SMALL and medium enterprises (SMEs) play a vital role in any nation's economic advancement and employment creation, as they are the economy and job creation's lifeblood.
This was said by the governor of the Bank of Namibia, Johannes !Gawaxab, at the relaunch of the SME Economic Recovery scheme in Windhoek yesterday.
He said the aim of the scheme is to revive the country's economy, put Namibians back to work and assist in alleviating poverty.
He said placing Namibia on a sustained path of revival required collective and extraordinary efforts, including a rejuvenated SME sector that is "crucial to our collective success".
Quoting data from the World Bank, !Gawaxab said SMEs represent around 90% of businesses and more than 50% of employment worldwide, with these figures being even more pronounced for developing economies like Namibia.
The governor said a 2017 International Finance Corporation (IFC) study on micro, small, and medium enterprises (MSMEs) estimated that there are approximately 71 000 MSMEs in Namibia.
"MSMEs provide employment and income to around 160 000 Namibians, accounting for approximately one-third of the country's workforce and contributing 12% of gross domestic product.
"The support and development of the SME sector require a steady and continuous commitment from all stakeholders and consistent, appropriate cooperation between the government and the private sector," said !Gawaxab.
For the SME sector to thrive and optimise its contribution to economic growth, development and job creation, access to financial services and adequate financing is, without a doubt, crucial, he said.
"In fact, limited access to financial products and services is highlighted as a critical constraint faced by around 40% of companies operating in this sector," he said, quoting the IFC study.
!Gawaxab said Namibian policymakers are aware of this constraint and against that backdrop, the SME sector has been identified as one of the priority areas to be addressed in Vision 2030, the Namibia Financial Sector Strategy (2011-2021) and the Harambee Prosperity Plan.
Under the auspices of the Ministry of Finance, the government launched the SME Financing Strategy in collaboration with the Bank of Namibia (BoN), he said.
"The BoN has contributed N$80 million to the scheme currently being operationalised by the Development Bank of Namibia, which includes a credit guarantee facility. Furthermore, as the central bank, we have provided relief to commercial banks, which made it possible to provide loan repayment holidays and other business assistance, resulting in a coverage of more than N$1 billion worth of loans," said !Gawaxab.
"We have repackaged the Covid-19 SME loan scheme to address the unique challenges SMEs face post-Covid-19 and in the ongoing geo-political tense environment," he said.
The scheme is a partnership between the Ministry of Finance and Public Enterprises, BoN and various participating commercial banks, namely Bank Windhoek, First National Bank, Nedbank, and Standard Bank.
The original scheme was launched in November 2020, to assist SMEs buckling under the weight and pressure exerted by the ripple effects of the Covid-19 pandemic.
The primary aim of the scheme was to provide funding to qualifying SMEs to cover certain fixed costs and to provide working capital to preserve the sector and provide sustenance during the lockdown periods.
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A total loan amount of N$500 million was made available through the scheme, accessible to SMEs via participating banking institutions. However, since the scheme's inception, only a total of N$6,4 million was utilised for this purpose, despite the pleas from SMEs to access financing.
BoN went back to the drawing board and revised some of the stringent measures in accessing the loan scheme.
Stringent qualifying criteria were revised to be more inclusive and not limited to the aftermath of the Covid-19 pandemic.
The high lending rate has been reduced to prime less 50 basis points, and SMEs with tax liabilities can participate in the scheme on condition that they enter into a payment agreement with Namra.
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