THE Bank of Namibia (BoN) and the Development Bank of Namibia (DBN) this week signed a Memorandum of Agreement that will operationalise the Government’s SME Financing Strategy.
Speaking at the press briefing, CEO of DBN, Martin Inkumbi, stated that the SME Financing Strategy, which originated from the Namibia Financial Sector Strategy (NFSS), is aimed at addressing limited access to finance and support services for SMEs in Namibia.
A total of N$20 million will be spent on the implementation of this fund. Inkumbu, however, added that this is just a mere drop in the ocean and more funds will be injected into the fund. Approved by Cabinet, on 6 June 2018, the Strategy comprises of three interlinked facilities, namely Mentoring and Coaching Programme, Credit Guarantee Scheme and the Venture Capital Fund.
“These facilities are complementary as they serve SMEs at different stages of growth and maturity. SMEs have the potential to contribute significantly to economic growth, employment creation and poverty alleviation,” Inkumbu stated.
He added that the sector, however, faces numerous challenges, including inadequate capacity and limited access to finance.
“It is therefore important that this sector is supported in order for it to optimally contribute to Namibia’s socio-economic development. The SME Financing Strategy thus aims to ensure that multiple challenges are addressed in a targeted and effective manner,” he said.
He further explained that the Mentoring and Coaching Programme is designed to enhance business and financial management for enterprises to effectively and efficiently manage their businesses. He added that building on capacity development through the Mentoring and Coaching Programme, the Credit Guarantee Scheme, will ensure that bankable SMEs that require debt financing but lack collateral are able to get loans from lending institutions.
“This is done through a shared risk arrangement between the government, lending institutions and the borrowers. At a certain stage in their lifespan, businesses aiming to expand and grow into thriving enterprises will require more than debt financing, they will need direct investment in the form of equity.
That’s where the Venture Capital Fund comes in which is intended to grow selected high-potential companies into new industrial leaders of Namibia.
The Fund will spur innovative products and services that have the potential to create employment and grow the economy sustainably,” Inkumbu concluded.