million from the guarantee fund.

Loans covered by the credit guarantee scheme would be larger than the micro loans. While the terms of the loan will need to be agreed with the banks, the Government will press for lower interest rates and longer loan duration than currently provided by the banks to small businesses. The reluctance to lend on better terms should be overcome by the substantial risk reduction provided by the credit guarantees.

The investment of seed capital will be the responsibility of NDC. The Corporation will co-ordinate the raising of N$33.5 million to be used in the form of interest free loans to entrepreneurs for undertaking market research, investigating sources of raw materials and plant and equipment or other inputs and for the preparation of feasibility studies.

If the project leads to the formation of a business, the seed capital invested by NDC would be commuted to a loan on the same terms as NDC would charge the business for long-term loan finance. If the project fails to become a business, the sum would be considered a grant and written-off. The NDC will also be responsible for venture capital, the other need of small businesses in order to encourage the injection of both equity and loan financing into small businesses.

Each application for any of the above-stated credit schemes will be judged on its merits. Therefore, in the case of existing businesses, things like the standing of the financial institution and its track record in managing investments and the proportion of the fund it will invest in small businesses will play important roles in determining the Government’s decision to participate. To re-emphasise the point, it is essential that the commercial banks be persuaded to use their own funds to lend to small businesses. This will require them to overcome two sets of problems:

The problem of the cost of loan appraisal, can be solved if entrepreneur support agencies have the competence to use the commercial banks’ loan criteria and are able to convince the commercial banks of their competence. We will, therefore, strive to establish close relationships between the banks and the entrepreneur support agencies and strengthen the competence of enterprise support agencies to undertake loan appraisal.

A major constraint to the development of small business in Namibia is the problem of gaining access to markets at home and abroad. The main issues are:

Analysis of the informal sector has revealed that a major constraint to the development of the sector's large number of retailers and caterers is the lack of suitable market sites. There have been too few markets and where they exist, they are not well located. They are usually in townships with poor access to the spend of affluent Namibia and even in the townships, they are not attractive to consumers.

This problem is well recognised. The Windhoek municipality has built a new market. Other progressive municipalities, such as Tsumeb, have long conceived appropriate solutions. The difficulty is that the municipalities have limited funds to realise the solutions.

The need is for attractive but low-cost markets in town centres and at strategic locations in the townships. Experience in other countries has shown that such markets can add substantially to the attractiveness of town centres. They stimulate local and regional trade and provide a focus for the development of supplier businesses. Such businesses can range from agribusinesses supplying livestock and horticultural produce to manufacturers of clothing and household goods. A particularly relevant example is the informal market in Johannesburg.

Instead of being the eyesores of popular conception, they can be designed to be attractive and yet low cost. Although fully served with appropriate infrastructure, they need not be covered or have fully constructed shops. Stalls would suffice. It should be remembered that informal markets are held in the main squares of many European towns and are regarded as tourist attractions. The market in Johannesburg draws tourists as well as affluent South Africans.

The Government, as is known, has launched a programme, as part of a N$50 million industrial parks programme, of which the Ministry of Trade and Industry has earmarked N$21 million for Small and Medium Enterprise (SME) modules. These modules include attractively designed markets in suitable locations.

These markets will be run on a commercial basis, charging rents so that, over a number of years, they not only cover operating costs, but provide a reasonable return to the funds invested. It is possible that, as the level of trade through such markets develops and a track record of commercial success is established, the municipalities may either alone or in combination with the private sector, be encouraged to invest in such markets in all towns.

In the section on sites and premises, a mechanism is set out for ensuring that the provision of suitable sites for small business becomes an integral part of the town planning process. Together, the MTI’s initiative and these provisions should ensure that the needs of small business are met effectively.

The Frederic Ebert Stiftung (FES) of Germany, in conjunction with the Namibia National Chamber of Commerce and Industry (NNCCI) and the MTI, has launched an initiative which will help small businesses to reach customers in the large business community and the public generally. The programme is known as Business Linkages and is designed as follows:

This scheme will represent an additional channel for small businesses to reach potential customers.

With help from the Commonwealth Secretariat, MTI has pioneered a scheme which seeks to bring together, in a commercial relationship, buyers in large organisations with small suppliers via a Vendor Development Programme (VDP). The programme is designed to contribute to:

By matching buyers to suppliers and, thus, helping to establish an on-going relationship between them, the VDP is an important element in the development of the small business sector. In this new relationship, buyers help suppliers meet their specifications until trade commences.

Results to date are encouraging. Trade has started between the five small businesses selected for the pilot phase and large buyers. MTI is currently working with the Commonwealth Secretariat to extend the pilot phase to twenty small businesses and the results are encouraging. Perhaps the most encouraging aspect to date has been the very positive response from large buyers.

To date, most of the wholesalers and retailers that have been contacted have indicated their willingness to participate. Some have gone out of their way by agreeing to supply inputs at a discount and providing working capital support by extending credit terms.

