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Minister of Industrialisation and Trade Lucia Iipumbu has urged the private sector to develop funding mechanisms, especially tailored for Small and Medium Enterprises (SMEs), addressing the challenges they face in accessing finance.
Responding to parliamentarian Maximalliant Katjimune’s motion to investigate obstacles surrounding SME financing in Namibia, Iipumbu emphasised the need for the private sector to adapt their requirements to meet the specific needs of MSMEs.
Katjimune’s motion was passed in parliament on Wednesday and referred to the relevant standing committee.
Iipumbu noted that private financial institutions, including banks and development financial institutions, have been the primary source of external funding for businesses in Namibia, contributing over 90% of total SME financing in recent years, according to the International Finance Corporation (IFC, 2017).
Highlighting the complexity of the issue, Iipumbu underscored not only the challenge of access to credit but also the need for appropriate credit availability.
She cited Private Sector Development Surveys conducted by MIT from 2019 to 2022, which consistently highlighted the persistent problem of access to and cost of finance, especially among MSMEs.
The ministry aims to introduce a National Policy on Informal Economy, Startups, and Entrepreneurship, along with its accompanying Act, soon, along with a review of the 2016 MSMEs Policy. These initiatives aim to address key impediments related to SMEs’ access to credit.
“In the policy and law, we will work on extensions of the definition of collateral. Further, we can still rework and reintroduce formal funding mechanisms by consolidating our current grant efforts as government and private sectors. The consultations on the Informal Economy policy will provide us with requisite guidance,” Iipumbu stated.
She urged the public to participate in ongoing consultations and provide their inputs before finalising the law.
Last year, the Bank of Namibia reported that the Small and Medium Enterprises Economic Recovery Loan Scheme disbursed N$85.9 million to 80 SMEs. The scheme aimed to support SMEs to continue operations and revive the Namibian economy.
Iipumbu also mentioned that successful beneficiaries of the Equipment Aid Scheme (EAS) will be announced this month. The EAS assists SMEs by providing equipment and technology necessary for their business operations and job creation.
Despite funding constraints in recent years, Iipumbu assured that the treasury allocated funding from 2022 to sustain essential initiatives such as the Equipment Aid Scheme, Business Infrastructure Support Programme, Industrial Upgrading and Modernisation Programme (IUMP), SDG Impact Facility, and EMPRETEC Namibia.
Meanwhile, in his motion, Katjimune highlighted the challenges stemming from the lack of financing and access to capital, particularly following the collapse of the SME Bank in 2017. He also questioned the effectiveness of encouraging youth and graduates to establish businesses for job creation given the struggles faced by many SMEs.
Source: https://www.thevillager.com.na/trade/2024/trade-minister-calls-on-private-sector-to-address-sme-funding-challenges/