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Finance for young professional doctor boosts Rundu health
Development Bank of Namibia (DBN) has provided finance for MedRundu Health Centre, a new health facility, operated by a young professional, Dr Vincent Kambinda. MedRundu used the finance for equipment, supplies and working capital.
Speaking about the importance of the facility, DBN Head of Marketing and Corporate Communication, Jerome Mutumba, said although Rundu and its surrounding areas form the second largest Namibian population centre, with a populace estimated to be in excess of 90,000, health services consist of approximately of only sixteen general practitioners, one state hospital and one private hospital.
The relatively few service providers and doctors, places residents of Rundu at a disadvantage in terms of the World Health Organisation recommended norm of one doctor per 1,000 head of population. Says Mutumba, the addition of just one doctor, under the circumstances, significantly alleviates pressure on the pool of medical skills available in the region.
He goes on to say that the shortage of local skills can lead to circumstances in which patients forgo medical treatment, which has wider costs in terms of lost productivity or social burdens on families who have to provide care for ailing family members. The alternative, he adds is that patients have to travel further afield at their own expense, which may also place pressure on public sector medical facilities.
The Bank has a long history of finance for medical facilities and professionals, which includes finance for Ongwediva Medipark, two providers of radiological and diagnostic services, one of which was assisted under the Bank’s Innovation Fund, as well as several pharmacies.
Talking about finance for young professionals, Mutumba says the facility is proving fit for purpose. The role of young professionals, he continues, is to provide business and social services that foster sound socio-economic and enterprise environment.
In addition to this, young professionals are nurtured financially by the Bank with the expectation that they will form part of the future pool of entrepreneurs to come. He points out that their earnings are also the basis for future investments in the economy.
On the topic of financing amounts, Mutumba notes that early career-stage professionals and artisans generally require lower amounts to establish their enterprises. This has the effect that the amount of debt finance used becomes more affordable, and in turn, the enterprises become more sustainable.
The win, he concludes, is mutual. On the one side, the Bank empowers youths venturing into entrepreneurship. On the other side, the Bank and the nation receive exceptional development impact for every dollar invested.
DBSA and DBN fast-track TransNamib with N$2.6 billion
Development Bank of Namibia (DBN) and Development Bank of Southern Africa (DBSA) have confirmed a loan of about N$2.6 billion finance for TransNamib.
The loan will be used for remanufacturing of rolling stock, acquisition of new rolling stock, modernisation of the TransNamib Workshop, upgrading of signalling equipment, including spares and associated equipment.
DBN and DBSA have a long-standing relationship that is governed by a Memorandum of Understanding. The Memorandum enables both Banks to jointly participate in the financing of infrastructure projects in Namibia.
During the 2019 Investment Summit, in Windhoek, DBN and DBSA jointly pledged N$8 billion towards infrastructure development in Namibia. Among this was the pledge of about N$2.6 billion towards TransNamib.
According to Martin Inkumbi, the CEO of DBN, the success of Harambee Two places emphasis on the positioning of rail as a catalyst for growth of economic activity.
The DBSA Head of SADC Coverage, Davies Pwele, further emphasised, in line with DBSA’s mandate of regional integration, that the repositioning of TransNamib as a logistics hub comes at a critical time when the SADC rail network needs to gear itself to respond to the Africa Continental Free Trade Agreement (ACFTA) which is now in effect.
The partnership between DBN, DBSA and TransNamib is a testimony of what can be achieved in the delivery of critical infrastructure, starting from financing of feasibility studies to investment, Pwele concludes.
Young artisan finance opens door for Erongo welder
The Development Bank of Namibia (DBN) facility for skills-based finance has provided finance to Muudhigu Investments CC. The company, operated by young artisan, Ndeenda Mbungu, offers welding services in Walvis Bay, Swakopmund and Arandis. Services include metal fabrication, pipe welding, tube brazing, cast iron welding and sheet metal welding.
