The long awaited Credit Guarantee Scheme (CGS), which aims provide collateral cover to qualifying SMEs, was gazzetted last month.
The CGS which will be rolled-out in collaboration with the Namibia Special Risks Insurance Association (NASRIA) under the Namibia Financial Sector Strategy, with a N$100 million allocation, for which N$2 million will be dedicated to the establishment of a database for SMEs.
The facility size will be scaled up over the medium-term through greater public and private sector support.
Although SMEs and entrepreneurs will still continue to apply for credit at commercial banks, it is the financial institutions which will apply for collateral coverage for the assessed bankable projects which have high growth potential, but lack collateral.
NASRIA’s role is to guarantee the repayment of the loan to the participating institutions, with the Development Bank of Namibia (DBN) coming in as an implementing agent.
“The gazetting of the Credit Guarantee Scheme (CGS) paves the way for the rolling-out of this scheme, which is aimed at aiding qualifying SMEs in accessing finance from commercial lenders who are participating in the scheme. The implementation of the CGS therefore helps DBN in achieving two of its object, the object of mobilizing financial resources for Namibian enterprises as well as its object of providing finance for SMEs,” DBN Chief Executive Officer Martin Inkumbi told the Windhoek Observer.
He, however, said SMEs borrowing directly from DBN will not be guaranteed by this scheme as the bank is an implementing agent of the arrangement.
“DBN expect the Credit Guarantee Scheme (CGS) to improve access to finance to SMEs. The CGS will be rolled out through participating financial institutions and has been designed to enhance access to finance for viable SMEs who lack collateral. Since the DBN is the implementing agent of the scheme, SMEs borrowing directly from DBN will not be guaranteed by this scheme, only those borrowing from participating commercial banks,” Inkumbi said adding that the bank over last two financial years, has availed 359 loans to the value of N$439.6 million to SMEs.
Ministry of Finance Chief Public Relations Officer, Tonateni Shidhudhu said, “This is yet another demonstration that government is committed to revive the economy through different support packages to businesses.”