DBN working on new SME scheme
By Hilary Mare
DEVELOPMENT Bank of Namibia (DBN) CEO Martin Inkumbi says that the Bank is developing a credit guarantee scheme which will be made available to commercial sources of finance, such as banks, to reduce the risk of financing SMEs with sound business plans and cash flow projections.
Inkumbi added that the scheme that will require lower levels of collateral will enable banks to finance a greater number of SMEs.
He also added that currently, the Bank is also developing a facility for youth artisans which will address the widespread need for vocational skills to further industrialisation.
“When implemented, the youth artisan facility is envisaged to have a robust mentoring and training component to ensure that the enterprises are sustainable,” he said.
Inkumbi goes on to say that the Bank has not only provided new forms of finance but has also implemented new approaches to finance.
The Bank, he says, has taken the lead in providing mentoring for SMEs. This has the effect of reducing risk inherent in financing start-up SMEs and makes the enterprises more sustainable.
He goes on to say that the Bank was also the first financial enterprise to implement an environmental and social management (ESM) system. The ESM Unit monitors all projects financed by the Bank for compliance with local environmental, labour and social legislation and regulations. The ESM Unit also vets applications to ensure that potential lending will not have negative environmental and / or social impacts.
Furthermore Inkumbi says that the Bank’s impact on economic activity extends beyond lending and it has had a catalytic effect on forms of finance.
To illustrate the point, he says that the Bank has introduced new sectoral models for finance. In this regard, he says that the Bank pioneered contract-based finance to enable contractors to undertake projects for which they would not have previously had operating capital or assets.
This he says has made the contracting subsector more inclusive.
He points to finance for renewable energy as another feather in DBN’s cap.
In order to enable privately owned renewable energy utilities to participate in electricity generation, regulatory change had to be paired with a suitable financing model.
In addition to photovoltaic plants, the Bank also provided finance for the Ombepo wind farm, another first in Namibia.
Finally, he highlights the Bank’s apex finance which provides capital to on-lenders.
Although the Bank is noted for providing capital to two local commercial banks and the Namibia Procurement Fund in the past for SME finance, what is less well known is that the Bank provides apex microfinance for entities which on-lend small amounts for business activities with beneficial development impacts. He points to the Banks capital provision to boost Postfin, the lending arm of Nampost Savings Bank.
At its opening in 2004, DBN had a single employee, Founding Chief Executive Officer (CEO) David Nuuyoma, and operated from a single office equipped with a fax machine. At the end of its 2004 financial year, the Bank had assets of N$138 million and a staff complement of 16. Fifteen years on, at the end of its 2019 financial year, its assets amount to N$9.7 billion and it has a staff complement of 105.