Aged 28 at the time of application, Mbungu satisfied the requirements for young artisan finance with an NQF3-level certificate in metal fabrication from Okakarara Vocational Training Centre, as well as the necessary experience in full time employment prior to starting his own business.
He uses outsourced accounting services to assist him with management. In addition to his own employment in the company, his permanent workforce consists of a welder, a handyman and a general worker. Mbungu expects to employ temporary employees on a needs-basis as his business grows.
Mbungu and Muudhigu Investments represent the ideal borrower on many levels, says Jerome Mutumba, DBN Executive for Marketing and Corporate Communication.
There is a perception, Mutumba says, that an effective enterprise requires large amounts of capital at start-up. However, Muudhigu shows that with grit, determination and innovation, a business can be established with lean capital structures. In the case of youth enterprise, although expectations are often high, the reality is that larger loans often impose a significant debt burden on the young.
The high repayment can have the unintended effect of reducing profits to the enterprise and owner, which actually restricts financial growth and enterprise savings, counter to the intent and best-interest of the borrower.
In Muudhigu’s case, he continues, borrowing less and rationalising on assets and working capital has placed Mbungu in a better position to approach the future as his monthly repayments are lower.
On the topic of the enterprise environment, Mutumba says that Walvis Bay is a hub for industrialisation. Providing an artisanal skill such as welding enables multiple enterprises to make use of the skill. He notes that at the expert level that Mbungu has attained through certification and experience, various companies that might have competed to hire Mbungu can now share his expertise by contracting Muudhigu Investments.
Talking about the rationale behind the skills-based facilities for artisans and professionals, Mutumba emphasises that although Namibia needs to develop enterprise now, it also has to consider the future of economic activity.
Investments in youth and their empowerment as entrepreneurs are one of the best ways in which we can express our hope to expect more from the future, he concludes.
Finance for Eenhana PPP lays foundations for new community
Development Bank of Namibia (DBN) has been instrumental in developing serviced land for a new community in Eenhana, the capital of Ohangwena Region. Established as a town in 1999, Eenhana is one of Namibia’s fastest growing towns, and serviced land is needed to ensure that the population can continue to grow while reaping the benefits of socioeconomic wellbeing.
Development of serviced land in Portion 5 of Eenhana was undertaken by a public private partnership consisting of Eenhana Town Council, a joint venture between developer Ino Investment Holdings and consulting engineers Lithon Project Consultants, and financier Development Bank of Namibia. The PPP was the first of its kind, and serves as a model for ongoing and future development of serviced land.
Speaking about the project, DBN CEO Martin Inkumbi says the requirements were complex and benefited from multifaceted expertise.
Among the works undertaken were establishment of gravel roads, sleeving for telecommunications infrastructure, water mains and connections to the erven, sewage reticulation, an underground electricity system and infrastructure to lead away stormwater. Following planning by Lithon Project Consultants the works were undertaken by Ino Investments using contractors.
Land was made available by Eenhana Town Council.
The project made provision for 151 residential erven on which 151 single houses can be built and eight general erven on which blocks of apartment units can be built. Two civic erven on which public spaces, playgrounds and / or sports grounds were provided for. One erf was allocated for business and another two were provided for government institutions.
On the topic of developmental qualities of the community, Inkumbi said that not only does the land have to be suitable for construction through a full range of services, but the entire community has to be planned to make it socially sustainable, hence the requirement for civic erven for recreation and business erven to allow for retail facilities and potential employment opportunities within the community.
The benefit for Eenhana, Inkumbi states, is that the town will be able to attract and keep residents, through the provision of better land and municipal services. This, in turn, makes the town more attractive to enterprises, which in turn will attract more residents. At the same time, Eenhana Town Council earns income from rates and taxes which enables it to maintain municipal services as well as service more land and grow the extent of the town.
Inkumbi expresses satisfaction and pride in the model and the learnings. The model is sustainable, the development benefits are clear and the finance is determined by sales. He concludes by opening the door to stakeholders from local authorities and developers to consult the Bank on means to facilitate serviced land.
