06 Nov 2018 14:20pm
WINDHOEK, 06 NOV (NAMPA) The Bank of Namibia (BoN) and Development Bank of Namibia (DBN) on Tuesday signed an agreement on the operationalisation of the Small and Medium Enterprise financing strategy.
The agreement was signed by BoN Governor Ipumbu Shiimi and DBN Chief Executive Officer, Martin Inkumbi on behalf of the two institutions.
A total of N.dollars 20 million has been approved by the BoN Board of Directors for the implementation of the strategy.
Shiimi explained that N.dollars 2 million will be spent on administration costs, while the remaining N.dollars 18 million will be spent on three facilities as laid out in the Namibia Financial Sector Strategy.
SMEs will be able to borrow a minimum of N.dollars 150 000 and a maximum of N.dollars 400 000.
DBN Chief Executive Officer Inkumbi said the strategy is aimed at addressing limited access to finance and support services for SMEs in Namibia and originated from the Namibia Financial Sector Strategy.
This has also been identified as one of the priority areas in the Harambee Prosperity Plan, the National Development Plan and Vision 2030, he added.
The three interlinked facilities in the strategy are the monitoring and coaching programme, credit guarantee scheme and the venture capital fund.
The facilities are considered to be complementary as they serve SMEs at different levels of growth and maturity.
While the sector has the potential to significantly contribute to economic growth, employment creation and poverty alleviation, it faces numerous challenges, including inadequate capacity and limited access to finance.
This, according to Inkumbi, makes it important for this sector to be supported in order for it to optimally contribute to Namibias socio-economic development.
Explaining how the facilities are designed to operate, he said the monitoring and coaching programme will enhance business and financial management for enterprises to effectively manage their businesses. This will increase the ability of the SMEs to access finance from lending institutions.
The credit guarantee scheme will ensure that bankable SMEs that require debt financing, but lack collateral, are able to get loans from lending institutions.
The venture capital fund is intended to grow selected high-potential companies into new industrial leaders in Namibia.
In accordance with a Cabinet directive, the strategy should be spearheaded by the Ministry of Finance, which is the custodian of the Namibia Financial Sector Strategy. The DBN has been delegated by the ministry to administer the facilities.