Wezi Tjaronda
30 April 2004
Windhoek — PRESIDENT Sam Nujoma has urged financial institutions to stop hiding behind outdated policies and facilitate small and medium enterprises' access to financial resources.
The president noted that there are constraints regarding access to finances as well as expanding small businesses in the country, as many people can not provide collateral, which is a prerequisite for a business to get a loan from any bank.
Speaking at the launch of the Development Bank of Namibia yesterday, Nujoma said financial institutions have a responsibility towards the public, that of facilitating access to adequate financial resources for them to participate in the country's development.
The Development Bank, established by an Act of Parliament in October 2002, is charged with providing services and capital to larger scale, viable and sustainable public and private enterprises and development projects such as ones dealing with infrastructure.
Nujoma said although the bank would fund capital projects, it should play a role in improving access to finance for SMEs, which sector is the backbone of any successful economy.
"The expansion of this sector will also give practical meaning to the principle of economic growth with equity," he said, adding that the capacity of SMEs has to be strengthened to enable them to play a more central role.
According to research by the Namibia Economic Policy Research Unit (Nepru), the contribution of SMEs to the country's GDP increased from 8.43 percent in 2002 to 10.74 percent last year.
The sector has also employed 15 532 more people than the 81 634 that were employed in 2002.
The manufacturing and service sectors together employ 107 166 people. Quoting the study, Nujoma said the majority of Namibian businesses feel they need financial support.
With the establishment of the bank, investments in infrastructure, which have been financed through external sources and have led to the soaring of foreign debt, will now be sourced locally.
And this, said the president, charged the bank with the responsibility to mobilise funds for the country to fund its initiatives from local sources.
Finance Minister Sara Kuugongelwa-Amadhila said the establishment of the bank followed the need to fill the gap provided by parastatal develop-ment finance institutions and the commercial banking sector.
This, said she, "led to the identification of the need for institutional restructuring, where provision is made for a strategically focused development finance institution, run on sound business principles, but without losing sight of socio-economic objectives."
Kuugongelwa-Amadhila said the bank should be seen as an opportunity to provide funding for sustainable economic development, in a way that raises the gross domestic product of Namibia and helps to increase employment opportunities.
The core financial products of the bank are infrastructure finance to projects of a national and regional nature, such as water and energy generation infrastructure development; sector-based project finance, trade finance to promote the import and export of goods and services; as well as short-term finance and bridging finance.
The Chief Executive Officer of the bank, David Nuyoma, said through the sector-based project finance packages, support would be given to projects such as agro-industry, fishing, manufacturing, mining, the techno-industry, services and tourism.
"The development of this particular product results from the dire need to transform the content and character of these critical sectors," he added.
Eligibility to the bank's services will depend on the viability of an initiative and such projects should be majority Namibian-owned. Sixty percent of the funds of the bank are earmarked for previously disadvantaged individuals.
A Special Development Fund has also been established to provide funding to sustain projects that may not satisfy strict conventional banking requirements, but are perceived to have justification through other socio-economic merits.
The fund will help address the challenge of the SME sector through lending arrangements with commercial banks and other financial institutions.
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