Both public and private businesses should strive to procure all goods and services locally, which, when coupled with a stimulus package for producers, should put the Namibian economy well on the road to recovery from the devasting effects of the Covid-19 pandemic that exacerbated the country’s already dire straits.
These combined with efforts such as the Development Bank of Namibia (DBN)’s N$450 million in relief loans for businesses are expected to improve Namibia’s hopes of achieving positive growth during 2021.
“The loan facility can provide some relief to businesses that need bridging capital. It will not only benefit the loan beneficiaries but the whole economy if the funds are spent on goods and services,” said local economist, Klaus Schade.
However, Schade cautioned that the viability of businesses depends not only on concessional loans but on the recovery of the economy.
“We, therefore, need a stimulus package that benefits Namibian producers. Government, state-owned enterprises and the private sector need to use their procurement power to channel money into the local economy and support local businesses. The directive to state institutions to buy locally is a step in the right direction,” said Schade.
However, he warned that more needs to be done to propel the local economy to recovery, such as increasing the capital budget, allocating funds to programmes and projects that promise high social and economic returns and awarding tenders to reputable Namibian businesses that can deliver.
DBN last week said businesses can apply for Covid-19 relief loans as of today. Through these loans, DBN will provide between three- and six-months working capital for enterprises affected by Covid-19. The term of the loan will be a maximum of 60 months.
The relief loans, made possible through a N$450 million concessional loan from the German Development Bank, will be available to both existing DBN SMEs borrowers and to enterprises which are not yet clients of DBN as long as these enterprises have been in operation for at least 12 months, and meet the qualifying criteria.
DBN CEO, Martin Inkumbi says he hoped the financial intervention will contribute to preserving the continuity of SMEs business activities and to build a foundation for recovery.
DBN forecasts that the funding will offer financial relief to around 200 SMEs. The bank will customise the loans based on individual enterprise needs. Industries such as tourism, hospitality, and transport and logistics that have experienced the largest loss of revenue due to lockdown-related effects will be prioritised.
The loan facility may also be used for diversifying into new business areas that will help strengthen the resilience of existing companies for future shocks.