The Development Bank of Namibia (DBN) has set the record straight that it has no plans to transform into a commercial banking institution or fully take over the mandate of the now liquidated SME bank. This comes after the Bank published an expression of interest for the provision of a core-banking system which ignited speculation that DBN might be on a transformative phase.
The Bank’s senior communications manager, Jerome Mutumba confirmed that the need for a core-banking system arose as a matter of improving the bank’s systems.
“DBN has no intention of evolving into a commercial bank. The core banking system has nothing to do really with whether you want to become a commercial bank or a development finance institution or anything. Most organisations have an IT system that they use and I think you have heard of SAP for example. It’s a very common one. It cuts across industries, most businesses actually use it,” he said.
DBN has been utilising the SAP model and a review carried out on the system brought the Bank to identify the need for software that takes care of all gaps that are pertinent to its core-needs without introducing any further costs.
“So what happens is that you look at the nature of your business then you look at the IT system that you have, whether it has models that takes care of the core functions that you want. So when you identify that there are some gaps and limitations, you go out into the market and see if there is a system that more or less can give us a tailor-made model of what we are actually looking for,” said Mutumba.
DBN is currently sourcing a core banking system that has the following features, core banking foundation, customer relationship management, loans management, financial management and information management.
“If you look at the features that we are sourcing, there is nothing that has to do with deposit taking or anything like that. So even if we can use a system that the commercial bank is using, we will not use those models that the commercial bank uses when they are taking deposits, ATMs or anything like that because we do not do those”
“We only stick to those models that are relevant to us, loan book management and other stuff that we are actually looking at. That we are turning into a commercial bank is out of the picture. And those comments that we saw people making, sometimes people want to lead a conversation that they do not necessarily understand. The tender is very clear, it says we are looking for those particular models,” he emphasised.
He added, “The SME Bank was a fully fledged commercial bank while the DBN is a development finance institution. It does not have a commercial banking license. It is not regulated by the central bank, SME Bank was regulated by the central bank because it was taking.”
Transforming into a fully-fledged commercial bank goes beyond merely changing IT systems into fundamentally changing the law that speaks to its mandate, Mutumba said. “DBN has a mandate that is drawn by law so in order for us to become a commercial bank we need to change the law and take it away from the space of a development finance institution,” he said.
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.
Development Bank of Namibia (DBN) Senior Manager: Corporate Communications, Jerome Mutumba, has announced that the Bank will visit the regional capitals of north-eastern Namibia in order to stimulate demand for development finance. The visits begin in Rundu on 5 February, continue to Nkurenkuru on 6 February, and end on 9 February in Katima Mulilo.
Talking about the regions, Kavango West, Kavango East and Zambezi, Mutumba says they hold significant opportunity for development, in terms of infrastructure and enterprise, however he notes that demand for finance can be strengthened, based on demand from local authorities and entrepreneurs, respectively.
Mutumba says that calls for finance from the regions are low in relation to their potential for economic activity. He illustrates this with the fact that, since inception, there has been no call for finance for tourism and hospitality. This flies in the face of the combination of tourism and hospitality potential, and the Bank’s ability to provide tailored finance, which is flexible, and meets the needs of the tourism industry in other regions of Namibia. The same, he says, is true of other sectors.
In reaching out to the north-eastern regions, Mutumba says the Bank is not only showing its capacity to provide finance, but also challenging entrepreneurs to come forward with their business plans and translate them into operational opportunities with the aid of DBN finance.
The Bank, he says, seeks not only greater levels of economic activity spread across Namibian regions, but also a spread of sectoral activity across the regions.
The three regions, Mutumba says, are connected by the Kavango River, and this offers opportunities for coordination of activities which the Bank may finance. Tourism might explore and further develop the river as a travel route which can add value to tourism in the three regions. He also points to the riverine fishing industry, which is a source of fish regarded as a delicacy in many restaurants across Namibia. This, he says, indicates the need to explore potential for processing and packaging the fish.
Mutumba goes on to add that Nkurenkuru is a particular hotspot for development. As a recently proclaimed regional capital, the centre offers numerous opportunities for further development. This includes excellent possibilities for tourism and hospitality, wholesale and retail, and social enterprises such as private schools and private medical facilities.
On the topic of infrastructure finance for north-eastern Namibia, Mutumba says that the Bank is one of the central agencies tasked with contributing to development of infrastructure. In this light, he encourages local authorities in Zambezi, Kavango East and Kavango West, to approach the Bank.
The construction of a road, he says, stimulates wellbeing and enterprise at either end, and at all the centres alongside it. Servicing of land, and construction of housing, are important elements in the quest to improve social wellbeing, he continues. Local authorities can draw on the Bank’s expertise in the field of infrastructure financing as a pathway to development.
Mutumba concludes by saying that local authorities and entrepreneurs should view the Bank as a partner in achieving the goals of development of their respective regions. In order to develop the three regions, the Bank sees potential for cooperation and, consequently, expects more applications from the regions.
The Development Bank of Namibia (DBN), has developed a range of products to support the construction industry, says Senior Manager: Corporate Communications, Jerome Mutumba.
Motivating the Bank’s interest in the sector, he says that all economic development will directly or indirectly require construction, typically early in the lifespan of an economic initiative. To illustrate this, he sketches the scenario of a developing town. In order for the town to have inhabitants, housing must be constructed. To make those households sustainable, infrastructure must be constructed. The same applies to commercial infrastructure which is needed to sustain operations and employment.
Still on the topic of employment, Mutumba says that ongoing employment is a prerequisite for development, and although the sector produces a number of permanent jobs, it produces cycles of temporary employment. This form of job creation injects cash into the economy through the consumption that it enables, as well as providing temporary relief for families and individuals.
In light of the sector as a central hub of good development impact, Mutumba says that support to construction is one of the Bank’s natural fields of activity.
The Bank’s range of products, Mutumba says, is the optimum mix to support construction. Products are geared for both PPPs and local authorities, engaged in development of infrastructure, vehicle and asset financing in terms of which moveable assets including vehicles are financed by the Bank through instalment sale agreements (ISAs), and term loans. Contract based finance is available to support tenders. Performance guarantees can also be provided.
Mutumba adds that the Bank has a sound track record of finance for servicing land, as well as residential units, in regions across Namibia. The Bank does however require that enterprises that are constructing business premises such as offices, factories and warehouses should apply directly to the Bank, as the final beneficiaries, rather than contractors.