Big turnaround in SME aid scheme

By the close of 2023, Namibia's revised SME Economic Recovery Loan Scheme witnessed a significant surge in uptake, with disbursements soaring to N$358.7 million up from the N$6.4 million during the initial rollout of the original programme during the Covid-19 pandemic.

The beneficiaries spanned across various sectors, including construction, retail and wholesale, business services, tourism, tours and transport, as well as energy, fuel and electricity.

Originally launched as the Covid-19 SME Loan Scheme, the initiative was reintroduced during the first quarter of 2023 with an array of strategic alterations aimed at bolstering its efficacy.

The scheme, initially devised to aid struggling small and medium-sized enterprises (SMEs) disproportionately affected by the Covid-19 pandemic, faced a sluggish start despite a commendable allocation of N$500 million for distribution through participating commercial banks.

Disbursing a modest N$6.4 million during its initial rollout, the programme fell short of expectations set by the ministry of finance and public enterprises (MFPE) and the Bank of Namibia (BoN).



Relaunch

Determined to rectify this setback, stakeholders, including the MFPE, the BoN, and participating commercial banks, convened with key SME sector representatives and stakeholders such as the Business Rescue Task Force and the Black Business Leadership Network of Namibia.

This collaborative effort aimed to dissect the shortcomings of the inaugural scheme, serving as the bedrock for a comprehensive redesign and relaunch.

“Much in line with the national slogan, “Land of the Brave,” the MFPE, the Bank, and its participant partners did not shy away from adversity and less-than-desired outcomes,” the BoN said in its latest Annual Report.

“Instead, they regrouped, retried and ultimately helped to improve the lives of Namibians who are both directly and indirectly associated with the SMEs that have benefited from the SME Economic Recovery Scheme,” the central bank said.



Revamped

The revamped scheme centred on broadening qualifying criteria to encompass SMEs grappling with pre-pandemic economic challenges, recognising Namibia's subdued economic trajectory preceding the global crisis.

Additionally, adjustments were made to ease participation requirements, acknowledging the distinct hurdles faced by SMEs. Furthermore, the scheme targeted a reduction in financing access costs by 50 basis points, addressing a key impediment identified post-launch.

A pivotal enhancement was the inclusion of the Developmental Bank of Namibia (DBN), augmenting the participating bank count to five alongside established entities such as the First National Bank of Namibia, Standard Bank Namibia, Nedbank Namibia and Bank Windhoek.



Success

The combined effect of these strategic manoeuvres, coupled with relentless administrative and marketing efforts by participating banks, precipitated a remarkable turnaround.

The success of the SME Economic Recovery Loan Scheme stands as a testament to the resilience and collaborative spirit ingrained within Namibia's ethos, according to the BoN.

By navigating adversity with unwavering determination, stakeholders have not only revitalised the SME landscape, but also underscored the transformative potential when government, regulators and the private sector unite in pursuit of national prosperity.