Lack of credit hampers businesswomen

Experts are calling for innovative ways of providing women entrepreneurs with start-up capital.
Jana-Mari Smith
JANA-MARI SMITH



Near insurmountable roadblocks to loans are hindering female micro-business entrepreneurs from growing their businesses and making vital contributions to job creation and wealth.

The recent launch of a two-year training programme for women spearheaded by the gender ministry to teach basic and advanced business skills has highlighted concerns that acquiring these skills would mean little without easier access to financing.

Unam professor of economics Omu Kakujaha-Matundu took a hard stance, telling Namibian Sun that most small-business owners don’t lack skills, only funds.

“These women are the real entrepreneurs. Most of them are more skilled than your MBA graduates,” he said.

He said the lack of credit options available to them amounted to “pure discrimination”.

“Since most do not have a formal education they don’t have friends and connections in banks. Sometimes, it is not about what you know or have, but who you know.”

He argued that because banks are “in the business of making money and hide behind issues of collateral” they don’t cater to the small-business sector because of its lack of potential profit.

Despite this, he said multiple studies have shown that “these small traders are known to faithfully service their debt”.

Kakujaha-Matundu stressed that the informal small-business sector is a vital driver of the economy, but lack of government support on many fronts is stymieing growth of the sector.

Development Bank of Namibia (DBN) spokesperson Jerome Mutumba said although business training could ease access to credit, it would remain tricky because of the financial models in place.

“Many sources of finance apply a derivative model geared to optimising returns while minimising risks and limiting the operational requirements of managing many small debtor accounts. In this paradigm, women micro-entrepreneurs are sidelined.”

“This flies in the face of global evidence that women micro-entrepreneurs have a lower level of risk in terms of managing debt.”

Mutumba agreed that micro-enterprises are a crucial lifeline to Namibia, and “extremely important to Namibia’s social fabric overall”.

We have a plan

Clara Baitsewe, chairperson of the Khomas Region branch of the Women in Business Association (WIBA), said while the business training initiative was important, the struggle for financing remained.

“Many of these women have undergone training, but it is still very difficult to access a bank loan. If you can’t access money even if you have training, then it doesn’t help.”

WIBA has partnered with local experts to help draw up business plans and present banks with an opportunity to limit risks, which they hope to present soon.

“Provide the money to us, and give us a grace period, but also ensure mentors and experts are there to guide us as part of the agreement. We have the experts in Namibia who can monitor our progress and provide help, including with keeping books,” she said.

Solutions on the horizon

Danny Meyer of SME Compete agreed that Namibia’s informal sector is not only of crucial importance for job and wealth creation, but also as an entrepreneurial entry point.

He praised the business skills training initiative, which he said could help many of the women migrate into the formal sector.

Nevertheless, Meyer noted that banking in Namibia is undeniably security or collateral based, and that risk must be aligned to the ability of a lender to repay their loans.

As such, “micro-enterprises are not well catered for when it comes to small business loans”.

He added that the difficulties of obtaining loans for the sector are linked to over-cautiousness, “but one must hasten to add this conventional and conservative approach to banking is fostered by the environment in which the banks operate”.

Notwithstanding this, Meyer noted that “there is improvement needed when it comes to servicing the micro-enterprise sector or those operating in the informal sector.”

However, if banks take a long-term view, Meyer said there are opportunities for a win-win solution if banks see micro-enterprises as potential big clients of tomorrow.

“Then, by not diminishing risk management, they develop services to meet the sector’s needs in a viable and sustainable manner.”

DBN’s Mutumba added that furthermore, “Namibia’s legislative ecosystem is currently gearing to retain greater levels of savings and investments, so this will potentially augment the pool of capital available to micro-lenders.”

The challenge, he said, is management of the accounts in an ethical manner, in order to avoid entrenching small business entrepreneurs in a spiral of debt brought on by unaffordable repayments.

Kakujaha-Matundu said addressing the needs of these women was urgent.

“Government should get serious about growing the informal sector, by consolidating their support funds to SMEs or informal sector traders. Banks and other institutions should use corporate responsibility funds to support real productive activities, such as those by small trading and businesswomen, not just spend money as a means to promote themselves.”

