Is DBN changing to a commercial bank?

The Development Bank of Namibia’s (DBN) request for the submission of an expression of interest for the provision of a core banking system has raised eyebrows with sentiment going rife that the bank is transitioning to being commercial. 

A core banking system is a software used to support a bank’s most common transactions, and its elements include opening new accounts, processing cash deposits and withdrawals and maintaining records for all the bank’s transactions.

This is not in line with DBN whose mandate is to bankroll development projects through loans and does not have accounts where customers would naturally put their money and make withdrawals.

When approached by The Villager, the bank’s CEO Martin Inkumbi denied that they were gearing towards transitioning into a commercial bank.

“We are not, the only thing that has happened is that the system that we used to have was no longer working well, so we need a better one. We are requesting for it not only from local companies but foreign companies as well,” he said.

Glowshot Capital chief executive officer Tawanda Zhanje said, “It’s no longer a secret that DBN is now taking possession of all things that were supposed to be carried out by the SME bank.” 

“Somewhere along the lines, they may be in the process of starting to offer services like those offered by the mainstream commercial banks whereby, if you’re getting a loan there, you are required to open an account, and you will be able to deposit your money. That has to work through a system that allocates account numbers.”

“If you look at the SME Bank, it was operating as a commercial bank as much as it was a lending institution. People were going there getting cheque and savings accounts. 

"If DBN has a way of trying to go that route, I think it might want to retain the same customers as those retained by the SME bank. They will tell you that we are not a commercial bank, but they will do everything that a commercial bank will do,” he said.

He says this would make a lot of sense as people who get DBN loans will have to access them via another bank at which point DBN loses its control. 

“When your money comes in you have to seek authority to take it. So they (DBN) will in a way monitor your use of funds for developmental projects up until the project is fully paid. So for me, it makes sense to do that,” he explained.

A local ICT expert speaking on condition of anonymity said DBN’s need for a banking system points to the direction that they may be taking over from where the now-defunct SME bank left. 

“Obviously there has been some shake-up in the financial sector due to the SME bank. Maybe the bank wants to replace the SME bank. There was a direct relationship also between both banks. So its things like that. The issue is, where is the bank going?” he quizzed. 

A South African based expert working in the ICT department of FNB, also speaking on condition of anonymity said a core banking system is an expensive solution which DBN cannot just procure if they are not making efforts towards offering commercial banking services. 

“Why would they need a core banking system if they do not have customers? Besides, such a system is costly, of course, they may not say, but something is fishy. It looks as if they are transitioning,” he said.

Pressed on how much has been budgeted for the procurement of this banking application, Inkumbi said, “I can not say the figure, for now, I will have to consult with my team.”

DBN has announced that it will be offering loans to small-scale business enterprises, reinforcing sentiment that they are taking over SME bank functions. 

The SME Bank was wound up this year after the dust had raised over some missing “irrecoverable” funds and other irregularities which led to the initial firing of the bank’s board, CEO, foreign and local workers.