By: Nghiinomenwa Erastus
The Development Bank of Namibia gave the youth ministry an N$8 million soft loan (below market rate) to fund 28 rural entrepreneurs.
The bank confirmed to The Villager Business Desk that the rural financing announced last week by the sport, youth and national service ministry is through an N$8 million soft loan from the bank.
“The finance is in the form of a soft loan to the sport, youth and national service ministry. It is called a soft loan because it is financed/offered at below market-related rates,” the bank wrote.
Through the initiative, 28 rural-based start-ups out of the 121 presented.
The Development Bank’s (DBN) unconventional move comes at a time there is so much outcry from the youth who do not have collateral to access funding. Moreover, they cannot afford market-priced loans.
Furthermore, most government entities with youth empowerment mandates are also constrained with funds as a result of fiscal consolidation by the government.
The bank explained it is part of its goal to provide finance for young entrepreneurs.
They also added that they hope to see more private sector financing players and other Development Financial Institutions come on board and consider soft loans to some viable youth-owned businesses.
The loan details indicate that the development recipients will have to repay interest at the end of every second year, and the capital must be repaid at the end of the eighth year.
The DBN, however, wants the youth to take ownership and repay the loans as that would help the ministry finance other youth.
Since the project is ongoing, the DBN loan can only cater for 28 businesses out of the 121, leaving some 93 enterprises that still would have to be financed.
On the criteria used to choose the enterprises, the bank indicated that it was the one that developed the selection criteria that were used for those to be financed with training in business planning that was also provided.
The assessment was done by a technical committee that comprised staff members from the ministry, DBN and the advisory consultants.
Given the nature of the loans and the fact that they are in rural constituencies, part of the agreement was that the ministry would employ the services of an implementing agency that would administer the loans.
The initiative/projects are envisaged to create 1 210 new, sustainable, permanent jobs.
DBN’s initial involvement in the initiative consisted of business management training for 407 young people from the 121 rural youth enterprises, an exercise that involved technical support to the tune of N$1.2 million.
The bank explained that the exercise also involved helping the youth identify potential business ideas and opportunities in their constituencies and developing business plans.
The programme is expected to be a seed for the future of Namibia’s economic growth.
The bank highlighted that youth enterprise would be the pool from which it draws its future prosperity and employment creation.
With high urbanisation and more pushing factors in rural areas than pulling factors, the bank believes that rural enterprise is critical to the future of Namibian prosperity and food security.
The country’s social statistics also show uneven development in urban areas compared to rural areas; the initiative is expected to add to the attainment of development impact in rural areas.