Bank announces N$130 million bond, DBN29
Another N$130 million for development finance, funded by private investors
The Development Bank of Namibia (DBN) has issued a new bond, DBN29, with a face value of N$130 million. The 7-year bond was issued via private placement on 4 March 2022, and it matures on 5 March 2029.
DBN29 was issued with a spread of 240 basis points above the 3 month JIBAR, the Johannesburg Interbank Average Rate, meaning it will pay interest quarterly at 2.4% above the average rate at which banks buy and sell money. As the 3 month JIBAR is set quarterly, DBN29 is a floating rate bond and the interest rate will change every three months.
Payments of interest will be made quarterly in arrears, and the capital amount of N$130 million will be repaid on 5 March 2029, when the bond matures.
The bond is the Bank’s first sovereign guaranteed bond, so its repayment is guaranteed by the Government.
As bonds come with a high interest costs for use of investor funds, DBN bonds are used to raise funds to finance infrastructure and large enterprises. These categories have a lower risk of impairments and defaults.
SMEs have a higher risk of impairments and defaults, so they are financed from the Bank’s Development Portfolio (DP).
In total, DBN has issued five bonds, including DBN29, since it listed its medium-term note programme on the Namibian Stock Exchange (NSX) in 2017.
The programme falls within the twin mandate elements of the Bank to develop new, sustainable methods of investment and to enable the private sector to participate in funding of development.
The first bond, DBN20 was fully repaid at maturity at an amount of N$291 million issued. DBN20A1, an amortizing bond, has paid N$112 million and has N$28 million still in issue. DBN20B has repaid N$49 million and has N$21 million still in issue. DBN23 has repaid N$203 million and has N$87 million still in issue.
DBN20, DBN20A1, DBN20B and DBN23 redeem(ed) part of their capital amounts (subscriptions) plus interest every six months, unlike DBN29 which will pay interest quarterly, but will only repay the capital amount of N$130 million on 5 March 2029.
Currently, bond subscriptions are issued via private subscription to large institutional investors who wish to invest in DBN paper, while contributing to development. The Bank expects to hold an auction for public subscriptions which will be open to all qualifying investors. Bonds are denominated at N$1 million per bond with subscriptions allocated according to the interest rate at which investors are prepared to subscribe for the bonds.
DBN is rated by Fitch Ratings. The bank currently has a foreign currency long-term issuer default rating (IDR) of 'BB'/Outlook Negative and a national long-term IDR of 'AAA(zaf)' /Outlook Stable.
Bank passes N$1 billion mark for renewable energy
On Friday, 25 February 2022, Development Bank of Namibia (DBN) signed an agreement to finance a solar park at Rosh Pinah.
With the latest agreement, DBN’s commitment to the field of renewable energy amounts to N$1.038 billion encompassing finance for 87.9 MW from 13 projects.
Once commissioned, the new power producer, Rosh Pinah Solar Park (RPSP) will generate 5,4 MW for the operational energy requirements of Rosh Pinah Zinc Corporation (RPZC). RPZC is in the process of expanding its operations and will require additional supplies of electricity. The establishment of Rosh Pinah Solar Park is expected to reduce the cost of energy to run the mine, diversify its sources of energy and improve its sustainability.
RPSP is owned and will be managed by two Namibian entities, Otesa Energy Projects, the majority shareholder, and Emesco Energy (Namibia). Otesa Energy Projects will construct the plant and Emesco developed the plant.
In a statement about the solar park, Director and Shareholder, Elmo Kalyamo, said the facility will supply 30% of RPZC’s power requirements over the 15-year duration of the power purchase agreement (PPA). This will reduce RPZC’s emissions of greenhouse gases by 6% annually at a company level. Emissions of CO2 produced by utility supplied power in the //Kharas Region will be reduced by 14,242 tons.
Kalyamo said Rosh Pinah Solar Park greatly appreciates the support of DBN and their responsiveness to the specific financing requirements of the project. He also stated that this majority Namibian-owned project supports the country’s objective of energy independence.
