NamPro Fund: Strengthening its role as a preferred financial partner for SMEs

December 2012 - January 2013
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NamPro fund is rising to the occasion as a preferred financial partner for SMEs. We caught up with Derek Wright Chairperson of the NamPro fund and he shares with us their formula for success.

PF: Can you share with us who is Nampro fund and what do you do in the Namibian space?

DW: Not all people are aware of our existance, nor the way we operate but I am confident with our outreach activities this will change. The NamPro fund is a bridge finance vehicle that supports SMEs who supplies good, services and value adding into larger supply chains. Such supply chain could be Local Authorities, Regional, Governments, other central Government Departments, large private sector companies or Parastatals.

Through our funding, SMEs who lack the required funding to pre-finance their contracts are enabled to deliver. The Fund works complementary to commercial banks and the DBN and contributes towards filling a financing gap in the market.

PF: Do people understand the nature of your company’s products and services and what would you say are the most in demand?

DW: Purchase order finance, operating leases and working capital finance have the highest uptake. But products such as Invoice discounting has great potential, particularly for professionals such as Quantity Surveyors and engineering firms that typically wait over 60 days for their payment from Government.

PF: What strategies informed your business growth?

DW: The following helped us to grow the business

• Identifying SMEs that take a long-term view of their business and are interested in achieving sustainable growth. Such business owners are able to utilize our funding efficiently and able to secure larger contracts as they successfully complete previous ones
• Supporting such SMEs with business support services through our enterprise development interventions
• Applying prudent decision making in making new investment
• Our business model that is built on partnerships. It is simple, easy to implement and simply requires co-operation and commitment of key stakeholders.

PF: What would you say are the key successes you registered this year?

DW: As a fund we accomplished a lot as we proud of the following

• Being able to put 95% of the GIPF allocation to good use
• Observing enterprise growth through the repeat clients who continue to secure larger transactions from their Off takers. To give you an example: A client started off with a facility of N$ 250 000, second transaction, N$ 500 000, 3rd transaction N$ 1 million, 4rth transaction N$ 4 million. This is the trend we wish to see in the market as it confirms larger entities confidence in SMEs ability to perform
• Over 60 clients benefited from the fund compared to the past two years.

PF: Would you say you are empowering Namibians?

DW: Absolutely, the Nampro Fund only support Namibian owned entities or JV activities with at least 26% Namibian ownership. Furthermore, by enabling Namibian companies successfully execute their supply contracts, the Fund enables SMEs to increase their business activities, generating greater revenues and profits. In addition to this local spending is increased, resulting in a greater spin off effect in the economy. We believe procurement is a most effective tool to empower Namibians.

PF: What are some of the challenges NamPro fund is facing?

DW: Despite our success we face the following challenges

It regulatory level:

• The delays experienced with gazetting regulation 28 and 29 to pave a way for Pension Funds to invest in unlisted investments. A vehicle like Nampro Fund need more funds allocated but at present it is only GIPF that is committed to make investments in unlisted entities. The other pensions funds awaits the gazatting of regulation 28 to make such investments. This limits growth of the economy because there is not adequate capital to finance the actvities
At Portfolio level:
• The biggest challenge is identifying skilled SME operators in the technical field ( eg Construction sector) that can be further uplifted to become well established medium size players in the market

PF: What is keeping you going despite all these challenges locally and internationally?

DW: The contribution that the Fund makes in terms of capacitating SMEs, increasing access to finance, contributing to job retention and creation (1300 jobs saved thorough the projects funded), and in increasing SME choice for finance. Also, the Funds existence contributes towards the deepening of the financial sector

PF: You are running certain training programmes why so?

DW: We believe in a wholesome offering and recognizing the limited capabilities of Namibian SMEs to conduct business adequately, the Fund committed itself to boost SMEs capacities through group interventions (training) and individual interventions that addresses specific SME needs

PF: How important is the development of the SMEs in economic development?

DW: In our views, highly significant! However, the SME sector in Namibia makes a smaller economic contribution that is typicall if compard to other markets. At 12% GDP contribution is fall far short of both developing and developed economies ( which is in excess of 30%). We are however observing an encouraging trend from Government to support SMEs and put necessary policies and structures in place, (such as he industrialization policy, the recently established SME Bank) to boost the sector’s relevance to the economy.

PF: How is government enabling or disabling you at policy level?

DW: The recently launched financial sector strategy clearly illustrates Government’s commitment to create an enabling environment for the deepening and growth of the financial service sector. However, the pace at which initiatives or regulations are rolled out is extremely frustrating. As mentioned before, the finalization of regulation 28 and the industrialization policies are just but a few examples.

PF: What can we expect from Nampro fund in year 2013?

DW: A strengthening of Nampro Fund’s role as the preferred financial partner of SMEs! The Fund will strengthen its partnerships agreements with key off takers and identify key economic activities to facilitate a greater role for SMEs.