SME grant capped at N$50,000
Current beneficiaries of the Ministry of Industrialisation, Trade and SME Development’s Equipment Aid Scheme, will now receive a maximum payout of N$50 000.
The cap in grants will also affect applicants that successfully applied to be assisted, before the aid scheme was temporarily put on hold last year.
Ministry Deputy Permanent Secretary, Michael Humavindu, said that the decision to cap the aid scheme grant at N$50,000, per selected entity, was because the ministry wanted to help more people under the Harambee Prosperity Plan.
He added that the ministry only received N$7 million from treasury, under the Equipment Aid Scheme, for the 2016/17 financial year, which was needed to help about 180 people.
During the 2015/16 financial year, the programme received about N$16 million from the national budget.
Humavindu said that although they had received N$16 million during the previous financial year, they were in arrears with payouts to SMEs, to the tune of N$17 million.
“We realised that if we continue like this, then we would end up with a scheme that has a backlog,” he said.
Last year, the Bank of Namibia (BoN) commissioned a study on the grant programmes and loan schemes offered to emerging entrepreneurs by various government ministries and departments.
The consultants presented their findings, which were quite revealing and worrisome, at a seminar arranged by BoN.
The study revealed that there was no database or monitoring mechanisms to check the progress of the SMEs and how exactly these grants were helping the beneficiaries.
It also showed that government ministries were dishing out money, without looking at the needs of the different applicants.
“We realised that the support from the different ministries should be integrated, to avoid people applying grants from several ministries,” Humavindu said.
He said the N$50,000 grant is being offered to businesses that are involved in manufacturing, food processing/value addition, pharmaceuticals, chemicals, plastics and poultry.
As part of the new requirements, applicants should have a good standing certificate from the Social Security Commission, in order for the ministry to track employment creation in the long run.
According to Humavindu, the ministry will publish the names of the people who benefit in order to ensure transparency in the distribution of the grants, while also specifying the type of business they do.
Meanwhile, those in the SME fraternity have criticised the N$50,000 grant cap, saying that it is a drop in the ocean.
SME Compete Chief Executive Officer, Danny Meyer, said that the idea might be to achieve a wider spread, and thereby broaden the number of beneficiaries, but there must be good reason for changing the rules pertaining to the grants.
He added that the ministry should declare its motivation for doing this, before adding that the N$50,000 will not be able to buy much, in terms of equipment used in a manufacturing environment, whereas government was passionate about its Growth at Home strategy, and broadening the country’s industrial base.
Meyer said the money might be enough for a few industrial sewing machines for a garment-maker, a stove and freezer for a caterer or a concrete mixer and a compactor for a builder, but would not mean much for leather and engineering businesses, or for those making door frames, window frames and other building materials.
The social entrepreneur added that a beverage producer, baker or a manufacturer of hospital or school furniture would also not benefit much from using the N$50,000 grant.
He said that in the spirit of Harambee, it might be useful for the ministry to go back to the drawing board, and to consult representative bodies, such as the Namibian Manufacturers Association (NMA) and the Namibia Chamber of Commerce and Industry (NCCI).
He said those business sector support organisations will be able to provide useful information on what type of equipment is needed to promote manufacturing in the various sectors, as well as the costs involved.
Humavindu, however, said that the money can be used by individuals as a guarantee at the bank, so they can access more funds.
“Money is never enough, no matter how much you give. This is a starting point to help out SMEs,” he added.