Finance for Rosh Pinah Solar Park is the second renewable energy project financed using the Bank’s Climate Adaptation Facility.
Commenting on the financial and developmental aspects, DBN CEO Martin Inkumbi said the Bank is committed to the development of renewable energy generation, and the benefits that it brings to economic activity and socio-economic wellbeing in Namibia.
Particular development benefits of the finance include preserving sustainability of the Mining and Quarrying sector by reducing costs to a significant producer, making employment offered by RPZC more sustainable, as well as alleviating pressure on the electricity grid.
Pressure on the grid is driven by growing demand from industry as well as expansion of the grid to reach previously unconnected households. As a result of demand outstripping installed generation capacity, Namibia is a net importer of electricity from South Africa and the Southern African Power Pool (SAPP). In December 2021, the country generated 89,054 Megawatt hours (MWh) but had to import 263,899 MWh.
By financing renewable energy generated by Independent Power Producers (IPPs), DBN aims to reduce cashflows out of the country, increase the amount of locally generated electricity, reduce future costs associated with developing and maintaining cross-border transmission infrastructure as well as enhancing security of supply which may be complicated by threat of disruption of export operations.
The Bank has developed a sound track record in financing IPPs generating renewable energy since developing the original industry financing model for Omburu Photovoltaic Park, as well as Ombepo Wind Farm near Lüderitz.
Bank responds to Black Business Leadership Network
The Development Bank of Namibia (DBN) has responded to the Black Business Leadership Network of Namibia’s (BBLN) petition by stating that it has been and remains responsive to economic challenges faced by entrepreneurs in the country in line with its legal mandate and strategic business objectives.
The Bank proactively responded to the impact of Covid-19 on the economy, and has implemented measures to alleviate the burden of loan repayments, which include:
- Covid-19 Business Relief loans to qualifying enterprises
- Loan restructuring for affected clients
- Loan repayment holidays in the tourism and hospitality sector, which have now been extended through June 2022
- Loan repayment holidays to all SME borrowers at the advent of the first lockdown, from March 2020 to September 2020.
- Extended loan repayment holidays to SMEs on the merit of each business case.
Says DBN CEO Martin Inkumbi, it is imperative to note that DBN has not called up any loan for any business enterprise that was in good standing before the arrival of Covid-19. He adds that the Bank will continue negotiating suitable loan repayment arrangements for borrowers affected by depressed business revenue as a result of Covid-19.
Inkumbi further states that, as a matter of operational policy, the Bank negotiates realistic loan repayment arrangements that suit both the Bank and the borrower. This policy is extended to all borrowers who experience business challenges and is not limited to those affected by Covid-19. The policy, in existence since early in the Bank’s operational history, is designed to preserve the development impact of loans.
However, the Bank reiterates its legal obligation, as an accountable lender of public funds, to recover all money lent out, plus interest charged.
Affected members of BBLN are urged to approach DBN on a case-by-case basis to negotiate possible relief measures.
He adds that the BBLN should not allow itself to be used by borrowers who see it as an opportunity to avoid loan repayment responsibilities. He says the Bank is seeing some businesses that defaulted years before the term Covid-19 was known and collection efforts were already underway. These businesses are now claiming Covid-19 as the problem. BBLN should ideally also advocate good business management practices, and accountability on the part of entrepreneurs, and not demand a blanket cessation of loan collection efforts by lenders. Such demands introduce a new risk factor that lenders now have to consider and discount when lending money.
Inkumbi further comments that adverse macro-economic developments and external shocks to the business environment are bound to occur from time to time, requiring flexibility and agility on the part of lenders and borrowers alike. DBN commits to be responsive to such developments. Where there is a clear recovery or turnaround plan, DBN will and has always come to the table.
However, when a business concept has failed, even taking covid-19 out of the equation, the best response by the entrepreneur is either to change the business concept, or if that is not possible, to close it and invest the capital elsewhere. That is also flexibility and agility.
