INTERNATIONAL UNIVERSITY OF MANAGEMENT
SCHOOL OF MANAGEMENT AND SCIENCE
DEPARTMENT OF BUSINESS MANAGEMENT
THE CONTRIBUTION OF SMALL TO MEDIUM ENTREPRISES TO THE
DEVELOPMENT OF THE NAMIBIAN ECONOMY
A CASE STUDY OF THE MINISTRY OF TRADE AND INDUSTRY
BY
Klaudia T. Shigwedha
STUDENT NO : 1100 06151
A RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILMENT OF THE
REQUIREMENTS OF THE HONORS DEGREE IN BUSINESS ADMINISTRATION
SUPERVISOR : Dr. Matipira
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DECLARATION
I Klaudia T. Shigwedha, do hereby declare that the contents of
this research are totally my own intellectual property as
submitted to the International University of Management during
the 2014 academic year. In this research, virtually everything
was solely done by me except in instances where the work of
other scholars have been used, in such cases, APA style
referencing was used to acknowledge that the work was not my
own. This research has never and shall never be submitted to
any other awarding body, or any other institution for possible
evaluation and shall not entirely form part of this
researcher’s other works in the future.
........................................ ………………………………………
Student Signature Date
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DEDICATION
I dedicate this project to me parents who natured me from
tender age to be who I am now, they even encouraged me to
enrol into tertiary institution and for that I owe them
success. I also dedicate this study to the Almighty God for
being my creator, my protector and my guide right from the
start of the study till its conclusion. Lastly but not least,
I dedicate this study to the future researchers especially
those who shall trade in similar fields like this study and
who shall need and use and reference my material as part of
their work. May God bless you!
_____________֍Ω֍_____________
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ACKNOWLEDGEMENTS
This study would not have even kick started without the
following great people’s enormous contribution towards its
completion. I wish to acknowledge their tireless efforts for
the completion of this study.
Mr Bla Bla
Ms Bla Bla
Ms Bla Bla
Mr. Bla Bla (Supervisor)
Dr Bla Blab a ha ha
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ABSTRACT
The relevance of SMEs in any economy worldwide cannot be
overemphasized and this has dictated some policy reforms and
responses in many countries. This qualitative study shall
seek to engage a descriptive approach to assess the
relevance of SMEs in state and national economies in
Namibia. The main aim is to determine the extent of
relevance as well as the contribution of the SME sector in
the Namibian economy.
Some benchmarking research revealed that the SME sector in
Namibia has not been very relevant in the areas of
enterprise creation, employment, contribution to GDP and
export earnings as well as global competitiveness. The study
concluded that the government needs to do more to support
the SMEs and other stakeholders to enhance relevance of the
sector in the Namibian economy.
The Namibian government with the help of the Ministry of
Trade and Industry should formulate and implement policies
that foster industry cluster strategy, stimulate local
demand for products of the SMEs by making it mandatory for
the appliances and equipment needs of its institutions and
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agencies be 80% of products of SMEs in Namibia amongst
others. This study shall seek to use the Ministry of Trade
and Industry as a case in point since it is the incubation
center for the small to medium enterprises.
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Table of Contents1. INTRODUCTION & BACKGORUND......................................11.1. INTRODUCTION..................................................11.2. BACKGROUND OF THE STUDY.......................................21.3. PROBLEM STATEMENT.............................................31.4. PURPOSE OF STUDY..............................................31.5. RESEARCH OBJECTIVES...........................................31.6. RESEARCH QUESTIONS............................................41.7. LIMITATIONS...................................................41.8. DELIMITATION OF STUDY.........................................41.9. SCOPE OF THE STUDY............................................51.9.1. SUBJECT SCOPE...............................................51.9.2. GEOGRAPHICAL SCOPE..........................................51.9.3. TIME SCOPE..................................................51.9.4. POPULATION SCOPE............................................61.10. DEFINITION OF TERMS.........................................61.11. STRUCTURE OF THE STUDY......................................61.12. CONCLUSION..................................................72. LITERATURE REVIEW..............................................82.1. INTRODUCTION..................................................82.2. THEORETICAL FRAMEWORK.........................................82.2.1. CRITERIA TO DEFINE AN SME...................................82.3. HOW GOVERNMENT ASSISTENCE CAN LEAD TO SME PRODUCTIVITY........92.5. IMPACT OF GOVERNMENT INTERVENTIONS ON SMES...................112.5.1. CHALLENGES THAT SMES FACE..................................132.6. THE CONTRIBUTION SMES TO AN ECONOMY..........................142.7. COMMITMENT...................................................162.8. EMPLOYEE EVALUATIONS.........................................172.9. RELATIONSHIP BETWEEN THE RECRUITMENT AND SELECTION PROCESS AND EMPLOYEE TURNOVER AND PERFORMANCE.................................172.10. CONCLUSION.................................................183. RESEARCH METHODOLOGY..........................................19
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3.1. INTRODUCTION.................................................193.2. RESEARCH DESIGN..............................................193.3. POPULATION...................................................193.4. SAMPLE SIZE..................................................203.5. COLLECTION AND RECORDING OF DATA.............................203.6. MEASUREMENT INSTRUMENTS......................................203.7. RESEARCH ETHICS..............................................213.8. CONCLUSION...................................................214. DATA ANALYSIS AND RESULTS.....................................224.1. INTRODUCTION.................................................224.2. RESEARCH ANALYSIS AND INTERPRETATION.........................224.3. INTEPRETATION OF RESULTS.....................................284.3.1. THE RECRUITMENT AND SELECTION PROCESS AT NAC...............284.4. CONCLUSION...................................................325. CONCLUSION AND RECOMMENDATIONS................................335.1. INTRODUCTION.................................................335.2. RECOMMENDATIONS..............................................335.3. CONCLUDING REMARKS...........................................345.4. IMPLICATION OF THE RESULTS...................................345.5. FUTURE RESEARCH SUGGESTIONS..................................355.6. CONCLUSION...................................................35
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CHAPTER ONE
1.INTRODUCTION & BACKGORUND
1.1. INTRODUCTION
There are previous attempts in studies to show the
relevance of small and medium enterprises (SMEs) in the
growth and development processes of the developed
economies, and highlight the fact that SMEs are very
relevant as engines through which the growth and
development objectives of developing countries can be
achieved.