It is the intention of the Ministry to bring the VDP programme into full operation during 1997. Those large businesses demonstrating strong commitment to the programme will receive a "National Award for Economic Development". This will include permission to use a logo of the Award on the company's stationery and literature.

A needs analysis would then be undertaken for each large organisations, to categorise their purchases of raw materials, products and services in terms of specification and annual usage value. This information will be built into a computerised database to facilitate analysis and to allow the merging of similar requirements.

At the same time, small businesses will be offered the opportunity to join the Vendor Development Programme. Their capabilities in terms of product or service offering will be identified and evaluated and matched with the requirements on the database.

The scheme should be publicised widely, to give ample opportunity to all those who may wish to participate. It will be important not only to work closely with the small businesses selected to participate, but also to pass on those which currently do not qualify to appropriate support agencies. NDC is responsible for running the VDP programme.

It is recognised that for this scheme to expand, significant expertise and experience will be required. Thus, there is a need for an understanding of the nature of the requirements of large organisations and appreciation of the capabilities of small suppliers. To this end, a mix of international and local experts is being established within the NDC. These will include engineers and skilled trainers in crafts and trades to advise small businesses. The mix will also include commercial and financial experts.

The fact that there are relatively few intermediaries in Namibia to market the products of small businesses disadvantages the formal and informal enterprises.

To overcome this weakness, it is necessary to include in this particular programme, co-operatives and organisations based on marketing products manufactured by out-workers in the small business sector. Such bodies would also be eligible for the incentives set out in section IV above. This should help increase the numbers of such businesses as well as expand their activities.

The MTI has entered into an agreement with the EU on a programme of consultancy assistance to promote Namibia’s exports. The consultants will advise, in detail, on the strategy best suited for Namibian businesses to develop export markets.

The Ministry will ensure that the work of the consultants pays particular attention to the needs of small business, by giving them preferential access to export market services in terms of participation in programmes and costs.

The introduction of appropriate technology is crucial to the development of small manufacturing industries in Namibia. Appropriate technology is that which is suitable for small businesses. The low overheads and greater flexibility of such technology would enable small businesses to compete effectively with larger organisations.

But, in Namibia, the knowledge of and access to available technologies is low. The main influence is what is available in South Africa. This low technical appreciation, coupled with the historic trading relationship between the two countries, has led many Namibians to hold an exaggerated view of the strengths of South African industry. This has meant that many have been discouraged, by fear of foreign competition from South Africa, from setting up manufacturing businesses themselves. And, in some instances, appraisal of business ventures, using unsuitable high cost South African technology, has resulted in the rejection of sound commercial ventures.

There are, however, many alternative technologies and manufacturing practices which can compete effectively with those of South Africa. Lower cost, less sophisticated technologies and processing plants are available, which allow viable manufacturing facilities to be introduced to service small markets. In many instances, these small, appropriate technology plants can produce at costs which can compete with multinationals. In India, for example, it is reported that small manufacturers of detergents are taking significant market share from the branded product producers like Unilever. In Mauritius and Hong Kong, small electronics firms are out-competing Japanese multinationals.

The reorganisation of production to enhance speed of response (changing from one product to another as per market demands) and higher productivity have replaced long production runs as a source of competitive advantage. But knowledge of these technologies and manufacturing practices is very poor in Namibia.

A structured process of technology transfer being proposed, involves the following stages:

The MTI, with support from donor agencies, is in the process of creating a database of appropriate technology and suppliers of such technology. The task covers the search and assessment stages in technology transfer. The database would be used for sector planning and for the dissemination of information to local enterprises and development agencies; and hence; to entrepreneurs. As a starting point, the focus is on technology suitable for the existing sectors of agriprocessing and manufacturing, as well as those other sectors which offer strong opportunities for the expansion of small manufacturers. Further prioritisation of the types of technology required will be provided by the needs analysis of large businesses, as discussed under Vendor Development Programme.

Once the target technologies have been identified, the process of assessment will be carried out. This will take into account markets, factor costs and most importantly, skill levels. It will be important to update the database frequently with information on new technologies, processes and licensing opportunities for target sectors.

In countries where the manufacturing sector is better developed, the government’s role has been confined to the dissemination of the results of search, assessment and evaluation of transfer mechanisms. Entrepreneurs then take over and effect the actual transfer, absorption, adaptation and replication.

But in Namibia, small businesses are not sufficiently familiar with technology and the process of transfer. To execute these crucial stages of technology transfer, the Government will have to play the role of catalyst, at least in the initial stages. The Ministry has, therefore, taken steps to establish a technology demonstration centre. This centrally-placed institution will be responsible for bringing technologies that are found appropriate to the country and for demonstrating to Namibian businessmen and women the viability of commercial exploitation of the technology.

It is vital for each technology to be seen in a business environment where it is actually being operated to generate wealth. Examples from the range of technologies considered appropriate will have, thus, to be installed in appropriate regions and operated to generate an income. For example, it might be appropriate to install a sunflower mill in Caprivi and sell the oil to illustrate that the technology is viable. Similarly, a small cotton gin can be installed in Rundu to show that the technology can be used to produce saleable cotton.

