Factors influencing SME performance in Kavango East
SMALL and medium-sized enterprises (SMEs) are the backbone of numerous economies across the globe, having consistently driven impressive economic growth, spurred job creation, reduced poverty and enhanced gross domestic product (GDP).
SMEs have also fostered equitable and sustainable development.
A thriving SME sector is a testament to its importance in urban and rural development, highlighting entrepreneurships' central role in national economic prosperity.
Moreover, youth entrepreneurship has greatly contributed to self-employment and widespread poverty reduction. Youthowned SMEs serve as the linchpins of socio-economic integration within their countries.
In Namibia, the SME sector's contribution to GDP and employmen-t creation are modest, compared to its counterparts in sub-Saharan Africa.
From 2017 to 2022, Namibian SMEs accounted for about 12% of the GDP, and employed roughly 20% of the workforce. These enterprises are critical for jobcreation, significantly impacting both urban and rural communities, and supporting a large part of Namibia's population.
Under the Vision 2030 framework, the Namibian government recognised the potential of SMEs to bolster
GDP through reducing unemployment, alleviating poverty, and fostering entrepreneurship. This imperative was underscored by President Nangolo Mbumba, on 10
April 2024 when he addressed University of Namibia graduates, and challenged them to leverage their entrepreneurial spirit to create opportunities, and devise innovative solutions to society's complex challenges.
The emphasis on youthowned SMEs is particularly pertinent, given Namibia's demographic profile, with 71% of the population under 35 years of age.
Coupled with a high unemployment rate of 32%, focusing on youth entrepreneurship becomes a critical endeavour.
Yet, youth-owned SMEs face a barrage of challenges, including limited access to finance, resource constraints, regulatory burdens, stiff market competition, and difficulties in talent acquisition and retention.
It is against this backdrop that a study was initiated to explore the factors impacting the performance of youth-owned SMEs in Kavango East region - selected due to its alarming youth unemployment rate of 62.5%.
In Namibia, the stark reality is that around 90% of SMEs fold within their first five years. This high failure rate, estimated at 75% for small businesses, points to deep-seated entrepreneurial challenges that demand attention.
While much literature spans various geographies and sectors, there is a gap concerning youth-owned SMEs. This study fills that void, assessing the impact of individual, organizational and environmental factors on the performance of these enterprises in Kavango East.
Employingapragmaticresearchphilosophy and an abductive research approach, the study reached out to 368 youth-owned SMEs in the region, and conducted in-depth interviews with five key informants. Utilising a mixedmethods research approach, data was collected through structured questionnaires and analysed using descriptive statistics, exploratory factor analysis, regression analysis, and structural equation modelling in SPSS and AMOS.
The findings were insightful: individual factors, including age, gender, education, innovativeness and entrepreneurial orientation were seen to positively
influence the performance of youthowned SMEs. Organisational factors such as managerial competencies and access to resources, also positively affected performance. Furthermore, the study confirmed a significant positive relationship between competition, market access, government policy, regulatory framework and the performance of these SMEs, along with other influencing factors like business and financial issues, youth-specific challenges and local conditions. The study concludes with a recommendation for stakeholders - government agencies, business associations and financial institutions to work in concert to forge an enabling environment for youth-owned SMEs. Financial supporters and entrepreneurship advocates should offer accessible financing tailored for these SMEs. Meanwhile, the government must prioritise easing regulatory constraints to promote a business-friendly environment that nurtures growth and innovation.
Regular reviews and updates of policies and frameworks are crucial to maintaining an agile and supportive business climate that can accommodate the evolving needs of youth entrepreneurs.