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Namibian Sun 2024-03-28

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Katima Mulilo: 19° | 37° Rundu: 17° | 33° Eenhana: 18° | 33° Oshakati: 20° | 31° Ruacana: 19° | 33° Tsumeb: 17° | 29° Otjiwarongo: 16° | 28° Omaruru: 18° | 31° Windhoek: 17° | 28° Gobabis: 17° | 28° Henties Bay: 16° | 19° Wind speed: 24km/h, Wind direction: S, Low tide: 10:54, High tide: 04:57, Low Tide: 22:58, High tide: 17:16 Swakopmund: 15° | 17° Wind speed: 29km/h, Wind direction: SW, Low tide: 10:52, High tide: 04:55, Low Tide: 22:56, High tide: 17:14 Walvis Bay: 16° | 22° Wind speed: 33km/h, Wind direction: SW, Low tide: 10:52, High tide: 04:54, Low Tide: 22:56, High tide: 17:13 Rehoboth: 18° | 29° Mariental: 22° | 32° Keetmanshoop: 21° | 34° Aranos: 21° | 31° Lüderitz: 15° | 29° Ariamsvlei: 23° | 34° Oranjemund: 15° | 21° Luanda: 27° | 30° Gaborone: 20° | 32° Lubumbashi: 17° | 24° Mbabane: 15° | 23° Maseru: 12° | 28° Antananarivo: 16° | 27° Lilongwe: 17° | 29° Maputo: 20° | 28° Windhoek: 17° | 28° Cape Town: 17° | 23° Durban: 21° | 25° Johannesburg: 18° | 28° Dar es Salaam: 26° | 32° Lusaka: 18° | 30° Harare: 15° | 31° Currency: GBP to NAD 23.97 | EUR to NAD 20.54 | CNY to NAD 2.63 | USD to NAD 19.05 | DZD to NAD 0.14 | AOA to NAD 0.02 | BWP to NAD 1.33 | EGP to NAD 0.39 | KES to NAD 0.14 | NGN to NAD 0.01 | ZMW to NAD 0.74 | ZWL to NAD 0.04 | BRL to NAD 3.8 | RUB to NAD 0.2 | INR to NAD 0.23 | USD to DZD 134.45 | USD to AOA 832.63 | USD to BWP 13.71 | USD to EGP 47.27 | USD to KES 130.98 | USD to NGN 1415.13 | USD to ZAR 19.05 | USD to ZMW 24.97 | USD to ZWL 321 | Stock Exchange: JSE All Share Index 73909.5 Up +0.41% | Namibian Stock Exchange (NSX) Overall Index 1516.02 Down -0.13% | Casablanca Stock Exchange (CSE) MASI 12981.98 Up +0.34% | Egyptian Exchange (EGX) 30 Index 28224.37 Down -2.87% | Botswana Stock Exchange (BSE) DCI Same 0 | NSX: MTC 7.75 SAME | Anirep 8.99 SAME | Capricorn Investment group 17.34 SAME | FirstRand Namibia Ltd 49 DOWN 0.50% | Letshego Holdings (Namibia) Ltd 4.1 UP 2.50% | Namibia Asset Management Ltd 0.7 SAME | Namibia Breweries Ltd 31.49 UP 0.03% | Nictus Holdings - Nam 2.22 SAME | Oryx Properties Ltd 12.1 UP 1.70% | Paratus Namibia Holdings 11.99 SAME | SBN Holdings 8.45 SAME | Trustco Group Holdings Ltd 0.48 SAME | B2Gold Corporation 47.34 DOWN 1.50% | Local Index closed 677.62 UP 0.12% | Overall Index closed 1534.6 DOWN 0.05% | Osino Resources Corp 19.47 DOWN 2.41% | Commodities: Gold US$ 2 199.60/OZ UP +0.40% | Copper US$ 3.98/lb DOWN -0.0019 | Zinc US$ 2 441.60/T DOWN -0.61% | Brent Crude Oil US$ 86.61/BBP