As the economy evolves and as new needs become apparent, it is vital that enterprise and infrastructure finance evolves as well. If not for this evolution, the economy will begin to lag, in terms of providing an enabling environment for economic activity, solving issues, and in terms of national competitiveness on the regional and global stages.

The ability of finance to adapt to the changing Namibian economy and enterprise ecosystem is hampered by two factors.

Firstly, commercial sources of finance are risk avoidant. Their duty to their investors is to deliver consistent returns, and to protect their customers in delivering fixed interest rates on savings and borrowing. All capital advanced or deployed has to be in a measured risk environment and adhere to the regulatory measures of central monetary policy.

Secondly, although the funds subsector is developing, there is limited space for venture capital, in which high returns to successful enterprise investments can offset losses and low returns on unsuccessful enterprises. This biases venture capital to smaller investments with lower risks.

As a result, the Development Bank of Namibia has adopted the role of pioneering avenues of finance and absorbing risk on innovative forms of finance for enterprise and infrastructure.

Although the Development Bank of Namibia operates competitively it takes pride in pioneering financing models that are adopted by other sources of commercial finance.

The Bank accepts that its models will be replicated in terms of its mandate, to foster economic and social wellbeing in Namibia. Through its models, the bank effectively mitigates the risk of finance within the sector or financing space and leads by example.

Notable examples of this include finance for privately owned renewable energy facilities as well as contract or tender-based finance, the latter in terms of which contracts are financed on the basis of revenue streams from the contract.

However, the Bank takes a cooperative approach from time to time. In the past it has provided stimulus for SME finance in the form tranches of capital to two commercial banks to foster on-lending to SMEs. The Bank also administers the Credit Guarantee Scheme (CGS) which is offered by First National Bank and Standard Bank. The CGS reduces the collateral requirement by 60% for qualifying SMEs.

However, the Bank is a leader in the enterprise financing industry in other respects that extend beyond pure financing. The Bank was the first to package mentoring and coaching with finance to enhance sustainability of SMEs, and the first to implement environmental and social management in its financing decisions.

In terms of addressing current economic issues, the Bank has pioneered land servicing in PPP models, skills-based finance for young artisans and professionals and is actively promoting agri-industry to support primary agriculture and food security. The latter takes the form of manufacturing inputs and services for agriculture, agricultural infrastructure and processing of agricultural produce.

The Bank’s track record in the field of ICT and transformation includes finance for Nampost’s biometric system that substantially expanded access to Banking, finance for Namibia’s second mobile provider, Cell One, as well as finance for internet service providers and ICT companies.

Looking ahead, the Bank is actively researching a financial product to promote access to finance and inclusive economic participation for women and young entrepreneurs.

The Bank’s success in innovating finance is rooted in its deep understanding of the sectors and enterprises that form its ecosystems. Aside from its own substantial body of experience, this is also embodied in its Project Preparation Fund. 

Taken together, the track record of the Development Bank in innovating, as well as its experience and its role as a brains trust indicates that the future of the Namibian economy and the financing sector is in good hands.

The Agricultural Bank of Namibia (Agribank) and the Development Bank of Namibia (DBN) have signed a memorandum of understanding (MoU) to cooperate and co-finance controlled environment agriculture activities in Namibia. The signing took place on 01 December 2022, in Windhoek.

The MoU recognises the joint interests of the two banks in promoting agriculture as a route to economic activity and food security. Agribank promotes agriculture through financing the entire agriculture value chain and related activities. DBN provides finance for agricultural infrastructure, manufacturing of agricultural inputs and provision of agricultural services, as well as enterprises that process agricultural produce and manufacture food.

Controlled environment agriculture finance envisages provision of land and facilities that enable consistent productivity with infrastructure that reduces the impact of drought and variable weather. This may include hydroponics, vegetable tunnels and green schemes. It also encompasses aquaculture.

In terms of the MoU, the banks will also identify parallel opportunities of mutual interest. For instance, if DBN receives a request for direct financing for agriculture it will refer the request to Agribank. Agribank may similarly refer requests for financing for agri-processing facilities to DBN. Both banks may collaborate on finance for controlled environment agriculture.

At the signing ceremony, Agribank’s Chief Executive Officer, Dr Raphael Karuaihe, said collaboration with other institutions to pool financing resources speaks directly to the Bank’s strategic initiative of targeting high impact projects to transform our economy and the agriculture sector, in particular.

DBN CEO Martin Inkumbi, stated that DBN has identified controlled environment agriculture to focus on, as this industry inherently mitigates many of the risks usually associated with agriculture, and with limited background in agriculture, it greatly reduces the risk DBN has to mitigate and manage in the agricultural space.

The Memorandum of Understanding is valid for two years from the date of signature, with the option for renewal at the end of the term.

Development Bank of Namibia (DBN) has donated N$500,000 to construct two new classrooms for Maunga School in Zambezi. Maunga School caters to learners up to Grade 4.

Speaking at the handover and inauguration of the classrooms, DBN Head of Marketing and Corporate Communication, Jerome Mutumba, said rural development is central to the government and government institutions must play a part to develop the rural part of the country.

He pointed out that DBN encourages applications for enterprise in rural areas, and that although the Bank does not engage in finance for direct agriculture, it may finance agri-enterprise as well as infrastructure for controlled environment agriculture.

On the topic of the Bank’s interest in finance for education, and the donations it makes to the sector, Mutumba said that education is one of the most significant resources for the future. Suitable facilities are a contributor to the resource as they provide an environment in which young minds can focus on learning without distraction and discomfort.

Speaking at the handover, area induna Pex Isiah asked for additional assistance to build additional classrooms, and electrify new classrooms as well as teachers’ dwellings.

Maunga School Principal Susan Museke noted that the new classrooms will improve learner attendance but also indicated that school facilities still include tents and mud structures that leave room for further development of the school’s facilities.

Mutumba concluded by challenging other institutions to make donations that improve facilities at the school. By focusing resources at a single point, socio-economic needs can be satisfied faster and with greater focus before moving to the next project.

DBN allocates a portion of its revenue to corporate social investment (CSI) in initiatives that cannot sustain commercial finance. In addition to education, the Bank also makes investments in skills development, community safety and health, poverty alleviation, enterprise development, and environmental and biodiversity management.