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.