Investigation into the causes of failure of small and medium enterprises in Namibia: A case study of Bokamoso Entrepreneurial Center in Windhoek

Abstract

Small and Medium Enterprises (SMEs) are important tools to address the challenges of job creation, sustainable economic growth, equitable distribution of income and the overall simulation of economic development. The failure rate of SMEs in Namibia is very high as it is stated by Ministry of Industrialization, Trade and SME Development that it reduced employment rate from 20% to 10% as from year 2016 to year 2017 and it is of great importance to investigate the reasons for failure of SMEs which impacts on their performance. The high failure rate of SMEs paints a bleak picture of the SME sector‟s potential to contribute meaningfully to job creation, economic growth and poverty reduction in Namibia. The study investigated the causes of failure of SMEs in Namibia using Bokamoso Entrepreneurial Center as a case study. The study was exploratory, descriptive and analytical in nature it therefore followed a qualitative approach. The objectives of this study were achieved by means of interview and questionnaires that were distributed to 25 SMEs at Bokamoso Entrepreneurial Center in Windhoek, Namibia. 5 SMEs could not fill the questionnaires, only 10 SMEs manage to fill the questionnaires and 10 SMEs were interviewed, which means that the return rate of questionnaires was 20% while the response rate for interview and questionnaires was 80%. Based on the study finding, Lack of financial support, lack of technology, absence of business plan, lack of entrepreneurial training or education and competition were the major cause of SMEs failure. The causes of failure of SMEs that were identified in literature review were poor management skills, poor planning, lack of budget management, lack of customer relations, lack of employee satisfaction, lack of managing cash flows, lack of inventory management and inability to manage growth. The study made some recommendations from the research findings and it is clear that the government and the other role players need to address the challenges and problems faced by the SMEs