Analysis Of Factors Hindering Small And Medium Enterprises Access To Finance In Prosperita Industrial Park II

ABSTRACT

The primary objective of the study is to assess both the demand and supply side factors that hinder Small and Medium Enterprises (SME’s) in Namibia to gain access to finance. This is a case study of SMEs of Prosperita Industrial Park II in Windhoek. Four commercial banks, SME Bank and the Ministry of Industrialization, Trade and SME Development were also included in this study. The study employs both quantitative and qualitative methods, whereby a questionnaire and interviews were used as the research instruments. The data was analysed using SSPS and Microsoft Excel software. Statistical analysis, including Pearson Product-Moment Correlation, descriptive statistics, thematic code and content analysis were used. The study found that both demand side and supply side factors impact on access to finance among the SMEs. These are factors such as the age and the size of the business, collateral, asymmetrical information and stringent conditions, such as high interest rates and high transaction costs. The study recommends that the Government should intervene in the operations of the supply side and apply leniency regarding criteria, especially in the collateral requirement. The study further recommends that training should be availed to SMEs in order to create an understanding of the art of financial administration. SMEs should furthermore be encouraged to implement financial systems with at least three basic components of the budgetary period. It is also recommended that in order to build credibility with lenders, SMEs should start maintaining proper records to avoid asymmetrical information. In addition, SMEs should invest in fixed assets, such as property and machinery, which could serve as collateral for financial providers.