Namibia's cession fix: Policy vs. Practice

When the then minister of finance, Ipumbu Shiimi, first issued the directive on the cession of procurement contract payments in 2023, his intent was not merely administrative. It was a deliberate attempt to solve one of the most persistent barriers facing Namibian micro small-and-medium enterprises (MSMEs), which is access to finance.Many small businesses struggle to secure funding because they lack traditional collateral or carry prior credit history blemishes, even when they hold confirmed government contracts. By allowing MSMEs to cede their rights to contract payments to financiers, the Minister introduced a mechanism to bridge that financing gap and enable more inclusive participation in public procurement.The 2025 revision of the directive refined this framework to address the practical challenges that arose in implementation. Yet, the underlying principle remains as important as ever, cessions are not bureaucratic conveniences, but instruments of economic inclusion. They provide financiers the comfort to extend funding by linking repayment directly to government contract flows.Mariana Mazzucato reminds us, “the role of the state is not to fix markets, but to actively shape and create them.” In the same spirit, this directive is the state activelyshaping a market for SME finance, meeting the private sector halfway through pragmatic developmental policy so entrepreneurship can thrive.Yet despite this great effort from treasury, adoption of this directive remains low. Many procuring entity’s, especially in public procurement, decline to co-sign the said cession agreements, citing risk or administrative burden. Without this bridge, the financing ecosystem breaks down, the entrepreneur cannot deliver, the financier cannot lend, and the government’s own procurement objectives are delayed.Additionally, MSME’s who have the privilege of accessing alternative financing, it is often done at exorbitant interest rates, which erodes profit margins, heightens project abandonment risk, and stifles job creation efforts. As it is often said, Namibia’s challenges are often not in policy design but in policy absorption or execution. While the Ministry of Finance issued this directive to unlock finance for MSMEs, its impact is diluted by the siloed implementation, as those tasked with approving the cession agreements are uneasy about their implications.This lack of alignment has become one of the biggest obstacles to translating policy intent into real outcomes. When cession agreements are embraced, the ecosystem flourishes. MSMEs access funding, deliver on time, and build credibility. Financiers earn returns, regulators collect levies, and tax revenue grows. While beneficiaries receive timely services, and ultimately, the procuring entities fulfil their mandates efficiently. The standardised framework itself protects all parties, ensuring that payments are redirected only after certification of satisfactory work. In addition, a by-product of this framework builds discipline among entrepreneurs.Cession agreements therefore are not minefields, but rather strategic enablers of iinclusive growth. As President Netumbo Nandi-Ndaitwah reminded the nation at the inaugural Namibia Public-Private Forum, Namibia’s future demands collaboration, innovation, and action. Government’s role is to create an enabling environment, and the private sector must rise to the occasion by investing in local value chains and empowering MSMEs.*Kovimariva Mungunda and Manfread Hishitongo are investment analysts. They write in their own capacities.**

Namibia's cession fix: Policy vs. Practice

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Republikein 2026-01-12

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Namibia's cession fix: Policy vs. Practice

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Republikein 2026-01-12

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