ONGWEDIVA, Sept. 8 – First National Bank Namibia has established a special fund for Small and Medium Enterprise, which is aimed at addressing financial challenges faced by entrepreneurs when trying to get a loan.
First National Bank (FNB) Area Business Manager for Far North, Tomas Iindji, said that FNB has recognized the critical role played by SMEs in the economy and the need for the banking sector to support them.
Iindji said most entrepreneurs have great business ideas, but lack the collateral or capital to start their businesses.
Aside from lack of collateral and equity, clear business planning and development opportunities for business management skills was often a drawback, prompting FNB to extend a helping hand by encouraging budding entrepreneurs to believe in their business ideas.
The scheme is specifically designed for individuals lacking collateral,” said Iindjii, adding that the aim of the fund is to ensure that SMEs are uplifted enabling the SME sector to contribute to the economics of the country.
SMEs are more likely to experience greater difficulties in obtaining loans from financial institutions, ascredit sources for small firms tend to dry up more rapidly than for large companies during an economic downturn, thereby disrupting their business and investment activities to a greater extent.
Iindji explained that it has been the case during the crisis in the northern area, where creditworthiness and the financial health of SMEs have now deteriorated more sharply than those of large firms.
“The protracted period of weak economic conditions has exacerbated the asymmetric information challenges of SMEs,” he said.
Several entrepreneurs noted with concerned that is hard to obtaining loans, and need new approaches to ensure that they benefit so they can stand on their own. – Maria Abraham