Among the areas of relevance are employment, contribution
to gross domestic product (GDP) and export commodities
according to Oni et al, 2012
Okwu (2011) however noted that SMEs provide employment,
produce goods and services and, thus in a way, contribute
to the general growth of the society and economy as a
whole. Daniels et al, 1993 contends that SMEs employ
approximately 22% of the adult population in developing
countries however, (Henriques, 1998) considers
development of the SME sector crucial for the achievement
of broader development objectives of eradication of
1
poverty, economic development as well as and the
promotion of more democratic and pluralist societies.
The 2005 United Nations Conference on Trade and
Development (UNCTAD) noted that small and medium-sized
enterprises (SMEs) are important agents of development
throughout the world, and that promoting a country’s SME
sector is vital for sustainable high employment rate and
income generation and, as such, critical for achieving
sustainable growth. UNCTAD (2005) further contended that,
despite the general recognition that SMEs are important
contributors to the domestic economy, not many
governments have framed policies to enhance their
contribution or increase their competitiveness. Most
central governments have no reliable statistics on what
the SMEs actually contribute to the fiscus. Lack of a
uniform definition, high cost of an industrial census,
and the fact that many SMEs do their own things without
government control explains that the reasons for poor
statistics on SMEs. This may have contributed to the less
emphasis on SMEs sector development in Namibia and, thus,
the neglect of its relevance.
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This paper deliberated the contribution of small and
medium enterprises (SMEs) in the
Namibian economy within the context of enterprise
creation, employment generation, contribution to export
earnings and global competitiveness. The paper included
five Chapters.
1.2. BACKGROUND OF THE STUDY
This study was done to partially fulfil the requirements of
the Bachelor in Human Resources Degree while on the other
hand, it came to explore the possible contributions that the
small to medium enterprises make towards the overall
Namibian economy. This qualitative study was a study that
opened not only the researcher’s eyes, but potentially of
future researchers in similar fields. The main case in point
was the Ministry of Trade and Industry because it registers
and support SMEs. The SME sector carries great hopes and
great burdens in the evolution of all of the transitional
economies like Namibia. Governments must step up their
support of such sectors as their sustained and healthy
growth is not only necessary but crucial for the development
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of low to medium income earners who can’t be entirely
absorbed in the private sector. This study sought all the
answers pertaining to the contribution of the SMEs to the
growth and development of a country’s economy. It covered 5
chapters which included the second one which dealt with
review of literature, the research methodology as well as
the analysis of findings as well as the conclusion and
recommendations. The questionnaire was attached at the very
end of the study which was a template which was used during
the data collection period recorded in the research
methodology.
1.3. PROBLEM STATEMENT
This study was designed to solve problems that has arisen
within the Namibian economy, it brought the contribution
that SMEs make towards the economic growth and development
of the Namibia under the spotlight. The public domain was
awash with complaints from the SMEs that they were not
getting the necessary recognition and support from Central
Government so this study came in handy to assess their
4
importance to the economy as well as to justify their need
for such support.
The SMEs further complained about their victimization by
large scale and/or foreign companies which made the industry
less competitive and conducive for small scale companies. In
a way this study sought to justify the existence of small
scale enterprises as well as to highlight the continuous
contribution they make to the growth of the Namibian
economy.
1.4. PURPOSE OF STUDY
The main purpose of this study was to highlight the
contribution that the SMEs make to the overall success of
the Namibian economy. In tandem with that, the research
objectives and questions were outlined as follows.
1.5. RESEARCH OBJECTIVES
The main objectives of this study were set as follows:-
To scrutinize the quantifiable contribution that the
SMEs are making to the overall Namibian economy.
5
To assess how the nature of assistance that the SMEs
receive from the Central Government through the
Ministry of Trade and Industry.
To check the meaningfulness of the SMEs contribution
and sustainability to the economy and to the
eradication of unemployment in Namibia.
1.6. RESEARCH QUESTIONS
These questions were derived from the objectives stated
above
What percentage of the GDP is contributed by SMEs?
What sort of help do the SMEs receive from the
government and how far does it go in helping them out
of their capital blues?
How durable is the government assistance to the SMEs?
1.7. LIMITATIONS
This research had to overcome a host of limitations in
its quest towards its completion. Obviously the
researcher being a student, resources were a challenge to
mobilize to fund the study, arranging interviews was also
another challenge too. Sometimes, respondents were either
too busy to attend to this researcher or they were
preoccupied with the issues of their businesses they
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couldn’t spare a second to attend, so these constraints
made the researcher to conduct the study in Windhoek
only. However, in spite of those limitations, the study
went on well and its findings were not compromised
either.
1.8. DELIMITATION OF STUDY
The study focused only on Ministry of Trade and
Industries department of SME Support Center. This made
life easier because the researcher was running out of
time and finances so he narrowed in on this department.
Even though one department was chosen, all interviews
were done individually and the respondents were advised
not to share information amongst themselves.