UP +0.26% | Platinum US$ 896.95/OZ UP +0.23% Sport results: Weather: Katima Mulilo: 19° | 37° Rundu: 17° | 33° Eenhana: 18° | 33° Oshakati: 20° | 31° Ruacana: 19° | 33° Tsumeb: 17° | 29° Otjiwarongo: 16° | 28° Omaruru: 18° | 31° Windhoek: 17° | 28° Gobabis: 17° | 28° Henties Bay: 16° | 19° Wind speed: 24km/h, Wind direction: S, Low tide: 10:54, High tide: 04:57, Low Tide: 22:58, High tide: 17:16 Swakopmund: 15° | 17° Wind speed: 29km/h, Wind direction: SW, Low tide: 10:52, High tide: 04:55, Low Tide: 22:56, High tide: 17:14 Walvis Bay: 16° | 22° Wind speed: 33km/h, Wind direction: SW, Low tide: 10:52, High tide: 04:54, Low Tide: 22:56, High tide: 17:13 Rehoboth: 18° | 29° Mariental: 22° | 32° Keetmanshoop: 21° | 34° Aranos: 21° | 31° Lüderitz: 15° | 29° Ariamsvlei: 23° | 34° Oranjemund: 15° | 21° Luanda: 27° | 30° Gaborone: 20° | 32° Lubumbashi: 17° | 24° Mbabane: 15° | 23° Maseru: 12° | 28° Antananarivo: 16° | 27° Lilongwe: 17° | 29° Maputo: 20° | 28° Windhoek: 17° | 28° Cape Town: 17° | 23° Durban: 21° | 25° Johannesburg: 18° | 28° Dar es Salaam: 26° | 32° Lusaka: 18° | 30° Harare: 15° | 31° Economic Indicators: Currency: GBP to NAD 23.97 | EUR to NAD 20.54 | CNY to NAD 2.63 | USD to NAD 19.05 | DZD to NAD 0.14 | AOA to NAD 0.02 | BWP to NAD 1.33 | EGP to NAD 0.39 | KES to NAD 0.14 | NGN to NAD 0.01 | ZMW to NAD 0.74 | ZWL to NAD 0.04 | BRL to NAD 3.8 | RUB to NAD 0.2 | INR to NAD 0.23 | USD to DZD 134.45 | USD to AOA 832.63 | USD to BWP 13.71 | USD to EGP 47.27 | USD to KES 130.98 | USD to NGN 1415.13 | USD to ZAR 19.05 | USD to ZMW 24.97 | USD to ZWL 321 | Stock Exchange: JSE All Share Index 73909.5 Up +0.41% | Namibian Stock Exchange (NSX) Overall Index 1516.02 Down -0.13% | Casablanca Stock Exchange (CSE) MASI 12981.98 Up +0.34% | Egyptian Exchange (EGX) 30 Index 28224.37 Down -2.87% | Botswana Stock Exchange (BSE) DCI Same 0 | NSX: MTC 7.75 SAME | Anirep 8.99 SAME | Capricorn Investment group 17.34 SAME | FirstRand Namibia Ltd 49 DOWN 0.50% | Letshego Holdings (Namibia) Ltd 4.1 UP 2.50% | Namibia Asset Management Ltd 0.7 SAME | Namibia Breweries Ltd 31.49 UP 0.03% | Nictus Holdings - Nam 2.22 SAME | Oryx Properties Ltd 12.1 UP 1.70% | Paratus Namibia Holdings 11.99 SAME | SBN Holdings 8.45 SAME | Trustco Group Holdings Ltd 0.48 SAME | B2Gold Corporation 47.34 DOWN 1.50% | Local Index closed 677.62 UP 0.12% | Overall Index closed 1534.6 DOWN 0.05% | Osino Resources Corp 19.47 DOWN 2.41% | Commodities: Gold US$ 2 199.60/OZ UP +0.40% | Copper US$ 3.98/lb DOWN -0.0019 | Zinc US$ 2 441.60/T DOWN -0.61% | Brent Crude Oil US$ 86.61/BBP UP +0.26% | Platinum US$ 896.95/OZ UP +0.23%