Development Bank of Namibia (DBN) Senior Manager: Corporate Communications, Jerome Mutumba, says the Bank is seeking opportunities to finance retail, wholesale and franchises. The Bank, he says, has a wide range of products that are geared to assist retail and wholesale operations to grow, as well as to enable new operations to open their doors.
Mutumba says that the Bank is particularly seeking retail expansion into regions with lower levels of economic activity. In addition to employment opportunities, retail in particular stimulates regional growth.
On the topic of the footprint of the sector, Mutumba says that large concentrations of retailers in larger centres, such as at Windhoek or the coast, experience diminishing returns as more outlets vie for the consumer dollar. By spreading to larger centres in regions which have been historically ignored as sources of enterprise growth, retailers can find new opportunities to grow. Group retail operations may also benefit from more frequent spending, and additional disposable income that would previously have been restricted due to the need to travel for shopping.
The Bank’s range of products, Mutumba says, is the optimum mix to support the sector. Products include finance geared for construction of retail premises and warehousing, vehicle and asset financing in terms of which moveable assets including vehicles financed by the Bank through instalment sale agreements (ISA), and term loans. Contract based finance is available to support tenders for provision of goods to state owned entities, the private sector, and NGOs, among others. Franchise finance is also supported by performance guarantees required by master franchisors.
On the topic of flexibility, Mutumba says DBN understands that there may be challenges faced by the enterprise. In order to address this, the Bank may tailor finance to ensure viability of the enterprise.
The Development Bank of Namibia (DBN) has expressed satisfaction with its financial performance in an annual report for the financial year that ended 31 March 2017.
Speaking about the results, DBN CEO Martin Inkumbi says, the Bank’s loans and advances grew to N$6.7 billion, up from 3.8 billion for the 2016 period. The Bank’s profit was N$172 million. The bulk of this will be redirected to lending, with portions set aside to maintain prudential requirement liquidity standards, for the Project Preparation Fund and for corporate social investments (CSI).
The Project Preparation Fund (PPF) is deployed at the Bank’s discretion, to assist projects with exceptional potential development impact to further prepare business plans and improve their sustainability. In 2017 N$2.7 million was disbursed from the PPF to prepare projects in the fields of renewable energy, and affordable land and housing.
In total, the Bank’s assets grew to N$7.8 billion at 31 March 2017, compared to N$4.6 billion at 31 March 2016.
Asked about loan impairments, Inkumbi says that the Bank’s impairment ratio is 2.9%, below the target of 3% that the Bank imposes on itself. He points out that impairments are delayed repayments, and do not constitute bad debts until the Bank is forced to take legal action. He goes on to say that the level is substantially lower than the 7% benchmark of the Association of African Development Finance Institutions (AADFI).
In terms of its impact, Inkumbi says the Bank projects that its approvals in 2017 created 2,197 temporary jobs and 1,607 new, permanent jobs. Of its approvals, N$894 million was allocated to previously disadvantaged Namibians, with N$257 million approved for women entrepreneurs and N$148 million for young entrepreneurs.
The Bank, Inkumbi says, has also made strides towards addressing national issues. N$436 million was allocated to construct 736 housing units, and N$114 million was approved for servicing of 498 erven. Allocations to energy generation amounted to N$462 million.
For the financial period that ended March 2017, the Bank has observed lower credit demand in some key economic sectors such as manufacturing and tourism. Allocations to the manufacturing sector for the period amounted to N$140 million. The tourism and hospitality sector received allocations of N$62 million. The Bank’s cumulative investments in these two sectors however remains satisfactory at N$585 million for manufacturing and N$ 452 for the tourism as at the end of March 2017.The transport and logistics sector received allocations of N$2,804 million. These sectors were identified as key to economic development in terms of NDP4, and are still noted as key sectors in NDP5. The Bank does not engage in direct lending to primary agricultural projects, but it does finance agro-processing businesses.
Inkumbi continues by saying that largest regional allocation went to Erongo (N$2,968 million), followed by Khomas (N$524 million) and Omaheke (N$172 million). Projects crossing regions received N$120 million in approvals. In the densely populated northern regions, Oshana led approvals with N$143 million, followed by Omusati with N$130 million.
Development Bank of Namibia (DBN) Senior Communications Manager Jerome Mutumba has announced significant funding for the Cheshire Home in Katima Mulilo. The center provides shelter for children and youths living with disabilities.
In terms of the agreement with the Cheshire Home, DBN will provide N$250,000 annually for three years. The total of N$750,000 will be dedicated to upgrading facilities at the center. The first tranche of N$250,000 is earmarked for provision of solar power.
Talking about the donation, Mutumba says, although the amount appears substantial, it is a drop in an ocean of need. The residents of the Cheshire Home in Katima Mulilo, are some of the most vulnerable in Namibia, and come from poverty-stricken environments that made it impossible to give them adequate food, clothing, shelter and education.
Mutumba goes on to challenge other enterprises to assist the home with other needs that exist, and may arise. He invites DBN borrowers and other potential donors to call his office for contact details. By giving together, he says, all can make a difference.
On the topic of DBN’s social responsibility, Mutumba says that although the Bank provides commercial lending for developmentally beneficial projects, it provides support to entities that cannot qualify for loans, by virtue of non-profit status, through its corporate social investment programme.
He explains that, with the agreement of the Bank’s shareholder, Minister of Finance, Hon. Calle Schlettwein, representing the Ministry of Finance and the Government, the Bank sets aside a portion of its profit for the dual purposes of corporate social investment and the Bank’s Project Preparation Fund.
The Bank’s Corporate Social Investment Policy has multiple targets, defined by specific fields in which the Bank seeks to make targeted interventions. These are poverty alleviation, development of education, skills development, care for the environment, community health, and activities that materially improve the business environment.
He notes that the Cheshire Home in Katima Mulilo satisfy multiple targets of the Bank’s social investment policy, including health, education, skills development and poverty alleviation. He concludes by saying that the Bank regards the center as a signature project of its social responsibility.