The Government’s strategy to enable SMEs to have adequate access to finance is the establishment of a Small Business Credit Guarantee Trust.
The SBCGT’s principal objective has been to support SMEs who are otherwise credit worthy, but cannot offer adequate collateral to access loans from commercial financial institutions by providing up to 80 per cent guarantee for loans not exceeding N$250,000.

The establishment of the SBCGT, in 1999, was designed to improve accessibility to finance for SMEs and to act as a catalyst to encourage lending institutions in the private sector to provide finance to the SME sector.

By the end of October 2004, the SBCGT had granted guarantees valued at some N$50 million, to over 600 SMEs operating in various sectors. These guarantees have enabled SMEs to create and sustain over 3,700 jobs since the inception of the scheme.

During the same period the Trust managed to grow its capital base from the initial commitments of N$21.56 million contributed from both Government and donors to N$28 million, despite claims to commercial financial institutions arising from the above guarantee commitments.
Built-in to the provisions governing establishment of the Trust was an agreement to periodically review its performance, a process that would determine its future direction This was carried out, in 2004, and identified some constraints indicating the need to transform the Trust to achieve, among others, the following objectives:

• promotion of economic diversification through the inclusion within the scheme of smallholder farmers
• provision of support to those wishing to venture into non-traditional activities, such as, services, aquaculture and tourism.
• reduction of current dependency on government and donor funding through encouragement of equity participation.
• creation of an appropriate institutional legal form that to allow access to alternative sources of funding
• broadening of the product offering in order to achieve greater outreach; and
• diversification of sources of income through the introduction of additional financial products and services.

The SBCGT is thus to be transformed into a Microfinance Institution which will provide access to a wide range of financial and non-financial services, not currently available in the country. Experience elsewhere has shown that the provision of capital alone is inadequate to support SME development and growth, because SMEs need a range of other non-financial support services to assist them to grow and prosper. Such support would include business planning, direct lending, and after care services. Its core products will include: credit guarantee facility; individual business loans; group-based loans; group savings schemes; SME business planning services; and SME mentorship services.