1.9. SCOPE OF THE STUDY
1.9.1. SUBJECT SCOPE
The subject scope was confined to the contribution
of SMEs to the Namibian economy a case of Ministry
of Trade and Industry. The study could have been
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broader to include other Ministries but the only
challenge was that it would have ended up very broad
and difficult to carry out especially with the
limited time and resources there was.
1.9.2. GEOGRAPHICAL SCOPE
This study was confined to both primary and
secondary data obtained from the Ministry of Trade
and Industry Namibia situated next to NamPower
Convention Center. The study sought as much
information that could be available from Windhoek
even though a provision was made in case there was
information that was needed to be collected from out
of town, telephone interviews were made.
1.9.3. TIME SCOPE
This research was carried out within 3 weeks in the
month of August 2014. The arrangement and analysis
of the data took another 2 weeks into September
2014. The completion of the entire project was done
by end of October 2014.
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1.9.4. POPULATION SCOPE
The population from which a sample was selected
comprised respondents from the SME Support
department at Ministry of Trade and Industry. This
was because they are the ones directly dealing with
aspects of the SMEs. The staff compliment in this
department was recorded to be 12 employees. The
sample size was discussed in the methodology
chapter.
1.10. DEFINITION OF TERMS
Having gone through the entire study, this researcher
noted some difficult terms that needed to be defined to
make life easier for future scholars who might want to
use this study as the basis for their studies too. These
are defined as follows:-
Ministry of Trade and Industry – this is a branch of
government which deals with the facilitation of local
and international trade involving Namibia. They also
assist SMEs to grow though the provision of SME support
finance. The definition was confined to this even
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though the Ministry also have a mandate to register
patents and the like.
SME – Small to Medium Enterprise is a company that
operate at a small scale with less than 50 employees
and/or the revenue of less than NAD50 000 per month.
1.11. STRUCTURE OF THE STUDY
This research was conducted on location at the Ministry
of Trade and Industry at its Headquarter. 10 respondents
out of the total of 12 employees were selected to
participate in the study. Even though some slight
logistical challenges led to the delay in completion of
this project, it finally came to completion.
Overally, 10 questionnaires were administered
concurrently with the conducting of the interviews. The
filling of questionnaires was the most hectic and tiring
after which the data was collated and arranged into a
presentable manner understandable by even a lay person.
At the conclusion of the research, recommendations were
made.
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1.12. CONCLUSION
In conclusion, the purpose of this study was to
investigate the contribution that SMEs make towards the
Namibian economy with mush reference to the Ministry of
Trade and Industry. In the next chapter the literature
was reviewed with a possible link towards the aspects of
this study.
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CHAPTER TWO
2.LITERATURE REVIEW
2.1. INTRODUCTION
This chapter discussed the historic studies and previous
literature that past scholars did which was related to
this research. The topics discussed under this chapter
was closely linked to the research objectives as well as
the research questions.
Since this research topic was not researched much by
previous scholars, so much in a broader view to the
reader on the contribution of SMEs to the economy, this
paper managed to scavenge for the little information that
was available.
2.2. THEORETICAL FRAMEWORK
2.2.1. CRITERIA TO DEFINE AN SME.
Various agencies, institutions and authors have
conceptualized and defined small and medium enterprises
(SMEs) in their own unique ways. Beckley (1989) defines
small and medium scale enterprises varies according to
context, author and countries. Organization for Economic
12
Cooperation and Development (OECD), 2004 explained that
how SMEs are defined usually depends upon the scale of
and structure of business in the economy and varies from
one country to the next. The concepts and definitions are
usually on the basis of size or amount of investment in
assets, annual turnover and number of employees. For
example, in the USA, Britain and Canada, small scale
business is defined in terms of annual turnover and the
number of paid employees.
Britain conceives small scale business as that industry
with annual turnover of 2 million pounds or less, with
fewer than 200 paid employees (Ekpeyong & Nyang, 1992)
while Japan defines small scale enterprises as those
manufacturing with 100 million yen paid up capital and
300 employees.
However, Ogechukwu (2006) identifies more general and
comprehensive criteria for defining small and medium
scale enterprises in different countries to include
number of employees, annual turnover, local operations,
sales volumes, financial strength, managers and owners
autonomy, relatively small markets compared to their
13
industries and capital usually supplied by individual or
shareholders.
The factors that govern the performance and relevance of
the SMEs include policy of the government such as
regulation and deregulation, infrastructure, access to
external finance, technology, competition and corruption
in the business environment in which they operate. Quite
a lot of studies have attempted to scrutinize how the
factors affect the performance and, thus, enhance or
becloud the relevance of the SMEs in state and national
economies.
2.3. HOW GOVERNMENT ASSISTENCE CAN LEAD TO SME PRODUCTIVITY
Dollar, Hallward-Driemeier and Mengistae (2005) used the
World Bank Enterprise data to study how infrastructure,
access to external finance and frequency of yearly visits
by relevant government agencies affect productivity,
wages, profits and growth rates of outputs of firms in
countries like Bangladesh, China, and Pakistan. Dollar
et.al found that infrastructure is the most important
element in explaining performance and, by extension,
14
relevance of the SMEs in these countries. They came to a
conclusion that suitable infrastructure enhances
productivity, higher returns, and higher economic growth
rates. In his other study, Dollar et al. (2006) used a
samples from SMEs in Bangladesh, Brazil, China, Honduras,
India, Nicaragua, Pakistan and Peru to establish that
infrastructure facilitates international integration via
foreign ownership and exporting.
Fernandes (2008) noted that infrastructure enhances SMEs’
performance and relevance in Bangladesh. In order to
examine the relationship between some of the determinants
of SMEs performance and relevance, on the one hand, and
relative size of SMEs’ sector, on the other hand,
Ayyagari, Beck and Demirguc-Kunt (2005) used a cross-
country database on contribution to employment in
Manufacturing and GDP across 76 countries. Among other
findings, they established a stronger support for the
hypothesis that a large SME sector is due to a competitive
environment that allows and encourages entry of new
innovative firms.
