Taking hands for Credit Guarantee Scheme
05 May 2021 | Banking
Standard Bank’s Enterprise Direct Manager, Felicia Jooste, said the bank has a desire to see SME’s grow and thrive in difficult economic conditions. “We are determined to help our small and medium businesses navigate these difficult prevailing conditions, hence the reason we joined the CGS.”
She added that SMEs are the lifeblood of the economy and employs thousands of people across various sectors.
“We have undertaken various initiatives to support our SMEs and we found the CGS to be an additional and worthwhile undertaking to participate in, not only to help them grow as companies but also to help them grow the country’s economy and by so doing alleviate a number of our social challenges,” Jooste noted.
Launched in August 2020 by finance minister 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.
Seeded with N$98 million from government and the Bank of Namibia, the CGS is operated as a smart partnership between Development Bank of Namibia (DBN), Namibia Special Risks Insurance Association (NASRIA) and the participating financial institutions.
Referring the CGS, DBN CEO Martin Inkumbi says that he hopes to see all financial institutions lending to SMEs joining the scheme. He points out that national policy is striving to develop economic activity in Namibia through establishing a conducive environment for SME startups and growth.