Be seated for development. The Development Bank of Namibia (DBN) recently donated 215 chairs to Schlip Primary School in the Hardap Region. The Bank has financed numerous schools at primary and secondary levels. It also provided finance for the International University of Management, IUM. Where possible, the Bank makes social investments in education as well. Speaking at the handover, the Bank’s Public Relations Officer, Di-Anna Grobler said that when the Bank makes donations of this nature, it gives without expectation of repayment, but it expects a return in the improvement of educational outcomes.
Namibia is currently facing multiple economic challenges. Drought, in some parts of the country, volatile commodities markets, the changing market dynamics of our neighbors, Angola and South Africa, and a temporary period during which government spending priorities are being realigned are some of the uphill scenarios facing the country. In such a dampened economic environment the challenges facing enterprises are to sustain and strengthen assets and equity on balance sheets, and sustain operations.
It is in times like these that entrepreneurs and business promoters ought to take stock of their circumstances and map out a sustainable growth trajectory for their enterprises. The Development Bank of Namibia (DBN) advocates sound business administration. Strong administration is the basis for disciplined spending, and servicing of debt and other commitments. If commitments are not met, and if the administration is not sound, enterprises run the risk of losing capacity in a manner which will place them in difficult situations to offset their financial obligations in the medium to long-term.
This particularly includes robust cashflow forecasting and tracking to enable entities to identify challenges in advance and respond appropriately.
Cutbacks on unnecessary expenditure are a first response to circumstances, but must preserve operational capacity as well as the strategic assets in which an entity has invested. Ill-considered cutbacks will reduce the capacity of the enterprise with immediate effect, and will also have a long-term impact on viability.
Unless the enterprise has developed a cash reserve, growth should be a secondary consideration, and approached with caution. The primary consideration should be capital preservation and retention of current capacity.
Strong relationships with existing customers will be an asset. Although the first instinct of the entrepreneur will be to maximize profit, the soundest approach is to offer value and understanding in order to preserve existing cashflow.
The same applies to business-to-business (B2B) transactions and relationships. Supplier networks should leverage their understanding of shared outcomes and offer one another, value in order to preserve the viability of the B2B network.
In order to preserve and even strengthen capacity, DBN encourages equity participation transactions between enterprises where cash flow is required. In this manner, enterprises with strong reserves can grow their balance sheets, while enterprises that have underdeveloped reserves can build their own balance sheet.
This approach must be considered on a long-term basis, rather than as a short-term measure to bridge gaps. In addition to the long-term nature of the equity transaction, the Bank advocates common purpose of the enterprises and complementary corporate philosophy and management skills and capacity.
In this regard, DBN may consider financing of equity participation, which may include management buy-outs to leverage capacity of employees.
In terms of infrastructure, the current national investor initiative proposes to place the development of infrastructure, and its operation, in the hands of public private partnerships (PPPs) or purely private entities. The Bank will consider financing of particularly operating capital for Namibian holders of equity, where the entity is engaged in the development and servicing of projects identified in terms of the initiative.
One of the Bank’s underlying strategies is to preserve the development impact of its customers, not just in terms of physical outputs, but also in terms of capacity for employment.
In this regard, DBN advocates close cooperation with its customers. Where a customer may be experiencing challenges to cashflow, the Bank will advise on mitigation measures. The Bank has a track record of providing turnabout strategies for its customers with the help of pooled consultants, and also has an operational function to draw on proven external advisory and mentoring capacity for larger enterprises.
The Bank encourages customers to approach it for mitigation measures, where appropriate, as additional debt or delayed repayment compounds repayment commitments in the long-term.
Although the Bank understands that there are challenges, these challenges can be overcome with sound administration and prudent approaches on the part of enterprises, as well as close cooperation with the Bank on mitigation measures where these are required.
The Development Bank of Namibia has announced the appointment of Saima Nimengobe as its Senior Manager: Risk & Compliance. Nimengobe’s appointment supports the Bank’s Enterprise Wide Risk Management Framework.
Based on the framework, the Bank manages inherent risks in its environment which are categorised as risks in the financial market, liquidity risk, operational risk and IT risk. The management of liquidity risk is necessary for ensuring that the Bank has sufficient resources to continue lending, and the management of operational risk prevents fraud, corruption and misappropriation. IT risk is managed to preserve business continuity and protect against breaches of the Bank’s IT integrity.
Compliance risk management quantifies capital, funding and liquidity, credit, country, market, operational, regulatory and business risk. A qualitative component ensures that the correct principles, policies and procedures are applied by the Bank and reputational risks are properly managed by means of adequate controls.
Talking about the importance of risk management, DBN CEO Martin Inkumbi said that the Bank manages risk in the interests of its own sustainability, as well as the security of its borrowers. The purpose of risk management, he elaborates, is to properly understand the risks that the Bank faces, and proactively and effectively mitigate against and adjust to risk.
Inkumbi added that risk management does not reduce the Bank’s operational capacity and activities, but rather empowers the Bank to engage in operations within acceptable levels of risk.
He said that in 2016, the Bank took steps to better manage the market risk inherent in treasury functions by familiarising itself with market risk management processes and systems, and identifying specialist human capital requirements, as well as beginning the process of recruiting those skills on a permanent or outsourced basis.
He went on to say that the Bank also added an environmental and social management system in 2016 to ensure that its finance does not have harmful social and environmental consequences.
Inkumbi welcomed Saima Nimengobe, who joined the Development Bank of Namibia as Senior Manager: Risk & Compliance, to the team, saying that her skills and knowledge will greatly enhance the Bank’s effectiveness and sustainability.
Nimengobe holds an MBA from the University of Stellenbosch (USB), which she attained in 2012, a Bachelor of Accounting from UNAM, a postgraduate certificate in compliance management and several certificates in project, risk and compliance management.
She was previously employed as Group Enterprise Risk Manager at the Ohlthaver & List Group, and Risk Manager at Namibia Breweries. She has extensive experience and knowledge in developing and embedding risk policies, enterprise-wide risk management, including governance compliance, and financial evaluation for investment purposes.