15
In a study that Kayanula and Quartey (2000) carried, they
assessed the policy environment aimed at promoting SMEs in
Ghana and Malawi. They considered access to finance,
access to appropriate technology, existing laws, rules and
regulation as well as institutional capacity. SMEs’
performance and relevance indicators in the study were
management skills and training, potential for future
growth of employment and turnover as well as contribution
to poverty eradication. They established that limited
access to finance and appropriate technology, management
skills and training, deterring existing laws, rules and
regulation are among the constraints that impede the
development and relevance of the sector.
2.4. FACTORS THAT AFFECT SME PRODUCTIVITY AND EFFECTIVE CONTRIBUTION TO THE ECONOMY
A critical symptom of bad political environment is
corruption or the abuse of public office for personal
gain. Shleifer and Vishny (1993) highlighted that
corruption is potentially dangerous. Under the auspices
of the World Bank, some recent micro studies found
corruption to be more damaging than taxation. Using
Ugandan firm data set on bribery payments, Fisman and
16
Svensson (2007) discovered that both have a negative
effect on SME. Similarly, Cai et al. (2011) used a large
sample of the Chinese companies, and established that
corruption has a significant negative effects on firm
productivity. They also discovered that the negative
effects diminishes with high tax burdens and bad
government services. This suggests that private returns
accrue to the enterprises in bribing the government.
Hallward-Driemeier Scott and Lixin (2006) worked on the
World Bank Investment Climate Survey to study the effect
of labour regulation on SMEs’ sales growth, investment
rate, total factor productivity and employment growth in
five Chinese cities. They came to a conclusion that firms
perform better and tend to be more relevant under
flexible labour regulation. Likewise, Dong and Xu (2008,
2009) expounded on the fact that during the past two
decades, China adopted remarkable labour flexibility and
achieved economic growth.
Some studies have attempted to examine the constraints to
relevance of SMEs in the Nigerian economy. Obamuyi (2007)
concluded that poor credit worthiness, lack of collateral
17
security, poor-project package and the constraint imposed
on banks’ capital by regulations were among the several
factors responsible for banks’ attitude of restricted
loan portfolio to the SMEs. Akinbogun (2008) noted that
while Nigerian physical environment and people’s culture
have been favourable towards the business enterprises,
the infrastructural facilities and government policies
have not. He therefore examined the impact of
infrastructure and government policies on survival of
small-scale ceramic industries in South-West of Nigeria,
and found that infrastructural facilities and government
policies have not encouraged viable small-scale ceramic
industries in Nigeria. This has serious implication for
their relevance in the states and national economies.
2.5. IMPACT OF GOVERNMENT INTERVENTIONS ON SMES.
In order to examine the impact of government intervention
on the growth of the SMEs in Imo State, Nigeria Onwukwe
and Ifeanacho (2011) used primary data on some SMEs, and
found that policy formulation and implementation
constitute a major constraint to growth of the SME sector
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and, thus, its relevance despite several specialized
institutions in charge of micro credit and policy
instruments to enhance development of the SMEs.
In another related study, Oni and Daniya (2012) examined
the role of government and other financial institutions
in the development of SMEs in Nigeria. Employing
deductive approach, they concluded that the government
still needs to do a lot in terms of policy formulation in
order to complement the efforts of financial
institutions. Thus, they recommended, among other things,
establishment of more micro finance institutions to serve
the grass root financial needs of the SMEs.
The Nigerian Government has used various policies and
incentives in attempts to promote and enhance performance
and relevance of the SMEs. Olorunshola (2003) clarified
that the Government has introduced policy measures
through national development plans, annual budgets and
its agencies to provide financial assistance, training
and some infrastructural support to SMEs. The Government
has been lively in the following areas amongst others:
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Funding and setting up industrial areas and
estates and incubation centers
Providing local finance through its agencies – the
Central Bank, Ministry of Trade and Industries and
through the Development Bank as well as the
Chamber of Commerce and Industry.
Assisting and guaranteeing external finance
through the World Bank, African Development Bank
and other international institutions willing to,
and capable of assisting Namibia SMEs;
Facilitating the establishment of the National
Directorate of Employment (NDE) which also
initiates the setting up of new SMEs;
Setting up of the one-time National Economic
Reconstruction Fund (NERFUND) which is a source of
medium to long-term local and foreign loans for
small and medium scale businesses, particularly
those located in the rural areas;
Initiating the then Family Economic Advancement
Programme (FEAP); and
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Provision of technical, training and advisory
assistance programmes through establishment of
Industrial Development Centres, etc.
2.5.1. CHALLENGES THAT SMES FACE
Problems of the SME sector the world over seem to have
been so common and highlighted and discussed in the
literature by various institutions, agencies and authors
(World Bank, 1989). Maijama’a (2004) notes that the
condition under which SMEs are operating in the world
over is terrible. Akinbogun (2008) observes that the
manufacturing sector at all levels is performing below
expectation, and traces the nonperformance mainly to the
unfavorable economic environment. In the same vein,
Owoseye (2011) explains that the major complaints by the
SME operators have been lack of funds and unfavorable
business environment. To ensure SME-friendly business
environment, Maijama’a (2004) however believes
government’s provision of appropriate monetary and fiscal
policies, reliable infrastructure such as electricity,
21
water, roads, railway and telecommunication, security of
life and property, and vibrant SME support institutions.
