Namibia’s small to medium enterprises (SMEs) have so far accessed only 1.28% of the N$500 million Covid-19 loan scheme due to stringent qualifying criteria, high lending rate and poor visibility and reach of the scheme among others, it has been found.
Bank of Namibia Governor Johannes !Gawaxab since the N$500 million facility was availed more than two years ago, only N$6.4 million was utilized, despite the pleas from SMEs to access financing.
The scheme was launched in November 2020 and was part of the government’s efforts designed to assist SMEs that are hard-hit as a result of the economic and social impact of the COVID-19 pandemic.
“We went back to the drawing board to listen and learn through rigorous consultations with various stakeholders, including – the participating banks, the Bankers Association of Namibia (BAN), the Business Rescue Task Force (BRTF), and SME representative associations –to gauge the challenges the SMEs were facing with regards to qualifying for and accessing the scheme,” Gawaxab said.
He added that the feedback the banking industry received played a vital role in the structural redesign of the scheme to ensure that viable businesses are assisted.
During these consultations, the central bank identified several areas for improvement with the design and rollout of the scheme, which, in turn, affected the success and uptake of the original scheme.
Some of these shortcomings include good standing requirements, high lending rates and poor visibility and reach of the scheme among others. He said solutions to these compose of the revision of the criteria to be more inclusive and not limited to the aftermath of the Covid-19 pandemic.
Additionally, with the reduction of the rate to Prime Less 50 basis points, SMEs with tax liabilities can participate in the scheme on condition that they enter into a payment agreement with NamRA and participating banks are going to involve regional branches in administering the scheme.
“Given this background, today we are re-launching the revised scheme to increase awareness and to emphasize critical changes effected. The revamped scheme is designed to be more inclusive and accommodating and to provide general support to this vital sector that is not merely limited to addressing the aftermath of the Covid-19 pandemic. The partnership formed as we hold hands with participating banks is crucial for the revival of the SME sector by providing increased access to financing,” he said on Thursday, at the Covid-19 SME Loan scheme relaunched.
The scheme is now renamed the SME Economic Recovery Scheme. All Eligible SMEs are urged to enquire with the participating Banks for more details on how to participate in this scheme.
Gawaxab said that taking full advantage of this scheme can indeed be their opportunity not only to make a comeback but to rise to the next level and contribute to rebuilding the country’s economy.
According to data from the World Bank, SMEs represent around 90% of businesses and more than 50% of employment worldwide, with these figures being even more pronounced for developing economies like Namibia.
Additionally, a 2017 International Finance Corporation study on micro, small, and medium enterprises estimated that there are approximately 71,000 MSMEs in Namibia. MSMEs provide employment and income to around 160,000 Namibians, accounting for approximately one-third of the country’s workforce and contributing to 12% of GDP.
