Central bank throws its monetary weight behind SME financing
The Bank of Namibia this week pledged its support of the Ministry of Finance’s SME Financing Strategy by contributing N$70 million for its implementation. Of this amount, N$50 million will go directly to capitalisation of the Credit Guarantee Scheme, a pillar of the overall financing strategy.
The SME Financing Strategy comprises the Credit Guarantee Scheme, the Venture Capital Fund and the Mentoring and Coaching programme. These three complementary facilities is a smart partnership between public and private entities to boost access to finance for small and medium enterprises.
In a statement released on Monday 24 August, the central bank’s Deputy Director of Corporate Communications, Kazembire Zemburuka said that over the past few years, the Bank of Namibia, as Coordinator of the Namibia Financial Sector Strategy, joined by Development Bank of Namibia and the Ministry of Finance have undertaken extensive research that resulted in the development and operationalisation of the SME Financing Strategy. The strategy was approved by Cabinet and delegated to the Development Bank of Namibia for implementation.
The broader 2012 Namibia Financial Sector Strategy laid the foundations for the work which resulted in the SME Financing Stategy. The first strategy identified a financial safety net as one of five key areas requiring reform, ultimately to bring more SMEs into the formal financing fold.
Zemburuka said that the inability to access financing is one of the key challenges for SM Es. “The Credit Guarantee Scheme will therefore ensure that SMEs with bankable business plans but lacking collateral, are able to access funding from financial institutions. The scheme will provide 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.
Central Bank Governor, Johannes !Gawaxab commented “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 learned that our collective success will largely depend on the urgency with which we approach critical interventions such as SME development. As a central bank, with a mandate to impact economic development, we would like to assure all partner institutions, particularly the Development Bank of Namibia, NASRIA as well as the entire SME sector that the bank will remain committed to this noble cause.”