Specifically, Namibia’s Vision 2030 policy document on
SMEs (2004) identifies certain exogenous and endogenous
factors that constitute problems to SMEs’ performance and
relevance. These include inadequate institutional
support, poor infrastructure, limited or no access to
external finance, weak corporate governance, poor
business partnership culture, low human capital
formation, low level of technology adoption, and
insufficient innovation.
2.6. THE CONTRIBUTION SMES TO AN ECONOMY
According to Nigeria’s Vision 2020 NTWG on SMEs (2009:
27), SMEs are known to have significant relevance to all
world’s economies. In most parts of the world they
constitute about 90 percent of all business enterprises.
This and particularly their strong forward, backward and
intra-linkages with all other businesses, establishes
SMEs as the drivers of any economy and the engines of
22
economic development worldwide. With this they are able
to generate employment, create wealth and reduce poverty
incidence index.”
The above emphasis by the NTWG on SMEs (2009) clearly
shows that both developed and developing countries have
come to recognize the importance of the SME sector and
its relationship to large enterprises and the global
relevance that many countries are looking for in the
world economy. Many African governments have come to see
that running their own businesses is an inefficient
endeavor. Therefore, there are compelling arguments for
the development of a dynamic and competitive private
sector as a mechanism for the distribution of resources,
goods and services (Anheier and Seibel, 1987; Schmitz,
1995; White, 2004).
Akoga and Balcioglu (2010) explain the increasing policy
attention accorded the SMEs within the context of the
role they are expected to play in providing the driving
force for the industrialization and overall development
of the economy, in addition to their significant roles in
meeting some basic economic and industrial development
23
objectives. The various perspectives from which the
relevance of the SMEs in the state and national economies
has been considered include:
i. Training Ground for the Development and Growth of
Indigenous Entrepreneurs (Ayozie, 2006; Ogunleye
2004; Kelby, 1988). This agrees to Casson’s (1982)
view that by acting as a seedbed or nursery, usually
for indigenous population, they serve as vehicles
for the propagation and diffusion of innovative
ideas for far-reaching dimensions. They are more
flexible and can easily adapt to changes in the
external environment. In Italy, Ireland and Germany,
SMEs contribute to research and development (R&D) in
order to enhance their specialization along the
value chain and become successful global service
providers (Nigeria Vision 2020 NTWG on SMEs, 2009).
ii. Strengthening Industrial Inter-Linkages (Benzing,
Chu and Kara, 2009; Fabayo, 2009;
By producing intermediate products for use in large-scale
enterprises, the SMEs contribute to enhancing industrial
inter-linkages. This has been adduced as one of the
24
reasons for the increased interest which developing
countries have shown in the promotion of SMEs since the
1970s. SMEs in the US are given a position of prominence
in their national policy as the ‘backbone of the American
economy and the path to success for many Americans.
iii. Transition Channel from Traditional to Modern
Industrial Sector (Stefanovic et al. (2009);
Robichaud et al. (2001), Owualah, 1987). The SME
sector serves as the channel through which
traditional industry transits to modern industrial
sector. Thus, in developed and developing countries,
the SME sector has served and continues to serve as
the springboard for launching the economy into a
vibrant modern sector. This supports the United
Nations’ (1984) view that a fledging SMEs sector can
be a means of achieving a smooth transition from the
traditional to the modern industrial sector.
iv. Dispersal of Economic Activity (Akoga and Balcioglu,
2010; The SMEs assist in the dispersal of economic
activities thereby encouraging the modernization of
such activities outside the urban areas and, thus,
25
provide effective means resource mobilization and
mitigation of rural-urban drift.
v. Enterprise/Employment Creation, Employment
Generation and Poverty Reduction (Angahar, 2012) The
SMEs have been accepted as the engines through which
the growth objectives of developing countries can be
achieved. The manufacturing sector SMEs in Republic
of Korea contributed the highest at 81.9 percent
among developed economies. In Brazil, SMEs represent
81.4 percent of 4.6 million enterprises with 54
percent investing in social responsibility. The
Brazilian SMEs have been classified as the real
motors behind the country’s economic advancement
(Nigeria Vision 2020 NTWG on SMEs, 2009).
2.7. COMMITMENT
Employees that feel as though the company has made a
commitment to employee success tend to perform better,
according to Personnel Systems Associates (2014).
Commitment means offering a competitive rate of pay and
benefits package, offering assistance in paying for
26
employee's higher education costs, developing a regular
training schedule that keeps employees updated on company
changes and gives pertinent information for employees to
do their jobs and upgrading equipment to make sure that
employees have the most efficient technology available to
do their work. Commitment shown by the company is
returned in the form of commitment from employees.
2.8. EMPLOYEE EVALUATIONS
Chron, (2014) defined an effective employee evaluation as
an interactive process where the manager gives his input
on the employee's performance, and the employee gets the
chance to point out what she has learned throughout the
year. Managers create a plan along with the employee for
the coming year on how the employee can develop and
improve their performance. Comprehensive employee
evaluations are important to the ongoing performance of
employees.
In their arguments, they do not seem to mention the fact
of recruitment and selection seems to have a direct or
indirect impact on employee performance which is an
27
effective ingredient that this research is so much
looking.
2.9. RELATIONSHIP BETWEEN THE RECRUITMENT AND SELECTION PROCESS AND EMPLOYEE TURNOVER AND PERFORMANCE.
Ganon (1971) noted that the link that exist between
recruitment and selection exist because of the sources
from which the recruitment will have been done. He
concluded that, high school referrals, newspaper
referrals as well as recruiting agency referrals are not
good sources to recruit from. On the other hand, employee
referrals coming from other companies are good sources of
recruitment and selection.
