Trade ministry to address SME credit access

The Ministry of Industrialisation and Trade will be tabling a national policy on the informal economy, start-ups and entrepreneurship, to address the challenges faced by micro, small and medium enterprises (MSMEs) when accessing credit.

In response to a motion brought by Maximalliant Katjimune in the parliament last week, the minister of industrialisation and trade, Lucia Iipumbu, said this challenge is twofold.

“On the issue of access to credit I would first reiterate that the problem is marked by duality. It is not only access to credit, but also availability of appropriate credit,” she said.

Iipumbu said the ministry carried out private sector development surveys from 2019 to 2022, which showed that access to and the cost of financing remained a problem for MSMEs.

“The ministry aims to table a national policy on the informal economy, start-ups and entrepreneurship and its attendant act soon, as well as the review of the 2016 MSME policy to address some of the key impediments related to access to credit by our SMEs,” she said.

According to the International Finance Corporation, 90% of SME financing in recent years came from private financial institutions, which include banking institutions as well as development financial institutions.

“Let me therefore call upon the private sector to offer device funding mechanisms, especially for the lowest category of business and review their requirements to be tailormade to the specific needs of this group of our MSMEs,”said Iipumbu.

Iipumbu said in the policy and law, the ministry would extend the definition of ‘collateral’.

“We can still rework and reintroduce formal funding mechanisms through consolidating our current grant efforts as the government and private sector.

“The consultations on the informal economy policy would provide us with the requisite guidance. I therefore wish to implore all of us to attend consultations and give all our inputs before the law is finalised,” she said.

Namibia Local Business Associaiton (Naloba) spokesperson Marius Nangolo says many entrepreneurs face challenges accessing finance funding, due to a lack of experience or limited understanding of financial forecasting.

“The other fundamental problems are the qualifications requirements of the financial institutions, which are impossible for any SME to comply with,” he says.

Nangolo says most of the involved businesses are from previously disadvantaged communities.

“Those requirements or qualification criteria are too high to achieve, for example, collateral, cash guarantee, performance security equipment and start-up capital and relevant experiences.”

He says other common reasons why small businesses fail include a lack of capital or funding and retaining inadequate management teams.