SME sector needs loans to flourish

NAMIBIA is neglecting small firms and entrepreneurs, who are battling to obtain loans for expansion or setting up new businesses, an opposition Parliamentarian criticised.

McHenry Venaani of the DTA tabled a motion recently asking the House to debate how better support mechanisms and access to finance could be achieved to stimulate the local economy. “Small, micro and medium enterprises (SMEs) are important drivers of any economy, but especially in developing countries, also in Namibia – several international and local studies have proven that,” Venaani stated when tabling his motion.”However, commercial banks in Namibia are usually reluctant to lend money to such small enterprises.They usually argue these small, fledgling enterprises have no collateral, and are thus risky borrowers.”He said banks further claimed that the administration costs for small loans were costly to them, yet commercial banks announced huge profits each year.”Our banks have a continued tendency of not taking any risk at all.The private sector should not turn a blind eye on the assistance needed by SMEs and they should help by partnering with them to grow our economy.”Government had recognised the need of SMEs and created a Small Credit Guarantee Trust Fund, the DTA politician told the House.The recently established development bank should also support SMEs, however.Venaani further criticised the fact that no black economic empowerment (BEE) policy was in place yet, 17 years after Independence.”If we fail to plan, we plan to fail,” he said, quoting President Hifikepunye Pohamba.”Although the Ministry of Trade and Industry had drawn up an SME Policy in 1997, the ambitious aim of making Namibia’s SME sector a leader in our economy has not been achieved.The shortcomings should be addressed and financial reform accelerated to oil the SME sector,” Venaani proposed.A report on SMEs from 2004 indicated that 64 per cent of all small and medium enterprises had to raise their starting capital from their own sources like relatives or friends, he added.”Micro-financing should become a vital part to stimulate the local economy and incorporate SMEs into the formal economy,” Venaani ended his motivation.The debate will start at the end of the month, as there are no sittings of the National Assembly next week.”Small, micro and medium enterprises (SMEs) are important drivers of any economy, but especially in developing countries, also in Namibia – several international and local studies have proven that,” Venaani stated when tabling his motion.”However, commercial banks in Namibia are usually reluctant to lend money to such small enterprises.They usually argue these small, fledgling enterprises have no collateral, and are thus risky borrowers.”He said banks further claimed that the administration costs for small loans were costly to them, yet commercial banks announced huge profits each year.”Our banks have a continued tendency of not taking any risk at all.The private sector should not turn a blind eye on the assistance needed by SMEs and they should help by partnering with them to grow our economy.”Government had recognised the need of SMEs and created a Small Credit Guarantee Trust Fund, the DTA politician told the House.The recently established development bank should also support SMEs, however.Venaani further criticised the fact that no black economic empowerment (BEE) policy was in place yet, 17 years after Independence.”If we fail to plan, we plan to fail,” he said, quoting President Hifikepunye Pohamba.”Although the Ministry of Trade and Industry had drawn up an SME Policy in 1997, the ambitious aim of making Namibia’s SME sector a leader in our economy has not been achieved.The shortcomings should be addressed and financial reform accelerated to oil the SME sector,” Venaani proposed.A report on SMEs from 2004 indicated that 64 per cent of all small and medium enterprises had to raise their starting capital from their own sources like relatives or friends, he added.”Micro-financing should become a vital part to stimulate the local economy and incorporate SMEs into the formal economy,” Venaani ended his motivation.The debate will start at the end of the month, as there are no sittings of the National Assembly next week.