NI Business Infor (2014) believes that a good recruitment
and selection process can help reduce the turnover of new
starters. But if the business suffers from the loss of
long-term employees then one may need to look at wider
issues such as organisational structure or management
style.
28
2.10. CONCLUSION
Having looked at the articles and reviewed them, it was
now left for the data collection to take place.
Nevertheless, previous studies conducted on the subject
of SMEs’ contribution to economies were instrumental to
the development of this study. Chapter 3 covered the
research and methodology, whereby the design and method
of how the study was carried was highlighted.
29
CHAPTER 3
3.RESEARCH METHODOLOGY
3.1. INTRODUCTION
This research required a methodology that understood
qualitatively, the justification of the existence of SMEs
in an economy, the researcher’s main emphasis was on the
Ministry of Trade and Industry so as to describe and
understand ideas, beliefs and values. The reason behind
the selection of this research type was that, it
benefited the researcher and probably those who shall use
this study for their future studies not to find data that
can be enumerated but find possible qualitative answers
to why things are happening the way they are happening.
This research went deep in the reason why things are
happening the way they are and this chapter built on the
previous review of literature to carry the research
forward.
3.2. RESEARCH DESIGN
This research topic was of a qualitative nature, and was
primarily composed of secondary data which was collected
30
from journals and periodicals at the Ministry of Trade
and Industry. Data was collected by using the SMEs
support programmes.
The data which was received was of descriptive and non-
statistical in nature. The descriptive strategy that was
adopted in this study was one that used to answer
questions or test hypotheses and determines and reports
the way things were. This method could enable readers to
better understand today’s world and better prepare SME’s
to contribute meaningfully to the economy at large.
3.3. POPULATION
As discussed earlier, the population of this research was
taken from the 12 employees at the SME Support Department
at the Ministry of Trade and Industry. This constituted
the total staff compliment at the target department which
allowed the researcher to sap a great deal of
information.
3.4. SAMPLE SIZE
31
From this target population, 10 respondents were selected
to take part in the study which represented over 80% of
the population. This was a good representation of the
entire population such that the results collected from
this study were conclusive and represented the overall
views of the whole population.
3.5. COLLECTION AND RECORDING OF DATA
Collection of data took place without much challenges
from day one till the last day. Even though most of the
planned formal interviews had to be done informally the
study managed to collect all the necessary information
required. The right path was followed, the respondents
were informed that they are part of a research but they
were immediately assured that their responses were not
going to be used for any other purpose other than
investigative. Recorders were also used to maintain
accuracy and note books were used to record the main
points in the research.
32
3.6. MEASUREMENT INSTRUMENTS
The researcher used questionnaires in a semi-structured
interview as an instrument to collect primary data, due
to the sensitive nature of the topic so participants were
allowed to exercise their right to remain anonymous and
confidential. Search engines and the IUM library were the
tool utilized to search for secondary data such as
periodicals and journals.
3.7. RESEARCH ETHICS
In line with the ethical standards of research, the
researcher made sure that the consent forms are given
to all respondents which stated the overall purpose and
any risk or benefits respondents were to benefit from
for their participation. All information obtained from
respondents was kept with utmost confidence and they
were informed of such a decision and they were told
that the use of any such information was for academic
purposes only and that they would be requested to write
a consent letter if the information is to be used for
any other purpose.
33
Feedback of results was given to respondents and
individual autonomy was respected. Autonomy means
freedom to decide what to do. Even when participants
signed consent forms they were made aware that they are
free to withdraw from the study any time during the
course of the data collection process.
Since Plagiarism in academia is equated to theft of
intellectual property, which violates professional and
ethical values, any work of other authors used in the
study was acknowledged and referenced according to the
American Psychological Association (APA) referencing
style.
3.8. CONCLUSION
This chapter laid bare the procedure for the
collection of the data, it was followed by the data
analysis and interpretation of the results. The next
chapter was the backbone that made this study a
success. This was so because failure to decode the
data collected from this study would have rendered the
entire study worthless both now and in the future.
34
CHAPTER FOUR
4.DATA ANALYSIS AND RESULTS
4.1. INTRODUCTION
This chapter involved the data analysis as well as the
attachment of meaning to the data collected. Figures
and qualitative information had no academic meaning
until it became decoded in this Chapter to give the
meaning which could be useful to future researchers.
In that regard, this chapter formed the greater part
of the whole study ranked according to importance.
Results were interpreted herein, with the use of
graphs and tables to explain the findings and enhance
their meanings.
4.2. RESEARCH ANALYSIS AND INTERPRETATION
Questionnaire responses
Question 1
10 respondents volunteered to participate in this study,
and of those 10, 1 was in the range of 19-27, 5 were in
36
the age range of 28-36, 3 were in the range of 37-45 and
1 was above 46 years old.
The information was then presented in a pie chart to show
the demographics of the respondents as presented below.
Respondents' Demographics
Group A Group B Group C Group D Group E
Source: Klaudia Shigwedha (2014)
Question 2
The respondents stated that they were all employees at
the Ministry of Trade and Industry and that they all had
been at the SME support department for a minimum of 6
months. Their information was then arranged in a tabular
form as follows:
37
Age Group Average years at MTI
19 - 27 <1
28 - 36 1
37 - 45 3
45+ 5
The table shows that the Age group 19-27 has been in the
company for few years than others, this could be
attributed to the mainly due to the fact that most of the
respondents in this age group were still students of
various tertiary institutions some had just graduated in
less than a year before so that was the reason why they
had less than a year with the Ministry.
