The Development Bank of Namibia (DBN), Kongalend financial Services (Pty) Ltd and Bellatrix SME Finance (Pty) Ltd have all joined forces with the Namibia Special Risks Insurance Limited (NASRIA) on the Credit Guarantee Scheme (CGS).
Launched in August 2020 by Minister of Finance and Public Enterprises, Ipumbu Shiimi, the CGS provides collateral cover of 60% for qualifying SMEs that apply for finance from participating commercial finance institutions.
The CGS caters for SMEs with viable business plans that lack collateral to obtain loans. Commercial finance institutions require collateral to preserve their capital in the event of businesses being unable to repay their loans. By insuring credit granted to qualifying SMEs, the Scheme substantially reduces the collateral requirement for qualifying SMEs by 60%.
SMEs that may qualify for the Scheme are identified by the participating financial institution in terms of their own assessment of the bankability of the business plan.
The scheme was seeded with N$98 million from the Government and the Bank of Namibia.
“Exciting news as we officially join forces with NASRIA in the Credit Guarantee Scheme. Together, we’re empowering dreams, fuelling growth, and securing a brighter financial future for all,” DBN said last week soon after signing on as one of the financial institutions under CGS.
Talking about scheme, NASRIA’s Acting MD, John Uusiku said the rationale behind the Credit Guarantee Scheme is that there are SMEs with excellent prospects for success and viable business plans, but lacking the necessary collateral to obtain loans.
“SMEs will have to apply for business loans at participating financial institutions including the new ones signing on today. Upon being assessed as bankable and only lacking collateral, the SME can be considered for collateral cover of 60% of the principal loan amount. This collateral is provided by us – NASRIA.
“Unfortunately we have witnessed that the uptake of these loans is low owing to a variety of factors but we hope that more can be done to improve the uptake of these loans as we attempt to build our economies. Let me thus conclude by saying sustainable development is not exclusive for a few, but one that should involve all sections of business, with a focus on social as well as economic development,” he said.
“At NASRIA, we believe in unity of purpose, shared values and productive competition. It is therefore enriching that this event is taking off with much expectations which we wish to meet with the full force of our quality,” he further said.