DBN proposes to establish a National Equity Fund- NBC

Businesses in namibia have been finding it tough to stay afloat since the outbreak of covet 19 hence the need to assist them towards recovery for this reason dbn ceo martin incumbent suggests the establishment of a national equity fund this will be equity investments made by the fund in enterprises it will not be loans and therefore equity investment does not

Force cash flow there is no immediate requirement for enterprises to start paying back their loans so this is a form of a patient capital that will allow the enterprise enough time to do business to grow to come to a point where it is now able to pay dividends and maybe even repay the equity if it needs to be repaid that’s the main difference patient capital

Is supposed to dead since the start of the pandemic the financial sector has deployed numerous measures to reduce enterprise weaknesses due to covet 19. these include among others repayment holidays grace periods additional finance for operational cost and extension of repayment periods to reduce the monthly cost of interest on enterprises these measures are

However only deemed effective over a short period of time between 6 to 12 months of a depressed economic cycle giving additional loans to borrowers even as a temporary relief measure has also not proven as a viable solution for all limping businesses impacted by covet 19. in a depressed economic situation like where we are now if a business is not generating

Enough revenue and therefore it’s not able to meet its operational expenses so giving more loan to that business is causing more problem because the business is not going to be able to generate enough money to pay that loan in the medium term and that is the challenge and therefore the difference is that if additional funds is given to that business in the form

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Of equity in other words patient capital there is no need for that business to start concerning itself with the immediate repayment of that loan it gives it a little bit more time and it allows time until business environment has improved and the business is now able to generate a level of income that will enable it to first meet its operational expenses and pay

Any loans that it has taken so additional loans to businesses in an economy that is depressed is suffocating enterprises more than helping them really but who will be the main stakeholders and the source of funds i think some of the key players will obviously be the state government the private sector obviously but to come to the actual practical implementation

Of the equity fund i would like to believe the government can take a center stage to lead the establishment of such an equity fund to perhaps even provide seed capital but i do think that the majority of the funding can be raised by issuing for example bonds in the local market and this this capital can then be used to be managed by selected equity investment

Specialists who are able to evaluate the prospects and potential of enterprises that could then benefit from such an equity fund the most likely beneficiaries of the fund are borrowers who have experienced headwinds prior to the onset of coved 19 due to economic slowdowns but who were able to service their debts even if they are still in persistent areas on their

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Repayments other likely beneficiaries are borrowers who were successful and were able to service their debts but were still challenged by the onset of covet 19 lockdowns which hampered business activities and revenues the recovery of the funded businesses is not expected to be instant but will gradually happen in the medium to long term timo andreas nbc news then took

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DBN proposes to establish a National Equity Fund- NBC By Namibian Broadcasting Corporation