The performance of youth-owned SMEs
Small and medium-sized enterprises (SMEs) stand as the backbone of numerous economies across the globe, having consistently driven impressive economic growth, spurred job creation, reduced poverty, enhanced gross domestic product (GDP), and fostered equitable and sustainable development (Mabenge et al., 2020; Makanyeza et al., 2023).The vitality of a thriving SME sector is a testament to its importance in urban and rural development, highlighting entrepreneurship's central role in national economic prosperity (Makanga, 2022). Moreover, youth entrepreneurship, as Makanga (2022) points out, has greatly contributed to self-employment and widespread poverty reduction.
Youth-owned SMEs, in particular, serve as the linchpins of socioeconomic integration within their countries. In Namibia, the SME sector's contributions to GDP and employment 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 (Nautwima & Asa, 2022; Mukata & Swanepoel, 2017).
These enterprises are critical for job creation, significantly impacting both urban and rural communities and supporting a large segment of Namibia's population (National Policy on Micro, Small and Medium Enterprises in Namibia, 2016).
Under the Vision 2030 framework, the Namibian government has recognised the potential of SMEs to bolster GDP through reducing unemployment, alleviating poverty and fostering entrepreneurship (Mukata & Swanepoel, 2017). This imperative was underscored by President Nangolo Mbumba, who, addressing the University of Namibia's (Unam) graduates on 10 April, challenged them to leverage their entrepreneurial spirit to create opportunities and devise innovative solutions to society's complex challenges.
Stark reality
The emphasis on youth-owned SMEs is particularly pertinent given Namibia's demographic profile, with a significant 71% of the population under 35 years of age (2023 Namibia Population and Housing Census). Coupled with a high unemployment rate of 32% (Labour Force Survey, 2018), 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 the Kavango East Region, selected due to its alarming youth unemployment rate of 62.5% (Labour Force Survey, 2018).
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 (Latip et al., 2021). While much literature spans various geographies and sectors, there's a gap concerning youth-owned SMEs. This study fills that void, assessing the impact of individual, organisational and environmental factors on the performance of these enterprises in Kavango East.
Employing a pragmatic research philosophy 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.
**Emma Kantema is the deputy minister of sports, youth and national service. This piece is from her doctorate research. She writes in her personal capacity.