Staff Reporter
WINDHOEK, Nov. 7 — Nedbank Namibia, a leading financial institution, is taking a pivotal role in empowering small and medium enterprises (SMEs) through an innovative initiative led by the Namibia Special Risks Insurance Association (Nasria). The program aims to address a significant hurdle faced by SMEs – the lack of collateral for securing business loans from commercial finance entities.
In a groundbreaking move to revitalize the small-business sector, Finance and Public Enterprises Minister Iipumbu Shiimi introduced the Credit Guarantee Scheme (CGS) for SMEs in 2020. The scheme is a collaborative effort involving the Development Bank of Namibia (DBN), Nasria, and the Bank of Namibia. SMEs assessed as bankable but lacking collateral can now qualify for collateral coverage of 60% of their principal loan amount.
Sam Ikela, Head of SME Banking at Nedbank Namibia, sheds light on the scheme, stating, “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. 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.”
Minister Shiimi stressed the importance of this “smart partnership” designed to offer a lifeline to SMEs struggling with collateral requirements. The scheme, funded with N$98 million in seed capital from the Namibian government and the Bank of Namibia, provides collateral cover of 60% of the principal loan amount to qualifying SMEs. In Namibia, SMEs are defined as businesses with between 1 and 200 employees and an annual turnover of up to N$10 million, contributing significantly to the country’s economic growth and development.
Nedbank’s participation in the CGS means that SMEs can now apply for business loans and be considered for collateral cover, effectively mitigating a significant financing hurdle. The involvement of Nedbank, a leading financial institution, is expected to not only encourage more SMEs to seek financial assistance but also contribute to the growth of the bank itself.
Plans are in place for more financial institutions to join the CGS, providing SMEs with even more options when seeking financing and fostering competition among financial institutions, potentially leading to better borrowing terms.
The CGS, emphasizing collaboration and smart partnerships, is poised to bring positive changes to Namibia’s SME landscape. As more financial institutions come on board and SMEs gain easier access to the financing they need, the future looks brighter for the backbone of the Namibian economy. Minister Shiimi’s call to action underscores the importance of collective responsibility in achieving sustainable development and economic growth.
Nedbank’s involvement in the CGS represents a significant stride toward supporting the growth and development of SMEs in Namibia, reinforcing its standing as a supportive and innovative financial institution, says Ikela. The CGS has the potential to be a game-changer for Namibia’s SMEs and the nation as a whole, he concludes.
