The Effects of IFRS Implementation on the Financial Performance of Small and Medium Retail Enterprises in Windhoek’s CBD

Daniel Kamotho; Tangeni Muleka

doi:10.25159/1998-8125/20284

Authors

Daniel Kamotho Namibia University of Science and Technology https://orcid.org/0000-0002-9978-6001
Tangeni Muleka Namibia University of Science and Technology https://orcid.org/0009-0005-0075-4421

DOI:

https://doi.org/10.25159/1998-8125/20284

Keywords:

IFRS for SMEs, SMEs’ financial performance, retail sector, reporting quality, Namibia, access to financing, emerging market

Abstract

Purpose: This study investigates whether the adoption of the International Financial Reporting Standards for Small and Medium-Sized Enterprises (IFRS for SMEs) Accounting Standard is associated with the financial performance of small and medium-sized enterprises (SMEs) in Windhoek’s central business district (CBD), Namibia—an under-researched setting in sub-Saharan Africa.

Design/Methodology/Approach: This research employs a mixed-methods approach, integrating quantitative data from surveys with qualitative insights gathered through interviews with SME owners and managers.

Findings: Results reveal that SMEs that fully adopted IFRS for SMEs experienced significant improvements in key financial metrics: 72% reported enhanced financial transparency, 55% noted increased profitability, and 60% experienced improved access to financing. Moreover, 72% of the SMEs indicated that their financial credibility improved after adoption, facilitating trust among stakeholders such as banks and investors. These results underscore the critical role of adopting IFRS for SMEs in fostering better financial decision-making and bolstering investor confidence, which are essential for the sustainable growth of SMEs in emerging economies.

Research Limitations/Implications: The analysis is limited to SMEs in a single urban setting and may be affected by measurement constraints associated with private-firm data.

Practical Implications: The results inform policy and practice in emerging markets by highlighting how the adoption of reporting standards, capacity building, and sound governance can support SME performance and improve access to finance.

Originality/Value: The study provides rare firm-level evidence on the adoption of IFRS for SMEs and its impact on financial performance in Southern Africa, linking financial reporting quality to tangible outcomes for SMEs.

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