Business problems encountered when developing an own business in a financially constrained environment: The north-eastern regions of Namibia

Abstract

The purpose of this paper is to examine the macroeconomic environment of the poorest areas in Namibia, the Caprivi and Kavango regions, and to empirically investigate the problems experienced in developing an own business, specifically in the two largest towns Katima Mulilo and Rundu. First, a macroeconomic analysis of the Caprivi and Kavango regions was conducted to determine the potential for SME growth. It was found that there was no database of businesses in the two largest towns. Subsequently, a census of all the businesses (972) was conducted, from which a random sample of 176 businesses was drawn. The Mann- Whitney, Goodman and Kruskal’s tau and Kendall’s tau-b tests were used to test for differences in problems between the two towns. The major problems encountered in developing businesses were a lack of technical training, a lack of management training, a lack of credit for working capital, low demand and a lack of customers. Significant differences were found between the two towns with regard to major problems encountered. This is the first paper exploring problems experienced by SMEs in the remote regions of Namibia. Interventions such as a training centre for small business management training should be established in the two towns.