the need for policy intervention to stimulate the growth of this sector remains an active debate in the literature. this is particularly so given the failure of most intervention policies in the past. governments, cognizant of the need to provide a favourable business environment for their business communities and becoming increasingly aware of the role smmes play in achieving economic and social goals, have stepped up efforts in this regard over the years. such efforts have focused mostly on the need to provide appropriate competition policies, appropriate taxation regimes, flexible labour markets, an educational system which promotes entrepreneurship, open capital markets and more liberal access to financing. in deference to the organizers of this conference, allow me to make a few remarks on the last two issues. globalization and liberalization of financial markets have had some far - reaching effects on smmes. on the positive side, industrial restructuring through various types of business linkages, especially cross - border alliances and mergers and acquisitions have opened up international business opportunities for smmes. globalization may also have opened up access to international sources of financing thus removing a major constraint to sme development. however, smmes especially in developing countries may have to contend with more competitive products from the developed countries where the availability of adequate technology and well - funded research and development strategies may have resulted in lower costs of production. moreover, in many developing countries, financial liberalization may have resulted in higher real rates of interest and the suspension of subsidized lending to smmes thus further reducing smme access to finance. restrictive monetary policies which often accompany structural adjustment programmes may heighten interest rates and thus discriminate strongly against smmes. moreover, the strict requirement for collateral lending which is more predominant with financial liberalization policies could bring about a conflict between banking prudence and the policy of government to target borrowers who in the first instance cannot afford such securities. the overall impact of globalisation and liberalisation on smmes needs to be properly researched and appropriate policies designed to ameliorate any adverse consequences. by far the most publicized of all the barriers to smme development is the issue of access to finance. this is not to denigrate other smme problems such as skills shortages, sometimes unfriendly regulatory and supervisory environment, scarcity of capital goods, poor management, lack of data on the sector, resistance to change and marketing difficulties especially for export - oriented smmes. despite all efforts by financial institutions and governments to close the financing gaps in the market, smmes continue to experience considerable

difficulty in obtaining risk capital. access to finance therefore remains a policy priority by most governments. finance for smmes remains problematic because their borrowing requirements are usually small and frequently does not appeal to financial institutions. where they are available, more collateral may be required than smmes can pledge. moreover, flexibility on terms and conditions that many smmes require may not be available. governments must therefore come in to complement the efforts of private financial institutions with such policies that are aimed at easing access to existing and newer sources of financing. in particular, smmes face considerable difficulty with sourcing start - up finance. given the risk involved at this stage, most commercial banks are very reluctant to go into such ventures. this has led in recent times to an increasing role for, credit guarantee schemes and venture capital in the smme sector. many countries have also developed seed capital funds to provide capital and competence for projects involving high risk at an early stage. furthermore, many governments have now embarked deliberately on enterprise promotion schemes to build an entrepreneurial culture through the inculcation of entrepreneurial behaviour so as to foster competition and innovation in the smme sector. in spite of recent attempts to bridge the gap in smme finance, much still needs to be done and a lot of understanding needs to be created. this is why a forum such as this could go a long way in improving our understanding of this very important sector of our economies. let me at this juncture briefly highlight developments in the smme sector in my country, namibia. the government of namibia recognises the vital role which smmes can play in the country ’ s socioeconomic development. both the first and second national development plans ( ndp ) have as their main focus the eradication of poverty and inequality, two main problems that the country inherited at independence. this problem was exacerbated by the fact that a large proportion of the population did not have direct access to the means of production especially land and capital before independence. this previously disadvantaged people therefore constitute the bulk of the unemployed. realising the role that smmes could play in bridging this gap, government produced a policy paper on smme in 1997 entitled “ namibia : policy and programme on small business development ”. this policy document, amongst others stipulates government programmes in place to ensure that conditions are favourable for smmes in namibia to flourish. the government initiatives mainly concentrated on the following three areas : de - regulation in terms of policy and legislative measures so as to create favourable regulatory environment to serve