Fund novelty or lose its benefit - DBN
Few in the business would disagree with the importance innovation plays in the rise of any developing nation.
But according to Development Bank of Namibia (DBN) CEO Martin Inkumbi, local experience has proven that unless nurtured with financing, viable ideas have and will continue to slip through Namibians’ fingers.
“In order for Namibia to progress economically and prosper, it has to adopt an accommodating approach to innovation,†Inkumbi says in an opinion piece issued yesterday.
Recalling the case of the locally designed off-road vehicle, the Uri, Inkumi said the vehicle was initially created by a farmer from southern Namibia.
“The vehicle received a lot of acclaim due to its suitability for tourism, farming, mining and civil safety under the most rugged conditions.
“Unfortunately, due to lack of institutional support, low order levels and poor currency conditions, the local manufacturing operation floundered. The manufacturing operation was moved to South Africa, representing a loss for Namibia,†the bank boss said.
For Namibia to start claiming an accommodating approach to innovation, he said entrepreneurs must firstly accept the inherent risk which comes with it, and secondly they have to plan to manage that risk.
“Innovation typically entails a risk to the innovator as well as the financier. The innovator has to risk personal resources to develop the innovation, which is usually untried,†he said
Financiers, on the other hand, he said, are typically hesitant to extend funding due to fund models that expect returns in line with an optimum investment basket.
One way in which local businesses could hope to beat this risk, he suggests, is to embark on a range of smaller investments, grouped together.
“A number of these investments are expected to fail, however the failures are written off against significant gains of project successes. This was the approach taken by Andy Bechtolsheim, and venture capital firms Kleiner Perkins, Caufield & Byers, and Sequoia Capital, in financing Google,†Inkumbi said.
In the case of Namibia, he encouraged local investors to make use of incentives to fund unlisted opportunities and to direct a portion of that capital towards innovative entities.
“By fostering innovative individuals and enterprises with managed finance and institutiona and enterprise support, Namibia can take significantly valuable steps to economic self-sufficiency,†the development bank boss said.
WINDHOEK DENVER ISAACS
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