Half-a-billion SME loan scheme launched

23 November 2020 | Business

Namibia’s post-covid-19 recovery will in part depend on a thriving SME sector. – Iipumbu Shiimi, Finance minister

PHILLEPUS UUSIKU – Government, in partnership with four participating commercial banking institutions and with the financial support of the Bank of Namibia (BoN), on Friday announced the start of the Covid-19 Small and Medium Enterprise (SME) loan scheme to the tune of N$500 million.

Speaking at the launch, finance minister Iipumbu Shiimi pointed out that the scheme is designed to assist SMEs that are hard-hit as a result of the economic and social impact of the Covid-19 pandemic.

“The prevailing Covid-19 pandemic has not only exposed the vulnerability of small businesses and start-ups to external shocks, but it also reminded us of the importance of this sector in the economy and its role in supporting the livelihood of a large number of our people,” he said.

The scheme complements the SME and entrepreneurship facilities which are already operational. “These are, for instance, the skills-based lending facility for youth entrepreneurs, the funding facility for the 121 constituency-based youth enterprises launched last year in collaboration with the Ministry of Sport, Youth and National Service.

“It also includes the credit guarantee scheme which was rolled out in August this year under the SME financing strategy. These products are administered by the Development Bank of Namibia (DBN) on behalf of the government,” Iipumbu said.

INTEREST RATE, RISK

The BoN will play a crucial role in the roll-out of the Covid-19 loan scheme by availing funding to the participating four commercial banks at the prevailing repo rate.

The commercial banks will thus be able to extend loans to qualifying SMEs at the prime lending rate, which now stands at 7.5%. The obligation to pay interest and capital on these loans will be deferred for six months from date of the first drawdown.

The loans are repayable over a period of 5 years. The purpose of the loan is to enable qualifying SMEs to cover certain fixed costs and working capital during this challenging time.

The four participating commercial banks will earn zero economic profit as all profits will be deposited in a ring-fenced portfolio. When losses are recognised in the portfolio, the first loss will be absorbed by the ring-fenced profit account, while the second loss will be funded by the participating commercial banks up to a participation rate of 5%.

The third loss will be covered by the government guarantee which will be settled on a portfolio basis at quarterly intervals. This is a demonstration of a true spirit of partnership during this time of national need, Iipumbu said.

QUALIFYING REQUIREMENTS

To qualify for the scheme, the SME must have been adversely impacted by the lockdown and it will be required to demonstrate financial suffering as part of the application process.

It should also be able to demonstrate that it has insufficient normal borrowing capacity to fully fund its monthly operating expenses and be a registered business entity, including sole proprietorships.

Moreover, the SME should have an annual turnover not exceeding N$10 million per annum, be in good standing with their banks prior to the onset of the Covid-19 pandemic in Namibia and be registered with the Receiver of Revenue.

However, the business is expected to comply with the tax obligations once its cash flow improves during the loan repayment period.

The government is well aware of the potential of the SME sector and remains committed to supporting this important sector of the Namibian economy, Iipumbu said.

“We remain convinced that this important sector has the potential to contribute toward employment creation and poverty reduction. Namibia’s post-covid-19 recovery will in part depend on a thriving SME sector,’’ Iipumbu concluded. [email protected]

Similar News

 

South African Breweries cancels US$165 mln investment

21 hours ago | Business

South African Breweries, part of Anheuser-Busch InBev, has cancelled a further 2.5 billion rand (US$165 million) of investment earmarked for 2021 following a third local...

COMPANY NEWS IN BRIEF

21 hours ago | Business

Twitter locks account of Marjorie GreeneTwitter Inc, on Sunday, locked the account of Republican US Representative Marjorie Taylor Greene, a political newcomer known for promoting...

DBN keen to fast track loan payments SME's

1 day - 18 January 2021 | Business

PHILLEPUS UUSIKUTo avoid delays in loan payments as previously experienced in other relief packages, the Development Bank of Namibia (DBN) has a plan to ensure...

Bank Windhoek ranked as the best bank in Namibia

1 day - 18 January 2021 | Business

PHILLEPUS UUSIKUPSG Namibia’s 2020 Banking Review has again ranked Bank Windhoek as the best bank in the country for the second consecutive year.The ranking system...

COMPANY NEWS IN BRIEF

1 day - 18 January 2021 | Business

GM to invest C$1 bln in Canada plant General Motors Co and labour union Unifor said they have reached a tentative deal for the automaker...

Shoprite Tsumeb closed by community members

4 days ago - 15 January 2021 | Business

Trading at Shoprite’s Tsumeb branch was halted by community members Tuesday morning when they joined the striking employees of the shop in their demands for...

Shoprite Tsumeb closed by community members

4 days ago - 15 January 2021 | Business

Trading at Shoprite’s Tsumeb branch was halted by community members Tuesday morning when they joined the striking employees of the shop in their demands for...

Namibia’s very own Geneva Events

4 days ago - 15 January 2021 | Business

Monique AdamsFrom brand management to events, marketing and promotion, Geneva Events does it all. Besides their main areas of focus they also create promotional items...

COMPANY NEWS IN BRIEF

4 days ago - 15 January 2021 | Business

AB InBev completes Vietnam merger Anheuser-Busch InBev, the world's largest beer maker, has completed its merger in Vietnam with SAB Beer after securing approval from...

Dundee exceeds its gold production targets

5 days ago - 14 January 2021 | Business

PHILLEPUS UUSIKUDundee Precious Metals (DPM) has not experienced any material disruptions to its operations as a result of the Covid-19 pandemic.The company exceeded its production...

Latest News

South Africa's mining industry to...

21 hours ago | Economics

South Africa's mining companies will support government in the rollout of Covid-19 vaccines as the nation battles a surge in infections, the industry body said...

Price monster continues to be...

21 hours ago | Economics

The annual inflation rate for December 2020 stood at 2.4%, down from 2.6% recorded in December 2019, a decrease of 0.2 percentage points.This brings great...

Audit firm ‘knew’ of Fishcor...

21 hours ago | Crime

STAFF REPORTERWINDHOEKStier Vente Associates, external auditors for beleaguered state fishing company Fishcor, only reported the suspicious Fishrot-related transactions to the Public Accountants’ and Auditors’ Board...

Covid-19: Former Rundu mayor Ihemba...

21 hours ago | People

KENYA KAMBOWERUNDURundu mayor Gabriel Kanyanga has described former Rundu councillor Ralf Ihemba, who died from Covid-19 yesterday, as a hero and a loyal Swapo cadre.Kanyanga...

Creating change through gaming

21 hours ago | Youth

Enzo AmueleLothario Smith, a 17-year-old learner who is currently grade 11, recently launched his first game on both Android and IOS platforms after working on...

Kenya Airways plans more pay...

21 hours ago | Economics

Kenya Airways plans further pay cuts for employees of as much as 30% after the airline was hit by the coronavirus pandemic that has caused...

Namibian economy expected to continue...

21 hours ago | Economics

PHILLEPUS UUSIKUAlthough most economies, including South Africa, rebounded in in the third quarter of 2020, Namibia’s economy remains into deeper recession.According to Indileni Nanghonga, the...

Blind loyalty is costing Namibia

21 hours ago | Opinion

Too many people confuse loyalty with blind obedience. When loyalty clouds judgement to the extent that one is ready to ignore their inner child’s voice...

Angola releases Namibians arrested for...

21 hours ago | Justice

NAMPARUNDUFour Namibians who were held at the Gciriku Post holding cells for illegally crossing into Angola have been released.Three boys and a man aged 23...

Load More