Nedbank Namibia has committed N$20 million under the Credit Guarantee Scheme (CGS) for small and medium enterprises (SMEs) in an initiative aimed at supporting the growth and development of the sector.
The scheme is an initiative of the Development Bank of Namibia (DBN), Namibia Special Risks Insurance Association (Nasria), and Bank of Namibia, which have offered to provide 60% collateral cover of the principal amount after an SME’s idea is successfully assessed as bankable and lacking collateral.
The government has provided seed capital of N$98 million towards the realisation of the Scheme.
“Nedbank has taken an active role in the CGS as the bank’s application for a portfolio guarantee facility of N$20 million has been approved after a rigorous vetting process. Nedbank is now one of two commercial banks in the country offering this ground-breaking scheme to SMEs. Nedbank has a long history of engaging with the SME community, and this new initiative is another step in strengthening this partnership,” said Nedbank’s head of SME Banking, Sam Ikela.
Nedbank’s participation, which will see the allocated amount increased when the N$20 million has been depleted, means that SMEs can now apply for business loans and be considered for collateral cover, effectively mitigating a significant hurdle in obtaining financing.
According to Ikela, the bank’s involvement is expected to not only encourage more SMEs to seek financial assistance but also contribute to the growth of the bank itself.
“The CGS is a timely intervention designed to provide collateral cover for qualifying SMEs applying for loans from participating commercial finance institutions. Namibia has a burgeoning SME sector with enormous potential for success and economic growth. However, these businesses often lack the necessary collateral that traditional lenders demand to secure loans,” he said.
“This disconnect has stifled their growth and hindered their contributions to the economy. To bridge this gap, the CGS will ensure credit is granted to eligible SMEs, significantly reducing the collateral requirement,” Ikela said.
SMEs in Namibia are defined as businesses with between 1 and 200 employees, with an annual turnover of up to N$10 million. These businesses, widely believed to be around 40,000 across the country, contribute significantly to the country’s economic growth and development.
