Loan scheme to boost business enterprises

Martin Endjala

Small and Medium Enterprises (SMEs) are now eligible to get a loan scheme from the Ministry of Finance and Public Enterprises as well as the Bank of Namibia, which will effectively guarantee economic revival after N$ 500 million was availed towards the scheme for eligible enterprises.

This commitment was launched last week during the launch of the loan scheme for small and medium enterprises by the Minister of Finance, Iipumbu Shimi. The Ministry of finance today said that the loan scheme is designed to assist Small and Medium Enterprises to withstand the prevailing economic challenges by providing working capital and liquidity to aid them in managing their cash flows and covering certain costs.

As a result, they will continue operating and covering their expenditures while restructuring their operating models to future-proof their businesses. This will promote economic development and reduce unemployment and income inequality in Namibia.

In collaboration with the participating banks, the Ministry of Finance and the Bank of Namibia reformed the former Covid-19 SME Loan to accommodate SMEs that struggled to meet the qualifying criteria and expanded the reach so that business owners are aware of the facility and can participate meaningfully.

“The revised features of the scheme are also said to enable SMEs to qualify for loans ranging from N$ 50 000 up to N$ 10 000 000. The obligation to pay interest and capital on these loans will be deferred for six months from the date of the first drawdown. The loans are granted at the prevailing prime lending rate minus 50 basis points,” a joint statement from BoN and the finance ministry said.

Meanwhile, the Governor of the Bank of Namibia Johannes !Gawaxab said that as business models upended, he urged business people to make use of the provided financial scheme, while also reconsidering and rethinking their business models, to develop viable opportunities for the future.

Interested SMEs are advised to have an annual turnover not exceeding N$ 60 000 000 and should be able to continue operations in the foreseeable future by demonstrating solvency. Entities (including sole proprietorships) should be registered with BIPA and, where it is a regulatory requirement, registered with the national tax authority, Namibia Revenue Agency (NamRa).

Enterprises that wish to be assisted through the scheme should ensure that they have no existing business recovery loans in place with any other financial institution.

“It makes sense to begin planning now and to capitalize on potential opportunities especially in developing sectors such as green hydrogen, oil, and rare earth metals. Sectors of strategic importance, such as non-renewable and renewable energy, should prioritise local suppliers and the development of local competencies across value chains”, said the governor.

On her part, the Deputy Minister of Finance, Maureen Hinda-Mbuende, extended her acknowledgement to the partners in the operationalization of the scheme who made it more responsive to the SME sector needs.

She said that the overarching objective of the new scheme is to lend a helping hand to those critical but struggling businesses in our economy.

“This sector has adjusted the sails in response to the headwinds faced, and our businesspeople have shown tenacity and perseverance. Participating banks in this scheme are FNB Namibia Bank Windhoek, Standard Bank and Nedbank”, Hinda-Mbuende said.

She further stressed that interested SMEs are encouraged to engage their respective banks for more information on credit terms and conditions. Participating banks will receive applications and do credit assessments at their discretion, she added.

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