First National Bank of Namibia, in partnership with the Namibia Special Risk Insurance Association (NASRIA), has extended N$83 million to address credit limitations issues faced by aspiring entrepreneurs.
According to Head of Business Banking at FNB Tomas Iindji, traditional sources of financing are inaccessible to young entrepreneurs due to their limited experience and assets, making them appear too risky to financial institutions.
He said aspiring entrepreneurs’ small size often makes them unattractive to investors and venture capitalists.
“The NASRIA Credit Guarantee Scheme fills this gap by underwriting loans through a risk-sharing approach, providing young entrepreneurs, women entrepreneurs, and genuine SMEs with the capital they need to start, run, and grow their businesses,” said Iindji.
Iindji said NASRIA received a limit of N$20 million in the pilot of the project which reached full utilisation by April 2023.
“Building on this success, FNB has negotiated a new prudential limit of N$50 million with NASRIA, resulting in a total loan amount of N$83 million being made available. This increased funding will directly support youth, women, and pure SMEs with an annual turnover not exceeding N$20 million, enabling them to sustain their operations and contribute to economic stability,” said Iindji.
Weighing in, the CEO of FirstRand Namibia, Conrad Dempsey, said the initiative aims to extend beyond traditional collateral models by providing SMEs with non-financial support as well.
“Our initiative recognises that SMEs require more than just monetary assistance. By developing alternative financing mechanisms, we aim to empower youth and women entrepreneurs and help them turn their ideas into thriving businesses, thereby contributing to Namibia’s economic growth and job creation,” he said.
Dempsey further acknowledged the support of the Ministry of Finance and Public Enterprises for implementing the use of Cession Contract Monies to address challenges faced by SMEs.
According to Finance Minister, Iipumbu Shiimi’s Mid-Year Budget Review this week, 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.
