THE Development Bank of Namibia will launch a credit scheme and skills-based loan facility for small and medium-sized enterprises and the youth in June this year.
Martin Inkumbi, the bank’s chief executive officer, told The Namibian this week that the credit guarantee scheme will provide partial collateral to lending institutions which give loans to SMEs.
The initiative was a result of SMEs failing to access loans because they did not have collateral.
Collateral is an asset pledged to a lender as security for the repayment of a loan, to be taken up in the event of a borrower failing to pay back the loan.
The bank is finalising the appropriate legal and operational structures on how the loan guarantee will be rolled out.
Inkumbi said the skills-based loan will cater for young people with vocational training and other technical qualifications who are seeking financial help to start or expand their existing businesses.
The loan is tailor-made to encourage self-employment, and foster the entrepreneurial idea among the youth.
Furthermore, a venture capital fund, a scheme catering for SMEs, will be rolled out next year in the form of equity ownership.
Inkumbi noted that the scheme would enable start-up SMEs to offer partial ownership of their ventures to the DBN in exchange for funding, as opposed to getting loans and incurring costly debt.
The bank was aware of the high interest rates charged by lenders, but they have a higher risk appetite.
He said this enables budding businesses to approach the bank for funding as the financial institution has structured their loan packages to suit SMEs.
According to the 2019/20 national budget, the DBN will get an allocation of N$110 million for SME financing.
Of this amount, N$60 million has already been transferred to the bank, and N$50 million for the implementation of the credit guarantee scheme, skills-based loan. The venture capital funds will be provided later.
The DBN stopped funding SMEs in 2014 after the creation of the SME Bank, but revived the scheme after the demise of the latter bank.
From October 2017 to February 2019, the DBN gave out N$164,68 million in new loans to 101 SMEs, bringing its SMEs loan book to N$500 million.