Inkumbi concludes by saying that the Bank, as a responsible corporate citizen, draws no joy nor comfort in the closure of enterprises in the economy. The Bank is preoccupied with interventions which impact the economy positively.
What is given, gets given back. Jerome Mutumba on mutual responsibilities of lending and borrowing.
In the wake of emerging calls for write-offs of loan repayments for small and medium enterprises issued with the purpose of enhancing Namibia’s development, economic activity and prosperity, DBN Executive for Marketing and Corporate Communication Jerome Mutumba, has amplified important aspects of mutual responsibility for lending and borrowing, which must be factored into the concept of development finance.
Mutumba explains that there is a distinction between finance for development and commercial finance. Finance for development will be allocated with the goal of supporting and enhancing economic activity, while commercial finance in the main will have the goal of achieving returns for the lender, without the natural preoccupation to impact development. Both, however, will have the prerequisite of returns on capital, in order to sustain their operations. In the event of loans which are not repaid, both development and commercial finance will fail.
In making the choice between sources of commercial or development finance, the borrower will envisage the same outcome, regardless of the source of finance: a viable enterprise that will be a source of financial growth and income. The choice of lender, on the other hand, may influence the terms of the loan in favour of the borrower. A development finance institution (DFI) may, for instance, accept a greater degree of risk, offer capacity development services to borrowers and offer flexibility on repayment.
In order to qualify for a DFI loan, the borrower has to recognise the goals of development finance, and ensure that she or he can fulfil those requirements. The first cut decision of development finance will be a clear indication that the borrower can satisfy the terms of the loan. If not, the borrower will not be able to satisfy the DFI’s development goals, such as employment, development of capital, economic activity and other factors.
As a lender, the DFI will have the additional consideration of its own sustainability. It has the moral, patriotic and economic obligation to preserve its own capital, as well as collect interest, which will be used to sustain and grow its operational capacity, by providing more loans to a greater number of borrowers. What is given, gets given back, Mutumba emphasizes. In case of DBN, the Bank endeavours to recover all public money that it lends out.
Mutumba also points out that as the benefits of development finance are allocated from a common national resource, with the broader goals of development impact that extends beyond the owner and the DFI. Both the lender and the borrower must hold themselves responsible.
However, Mutumba says when enterprises do experience difficulty, this is rapidly identified by the Bank, at which stage the Bank will approach the borrower to examine the source of the business challenge and try to rectify the situation, rather than immediately call up the debt and recover it through a legal process.
He illustrates the point using the Covid-19 measures implemented by the Bank. Once the impact of Covid-19 became clear the Bank rapidly implemented repayment holidays and extended loan repayment periods to reduce the monthly debt burden on SMEs as well as tourism and hospitality borrowers. It subsequently launched Covid-19 Business Recovery Loans.
Mutumba concludes by saying that when the Bank has in a few instances experienced difficulty with loans, it is often as a result of a number of factors, but mainly attributable to a lack of administrative skills and capacity from the side of the entrepreneurs. The Bank, he says, has taken steps to rectify this with the implementation of a Mentoring and Coaching Unit which provides capacity building in the form of mentorship and coaching, through a network of experts in various fields on business management.
Development Bank of Namibia opens expanded office in Walvis Bay, Erongo
Development Bank of Namibia has inaugurated its expanded office in Walvis Bay on 14 February 2022. The office is expected to serve towns in the Erongo region as well as some entrepreneurs and enterprises in the Kunene region.
In his opening address, Chairperson of the DBN Board of Directors, Sarel van Zyl, described Erongo as a very important region for economic activity. It holds the Port of Walvis Bay, one of the most significant points of entry to Namibia. It is also an important hub for intra-regional trade. It is a major source of industrial and commercial output, and of course, is a very popular tourism destination, not only for local and regional tourists, but also for international visitors from all over the world. Through its economic activity, Erongo supports a large concentration of Namibia’s population, all of whom are beneficiaries of development.
