The Development Bank of Namibia (DBN) has announced its participation in the Bank of Namibia (BoN) SME Economic Recovery Loans scheme to provide additional support to small and medium-sized enterprises (SMEs) impacted by the COVID-19 pandemic.
With this new scheme, DBN now offers two loan recovery schemes to SMEs, the other being the KfW Bankengruppe (KfW) scheme.
According to Jerome Mutumba, DBN Head of Marketing and Corporate Communication, the BoN scheme is a longer-term solution that extends to seven years, while the interest rate is prime-0.5%.
In contrast, the KfW scheme is a short-term solution, with repayment due by 31 October 2025, offered at a fixed interest rate of 5.925%, with the first 12 months interest-free.
“Businesses that qualify for participation should be clear on the time that they will require to repay the loan amount. In the event of loans not being repaid in the periods specified in terms of the respective schemes, loans will be restructured to adhere to DBN’s terms of lending,” he said.
Mutumba also advised SMEs to interrogate their need for the relief schemes, as they place additional debt obligations on borrowers.
“The schemes place additional debt obligations on borrowers, which makes it important for each borrower to assess the benefit of and returns to participation. It is vital that enterprises be able to use the schemes to recover and grow. The Bank was put in place to support larger enterprises and SMEs with clear development impact. The implementation of these schemes requires beneficiaries of the loans to ensure that they further their goals and prolong their sustainability in the medium to long term,” he said.
The DBN and BoN initiative is a significant boost for SMEs who have been struggling with the impact of the pandemic, and it is hoped that the loan recovery schemes will help these businesses recover and grow in the coming years.
