The Bank of Namibia has made a financial contribution of N$70 million towards the implementation of the Small Medium Enterprise (SME) Financing Strategy, of which N$50 million will go directly toward the capitalisation of the Credit Guarantee Scheme.
The central bank’s spokesperson Kazembire Zemburuka said the contribution highlights the bank’s commitment to the development and upliftment of the SME sector in the economy. He said the bank is convinced this is an important sector, and it has the potential to contribute towards employment creation as well as poverty alleviation.
On Monday this week, the central bank welcomed the operationalisation of the Credit Guarantee Scheme that was launched by the minister of finance Iipumbu Shiimi on 18 August.
According to Zemburuka, the scheme is a result of a collective effort by stakeholders to ensure greater financial inclusion in Namibia. He said it is part of a package of three complementary facilities forming the SME Financing Strategy, namely the Credit Guarantee Scheme, the Venture Capital Fund as well as the mentoring and coaching programme.
Zemburuka said it is a smart partnership between the public and private sectors geared towards enhancing access to finance for small and medium enterprises.
The strategy was approved by Cabinet and delegated to the Development Bank of Namibia for implementation. It came after extensive research from the central bank, Development Bank of Namibia and the finance ministry, resulting in the development and operationalisation of the scheme.
Governor of the central bank Johannes !Gawaxab pledged the central bank’s support to the sector by stating: “Going forward, as we face an uncertain and unpredictable future, we need to explore novel ideas with lessons learned from external catastrophes such as the Covid-19 pandemic. If there is anything, we have that our collective success will largely depend on the urgency with which we approach critical interventions such as SME development.”
!Gawaxab said as a central bank, with a mandate to impact economic development, they would assure all partner institutions and the entire SME sector that the bank will remain committed to this noble cause.
Zemburuka said access to finance is one of the key challenges facing many small and medium enterprises. He said the Credit Guarantee Scheme will, therefore, ensure that SMEs with bankable business plans but lack collateral can access funding from lending financial institutions.
“The scheme will provide a collateral cover of up to 60% for bankable SMEs. The facility is designed in such a way that the risk is shared between the scheme, participating financial institutions and the borrowers. This is deliberately done to ensure commitment from both parties involved and minimise issues of moral hazards,” he said.
According to Zemburuka, the journey towards the implementation of these facilities started in earnest with the launching of the Namibia Financial Sector Strategy in 2012, which identified key strategic areas of reform, namely: deepening and developing Namibia financial markets, provision of financial safety net, enhancement of financial inclusion, localisation of the Namibian financial sector, as well as the development of critical skills needed in the financial sector. - mndjavera@nepc.com.na