First National Bank (FNB) Namibia says it is ready to provide financial assistance to Small and Medium Enterprises (SMEs) that were impacted by the COVID-19 pandemic.
The lender is part of financial institutions taking part in the SME Economic Recovery Loan Scheme, which was recently relaunched by the Ministry of Finance and Public Enterprises in conjunction with the Bank of Namibia (BoN).
The scheme provides funding to eligible businesses through participating commercial banks, including FNB Namibia, to help cover operational expenses such as salaries, rent, and supplier contracts.
The Ministry of Finance and Public Enterprises and BoN have made N$500 million available to SMEs through participating banks.
“FNB is proud to partner with the Ministry of Finance and Public Enterprises and other Namibian banks in this initiative,” said FNB CEO Erwin Tjipuka.
“We believe BoN’s guarantee allows us to use our credit extension capabilities to support the government’s efforts in promoting business growth and job creation in the country.
Tjipuka added that the scheme offers valuable support to SMEs and demonstrates FNB’s commitment to the economic recovery of these businesses.
“This financial support will allow many SMEs to optimise their operations and potentially withstand current economic pressures,” he said.
FNB’s Executive for Commercial Banking Sepo Haihambo added that the bank is already processing applications and will be ready to go live on 13 February 2023, to ensure a seamless loan application process for customers.
“The Recovery Loan Scheme has the potential to act as a catalyst for growth for SMEs, which is more important than ever in terms of contributing to the country’s sustainable economic recovery,” she said.
Tomas Iindji, FNB Head of Business Banking responsible for SME & Mid Touch segment, said the requirements for the SME Economic Recovery Loan Scheme have been revised to make the application process simpler for businesses.
“The only restrictions are that the loans cannot be used to repay shareholder loans or settle debt, and entities and sole proprietors must be tax registered,” he said.
“This means that companies can invest the funding in the areas they need to support future growth.”
Namibia’s 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.
BoN’s Governor Johannes !Gawaxab said since the N$500 million facility was made available more than two years ago, only N$6.4 million was utilised, 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.