The Development Bank of Namibia (DBN) Chief Executive Officer, John Steytler, has called on loan recipients to prioritise servicing their debts to ensure continued funding for future borrowers.
In a recent engagement , Steytler acknowledged that one of the pressing challenges facing young entrepreneurs was the lack of traditional collateral.
“Many young people don’t have assets to put up as security for loans. But what if their skills could serve as collateral?” he asked.
Meanwhile, he revealed DBN’s plans to allocate more funds towards skills-based loans and ease collateral requirements to empower more young Namibians to access financing.
However, Steytler was quick to highlight the importance of responsible borrowing, citing past experiences where loan repayments fell short.
“We’ve burned our fingers before, where loans were granted but not repaid. Only by servicing loans can we continue to provide funding to create opportunities for the next generation,” he noted.
Steytler’s call serves as a reminder that sustainable lending relies on a collective responsibility to repay, enabling DBN to support more individuals on their journey to success.
This comes as the development bank created the credit guarantee scheme and then transferred it to the Namibia Special Risks Insurance Association (NASRIA), an insurance company.
The CEO noted that the development bank is now a participant in this scheme.
“Initially, we covered up to 60% of the collateral required for SMEs. However, we realised that if the scheme was only managed by the development bank, the coverage would be limited. Therefore, we handed it over to Nasria and invited other banks to join, including Nedbank, to expand the pool of available funding for SMEs,” he said.
Steytler noted that now, SMEs can approach various banks, not just the development bank, for loans.
“If they don’t have 100% of the required collateral, the credit guarantee scheme can cover a portion of it, with the remaining amount needing to be provided by the borrower. For example, if N$100 in collateral is needed, the scheme might guarantee N$60, requiring the borrower to cover the remaining N$40,” he said.
Despite the potential benefits of this scheme, he contends that it has not yet been widely marketed, and many entrepreneurs are unaware of its availability.
“We aimed to maximise the impact of this scheme by involving other banks and transferring administration to Nasria. While most banks are participating, there may be a few exceptions. SMEs should feel free to approach various banks, such as Bank Windhoek or FNB, to access this credit guarantee scheme,” he added.
The Development Bank of Namibia is a state owned development bank founded to promote and finance development in economic sectors which support the country’s development and welfare of its citizens.
