SMEs paid N$326.1 million in recovery loans

October 31, 2023

Loans worth N$326.1 million have been disbursed to a total of 310 small and medium enterprises (SMEs) since the launch of the SMEs Recovery Loan Scheme by the Bank of Namibia, Finance and Public Enterprises Minister Iipumbu Shiimi has revealed.

According to the Minister, 73 applications worth N$108.9 million are still under consideration.

“The SMEs Recovery Loan Scheme at the Bank of Namibia was successfully revised largely addressing the identified shortcomings with regard to the qualifying criteria,” Shiimi said during his Mid-Year Budget Review presentation on Tuesday.

The figures are an increase from October data shared by the Bank of Namibia (BoN), which showed that over N$280 million has been paid to 267 SMEs operating in the construction, retail, manufacturing, and oil and gas industries, through the loan scheme.

The scheme, which was reinstated in February this year, aims to assist distressed SMEs. It provides funds through participating commercial banks, to eligible small businesses to assist in paying for operational expenses such as salaries, rent and lease agreements and contracts with suppliers.

Shiimi said the Development Bank of Namibia (DBN) was also making progress in establishing the Venture Capital Fund (VCF), with the process of appointing trustees for the Fund at an advanced stage.

The Fund will be established in the form of a trust under the Trust Moneys Protection Act 34 of 1934 and is set to be registered as an independent special purpose vehicle (SPV) in terms of the regulations of the Pension Funds Act 24 of 1956, he said.

The VCF comes more than two years after the development of the country’s SME Financing Strategy developed in August 2020 and launched by the Ministry of Finance, with the DBN to implement it.

The Fund’s financing strategy comprises three complementary components, the Credit Guarantee Scheme (CGS), the VCF and the Mentoring and Coaching Programme (MCP).

“More commercial banks are in the process of signing up to participate in the Credit Guarantee Scheme (CGS) established by the Government in August 2020 while others are increasing their utilisation of the scheme. This will make more resources available to SMEs with the view to strengthen their activities and consequently support the economic wellbeing of Namibians and the youth in particular,” Shiimi said.

The Fund is aimed at investing in identified SMEs, with a strong growth potential, but unable to borrow or acquire additional capital.

According to data from the World Bank, SMEs represent around 90% of businesses and more than 50% of employment worldwide, with these figures being even more pronounced for developing economies like Namibia.

Additionally, a 2017 International Finance Corporation study on micro, small, and medium enterprises estimated that there are approximately 71,000 MSMEs in Namibia.

MSMEs provide employment and income to around 160,000 Namibians, accounting for approximately one-third of the country’s workforce and contributing to 12% of GDP.

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Last modified on Wednesday, 01 November 2023 19:37

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