By Dhiladhila Magazine · Issue 19

The new board did not only absorb the SME division. It inherited the unfinished job of getting capital to firms the banks will not touch.

The Namibia Investment Promotion and Development Board is usually described as a magnet for foreign capital. Its quieter inheritance is domestic and financial: by absorbing the SME division of the trade ministry, the board took charge of micro, small and medium enterprises across the economy.

That inheritance comes with a hole in it. Since the 2017 collapse of the state-owned SME Bank, small firms have struggled to find lenders willing to price their risk, and the board now sits at the centre of a finance gap it did not create but is expected to help close.

Why small firms fell through the floor

The SME Bank was meant to serve exactly the businesses commercial lenders avoid – firms with promise but little collateral. Its closure in 2017 removed a dedicated rail for that segment and pushed those borrowers back toward banks that had never wanted them. Access to finance remains one of the sharpest constraints on Namibian enterprises trying to grow or hire.

The Development Bank of Namibia stepped into part of the breach, opening an SME Centre in Windhoek and extending lending through offices in Walvis Bay and Ongwediva. Useful as that is, it does not amount to a coordinated national answer, which is the space the new board is meant to occupy.

A missing bank is not just a missing lender; it is a missing rail.

Coordination before capital

The board’s value here is less as a funder than as a coordinator. Placing MSME development and investment promotion under one mandate means the same institution that courts a foreign anchor investor can, in principle, line up the local suppliers, the credit-guarantee cover and the enterprise support around it. The Credit Guarantee Scheme already shares up to 60 per cent of a bankable firm’s risk with participating lenders.

What has been missing is a single office joining those instruments to real deals. Scattered schemes help individual firms; a coordinating board can point them at the projects and value chains where the demand actually sits.

The gap is not only money; it is the office that matches money to firms.

The payments dimension

Finance for small firms is not only credit; it is the ability to be paid and to prove it. A micro-enterprise that trades in cash leaves no record a lender can read, which is why formalisation and digital payment acceptance matter as much as any loan. Card and mobile acceptance had spread across Namibia well beyond the capital by 2020.

A board that formalises MSMEs and connects them to buyers can help turn informal traders into documented enterprises with a transaction history. That trail is what converts a hopeful applicant into a borrower a bank can assess, and into a merchant a payment system can serve.

A traceable receipt does more for a small firm’s credit than a good pitch.

The risk in a broad mandate

The danger is dilution. A single board asked to attract multinationals and to nurse micro-enterprises at once may find the glamorous half of the job crowds out the patient one. MSME coordination is slow, unshowy work, and it competes for attention with headline foreign deals.

For the finance gap to narrow, the board’s small-enterprise mandate needs its own resources and metrics, not a share of whatever attention foreign investment leaves over. Otherwise the SME division simply changes address without changing outcomes.

Absorbing the mandate is not the same as funding it.

For a bank, a fintech or a development financier, the board’s arrival reframes where the domestic opportunity sits: not only in the deals it markets abroad, but in the payment trails, guarantees and enterprise records it can build around Namibia’s small firms. The decision is whether to help construct those financial rails now, while the board is defining its MSME role, rather than waiting for a finance gap to close on its own.

Sources: The Namibian; Development Bank SME Centre bridges the SME Bank gap (Namibia Economist); Namibia’s SME Bank (SME Finance Forum)