Why is selling financial services so difficult

Promotion of business and financial services

Brief description of the project

Description:Promotion of business and financial services
Client:Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Namibia
Lead executing agency: Ministry of Industrialization, Trade and SME Development (MITSMED)
Total duration: 2018 to 2021

initial situation

Although the World Bank classifies Namibia as a “middle-income country in the upper range” with a per capita income of US $ 5,230 per year in 2017, the country is in an economically difficult situation. The Namibian economy contracted by 0.95 percent and 0.1 percent in 2017 and 2018, respectively - a development that continued in 2019. Domestic added value is low and the raw materials the country exports are usually exported unprocessed, while finished goods and consumer goods have to be imported. The unemployment rate was 33.4 percent in 2018 and 46.1 percent for young Namibians between the ages of 15 and 34. In addition, there is an extremely unequal distribution of income and wealth. 13.4 percent of the Namibian population have to get by on less than 1.90 US dollars a day.

To combat poverty, it is important to increase economic growth, strengthen domestic added value and attract private investors. Companies that want to do business in Namibia are currently facing several challenges: Due to the low purchasing power of the population, domestic demand is weak. The size of the country and, associated with it, the low population density make things even more difficult. In addition, Namibia is in direct competition within a customs union (SACU) with the industrialized economy of neighboring South Africa, which is also the country's most important trading partner. For companies in Namibia, access to financing solutions is difficult because comparatively few financial service providers have products for the needs of micro, small and medium-sized enterprises (MSMEs) in their portfolio. The comparatively good framework conditions for investments - the country can boast legal security, stable democratic structures and a solid monetary and financial policy - are currently overshadowed by various aspects, such as: B. the downgrading of Namibia's creditworthiness by international rating agencies, the discussion about the New Equitable Economic Empowerment Framework (NEEEF), the land reform or the withdrawal of the Schwenk group with the sale of Ohorongo Cement.

Against this background, it is difficult for companies in Namibia to use their growth potential and to contribute to the overarching Namibian development plan "Vision 2030". This development plan paints the image of a “prosperous and industrialized Namibia” that “is developed by its people”, in which the “wellbeing of the people” is paramount and which strives for “fair and balanced growth with a flourishing industry”.

To realize the Vision 2030 and to promote the competitiveness of the Namibian economy, the industrial strategy for the period 2012-2030, the implementation strategy "Growth at Home" (2015-2020), the strategy for the Namibian financial sector (2011-2021 ), the SME financing strategy (2018-2021), the policy for the promotion of MSMEs (2016-2021) and the current national development plan NDP5 (2017-2022). The focus of the 5th National Development Plan is on the industrialization of the country in terms of structural change and the diversification of the economy. This includes increasing the added value of existing products and sectors as well as developing human capital through education and qualification measures.


Namibian companies are tapping their growth potential.


The program "Promotion of corporate and financial services for a transformation of the economy" (ProBATS) is a German-Namibian project of technical cooperation for sustainable economic development. The project works closely with its partner ministries, the Ministry for Industrialization, Trade and SME Development (MITSMED) and the Ministry of Finance (MoF). ProBATS is the follow-up project to the Promotion of Competitiveness of the Namibian Economy (ProCOM) project. While ProCOM has assisted the Namibian government in developing various policy and strategy papers, ProBATS is focused on implementing these strategies to develop the private sector and financial systems in order to promote business growth and the associated increase in employment and income.

The project consists of two components:

(1) With the “Promotion of the Private Sector” component, the project implements growth strategies for selected industries and ensures that the services to support companies in business development are improved as required. In addition, the Namibian Investment Center (NIC) is to be supported in attracting further private investors. To this end, the growth strategies developed in the previous ProCOM project are being implemented for selected industries.

(2) With the “Development of the financial system” component, the project gives the country's MSMEs better access to financing solutions. As part of the strategy for the financial sector, the project is working with the Namibian Development Bank (DBN), the Bank of Namibia (BoN) and the Namibia Financial Institutions Supervisory Authority (NAMFISA) to eliminate the funding bottlenecks that small Namibian companies are confronted with. The project also contributes to improving regulation of the financial sector and strengthening the financial literacy of MSMEs. The project also promotes the further development of consumer protection and, for this purpose, strengthens transparency in the financial sector in particular. The two components "Promotion of the private sector and" Development of the financial system "are used complementarily to open up new financing options within the framework of the growth-at-home strategy and to make them usable for the implementation of sectoral growth strategies and to make MSMEs bankable through more efficient ones Improve support services.


Various dialogue formats have been set up between the private sector in selected value chains and representatives of public institutions to implement sector strategies. As a result, the following effects were achieved in particular:

  • Development and introduction of a new, efficient and environmentally friendly technology (pyrolysis) to increase the capacity, efficiency and sustainability of charcoal production.
  • Improvement of the exportability of the cosmetics industry and participation in international trade fairs, sales exhibitions and conferences.
  • Preparation for the resumption of exports of game meat to the European Union (EU).
  • Development of the “Mine Stone” initiative, in which the gemstones mined in Namibia are processed into high-quality products in order to keep as much of the added value as possible in the country. The initiative also focuses on transparency and sustainability.
  • In addition, ProBATS has introduced an electronic system with which the implementation of the growth-at-home strategy is documented, controlled and monitored. With this system, MITSMED can call up and provide current information on all previous and ongoing measures to support companies.
  • The procedures for registering companies have been digitized and accelerated with the introduction of online registration with the Business and Intellectual Property Authority (BIPA).
  • With the support of ProBATS, the Namibian development bank DBN has started to implement the SME financing strategy, with the loan guarantee program and the mentoring and coaching program being publicly available by the end of 2019.
  • The Financial Literacy Initiative organized start-up festivals in three regions and thus reached more than 1,000 start-ups, MSMEs and potential new companies with measures to improve financial literacy.
  • Pitching for Business Funding has conducted financial management training courses for representatives from more than 160 MSMEs. Of these, 40 were funded with a total of 256,000 Namibian dollars in order to implement or further develop particularly good business ideas.
  • The project supported the One-Economy Foundation in the development and introduction of an unsecured group loan for MSMEs who would otherwise not be able to take advantage of formal financing solutions.