The transport and logistics sector can benefit from Development Bank of Namibia (DBN) finance in two phases, says Jerome Mutumba, the Executive responsible for Marketing and Corporate Communication. The first phase is to weather the Covid-19 pandemic until the vaccine rollout. The second is to grow apace with the growth of economic activity driven by the African Continent Free Trade Area (AFCFTA).

Talking about the Bank’s first phase interest in the sector, Mutumba says the Bank is currently prioritising preservation of the existing sector through Covid-19 financing measures, which have included repayment holidays for SMEs, and that now extend to the Covid-19 Business Relief Loans. The business relief loans provide three or six months operating capital, depending on the need of borrowers.

The sector, he says, has been severely affected by lockdowns, however it is vital to preserve capacity to ensure the current movement of goods as well as for the future.

Mutumba urges existing transport and logistics enterprises to make use of the recently launched Covid-19 Business Relief Loan to address operating challenges, where necessary.

Talking about start-ups, Mutumba says although in some instances the current economic environment could appear as an uphill for potential new enterprises, the Bank will consider applications from new enterprises with sound business cases.

Looking beyond the vaccine rollout, Mutumba points to the beacon of AfCFTA, which, he says, will incrementally enhance demand for transport and logistics as Namibian enterprises begin to take advantage of enhanced opportunities for production and efficiency. This, he says will be driven by demand for Namibian goods, as well as reduced trade costs, particularly in the Sub-Saharan Africa (SSA) region, but potentially further afield.

Although fleet immediately springs to mind in connection with future trade opportunities, Mutumba urges enterprises in the sector to consolidate and strengthen capacity with fixed assets such as cold storage and freight consolidation facilities. The positioning of Namibia as a transport hub in the SSA region, and ongoing policy development and implementation justify the development of fixed assets with a long-term view.

In terms of transport operations, Mutumba adds that the Bank supports contracted arrangements with contract-based finance as well as performance guarantees.

Talking about participation and inclusiveness in the sector, he says the Bank can also provide finance for management buy-ins. Mutumba notes that management buy-ins are a means to both strengthen the capital base of the enterprise as well as provide new capacity for the enterprise.

Buy-in capacity, Mutumba says, may also strengthen the fortunes of interdependent organisations. He uses the example of an enterprise producing, retailing or wholesaling goods buying into a transport and logistics enterprise. The producing enterprise can secure its transport and logistics need through this diversification of its interests while also benefitting from additional operations of the transport and logistics enterprise, while the transport and logistics enterprise can secure itself and expand with the additional capital.

The Bank, Mutumba concludes, stands firmly behind the transport and logistics sector. He calls on enterprises to approach DBN to begin developing a financial roadmap for their futures.

Find out more about DBN finance for transport and logistics, here...