SMEs must become Namibia’s economic engine
Namibia is standing at a precipice. The numbers are stark, the trends alarming, and the urgency undeniable. According to Cirrus Capital’s Robert McGregor, the number of individuals identifying as employers dropped from approximately 45 000 in 2018 to 15 000 in 2023. In just five years, our country has lost around 30 000 businesses - most of them small and medium-sized enterprises (SMEs).This collapse is not merely a statistic; it is a warning siren for the future of our economy, our youth, and our national stability.
SMEs are the backbone of any thriving economy. If this trajectory continues, Namibia risks hollowing out its entrepreneurial base, leaving behind an economy unable to generate jobs, drive innovation or sustain long-term growth.
The Namibian Statistics Agency reports youth unemployment at 44.4% in 2023. When discouraged job seekers are included, the broader rate rises to a staggering 61.4%. Urban youth face even higher unemployment than their rural peers. Beyond the economic crisis lies a social one: young Namibians are being locked out of opportunity, fuelling frustration, dependency and disillusionment.
Lack of entrepreneurs
Equally troubling is the limited entrepreneurial ambition among our youth. Only 19% of Namibians aged 18 to 35 say they would choose to start a business if given the chance, according to Afrobarometer. This makes Namibia’s youth the least entrepreneurial in Africa, despite making up 2.1 million of our three million citizens. But who can blame them? They are not being empowered, encouraged or inspired to build the businesses that could drive national growth.
The collapse of SMEs is not accidental. It is the product of systemic barriers that suffocate innovation and discourage risk-taking. Regulations, taxes, salary structures and outdated policies form a web of obstacles that make entrepreneurship in Namibia a high-risk, low-reward endeavour.
• Regulatory burdens: Complex licensing requirements and bureaucratic red tape slow down business formation and expansion.
• Tax pressures: SMEs face disproportionate tax obligations relative to their limited capacity, eroding profitability. High risk, minimal reward.
• Rigid labour policies: Salary structures and compliance costs weigh heavily on small employers, discouraging hiring and job creation.
The result is predictable: businesses close, jobs disappear, and potential entrepreneurs choose safer options rather than risk failure in an unforgiving system.
Viable path
Despite these challenges, SMEs remain the most viable path to grassroots economic revival. Large corporations and foreign investors play important roles, but they cannot absorb Namibia’s vast numbers of unemployed youth. SMEs, by contrast, are nimble, community-based, and capable of creating jobs quickly. They are natural incubators of innovation and engines of inclusive growth.
To unlock this potential, Namibia must urgently reposition SMEs at the centre of its economic strategy. Bold reforms - not incremental tweaks - are required. We cannot afford to tinker at the margins while our entrepreneurial base crumbles.
A dedicated, cross-ministerial task force for SME revitalisation is essential. Unlike task forces created merely to give the impression of activity, this one must bring together finance, trade, labour and youth development under a unified mandate: remove barriers, incentivise entrepreneurship, and restore confidence in Namibia’s business environment.
Key priorities should include:
• Regulatory reform: Streamline licensing and compliance to make starting and growing a business easier.
• Tax incentives: Provide targeted relief for SMEs, especially those creating jobs for young people. Let there be real reward for risk-taking and investment.
• Access to finance: Expand credit facilities and reduce collateral requirements for small businesses.
• Entrepreneurship education: Embed business skills into the curriculum to inspire and equip young Namibians.
• Digital transformation: Support SMEs in adopting technology to compete regionally and globally.
This task force must operate with urgency, transparency and accountability. Its success should be measured not in reports, but in the number of businesses created, jobs sustained and youth empowered.
Namibia cannot withstand another five years of decline. Losing 30 000 employers is not just a setback: it is a national emergency. Every SME that closes represents lost jobs, lost innovation and lost hope. If we fail to act, the consequences will reverberate for decades, leaving us with a stagnant economy and a disillusioned generation.
The urgency is clear. The risks are real. The rewards, if we succeed, will be transformative.
Namibia must act now.