5 December 2012

Namibia: SME Bank Gets Final Go-Ahead From Bank of Namibia

Windhoek — The Bank of Namibia (BoN) yesterday announced that a certificate of authorisation to establish a banking institution in Namibia was granted to the much-anticipated Small and Medium Size Enterprises Bank Limited, better known as the SME Bank, with effect from November 30, 2012.

The go-ahead by BoN means that the SME Bank is now legally permitted to conduct banking business with any person in Namibia. The opening of the bank was initially delayed by outstanding regulatory and shareholding structure requirements that BoN had asked government to establish before granting the bank its licence.

The outstanding requirements involved addressing the needs of SME financing, while the shareholding structure and quality of nominated directors also delayed BON's licensing approval.

Now that BoN has finally given its blessing and the necessary authorisation, the SME Bank is expected to comprise of a commercial division that will take commercial deposits and grant loans that will require collateral, while the other section of the bank, funded through government, will grant loans without collateral.

In order to sustain the operations of the bank, the commercial division is expected to plough back between 10 and 20 percent of its annual profits. Once operational, the SME Bank will give out collateral-free loans from as little as N$3 000 up to N$150 000. Although the bank will operate as a fully-licensed commercial bank, its main aim is to provide access to finance for businesses owned by those previously disadvantaged and who fail to obtain loans from other commercial banks due to the lack of collateral.

Speaking at the ground-breaking ceremony for the SME Bank earlier this year, Trade and Industry Minister, Hage Geingob, said the bank would appoint advisors for each and every project who will continuously monitor and advise those involved in the projects to ensure their success.

"The bank will not ask for any security, as the projects themselves become security to the SME Bank. It will ensure that the projects are feasible through project monitoring," said Geingob.

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