An Analysis of Early Stage Formal SME Funding Challenges in Windhoek, Namibia

Abstract 

The importance of SMEs in the economies of all countries is well documented in literature worldwide. SMEs play an important role in world economies, including that of Namibia. These roles include employment creation, contribution to gross domestic product (GDP) and the generation of income. The purpose of this paper was to analyse early-stage formal SME funding challenges in Windhoek, Namibia. This was informed by the high SME failure rate of 75% at the early stage. The research objectives sought to identify different forms of challenges faced by SMEs during the early stages of development in Windhoek. This would help draw up current sources of SME funding in Namibia, to determine the different forms of government SMEs assistance (funding, training) in Namibia, to determine what the necessary requirements are for SMEs at early stages of business and to recommend ways of overcoming challenges faced by SMEs at this stage. The research assumed that government intervention through the provision of financial assistance, infrastructure, training and favourable taxation policies would reverse the trend. The study adopted a descriptive research design using 120 randomly selected registered operators of SMEs in Windhoek. Data collected was analysed using SPSS. Results from the data analysis indicated that poor funding, different forms of government SME assistance, determine necessary requirements for SMEs at an early stage. The researcher recommended ways of overcoming challenges faced by SMEs at an early stage of development in Windhoek: provision of loans without collateral, training on how to keep records and draw up financial statements, establishment of different forms of government SMEs assistance, establishment of a strong SMEs funding agency, to highlight the requirements for SMEs at an early stage and recommend ways of overcoming challenges faced by SMEs at early stages of development.