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Namibia Is The Easiest Country In Africa For Small Businesses To Get Bank Loan

July 22, 2019

If you think that it is harder for small and medium-sized businesses to get loans from banks in Namibia, this is a chance to think again. A new report is saying Namibia is the best place in Africa for small scale businesses to get credit facilities from banks.

The 2019 Small and Medium-sized Enterprises (SME) Competitiveness outlook developed by the International Trade Centre (ITC) indicates that banks in Namibia are providing a high degree of investment relative to more than two-fifths of the countries examined in the survey.

A Look At The Report

The report presents what it calls an “SME Competitiveness Grid” which allocates scores to the various sizes of enterprises in Namibia— small, medium and large — for various aspects of business services available to them using key indicators such as a country’s Gross Domestic Products (GDP) per capita, current account surplus, deficit and share of GDP, Tariff preference margin and many others.

Small Businesses

In Namibia, small businesses are scored at 76.6 percent with regards to investment financed by banks which is well above the threshold score of 22.4 percent below which the availability of a business service is assessed as weak. This is the highest in Africa, closely followed by Kenya at 65.2 percent. Botswana is third at 62.5 percent. Following Botswana is Mali which is fourth at 61.9 percent. Africa’s largest economy, Nigeria was scored 15.8%. At this rate, it is hardest for small businesses to get a loan in Congo DR at 4.1% or in Sierra Leone at 4.7%

This figure means that small enterprises have far more access to bank financing in Namibia compared to other African countries and also compared to Namibian medium and large-sized counterparts. The survey regards any score over 67.3 percent as strong and in Namibia, only large-sized firms are assessed to have strong access to finance, although medium-sized enterprises come close.

Central and South American countries scored the highest in this regard with Chile scoring 85.6 percent, Dominican Republic 86.0 percent, Nicaragua 68.7 percent, and Guatemala 61.7 percent as prime examples.

Conversely, sub-Saharan African countries fared poorly. Surprisingly, Liberia scored a relatively high 46.6 percent but neighboring Nigeria recorded a low 15.8 percent.

Read Also: There Are Now Over 41.543 Million Micro, Small & Medium Enterprises In Nigeria

Medium and large

It is easiest for medium scale businesses in Kenya at 70.6% to get bank loans compared to their counterparts in Africa. In this regard, Namibia scored 56.3 percent. It is also easiest for large scale companies in Burundi at 83.5% to get loans compared to their counterparts across Africa.

This indicates that activities in Namibia’s banking sector gravitate heavily towards the financing of small scale businesses making it increasingly possible for small, medium and larger businesses to attract the needed investments from various banks.

It is deemed that SMEs contribute to the Sustainable Development Goals (SDGs) through the jobs and wages they provide to their respective employees; their business practices; the sector in which they operate as well as their contribution to the national economy.

Financial institutions in most cases do not extend substantial credit facility to SMEs, most especially in the developing countries to either expand their business or make direct investment owing to the lack of information on SME creditworthiness which in turn leads to high perceived risks.

This recent outlook is, therefore, making a strong case on the need to encourage continuous investments in the country’s small business sector in order to realize the SDGs.

It is in this regard that the ITC is advocating that local financial institutions namely banks, insurance providers and microcredit agencies playing an effective role by providing information on SMEs such as credit history, that is necessary to accurately assess performance risk.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.

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Africa’s Small-Scale Fisheries Critical to Food Security

July 4, 2019

Fish accounts for more than one-fifth of the protein intake of African south of the Sahara and provides a livelihood to millions of people.

Africa’s small-scale fisheries play a critical role in global food security and must be supported with greater research and investment, say international and African experts. Industry, NGO, government and academic representatives attended Murdoch University’s second Blue Economy Symposium in Tunis last week as part of the Africa Blue Economy Forum (ABEF) 2019 and Murdoch University’s Third Commission, a research investigation focusing on issues of public concern to Africa. Fish accounts for more than one-fifth of the protein intake of African south of the Sahara and provides a livelihood to millions of people.

Murdoch University Adjunct Professor, Dr. Jeremy Prince, who attended the symposium and is contributing to the work the Third Commission in this area, said the collective value of the small scale fisheries of Africa was too big to ignore. “It is critical that we stabilize and rebuild these fisheries to ensure both food security and the future of the blue economy,” Dr. Prince said. “The time to act is now.”

Discussions at the Tunis symposium provided useful insights and contributions to the fine-tuning of the focus and narrative of the Blue Economy chapter of the Third Commission’s report. A strong emphasis was placed on the need to highlight clear and innovative actions to effect a lasting transformation of the blue economy in Africa. Participants in the symposium called on all nations and international institutions to recognize the value and economic impact of small-scale fisheries in Africa.

Their recommendations included increasing investment to allow fishing communities to be more involved in the co-management of fisheries; directly engaging with fishing communities to collect and share relevant data regarding the state and economic value of small-scale coastal fisheries.

In keeping with Murdoch University’s commitment to quality research and teaching in public policy at both the national and international levels, Murdoch Commissions are exercises in applied public policy informed by rigorous scholarly research and analytical thinking. They bring together senior practitioners, international experts and thought leaders from Australia and around the world to work on pressing problems and issues of public concern.

The first Murdoch Commission, “Western Australia and the evolving regional order: challenges and opportunities” published its final report in November 2013 and the second Murdoch Commission, “Food security, trade, and partnerships: Towards resilient regional food systems in Asia” released its report in December 2015.

