The lack of public awareness about the government’s COVID-19 relief loan scheme of N.dollars 500 million aimed to back small and medium enterprises (SMEs) from the pandemic’s economic and social impact, has hindered the maximum disbursement of the funds.
This is contained in the Business Rescue Task Force (BRTF) report handed over to President Hage Geingob on Thursday at State House.
According to the report, only N.dollars 20 million of the N.dollars 500 million of the COVID-19 SME loan scheme have been disbursed to SMEs since the funds were made available through commercial banks between August and September 2021.
The funds were made available to the commercial banks with little or no advertising, it said.
Geingob appointed the BRTF in July 2021 to review global and domestic business laws, policies and frameworks to find the preferred path for businesses in financial distress in Namibia.
Government in April 2020 announced the commencement of the COVID-19 SME loan scheme of N.dollars 500 million through the Bank of Namibia in partnership with commercial banks to disburse loans to qualifying SMEs who suffered from the impact of COVID-19 lockdowns.
“The fund’s availability has to date not been properly advertised. A roadshow revealed that the public was virtually unaware of this relief,” it indicated.
The report further indicated that the funds equally took too long to get off the ground, noting that some SMEs have lost their appetite for credit given the poor economic climate, while others are failing to meet internal credit rating requirements.
To address the lack of disbursement of the fund, there is a need to increase the visibility of the scheme through extensive advertising by BoN; lower interest rates to align to the cost of funding repo rate and equally remove the requirement of a good standing certificate and be replaced with tax debt repayment, it recommended.
If further recommended that there is a need for the government to expand relief to not only cover future cash flow needs but include settlement of arrears on taxes, rentals and suppliers amongst others.
“The scheme should enable the fund to cover all distress causing periods, thus it should cover pre-COVID-19 since the economy has been in a recession since 2016. Most SMEs are unable to motivate distress primarily as a result of COVID-19 since the downward trends have been evident before,” noted the report.
It equally revealed that from the Development Bank of Namibia (DBN)’s N.dollars 450 million earmarked for business relief loans only N.dollars 75 million were disbursed, with only 20 per cent of all applications having been approved.
DBN should therefore consider extending the term of the loan to increase affordability, noting that businesses were in distress prior to COVID-19, therefore the loan should not only be based on COVID-19 but from a general perspective.
“In general BRTF should consider the restrictions around COVID-19 relied on lending programmes to be onerous and unnecessarily limiting and that consideration should be given by decision-makers to widen criteria for application of these funds,” read the report.
Source: The Namibian Press Agency
