Youth and SME Financing Needs

Namibia Youth have the potential of creating impactful SMEs that could absorb the growing unemployment rate and eradicate poverty within the country However, when it comes to youth entry into the SME sector there are 6 key questions that are fundamental to the success of any SME across all sectors in Namibia

How is youth defined?

What is experience?

What is a business?

What truly is capital?

What is a guarantee?

What funding support exists?

To begin answering the questions, in Namibia, youth is defined as an adult between the age of 18 and 35 years of age In many instances, the term ‘experience’ is misused as a person can have an experience that does not correspond to the business need Consequently, resulting in the failure of that specific business Therefore, it is important that the youth have relevant experience which directly relates to the business needs they would like to tackle The next key issue to address is the definition of a business. A business is a sustainable legal income-generating activity with a clearly defined vision (short, medium, and long term) However, it must be noted that there is a difference between revenue and profit, and if a business is generating revenue but incurring a loss that business is not ‘sustainable’. Thus, stands a great chance of failing. Therefore, it is of great significance that your business fully complies with this definition to be successful. Capital does not always have to be ‘cash’; it can also be other existing resources contributed by the owner to the business to get started Furthermore, a guarantee is another important element that a lot of young entrepreneurs do not consider when sourcing finance The guarantee required by financial institutions to provide financial aid needs to be ‘fair’ and ‘relevant’ The business idea or concept can also be used as a guarantee to secure financial assistance if it is ‘sound’ in the absence of a proven business track record! As a young entrepreneur, you can offer the lending institution an equity stake in the business, and this will aid in obtaining the funds required to operate your business even if you do not have properties or assets that you could provide as collateral to secure your debt Lastly, it is essential to consider existing funding support available within the formal market or within your social networks and utilize these opportunities to your advantage. In conclusion ‘With patience and financial disciple it can be done, youth can start and operate successful businesses!’