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Late payments destroying and delaying the growth of SME’s

Namibian entrepreneurs especially those in charge of Small and Medium Enterprises are struggling to stay afloat and risk running out of business following delayed payment by public institutions.

For any business, the amount of money flowing in or out is critical to its success. When money is tight, paying basic bills can get challenging and in most cases, supplier’s accounts are closed, making the procuring of materials impossible.

Entrepreneurs have, for the longest time now, addressed the issue of late payments in the country especially by government ministries, as it is shrinking capital for SMEs. The issue needs to be addressed immediately to support SMEs growth; SMEs contribute heavily to job creation and economic generation.

If money does not come back to SME’s on time, it would have negative impacts on the economy as SMEs will be unable to pay their suppliers, pay tax and that blocks the circulation of money back to the government which will then lead to the government not affording its expenses. Most of the invoices exceed the 30 days payment period, putting businesses in debts and eventually giving many businesses a poor credit rating, blocking them from accessing credit to grow in future.

There is also an emerging trend where procurement officials in some ministries are not fluffing their duties of informing business people of what the cause of delay in payment is. Normally businesses plan with the 30 days payment period in mind and once payments are delayed, it puts them in a tight financial position.

Many businesses also complained about the lack of involvement by the public procurement board in the debt collection process. The procurement cycle only ends at contract management, which ensures that the job has been complimented; contractors then have to knock at ministries’ door asking for payments. It would be helpful if the procurement board can ensure that payments for all the completed jobs are settled right on time.

If this trend continues, it could see businesses close, leading to loss of jobs and negatively impacting the country’s social-economic status. The government should at least settle payments in two to three weeks upon job completion or strictly in the 30 days.

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