Murdoch’s Third Commission commenced in June of 2018 and is focused on six themes firmly rooted in the agenda for action identified by the Africa Progress Panel (APP) as being in need of more significant research attention, bolder policy innovation, faster implementation on the ground, enhanced political leadership and the conceptualisation and roll out of innovative research solutions.

These themes are Promoting Equity in the Extractive Industries: Managing the Extractives Industry in a more equitable, transformative and sustainable; Boosting the Blue Economy: Better Monitoring, Governing and Harnessing of the Blue Economy; Promoting Sustainable Agriculture and Food Production: Enhancing Sustainable Farming and Food Production and Nutritional Security; Increasing Power and Light: Creating greater and more innovative access to Modern Energy (Electricity and Light) Fast; and Cross-cutting themes of Women & Youth and Climate Change.
An overarching focus of the Third Commission is identifying small scale policy interventions that have the potential to make big impacts. Additionally, it seeks to enhance Murdoch University’s links with Africa in areas of the university’s comparative advantage, including research and innovation expertise, strategic interest and networking capabilities within Australia, in Africa and globally. The Third Commission report is due to be published in 2020.

Kelechi Deca

Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.

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Kenya: How Smallholder Farmers Can Benefit From The Newly Signed EU Bank ’s EUR 50 Million Deal For Smallholder Farmers

June 17, 2019

Good news for small-scale farmers in Kenya. This is a huge opportunity to benefit from the newly signed deal between the European Investment Bank and Equity Bank of Kenya. The two banks have signed an Sh5.7 billion (EUR 50 Million) deal to finance agricultural development in the country.

Here Is The Deal

In the deal with EIB, Equity Bank through the program termed Kenya Agriculture Value Chain Facility will provide smallholder farmers and small agriculture-based Small and Medium-sized Enterprises (SMEs) with credit to expand their operations.
Working with Equity Bank across the country, the new Kenya Agriculture Value Chain Facility will help agriculture companies to modernize and harness the full economic, employment and export potential of agriculture as well as expand business with local smallholders.
The European Investment Bank aims to extend the project to other financing partners in the future with a focus on service providers expanding their reach to rural communities and smallholder farmers.
Agriculture is the leading source of economic activity, employment, and exports in Kenya. Agriculture contributes directly and indirectly to 51% of Kenyan GDP and accounts for 60% of jobs in the country.

Who May Get The Loan?

The loan program is strictly for agriculture companies and ventures that intend to modernize their ventures as well as embark on agriculture projects that are capable of creating employment opportunities for Kenyans. Agricultural businesses that are also interested in expanding their venture capacities may also apply. The enterprises targeted include Value Chain SMEs in agribusinesses that are supporting a smallholder farmer base.

“Equity Bank has aligned its strategy with the Big Four agenda, which includes agriculture, and our focus is on growing the agribusiness portfolio through servicing all segments from retail to SME to large enterprises and corporate banking customers,” said Equity Bank Kenya Managing Director Polycarp Igathe.

Is The Loan Attractive Enough For Kenyan Small Scale Farmers?

The sum of £50 Million has been budgeted to make this happen. This is the first ever dedicated support for long-term investment by agriculture companies in Africa backed by the European Investment Bank, the world’s largest international public bank.

When procured, beneficiaries will have up to seven (7) years to pay back. This is expected to take care of the highly risky agricultural sector mostly affected by adverse weather patterns.

The maximum amount of loan to be procured by the beneficiaries is 50% of the project cost as long as the beneficiaries are eligible.

Presently, the duration of most loans in Kenya is 12 months. 7 years to pay back the principal sum is a big edge. The new funding would be made available in Kenya Shillings. This will mitigate exposure to foreign exchange risks that currently hinder agriculture investment in Kenya.

“It is good to see the European Union’s bank, the European Investment Bank, partner with Equity Bank. This is the first time the EU funds the private sector in the agricultural sector in Kenya directly. There is a great deal of expectation on this new approach. The EU chose it in Kenya because we recognize that smallholder farmers do not need handouts: they need an enabling environment to be successful market operators. This requires access to finance and reducing the risk of investing in a difficult environment.” said Walter Tretton,Chargé d’affaires of the European Union delegation to Kenya.

Which Bank To Get The Loans From?

Equity Bank is the only Kenyan bank to get the loan from, in the meantime.

Equity Bank is the first Kenyan partner to participate in the Kenya Agriculture Value Chain Facility and other financial institutions are expected to join later. Equity Bank is one of the key financial institutions supporting the agricultural sector in Kenya and is a leading provider of financial services to rural communities and smallholders, the EU bank noted.

The EIB also noted that Equity Bank has identified the potential for growth, by adding medium size and large commercial farmers to the Agriculture portfolio as well as focusing on the financing of the Agri-Food processing companies.

Since 2007, the European Investment Bank has made available one billion euros (Sh114 billion) for private sector investment in East Africa through credit lines in both local and international currency in partnership with more than 25 banks and financial institutions.

Equity Bank Now Has Branch In Addis Ababa Ethiopia

Small scale farmers and businesses in Ethiopia may also now benefit from Equity Bank’s line of credit. This is because the bank has set up a commercial representative Office in Addis Ababa, Ethiopia as it prepares to expand into the hitherto protectionist economy. The bank’s Ethiopia branch is expected to be fully operational next month.
The entry into Ethiopia, a country with a population of nearly 100 million people, follows the Government’s appointment of a privatization commission and the ongoing reforms which are aimed at promoting a growing private sector.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.