Both the roles of identifying and evaluating technologies and the operation of the technology demonstration centre and units require wide exposure to technologies and the process and problems of technology transfer. External technical assistance will be sought in both areas from appropriate donors.

A further disadvantage facing emerging and existing small businesses in Namibia is the lack of competitiveness in sourcing components as well as raw materials and goods for resale.

This lack of access to competitive sources often caused by low individual demand, and too many levels of intermediaries in the supply chain, is what we must strive to overcome. In the case of the informal sector, there is also a problem of attitude among formal sector suppliers.

Confronting all these negative factors head-on will make Namibia’s small businesses viable and dynamic.

The provision of a range of sites and premises for both the informal and formal sectors, as a key factor for the development of small enterprises, is discussed earlier under Markets. Here, it suffices to mention that the Government will provide two types of support to manufacturing entrepreneurs, at some industrial parks

Managed workshops are buildings which contain between 10 and 50 small "incubator" units under one roof. Each unit will be separately lockable. Such complexes will include a range of common services, such as, business management support, on-site secretarial services, a meeting room and communications equipment which can be used by tenants on a chargeable basis. The rental of such units will be made on the basis of a simple licence granted monthly so that enterprises that fail or wish to expand outside the complex can leave with no extended liability for rent.

Such supervised workshops are reserved for people just starting their own businesses. Rents are low to start with, but increase progressively. Start-up entrepreneurs have to leave the supervised workshops after, say, five years to make room for new entrants.

This form of support provides a ready source of clients for the agencies rendering support to local enterprises, to demonstrate that targeted local initiatives can be very effective.

Such complexes will have two important features. First, they can be financially self-reliant on an on-going basis if management support is provided by an agency assisting local enterprises.

Furthermore, this type of complex can act as a focal point for the community’s small business initiatives. If implemented well, a managed workshop complex can demonstrate how active programmes of support and a creative approach can achieve results in a short time. In so doing, the initiative will give further impetus to the nation’s development process.

For certain types of manufacturing industries to develop, it is necessary to provide common facility centres, containing relatively expensive equipment to carry out testing and certification, measurement, quality and safety certification and certain key processes which are too large to be justified for one small manufacturer, but which would be viable if used by many. This will be particularly relevant for metal, jewellery, wood, leather, rubber, plastic and electronics products.

For example, in order to promote the development of a metal products industry in Namibia, we intend to provide a facility equipped with a laboratory for materials and product testing, power presses, plant and equipment for galvanising or plating. This facility would supply a service to companies both within the industrial park and further afield, for a fee. It is likely that for some years the cost of the facility will have to be subsidised. But the long-term objective will be for the facility to be run on a commercial basis, and eventually become part of the private sector.

Further, where there are strong concentrations of small manufacturers in a particular industry, such as, furniture in Oshakati, wood carving in Rundu and leather goods, furniture and metal fabrication in parts of Katutura, common facilities will be built specifically to meet their needs.

In addition to the N$50 million already earmarked for industrial parks, N$11 million should be earmarked for dedicated work-spaces and common facility centres over the next three years.

The shortage of suitably-trained entrepreneurs in either vocational or business disciplines is a major disadvantage of our small business sector. Not only are these businesses poorly managed, but the products or services they make or sell also leave much to be desired.

With the enactment of the National Vocational Training Act of 1994, the Government has established a substantial system of training and trade testing. In the future, the consumers as well as employers can be certain of the competence of those who have passed vocational tests. With enhanced business competence, on the part of entrepreneurs, the consumers will be more willing to use their services or buy their products. For small businesses, increased consumer support will lead to the expansion of markets and opportunities for both growth and sustainability.

With a high proportion of the workforce now entrepreneurs in the small business sector, it is appropriate that both our schools and vocational training institutes teach entrepreneurship.

While the country has a number of vocational training establishments and has enacted the National Vocational Training Act, surveys of small business reveal that suitable on-the-job training is in short supply. Provision of day-release or part-time courses in business management and vocational skills is particularly wanting.

For businesses, the ability to enhance the expertise and skills of management and staff is a vital component of capability building. We, therefore, propose that day-release schemes and/or part-time courses be introduced at our vocational training institutes.

The Ministry of Trade and Industry, through its Directorate of Industrial Development, will have the responsibility of ensuring inter-ministerial co-ordination regarding the policies and programmes for the development of the sector. It will also co-ordinate with NGOs, government agencies, chambers of commerce and prominent individuals who might be able to contribute to the success of the initiative.

However, in order to provide effective entrepreneurial support, these enterprise development agencies should represent a partnership between government (regional and local), and the private sector. They should thus have access to decision makers as some of them are charged with the role of providing advice, training and support to micro businesses. A good number of NGOs have the dedication and low-cost base that is required to work with small entrepreneurs.

In other words, the place of NGOs in the institutional framework should be formally recognised by the Government by inviting them to fully participate in the launching and implementation of this initiative.

EMP/SKILLS - Skills and Employability Department