By Irene !Hoaes
The Development Bank of Namibia (DBN) says it is promoting the public/private partnership that is advocated for in Vision 2030 in order to build the country’s economic base.
The DBN made the statement in response to an assertion by the new President of the Namibia Chamber of Commerce and Industry (NCCI), John Endjala, who accused the institution of having transformed itself into a commercial bank, rather than a development bank.
DBN Chief Executive Officer, David Nuyoma, said it was more effective and practical for the Small and Medium Enterprises (SMEs) to be dealt with by commercial banks, which already have the infrastructure all over the country.
“You will have to advance much more and the process will be slower. Banks have responded positively on our terms and roll out will be faster. Moreover, Vision 2030 calls for partnership,” Nuyoma said about the fact that SMEs were dealt with by commercial banks.
The NCCI president is of the opinion that the DBN has shifted its responsibility of directly dealing with SMEs to commercial banks, which he says makes it difficult for SMEs to access funding easier because of the requirements set by commercial banks.
“If there are shortcomings with regard to the process of loan advancements for SMEs from commercial banks, we have to address them,” Nuyoma added.
He noted that banks have generally bent over backwards supporting small businesses.
Nuyoma said in the past, banks used to ask for 100 percent security or collateral but not anymore.
“It will be irresponsible for any financial institution not to take risk into consideration,” remarked Nuyoma.
He said there were problems with SME funding. Many SMEs did not make it, and 70 percent globally had difficulty in becoming successful or paying back their loans.
“The bank is placing emphasis on management of levels of risk associated with yet higher levels of activity and nurturing levels of business innovation which lead to the ventures that generate employment,” said Nuyoma.
He, however, noted that the bank was in the process of adopting policymaking provisions for micro financing for the marginalised communities, a kind of support policy.
The policy makes provision for the establishment and strengthening of micro-finance support to marginalised communities.
Nuyoma said in financing bigger projects such as parastatals, corporates and municipalities, the bank was creating infrastructural capacity, which was so much needed for economic growth and investment.
“If we are not financing infrastructure, who would?” asked the DBN head.
Nuyoma said in the past, only foreign development institutions provided finance for infrastructural development, as Namibia did not have such capacity.
He said providing finance to municipalities was conducive for business and investment, especially for smaller local authorities, as most of them did not have the necessary infrastructure needed for development.
“It will also lure professionals to go and work in smaller towns. It is not only a money arrangement for the DBN. The statement seems not to appreciate the welfare of the people,” Nuyoma said.
He cited the Ongwediva Local Authority that has managed to service 500 erven (plots) with the money advanced from the DBN.
“Ongwediva now has bigger opportunities, shack dwellers live in proper homes while health and education for people has also improved,” Nuyoma noted.
The Ongwediva Local Authority also successfully paid back half of its N$20 million loan to the DBN.
The DBN head says its appraisal process was designed to objectively identify the merits of each proposal and was consistently and rigorously adhered to.
“These considerations evaluate and highlight each project’s financial, managerial and technical soundness, as well as the environmental and social impact thereof,” Nuyoma added.
He noted that the repayment rate currently stands at more than 95 percent, which he said made commercial sense.
To date, 74 SMEs have benefited from the Line of Credit extended to Bank Windhoek.
Twenty-two percent of the funding coming through the DBN was advanced to SMEs, 24 percent to State-owned Enterprises, 51 percent to corporates and three percent to local authorities.
Nuyoma added that most companies that got loans from the bank had a Black Economic Empowerment (BEE) component in them.
“What we look at is the net benefit to Namibia,” he said.
With regard to opportunities created by the closure of the Ramatex Textile Factory, Nuyoma said if there were viable proposals, the DBN would gladly finance them.
“If excellent ideas are out there, we will finance them,” he said.