Government’s relaunched scheme is starting to play a more meaningful role in supporting the growth and sustainability of small and medium enterprises (SMEs), with over N$85.9 million or 17.18% disbursed to 80 SMEs across the country. This figure was released on Friday by central bank spokesperson Kazembire Zemburuka.
In November 2020, the Bank of Namibia (BoN) launched a Covid-19 SME Loan Scheme, with N$500 million accessible to SMEs through participating banking institutions.
However, since the scheme’s inception, only N$6.4 million was utilised for this purpose at the beginning of 2023. The low uptake birthed the relaunch of the scheme in February 2023 after consultations to gauge the challenges the SMEs were facing with regard to qualifying for and accessing the scheme.
The scheme has since been renamed the SME Economic Recovery Scheme.
On Friday, Zemburuka was happy to state that since its relaunch, the scheme has garnered a significant response, with more than 200 SMEs nationwide submitting loan applications through regional bank branches of participating commercial banks.
The Development Bank of Namibia, Zemburuka added, is the latest institution to offer the scheme for its existing clients.
The remaining 120 applications, Kazembire noted, are presently undergoing review.
The SMEs, Kazembire stated mostly hail from the hospitality, retail, import and export, as well as oil and gas sectors.
“The amount is allowing them to continue operating while providing further impetus to the revival of the economy. The scheme was re-launched in response to the economic challenges posed by the Covid-19 pandemic and the lingering effects, and it is now instrumental in providing affordable financing to businesses in various sectors,” Zemburuka explained.
He added that by providing much-needed capital, these SMEs are provided with a shot in the arm and have created employment opportunities for Namibians who would have otherwise been jobless in the aftermath of the pandemic and geopolitical storms, which gave rise to inflationary pressure.
In a statement, BoN governor Johannes !Gawaxab added his voice, saying the positive reception of the SME Economic Recovery Loan Scheme is a source of encouragement. The governor said increased uptake underscores the pressing demand for local SME assistance.
“We are convinced that the provision of loans will significantly contribute to the revival of businesses. We are steadfast in our dedication to ensuring the scheme’s accessibility to eligible small and medium-sized enterprises nationwide,” !Gawaxab stated.
As per BoN guidelines, SMEs can request loans from N$50 000 to N$10 million. The loans are disbursed at a rate equivalent to the current prime lending rate, with a reduction of 50 basis points and less stringent conditions.
The loans aim to assist businesses in paying for operational expenses, such as salaries, rent and lease agreements, as well as contracts with suppliers.
Small and medium enterprises remain the lifeblood of many countries, as they continue to play a crucial role in stimulating economic activity.
In fact, SMEs account for the majority of businesses around the world and are important contributors to job creation and economic development.