Namibia’s SME Bank funds run dry 3 months after opening - CNBC Africa

Namibia’s SME Bank funds run dry 3 months after opening

Southern Africa

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Allegations were that the bank had spent majority of its start-up capital on buying and renovating a building, as well as on staff salaries, which made it unable to then issue loans to Small to Medium Enterprises (SMEs).

“It seems to have faltered as it got out of the starting block. However, on the more positive side, two commercial banks have established SME departments so it’s not all a tale of woe. Obviously the SME Bank would’ve been a welcome addition, bringing a bit of competition, and we were hoping to see a little bit more renovation perhaps in some of the products that they offer,” SME’s Compete director Danny Meyer told CNBC Africa on Thursday.

“But the SME sector here is very well serviced by particularly two of the commercial banks who have established SME departments, one about eight years ago and the one about seven years ago. I have observed, and so have my colleagues who work in this space of helping small businesses grow, that these banks have progressively extended their reach all over Namibia.”

The commercial banks have also eased the pressure on security collateral, which makes it easier for SMEs to be issued with loans than previously.

According to Meyer, the Central Bank of Namibia has been following the progress of SME Bank closely in the run up to its opening and had taken time to issue the bank with a license as the Central Bank was not fully satisfied with the percentage shareholding of SME Bank, among other aspects.

“When we work with entrepreneurs, we always tell them to go easy on the non-essentials, the buildings, cars, you focus on getting that business up and running, make sure your working capital requirements are covered and then from there you work,” Meyer explained.

SME Bank’s shortfall does, however, give other banks in the SME lending space an opportunity to prepare themselves to face any competition or challenges that might come from the sector.

Besides commercial banks, other non-bank organisations are also entering Namibia’s SME fold, broadening the provision of financial assistance.

The country’s sector itself is still under construction and needs to metor upcoming entrepreneurs on challenges in the start-up period, including access to affordable workspace, skills development and others.

“Namibia needs entrepreneurs but entrepreneurs also have needs and I think we tend to forget that. We think it’s only access to funding that’s the need, there are many others,” said Meyer. 

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