All respondents who took part in this study who fell in
the age group 28 - 36 age group, had more than a year due
to them being at the Ministry for longer, some even
migrated from other Ministries. The respondents within
the 37 – 45 age group had more years of experience and
had knew much about the topic of this research that is
why they were instrumental to the study. Moreover the 45
upwards age group were the ones with more years at the
38
Ministry of Trade and Industry due to their joining the
Ministry quiet earlier than the rest. This gave a
balanced view about the Ministry, with the younger ones
representing fresher perspectives about the Ministry and
the elderly and more experienced representing the more
insight about the organisation and how it works. Question
3
Almost all respondents knew the meaning of the
abbreviation SME. They knew that it was meant Small to
Medium Enterprises. However some didn’t know the criteria
to show that this is a small to medium enterprise. Some
said SME were companies owned by individuals.
Question 4
The respondents said that their relevance can never be
underestimated as they represent the opportunity for
young business organisation. They said these are the
breeding ground for bigger companies. They also said that
these SMEs provide a third employment alternative when a
person is not absorbed in the public sector or the large
private sector. They also contribute towards the GDP of
39
the country at large as some of them are into exporting
of products earning the country the much needed foreign
currency. The respondents further alluded the
contribution towards poverty alleviation to the SMEs.
They help make formally disadvantaged persons to be able
to sustain themselves. They also venture into service
provision such as has never been provided in the country.
Question 5
The responses from this question could best be summarised
in the following pie chart:-
Impact of SMEs in the Namibian economy
Too much Not that much Average Insignificant I don’t know
Source: Klaudia Shigwedha (2014)
40
The pie chart represented what the respondents believed
to be the contribution that the SMEs made and continue to
make to the Namibian economy. One said that they didn’t
know whether SMEs were that important or not. Those who
believed that SMEs were of not that much importance cited
reason that because they are small therefore their
contribution was like a drop in the ocean.
Question 6
The researcher first thought this question triggered
biased responses until they were shown evidence about how
the government support SMEs in Namibia. They all were
convinced the Government of Namibia is doing the best
they can to support the SMEs.
Question 7
The Government supports SMEs in various ways including
the following ways:
They register them at the Ministry of Trade, and
register them as SMEs at the same Ministry before
referring them to the Ministry of Finance for tax
41
registration which will allow them to compete for
tenders.
They set aside a certain amount of the budget for
the support of SMEs.
They conduct Expos and Trade Fairs through the
Ministry of Regional and Local Government, Rural
Housing and Development through their local
authorities and town councils. The SMEs can also
participate to encourage profitability.
The DBN has been set up to assist SMEs when they
need Venture Capital as well as credit facilities.
The Ministry of Trade has also shielded the SMEs
from brutal foreign companies for example through
the introduction of Trade Embargoes as well as
import tariffs and quotas. An example was given of
the chicken quotas introduced against the SA
exporters.
The government has also built facilities for them
like the Kapana facilities, meat and Vegetable
Markets, Incubation Centers, SMEs Centers,
Irrigation schemes so as to empower the SMEs.
42
The Government has also introduced interventions
like the
Question 8
The government often face challenges in their execution
of their mandate to assist SMEs. The challenges include:-
Corruption within the rank and file of the
government such that the funds earmarked for the
SMEs will end up being siphoned to private pockets.
Misuse, some SMEs connive with contractors so as to
get a loan under the pretence that they want to use
the funds to fund the tender yet they use it for
private purposes.
Some SMEs do not know of the existence of such a
facility and they remain in the dark about it.
The Government sometimes fails to reach all SMEs as
some of them are not properly registered yet some
are registered but they owe the Ministry of Finance
through outstanding taxes. Some do not even have
Bank accounts so their traceability is not always
successful.
43
Most SMEs don’t have adequate collateral that will
increase the risk portfolio of the SMEs which will
make it difficult to extend credit lines without
thinking twice about it.
Question 9
All respondents believed that the Government support that
SMEs receive will go a long way in making them grow one
day. Only one respondent had a different opinion who said
that some SMEs will die SMEs they will never grow
especially those businesses which does not have the
capacity to grow like the Kapana and the like.
Question 10
The responses were presented in a tabular form.
Correlation Number of respondents
Strong correlation 6
Weak Positive Correlation 3
No correlation 1
Weak negative correlation -44
Strong negative correlation -
Source: Klaudia Shigwedha (2014)
Question 11
Question 12
Long term benefits of Government support to SMEs was
listed as follows:-
Achievement of Vision 2030.
Economy growing as these supported SMEs will grow to
become larger organisations.
Eradication of extreme poverty through the support
of poor and formerly disadvantaged societies.
Better living standards for all the Namibian people.
Question 13
All recommendations were included in the recommendations
section after the findings.
45
4.3. INTEPRETATION OF RESULTS
Based on the findings, the data collected can conclude
that SMEs are doing their best to contribute meaningfully
to the economy of the country. They are trying their best
based on the challenges they face. The Government is also
doing their best to support them meaningfully even though
they face many challenges some of which goes beyond their
control yet some are manmade. The vast ness of the
economy and the number of meaningful SMEs contributing
directly to the economy seem to work to the ratio of
1:10.
SMEs contribute differently depending on their nature and
status. Some contribute directly through paying taxes,
and reducing employment levels though directly
4.3.1. THE RECRUITMENT AND SELECTION PROCESS AT NAC
The recruitment and selection at NAC as learnt from this
study was presented in the following way:
46
1. Vacancy arises due to employee leaving, dying or being
incompetent or is created probably due to a new
department created.
2. The Human Resources Department is informed of the
vacancy and the urgency with which they are supposed to
advertise it and get it filled.
3. HR flights a comprehensive advert in at least three top
daily newspapers, and at least 1 weekly.
4. HR conducts interviews with the help of the members of
the requesting departments to select the best
candidates for the job.