Since its early inception, Van Zyl continued, the Bank has been actively engaged in finance for the region. Early projects included Aqua Utilities to semi-purify water for Walvis Bay, as well as cranes for NamPort. The Bank has also made extensive investments in the Erongo tourism and hospitality industry.
He said the Bank recognized the the need for operational capacity in the region by opening an office in 2014, and to address expectations of substantial growth, the Bank has now developed this larger office.
Officially inaugurating the office, Walvis Bay Mayor, Trevino Forbes, described Walvis Bay as a microcosm of Namibia, pointing to its tourism and hospitality industry, transport and logistics as well as manufacturing and light industry.
However, he pointed out that Walvis Bay also reflects poverty experienced in Namibia. He said there is a need for a balanced approach to development. In order for development of enterprises and infrastructure to be of value, the initiatives also have to be of value to the residents in the vicinity, in this case Walvis Bay.
He went on to describe the needs of Walvis Bay that would improve the socioeconomic wellbeing of residents, especially expansion of residential areas to Farm 37 to alleviate population pressure in Kuisebmond and Narraville. The expansion, Forbes said, should include provision for medical, educational, commercial and recreational facilities.
He called on Development Bank to assist with development of the town, and pledged Council accountability and integrity in dealings with the Bank.
Talking about Development Bank activity in Erongo, DBN CEO Martin Inkumbi said the region is the second largest beneficiary region after the Khomas Region, however factoring in finance for the NEF strategic fuel storage facility of N$4.2 billion, the region received the highest amount of finance in Namibia.
Inkumbi concluded by saying that the Erongo office also receives some visitors from the Kunene Region, and is planned to serve as a future base for visits to //Kharas and Hardap.
Hellen Amupolo to head Investments Department
Previously Acting Head of the Development Bank of Namibia’s (DBN) Investments Department, Hellen Amupolo, has been formally promoted to Head of the Investments Department.
Since joining the Bank in 2008, Amupolo was instrumental in establishing the Ongwediva branch, and she played leading roles in developing pioneering financing models for renewable energy and delivery of land and affordable housing through public private partnerships (PPPs).
Amupolo’s career trajectory at the Bank began with the position of Business Analyst. As she progressed, she became Northern Regional Portfolio Manager, then Senior Portfolio Manager: Infrastructure and Utilities. Just prior to her appointment to the Head position, she held the position of Senior Investments Manager. Before joining DBN, she held the positions of Acting Chief Economist for the Ministry of Fisheries and Marine Resources and Market Analyst for South Africa Breweries.
Amupolo is a Chartered Development Finance Analyst who holds a Bachelors in Economics from the University of Namibia and a Masters in Development Finance from the University of Stellenbosch. Amupolo’s training includes exposure to a number of structured finance and investment banking interventions during her banking career.
Talking about the role of the DBN Investments Department, Amupolo said it finances large scale enterprises with annual turnover exceeding N$10 million and infrastructure. Infrastructure, whether for energy generation and distribution, water, telecommunication and transport infrastructure creates the necessary base on which large corporate and SME enterprises can anchor their economic activities.
Key focal areas for the Investment Department include transport and logistics, tourism and hospitality, and manufacturing, areas identified in NDP5 as critical for growth of the Namibian economy. The Department also finances initiatives that address structural needs of the economy, such as privately owned solar power generation, and sociological issues such as provision of serviced land and affordable housing.
Going forward, Amupolo said the Bank is consolidating finance for renewable energy and water infrastructure under its climate adaptation facility. The Bank is also investigating new financing programs, and announcements would be made if and when they become feasible.
In addition to her role as Head of DBN’s Investments Department, Hellen Amupolo also serves as Chairperson of the Investment Committee of Momentum Metropolitan Namibia, sits on the Board of the Roads Authority where she serves as Chairperson of the Audit Committee, and she is a member of the Ministry of Finance Public Private Partnership Committee and Review Panel for Public Procurement.
