THE Development Bank of Namibia (DBN) is in the process of developing and establishing a Venture Capital Fund as the third leg of the national SME Financing Strategy.
This initiative, according to the bank, acknowledges the importance of small and medium enterprises (SMEs) in the Namibian economy and seeks to, among others, improve access to funding and capital to SMEs.
The fund will accordingly be established to invest in identified SMEs, with a strong growth potential, but unable to borrow and/or acquire additional capital.
The fund will act as an equity investor in established SMEs, by providing funding in exchange for equity, and the small businesses would then use the equity funding for growth needs and operating capital.
The fund would receive returns through the growth of the value of its investments in SMEs.
It will be established in the form of a trust under the Trust Moneys Protection Act and is set to be registered as an independent special purpose vehicle (SPV) in terms of the Regulations to the Pension Funds Act.
A board of trustees, the majority of whom will be independent, will be recruited in the near future through an independent recruitment consultancy, who will then govern the fund.
According to the DBN, the fund will adhere to relevant registration processes and requirements, in particular the applicable regulations of the master of the High Court and the Namibia Financial Institutions Supervisory Authority (Namfisa).
DBN spokesperson Jerome Mutumba has expressed the hope that the fund would lead to the catalytic transformation of Namibia’s SME sector.
He said this would boost greater exposure to equity funding, which would reverse the trend and strengthen the SME sector.
The DBN has previously launched the collateral guarantee scheme and has pioneered the national mentoring and coaching programme.
The fund is the third and final leg of the SME Financing Strategy.
– email: bottomline@namibian.com.na