5. Successful candidates are selected and called again for
a second interview
6. HR recommends the recruitment of the successful
candidate(s) from the selected ones.
7. Letter of appointment is given to the candidate with
the salary and date of commencement.
8. Induction training and posting will take place soon
after.
These can be summarised in a diagram as follows;-
47
Source: Anna Negumbo (2014)
This study learnt the many reasons why people do not
perform at work. The following were the reasons.
Laziness – the employees are lazy and do not want to
put a lot of effort because they want an increment
or they have just gotten used to the system they are
not afraid anymore. It was noted that most employees
48
when they join the company, they are hardworking but
the more they stay the more complacent they become.
Some employees do not perform to their maximum
capacity because they are mainly in and out of the
hospital some due to some chronic sickness. Others
when the gossip spread that they are HIV positive,
face discrimination which emotionally affect them in
every way that they won’t concentrate at work.
Other employees have many other businesses and farms
such that their attention shifts to those extra
activities. Employees leave early on Fridays because
they want to attend to their other businesses and
farms. Some don’t come on Mondays probably because
they would not have finished their business so they
take leave. Some bring suspicious Doctor’s letters
to get away with this. Some answer personal calls
during work times. This contributes to
unproductivity at Namibia Airports Company.
Unproductivity to some is due to the lack of
motivation and inner drive to work hard. Most people
said that they are paid below average salaries but
49
an interview with one senior employee at NAC
revealed that NAC is one of the best paying State-
Owned enterprises in the country, so no one must
give an excuse about non-performance.
The study further, noted the reasons why people leave
the organisation. They are listed below:-
Looking for greener pastures – most employees
leave to join other SOEs in similar fields like
the Air Namibia etc. They leave to better
themselves financially or join other companies
offering better incentives.
To pursue further studies – some leave to further
their studies both locally and international with
most of the leavers going overseas to do Masters
in Business Administration. Few will bother
coming back but most will leave for good.
Some resign under pressure due to investigations
going on. A case in point was one employee who
upon realizing that they were under
investigations went on sick leave, and
compassionate after the sick leave and then after
50
that went with a doctor’s letter stating that
they were not in a proper state of mind. They
were declared mentally ill and are still on leave
a year on. Those are some of the issues that
force people to leave.
4.4. CONCLUSION
In conclusion, it could be noted that as the research came
to an end, the many ideas raised were important especially
for future researches. To wrap up the chapter, the main
points about the research findings were that the target
population was from the Human Resources Department of NAC
and were forthcoming with their valuable contribution
towards this study. The majority agreed that there is no
direct link between the recruitment/selection process and
the employee performance/turnover.
51
CHAPTER FIVE
5. CONCLUSION AND RECOMMENDATIONS
5.1. INTRODUCTION
In this chapter, the curtain was closing on the study and
to close down the study concluding remarks were made
after which recommendations iced the cake.
5.2. RECOMMENDATIONS
In light of this study, the following recommendations can
be made based on the findings there from.
Namibia Airports Company must always seek to
continuously develop its workforce through Staff
Development Programs aimed retaining the employees and
ensuring that they feel part of the overall vision of
NAC.
Motivation of employees is one of the most important
tool in ensuring that people stay longer at NAC. This
can be in the form of remunerations, gifts and awards,
non-financial rewards like paid holidays for best
performing employees, paid school fees for those who
wish to further their studies.
52
The researcher faced a lot of challenges as employees
were difficult to access due to a punishing work
schedule. If it is possible, most SOEs may have a
department which deals with helping scholars with any
information they might need.
Over and above all, there must be a private-public-
partnership between SOEs and Tertiary Institutions so
as to strengthen the relationships and build mutual
benefits to each other.
5.3. CONCLUDING REMARKS
This study was conclusive and was a success having
collected the desired information, it comes to a close
having found out that there is no relationship between
the recruitment and selection process at NAC and the
employee performance as well as employee turnover.
There were language barriers that took its toll on
some respondents with the researcher being from a
tribe that spoke a different language from the one
53
that the respondents spoke, the challenges were
insurmountable.
These conclusion will be useful in future studies as
well as in other companies especially SOEs.
5.4. IMPLICATION OF THE RESULTS
Drawing conclusion from the results of this research,
one can come to the conclusion that there is little or
no link between the two variables in question. .
However, this study shaded more light on the potential
ways to improve the recruitment and selection
processes that could likely improve the rate of
employee turnover.
The researcher acknowledges the fact that the sample
size was well representative of the opinions of the
entire population as the sample almost represented 75%
of the entire support staff in the HR department at
NAC. The results therefrom present the true
representation of the cross section of any population
there by validating the results. The research
objectives were well set out and the results imply
54
that according to the research objectives, there could
be a need for more studies around this topic as was
suggested in the potential future research areas.
.
5.5. FUTURE RESEARCH SUGGESTIONS
This study added to the body of knowledge in one way
or another, and even though it contributes to the body
of knowledge, it could not cover all the sectors of
Human Resources. There were definitely loop holes that
could not be covered by this study. For example the
aspect of the challenges that SOEs face as far as
Human Resources Management is concerned. In that
regard, the net was left widely cast with the hope
that future scholars could tap into the vast knowledge
presented by this study and take it up from where this
researcher left so that they can pursue future studies
along similar lines.
55
5.6. CONCLUSION
Based on the data analysis, it can be concluded that good
employment tests facilitate the selection of creative
employees in the public sector.
Proper selection interview facilitates the selection of
productive personnel whose contribution to the
organization enhances its profitability.
Apart from the recruitment and selection methods,
training, development and motivation of workers, it can
be expected that education background, years of
experience in the job and sex play vital role in
enhancing the performance of employees in corporate
organizations.
56
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